Contrast of Capitalism and Socialism

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Capitalism and Socialism
(Contrast Essay)
By Jemima M. Atok
In this complex world of ours, systems were theoretically developed and resolutely practiced. One of these multifaceted systems is the economic system, the,”1method by which monetary (economic) problems are solved in a particular society.” There are multiple systems governing nations, countries, and societies. Each particular system governs the community not only in its livelihood but also in its lifestyle, which in turn regulates the behavior of the people. Thus, economic system greatly affects our progressing world. Two of these economic systems are capitalism and socialism, which are widely contrasted in theory and practice throughout history. “2Capitalism and socialism are different political, economic, and social systems in use by countries around the world.” Capitalism is “3an economic system in which investment in and ownership of the means of production, distribution, and exchange of wealth is made and maintained chiefly by private individuals or corporations, especially as contrasted to cooperatively or state-owned means of wealth.” On the other hand, socialism is “4a system of society or group living in which there is no private property or a system or condition of society in which the means of production are owned and controlled by the state.” These two systems are north and south poles of a magnet, and, therefore, yield different results in an economy. Situated on opposite poles, capitalism and socialism aims on different purposes. Capitalism proposes on the purpose of freedom of choice through competition. Consumers can choose among varied products and services. Producers, then, struggle against each other to gain the consumers’ preferences. This principle coincides with Adam Smith’s theory of the limited role of the government in controlling the market in a country or nation, which he articulated in his book The Wealth of Nations (1776). He believed that “5the key concept of a free-market, or capitalist, economy is that prices regulate trade, and competition is essential in such a system.” However, under socialism the economic goal for the society is equality. “From each according to his abilities, to each according to his needs.” (Karl Marx, Critique of the Gotha Program) This intention of socialism conveys the thought that everyone would render and receive uniform labor and service. In the end, socialism would create a utopian environment, and society will emerge as a paradise. Pure socialism eliminates competition. Based on these particulars, both systems present varied process directing to different ‘perfections’ in the economy. Also, capitalism and socialism differ in its perspective concerning ownership in the economy and society. Both repel each other in the implementation of property holdings. In a capitalist system, free-enterprise influences ownership. Most agencies of production are privately owned. Some are held by corporations or shareholders. Individuals and companies can establish their businesses, conforming to the rules set by the government without troublesome restraints or complete prohibitions. These said rules are only present to products regarded as dangerous to the community. Some enterprises require licenses or requirements to operate. Beyond that, the government has no control of the system. In contrary, socialism emphasizes on private enterprise or political hierarchy. It provides less freedom of the people in terms of economical decisions compared to capitalism. This means that the government has the grip of the growth of the economy. According to socialists, this is called social control of the resources to provide prosperity in a society, which was clearly pointed out by Karl Marx and Friedrich Engels in Manifesto of the Communist Party (1848). Socialism presents two types of subsystems: ownership and control. Ownership socialism denies any private ownership besides the mainly personal sorts of property. Government...
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