January 28, 2015
Capitalism vs Socialism
The major differences between capitalism and socialism revolve around the role of the government and equality of economics. Capitalism affords economic freedom, consumer choice, and economic growth. Socialism is an economy controlled by a state and planned by a central planning authority, providing for greater social welfare.
Capitalism is an economic and political system that is based on one’s individual rights. It believes that it is inequality that will compel people to be more innovative and productive. Resources in a capitalistic society are privately owned by individuals. These individuals or groups of individuals freely trade in a market that has an equal playing field. The government allows the forces of supply and demand to freely operate with the guidance of laws and regulations. The law of supply and demand provides that if the supply is greater than the demand for a particular commodity, the price of that particular commodity will go down. The price of a commodity goes up if there is less supply than the demand.
The advantages of capitalism include the individual’s choice as to what to consume, and this choice leads to more competition, products and services. Goods and services produced based on demand create incentives to cut costs and avoid waste. This increases the gross national product and leads to improved living standards which improves and expands economies growth.
The disadvantages of capitalism include: Firms that monopolize the commodity can abuse their position by charging higher prices. A capitalist society is based on the right to pass on wealth to a family’s future generation. If a family holds all the wealth and that wealth continues to be passed down to the same family, inequality and social division continues occur. An economy based on the market of consumers and producers is invariably going to experience growth and decline....
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