Most time, you may be confused about what is the similarities between Capitalism and socialism and What is the difference between capitalism and socialism?
The main differences between Capitalism and Socialism revolve around the role of property, government, and the economy.
CAPITALISM AND SOCIALISM- ALL YOU NEED TO KNOW
While capitalism advocates a lesser state, socialism is based on the joint exploitation of goods, which must be controlled by the government and the profit distributed among the members of society.
Understand this and other differences between the two systems:
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Main Characteristics of Capitalism
- It is a market-based economy composed of buyers (people) and sellers (private or corporate);
- The goods and services produced are intended to generate profit;
- The government must protect the free market, as it determines investments, production, distribution of goods;
- Government interference is only permitted when making and applying rules or policies governing the conduct of business;
- There is a need for continuous production and purchasing for the capitalist economy to function efficiently;
Main Characteristics of Socialism
- Public enterprises or cooperatives own the means of production, and individuals are compensated based on the principle of equality;
- There is equal opportunity for all;
- Large-scale industries are cooperative efforts, and thus the returns of these industries must be given back and benefit society as a whole;
- The central project authority plans economic activity and production and based primarily on human consumption needs;
- The traditional forms of capitalist society, such as private property, must be destroyed.
The Advantages of Capitalism
- #1. Power of consumer choice
Individuals can choose what they will consume, and that choice drives competition to increase, and better products and services emerge.
- #2. The efficiency of the economy
Demand-driven goods and services create incentives to reduce costs and avoid waste.
- #3. Economic growth and expansion
The competition seeks to expand the market, increase the Gross National Product (GNP), and raise living standards.
The Advantages of Socialism
- #1. Decreases inequality
In socialism, no individual can have more than the government owns the other and businesses. Money is not a factor of control in a socialist society.
- #2. Needs met
Everyone’s needs must be met.
This means that health care is a statutory, which means it is universal; education is free, access to housing, and other necessities for life are facilitated.
- #3. Mobilization of goods
Disasters of various natures can occur at any time, and when they do, a considerable amount of services and products are needed to ensure that everyone is safe and cared for.
In socialism, the government has total control of these goods and can use them in the areas in which they need them most.
- #4. Basic human rights guaranteed
Certain ideas of socialism are used in practically all countries, but this does not make these states socialist regimes.
These ideas are a way to ensure that basic and necessary rights and articles are provided to all people. Some examples of this are the public education system in Brazil and the universal health system in Canada.
The Disadvantages of Capitalism
- #1. Power monopolies
Companies that are able to create monopolies on a particular market may abuse this position and may develop actions detrimental to society and charging higher prices for certain products.
With so much power over people’s consumption, capitalism would rely on various forms of economic and cultural exploitation, repressing workers, and even promoting social alienation.
- #2. Inequality
In capitalist societies, goods and wealth belonging to an individual are generally passed down from generation to generation. So if a small group of people owns all the wealth, which continues to be passed on to the same people, inequalities and social divisions tend to grow over time.
The concentration of wealth is one of the pillars of a capitalist society, and critics of the system maintain that this increases inequality, since people without capital need to sell their workforce to those they own.
- #3. Recession and Unemployment
An economy based on the market of consumers and producers can have many oscillations because it depends on supply and demand. In this way, in the case of diminishing demand, companies close and unemployment increases, and if one enters a cycle of economic crisis.
The Disadvantages of Socialism
- #1. The historical failure
Throughout the world, several countries have tested the idea of socialism, and all have failed.
No matter how many different adjustments the government attempts to apply, historically, it has been proven that this system does not work in its entirety. However, several countries have incorporated certain measures considered socialist in their governments.
- #2. Nothing is yours
It is forbidden to own private property in a socialist society. This makes the individual itself has nothing since the goods belong to “all” or to the government.
- #3. Less innovation and growth
With socialism, basic needs must be met, so an individual would not be bothered to strive to have a property as a property.
That may sound good, but there are those who believe that people settle in. As a result, innovation, creativity, motivation, and other forms of societal advancement would be diminished.
- #4. It’s expensive
It costs a lot of money to guarantee the needs of all people, and that money must come from somewhere. So all the money generated by citizens is taxed in extreme percentages to cover all costs.
It is worth mentioning that capitalism can also be costly since many tributes are put into practice. Some pay more, others less, returning to the heart of inequality, much criticized by those who do not believe in capitalism.
Conclusion On Capitalism And Socialism- All You Need To Know
So far so good, we have been able to enumerate to you the differences between Capitalism and socialism, the similarities between Capitalism and socialism, also, every other vital information you need to know has been met, if you have further questions and information, you may do well by dropping your views, opinions and other useful information you thought we needed to update this write-up, you may make of our direct email address to get in contact with any of our administrators.
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