CAPITALISM : an answer to third world challenge?

Janice XIIA4/21

CAPITALISM : an answer to third world challenge?

The third world challenge is something that can no longer be avoided by developing countries like Indonesia. The third world itself consists of developing countries that have low economic levels. The third division of this world has existed since the cold war right after the end of the second world war. This division is based on the ideology and level of the country's economy. The first world consists of countries that have a liberal ideology with a capitalist economic system such as North America, Germany, and Japan. Whereas the second world is countries with a communist ideology with a socialist economic system such as Poland and some of the Turk States. The third world consists of poor countries of former colonies for instance all countries in sub Africa except South Africa, Myanmar (Burma) and others. However after the Soviet Union collapsed, the third division of the world was no longer based on ideology but based on per capita income.

 I cannot choose to implement an economic system that is suitable for my country later without knowing what the advantages and disadvantages are and the impacts on the country in the future. Broadly speaking, the world economic system is divided into two, namely capitalist and socialist.

            Capitalism is an economic system in which trade, industry and production facilities are controlled by private owners with the aim of gaining profits in a market economy. This economic system has been adopted by most countries in the world because the private sector can take part in improving the country's economic system. However, because the government cannot intervene directly in economic activities therefore sometimes the distribution of goods is not evenly distributed in each region. One of the advantages of the capitalist economic system is that there is no direct intervention from the government so that the creativity and motivation of the community become high. As a result, the products and services offered are developing, both in terms of quality and type because there is competition to get maximum profit. While the disadvantages of the capitalist system are the occurrence of social inequality, where the rich are getting richer and the poor are increasingly burdened.

Unlike the capitalist economic system, the socialist economic system is an economic system that is centralized and regulated by the government. Before the Soviet Union collapsed in 1991, many countries in Eastern Europe implemented this economic system, now there are only 5 countries in the world that implement this economic system namely Russia, Vietnam, Cuba, North Korea, and China. The socialist economic system is an economic system that makes the state the center of economic command. In the sense that all community economic activities in the form of production, distribution and consumption are regulated systematically by the state. This economic system is known because usually countries that implement this system are led by cruel actors or commonly called iron curtain countries, for example, China or better known as bamboo curtains. All economic resources, both natural resources and human resources, are owned by the government, which will be used to implement all economic agendas made by the government. In contrast to the capitalist economic system, this economic system plays a very limited role in the private sector, resulting in the inhibition of individual innovation and creativity which causes the product to become monotonous and undeveloped. One of the advantages of this economic system is the full involvement of the government in the economy so that the basic needs of all citizens are fulfilled and there is no social inequality because the government determines the type of their work so that the unemployment rate is reduced considerably.

The fundamental difference of the capitalist economic system and socialism is not only a matter of government involvement in the country's economy but also a way of using existing natural resources and human resources. Most developed countries are countries that can maximize their use of natural resources and human resources. Ironically, most developing countries which are included in the third world even though they have many human resources and abundant natural resources, if the quality of their human resources is inadequate, the development of the country will certainly be hampered.

After all if anyone asks what economic system my country applies for the goodness of the people in the future, of course I will choose an economic system that supports its citizens to develop or rather I will certainly choose a capitalist economic system. Because by applying this economic system creativity and product innovation will become more developed to increase competitiveness with products in other countries. To avoid unhealthy competition between private parties and other private parties to maximize profits, the government must inevitably take part in the economy of the country by imposing regulations that limit the private sector to act arbitrarily, this action needs to be done for protecting the existence of new generation. So I hope to be able to pass on a prosperous country and to support its people to develop in future generations.