Difference Between Capitalism and Socialism

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Differentiate between capitalism and socialism and indicate which of the two socio-economic systems is more appropriate for sustained growth and development

INTRODUCTION

1.This essay shall bring out the difference between capitalism and socialism. In so doing, first, the terminologies used shall be defined and some quotes noted by early writers. The full differences between the two socio-economic systems will be discussed after which a more appropriate system will be selected and thereafter, a conclusion will be drawn.

"ordinary people are deemed competent enough to select their political leaders-but not their bosses. Contemporary capitalism celebrates democracy, yet denies us our democratic rights at precisely the point where they might be utilized most immediately and concretely: at the place where we spend most of the active and alert hours of our adult lives."

2.Definitions. The following are the definitions of particular words used in the essay:

a.Capitalism. An economic and political system in which a country's trade and industry are controlled by private owners for profit.

b.Socialism. A political and economic theory of that advocates that the means of production, distribution, and exchange should be owned or regulated. In Marxist theory, it is a transitional social state between the overthrow of capitalism and the realization of communism. c.A Product. A product is any good produced for exchange on a market. d.Commodity. A commodity refers to any good exchanged in a market, but more recently refers solely to standard products such as raw materials. e.Capital Goods. These are the means of production including intermediate goods such as raw materials, tools, industrial machines, vehicles and factories, f.Consumer Goods. Goods that are sold to other e.g televisions, cars, computers, houses. g.Esprit de corps. A common spirit of comradeship, enthusiasm, and devotion to a cause among the members of a group. Capitalism

2.From the definition, Capitalism is an economic system that is based on the private ownership of capital goods, or the means of production, and the creation of goods and services for profit. The elements that are central to Capitalism include capital accumulation, competitive markets, and a price system. There are also multiple variants of capitalism and these include, laissez-faire, welfare capitalism and state capitalism. Capitalism is considered to have been applied in a variety of historical cases, varying in time, geography, politics, and culture. There is general agreement that capitalism became dominant in the Western world following the demise of feudalism. Nearly all modern capitalist nations actually have mixed economies, and use a blend of capitalist ideas and other systems. While some aspects of the economy may be left alone, others, such as wages or safety procedures, may be carefully monitored by the government. There are at least four main types of capitalism, although different countries use variations of each:

a.Market systems operate with limited interference from the government, allowing supply and demand to create a balanced market. b.Corporate systems rely heavily on capital moving through large, powerful, for-profit corporations. c.Social market systems typically include more government involvement in social welfare systems and public services. d.State-led systems are different from the others in that the government owns the means of production, but runs them in order to make a profit.

3.Also known as the free market system, capitalism requires unregulated supply and demand and little or no government interference in matters of trade. Each individual is free to produce what he or she wants and to sell it at whatever price the market will support. These decisions are typically made by the laws of supply and demand: if there is no demand for a particular product, the producer won't be able to make a profit, but if the demand is...
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