Capitalism and Socialism Name: Institution: CAPITALISM AND SOCIALISM Socialism and capitalism are two schools of thought that stand in stark difference to each other when it comes to economics. In the capitalism vs. socialism debate, the central argument has to do with the government’s role in the economy and economic equality (Lanz, 2008)…
Communism, on the other hand, is an economic system whereby one single party controls all the country’s means of production. Under this system, no property is private, and all goods are equally distributed (Lanz, 2008). In capitalism, capital is traded, operated, and owned in order for private shareholders and owners to make a profit, whereas individual profit is emphasized over society or the workers (Lanz, 2008). The philosophy in socialism is a little different, contending that from each with his/her ability and to each according to what they contribute. It emphasizes on distribution of profit to the workforce on top of their wages. The ideas in capitalism and socialism also vary. In capitalism, a laissez-faire idea is used instead of the government intervening. The belief is that a free market portends the best outcome for a country economically. On the other hand, socialism’s idea holds that everyone should have an equal chance at success. The workers have the most say in the manner their factories are run. With regards to economic systems, whereas capitalism champions the free market, socialism champions for the redistribution of wealth so that all people in the society can share the benefits of their labor somewhat. However, like in capitalism, individuals can earn more if they work harder than the rest. The workers also control the means of production (Lanz, 2008). The key elements of capitalism are that capital accumulation is the driver of economic activity and that production is meant for profit. Socialism’s key elements, on the other hand, are that production and all economic activities should be adjusted to meet economic demands and human needs (Jones, 2009). In addition, production, unlike in capitalism, is meant for use and not for profit. With regards to economic coordination, capitalism is reliant on the markets in distribution decisions, production, and in the determination of investments. The markets may also be; regulated, free, or these two could be combined with some degree of; private company planning and economic planning directed by the government. However, socialism is reliant on planning in making production decisions and in the determination of investment. The planning in this case may be decentralized or centralized, whereas economic coordination is reliant on markets in capital allocation to various enterprises owned by the society (Jones, 2009). When it comes to political movements, capitalism adheres to modern social democracy, neo-liberalism, libertarianism, social liberalism, or classical liberalism (Jones, 2009). Socialism, on the other hand, is adherent to syndicalism, anarchism, libertarian socialism, communism, or democratic socialism. With regards to ownership structure, for capitalism, production means are owned by private entities, which operate the means of production to get private profit. This acts as an incentive that drives producers to be involved in economic activity. In socialism, means of production are owned by the society and produce that is in surplus accruing to either the employee-members or the entire society (Jones, 2009). There are various reasons why capitalism and its free market system have become more dominant compared to socialism in the organization of economic activi ...
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