Socialism vs Capitalism

1140 Words5 Pages
Compare and contrast capitalism and socialism and discuss a shortcoming of each system that is criticized by the opponents of the system. Then describe the overlap in capitalism and socialism and the economic theory associated with it. The theories of Capitalism and socialism adherently are opposing schools of thought. The principal arguments in the socialism verses capitalism debate are about economic equality and the role of government. Exponents of the capitalism are of the opinion that the government interference will lead to inefficiencies in the utilization of economic resources. They strongly advocate that private enterprises motivated by maximization of profits will lead to advancements in society, which will ultimately benefit everyone. Proponents of Socialism are of the contrary opinion. They believe economic inequality will not achieve the overarching goals of the wider society, and the government is ultimately responsible for reducing any perceived inequalities through programs that benefit the less able members of society. Capitalism is an economic system characterized by private or corporate ownership of capital goods. In a capitalist system, investments are determined by private decisions, prices, production, and the distribution of goods that are determined primarily by competition in a free market. This situation exists with little or no interference from government. According to the Neo-Classical Theory there are four main markers of the capital system. They include; 1. Consumers are conceived as “homo economicus”: (a)Consumers are rationally maximise (b) Consumers perceive one another fundamentally in terms of impersonal markets. This Karl Marx has termed alienation. 2. Business organizations, workers and consumers have all the needed pertinent information. 3. Workers select employment voluntarily; therefore this allows for symmetry of
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