Cold War (1945–91)

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What was the conflict of interests between capitalism and communism during the Cold War?

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Capitalism and communism are radically different ideologies, diametrically opposite in essentially every conceivable way. As this clash formed the basis of the Cold War rivalry between the United States and the Soviet Union, we can see why they generated such bitter conflict.

In economic terms, capitalism is a system whereby goods and services are produced and allocated on the basis of the free market. It is the market, not the government, that makes these crucial decisions in the operation of the economy. Under communism, however, it's the reverse; it's the government that decides what society's economic priorities will be. Centralized planning and state control of the means of production are considered crucial in meeting the people's needs.

Capitalism needs to have a strong legal and regulatory framework in which to operate effectively. It's imperative that businesses have a fair degree of certainty if they're to invest and grow. Furthermore, property must be respected and contracts honored, and this can only happen where the rule of law is paramount.

The spread of communism during the Cold War was a threat to this ideal because under this ideology the rule of the market is replaced by the rule of government. The internal logic of capitalism dictates that new markets always need to be found and developed. As more of the developing world came under communist control, Western business interests increasingly found themselves shut out of overseas markets. Many companies such as United Fruit spent large sums of money on supporting regimes hostile to communism, such as Batista's in pre-revolutionary Cuba.

A world safe for capitalism was a world in which capital could flow freely between countries, without much interference from government. Once communism became established in a specific territory, that was no longer possible. Communists saw wealth as created by workers, not by capitalists; the workers' state, therefore, was entitled to appropriate foreign companies and their wealth in the name of the people. Under such conditions, Western business interests became among the staunchest supporters of an aggressive Cold War strategy involving anti-communist subversion and the active financial support of dictators and rebel groups who could be relied upon to challenge the communist threat.

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Capitalism and communism were very opposite systems. Each system clashed with the other over various issues that arose after World War II. The communists wanted to spread their economic system throughout Europe and Asia. We wanted to prevent that happening. The communists believed that the government should control most aspects of the economy. The capitalists believed there should be a free economy in which private individuals made most decisions. The government would have a limited role in a capitalist system. Supply and demand would play an important role in a capitalist economy.

When the Soviet Union tried to spread communism to Western Europe, we developed the European Recovery Program to help countries trying to prevent a communist takeover. For example, we gave aid to Greece and Turkey to help them remain noncommunist. We went to the United Nations to help South Korea fight the spread of communism there. The Berlin Airlift was used to keep West Berlin free from communist control.

The capitalists also believed in having free elections. The communists supported having limited political opportunities.  Many governments under communist control were pressured or were forced to have a communist government. The capitalist concept supported freedom of choice. The communist system didn’t support this concept.

There were very different and competing interests for the capitalists and for the communists.

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The conflict between these two ideologies came about because they had opposing views of how the world should be organized and because they each felt the other was bent on dominating the world.

Capitalism and communism are based on diametrically opposed views of the world.  Capitalism depends on personal freedom while communism depends on centralized government control.  Communism argues that capitalism is inherently exploitative while capitalism believes communism denies people their human rights.

During the Cold War, each ideology felt the other was trying to dominate the world.  Therefore, each ideology felt that its very existence was threatened.  This was the cause of the conflict between the two.

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