Basically an economic system aims to answer 3 questions i.e. what to produce, whom to produce and how to produce, in communist states these questions were tackled by the state where the government formed certain bodies for each industry and these bodies would conduct a thorough research to determine the answers to the three economic questions, this kind of an economic system ensured that every one would get an equal share of the goods produced and there would be parity in the levels of income for the whole population. The thing that was lacking in this form of a system was that it did not cater to growth, people who were willing to work harder than the others did not get a reward for the work they would do and hence there was no place for individualism in this economic system, this was indeed a major draw back of communism because people did not want to cater for the whole society they wanted personal benefit which was almost impossible to gain from this economic system. ...
and this was not an effective method because these committees did not work for free and hence there was an extra cost that had to be paid in this system, therefore the prices of the goods were pushed up to cater to the expenses attached with the committees set up in this type of an economic system. What capitalism did was to liberate societies of this system, it catered to needs on the individual level, the answer to the three economic questions was ' to who ever could afford it' although this might sound pretty selfish but the capitalistic system provided means and methods for people to afford all the goods that they wanted to provided that they worked for it, another plus point of this system was that there were no committees that had to be dealt with on the cost front, prices in such a system are determined by the demand and supply mechanism which is basically a cost effective method of determining prices albeit one where prices could vary by a great deal. The supply and demand method was described by Adam Smith as the guiding hand where peoples interest guided them to demand and supply things as and when they wished to, the capitalistic system has been the foundation of modern day economics and has produced people like Bill Gates who have been able to work their way to building huge fortunes while working with in the system, but with in the same system there also exist people who live below the poverty line and have virtually nothing to eat and drink and this is the most major draw back of this type of an economic system. It was the monotonous nature of the communist system which gave birth to the capitalistic system and the capitalistic system has in return laid the foundation for a new world economic order.
Capitalism-Responsible for Hunger