Capitalism and Socialism Essay

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Capitalism is basically when all the resources of manufacturing, sales and distribution of goods and services are owned by a the privates entities and government does not exercise much control or regulation over such private entities. All the major decisions regarding the recourses are taken by the entities who own them with only a little inference by the government. Clearly the main motive of all private entities is to earn money, and therefore they target at profit maximization. Such companies aim at maximizing the wealth of the shareholders or to increases the value of their shares, either one of them are beneficial for the company as they end up making profit out of it. The only situation when government comes in to interfere by implementing its laws and regulations would be to act in the public's interest when it feels that the company is exploiting its customers. Capitalist economy is also known as the free market economy. Pros of Capitalism: 1. Easy Entry: There are no barriers to enter a capitalist economy so anyone who wishes to can enter the market. 2. Market forces the products and services: It is actually the market forces that decide what products and services that will be most profitable to be sold and preferred by the customers. This also helps in helping the different private entities to make changes in their product line which much in lines with what is demanded by the target customers.

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