CAPITALISM

VS
SOCIALISM

Simranjeet Singh
BBA 2(y)
1620991136
Chitkara Business School
Capitalism
Capitalism is an economic system based on private ownership of the means of
production and their operation for profit. Characteristics central to capitalism
include private property, capital accumulation, wage labor, voluntary exchange, a price
system, and competitive markets. In a capitalist market economy, decision-making and
investment are determined by the owners of the factors of production
in financial and capital markets, and prices and the distribution of goods are mainly
determined by competition in the market
A theory or system of social organization based around a free market and privatization in
which ownership is ascribed to the individual persons. Voluntary co-ownership is also
permitted.

Key Elements
Competition for ownership of capital drives economic activity & creates a price
system that determines resource allocation; profits are reinvested in the
economy. "Production for profit": useful goods and services are a byproduct of
pursuing profit.
In capitalism, the motive for producing goods and services is to sell them for a profit, not
to satisfy people's needs. The products of capitalist production have to find a buyer, of
course, but this is only incidental to the main aim of making a profit, of ending up with
more money than was originally invested. This is not a theory that we have thought up
but a fact you can easily confirm for yourself by reading the financial press. Production is
started not by what consumers are prepared to pay for to satisfy their needs but by what
the capitalists calculate can be sold at a profit. Those goods may satisfy human needs but
those needs will not be met if people do not have sufficient money.

Discrimination
Government does not discriminate based on race, color, or other arbitrary classification. Under
state capitalism (unlike free-market capitalism), government may have policies that, intentionally
or not, favor the capitalist class over workers.
Advantages
Capitalism tends to generate more wealth because the markets aren't constricted by
governmental entities. Free trade encourages healthy competition and gives companies an
incentive to innovate and create better and more efficient goods and services. Capitalism
is compatible with democracy because democracy values many freedoms that capitalistic
societies offer. For example, democracy values the freedom of choice, and this is also an
essential component of capitalism.

A staple of capitalism is consumer choice. Individuals have the freedom to choose and
purchase goods and services they want. This helps promote higher quality products
because companies strive to attract and keep their customers happy. Capitalism helps
improve the overall living standards because the uninhibited flow of money help lead to
economic growth. Economic growth is always beneficial because individuals have access
to more jobs and higher wages. Some capitalistic countries are the United States, United
Kingdom, Canada, Sweden and Australia.

Disadvantages
Capitalism doesn't provide for those who lack competitive skills. This includes the
elderly, children, the developmentally challenged and their caretakers. To keep society
functioning, capitalism requires government policies that value the family unit.

Capitalism does not promote equality of opportunity. Those without the proper nutrition
support and education may never make it to the playing field. Society will never benefit
from their valuable skills.

Capitalism ignores external costs, such as pollution. This makes goods cheaper and more
accessible. But over time, it depletes natural resources and lowers the quality of life in the
affected areas.
Socialism
Socialism is a range of economic and social systems characterized by social
ownership and democratic control of the means of production; as well as the political ideologies,
theories, and movements that aim to establish them. Social ownership may refer to forms
of public, collective, or cooperative ownership; to citizen ownership of equity; or to any
combination of these. Although there are many varieties of socialism and there is no single
definition encapsulating all of them, social ownership is the common element shared by its
various forms
A theory or system of social organization based on the holding of most property in
common, with actual ownership ascribed to the workers.

Key Elements
Calculation in kind, Collective ownership, Cooperative common ownership, Economic
democracy Economic planning, Equal opportunity, Free association, Industrial
democracy, Inputoutput model, Internationalism, Labor voucher, Material balancing.
It has the public ownership of all the means of production and distribution. This is also
known as collective ownership whereby all means are owned, controlled and regulated by
the state. In socialist economic system the basic motive of government is not profit but to
get targeted objectives.

Discrimination
The people are considered equal; laws are made when necessary to protect people from
discrimination. Immigration is often tightly controlled.
Advantages
A socialist economy gives individuals a chance at equal opportunity that is based on their
contributions toward a total goal. Companies and businesses are owned by public sources
that include the government. The people who work for these companies are compensated
according to the contributions that they make toward these companies. Citizen healthcare
and well-being is taken care of by the government from a pool that comes from all of the
citizens of the economic system.

Nearly all people in a socialist economy are equal. This equality contributes to the
fairness of the policies that are established by the socialist government. All items and
goods that are needed for the country are imported and produced according to the specific
demand of the citizens. Citizens all have equal opportunities for employment, healthcare
and housing. Citizens, goods and employment are all treated the same way regardless of
the size of the company that is handling the entities. Socialist economies do not have
room for a single large corporation to monopolize an entire industry and group of people.

Disadvantages
With socialism, apart from communal ownership and the government being in control of
certain industries and facilities, people feel that they are dictated upon on how to live
their lives, where they live and how much they should be paid for their services and
goods.
It is strictly forbidden to own private property in a socialistic society. This makes it so
that nothing you have is your, it belongs to everyone or the government. No body feels
 the need to work hard, learn new skills, or put effort into anything because they can never
truly obtain anything.
It costs a whole lot of money to provide everyone with the things that they need, and this
money has to come from somewhere. In order to subsidize where the funding comes
from, all of the money that is made by the citizens is taxed at extreme percentages in
order to cover all of the costs.

Capitalism versus Socialism

Economic theorists say that socialism evolves from capitalism. It improves upon it by providing
a direct route between citizens and goods and services. The people own the factors of
production instead of the capitalist.

Many socialistic countries own the companies in oil, gas and other energy-related resources. Its
strategic for the government to control these profitable industries. The government collects the
profit instead of corporate taxes. It also distributes these profits in government spending
programs. These state-owned companies still compete with private ones in the global economy.

My view
I SUPPORT CAPITALISM

In capitalism, governments limited control over businesses leads to healthy competition. This
leads to efficient production, which prevents firms going out of business. Economic growth
occurs when people having the freedom to conduct business. This allows people to work harder
and be innovative, leading to economic expansion which brings about an increase in the gross
domestic product. Capitalism encourages economic freedom because of the lack of government
intervention in businesses. Some believe that this economic freedom is in some way related to
political freedom. Capitalism ensures that goods and services are distributed according to
consumers' wants, bringing about efficient allocation of resources, with firms only producing
what the consumers prefer.

Capitalism increases efficiency over time as firms respond to new consumer preferences. Black
markets decrease, because there are no restrictions on types of business. Additionally, capitalism
increases production, subsequently increasing the wealth of the nation. The lack of government
interference regarding who enters the market presents fair opportunities for all who engage in
businesses. The quality of goods also improves as a result of prioritizing customer needs.

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