In essence, it is so important to bring into view the fact that capitalism and socialism are two different forms of economic systems. So to speak, it is important at this point to provide the meaning and definition of each kind of system in order to proceed into making the comparison of the two. First, capitalism is defined as an economic system whereby the means of production are owned privately. In connection to this, the wage labor in such a system becomes dominant over self employment. Rather than being set by the government, capitalism systems allow supply, demand and price to be set by the market forces.
At the same time, the distribution of profits is done among the owners responsible for the business investment. In a more detailed manner, capitalism entails the prevalence of business as well as commercial activity along with the fact that the production is done mainly for exchange. It can also be termed as a means of accumulating capital. Research has pointed out that capitalism is a means for enhancing economic growth as less government control of the economy is applied. In the same line of thought, the underlying theme of capitalism is the aspect of using wealth to create more wealth or rather investing money in a project in order to get a share return of the profit.
On the other hand, it is vital to bring into the context the definition of socialism. In essence, socialism is an economic system that makes a direct maximization of use values as conflicting with the exchange values. In line with this, it transcends the production of commodity and wage labor as well as the corresponding set of social and economic relations. From a broader point of view, it entails the organization of institutions of economy along with the methods utilized for allocation of resources (Benedict, 2009, p. 217). Equally, post monetary calculation that is basically on physical magnitude along with individual merit based method of return is applied. The return is also based on labor expended as well as the contribution of each individual. The socialism system puts it that the form gives room for a widespread application of the modern kind of technology. This has also been associated with the validation of the economic activity.
Accordingly, socialists put it that such an economic system would allow for economic output, maximum utilization of resources as well as equal distribution of resources (Benedict, 2009, p. 217). The distribution of power in this system is a resultant factor of the amount of work that is spent in production. From a much broader perspective, the socialist economy is founded on centrally planned economies that are directly owned by the state in regard to all means of production. Supposedly, the socialist economy has this point that the state ownership or the worker-run institutions have the capability to produce as well as deliver services and goods in with the heights returns of economy.
At this point, it is important to carry out a comparison of capitalism and socialism in a detailed manner. While carrying out a comparison of the systems in question, it is important to bring into view the fact that there are both disadvantages and advantages of the two systems. Based on these factors, the comparison will be done on bringing in the advantages of each as opposed to the other. Again in this context, the differences as well as the similarities will be examined. Needless to say, those that advocate for either system have their own supporting ideas. They also have the reasons why they refute the system other than the one they propose. It is acknowledgeable that both systems have been successful at one time in a particular society. This is because both systems have been in use across the world since their inception.
In a capitalism system, the private ownership of property and freedom to live a life that each and every one is pleased with is a key driving force. Individuals are again allowed to run businesses in a free market making profits and wealth as they desire. The level of wealth acquired by each individual is dependent on the self motivation. According to the proponents of capitalism, the role of government should only include the aspect of protecting the citizens from fraud incidences (Boswell & Chase-Dunn, 2000). In this sense, the police force, military force and in the larger perspective the court system, should be employed in order to restore order in the society by ensuring that individual citizen rights are protected. In a capitalist society or rather system, it is allowed for anyone to start any business.
Notably, in a capitalist society, there are not monopolistic protections. Arguably, capitalists hold individual rights as well as freedoms as absolutes. Generally, the capitalists are committed to the aspect of making profits (Boswell & Chase-Dunn, 2000). On the contrary, the socialism system is quite different from capitalism. Socialism views economy from an opposite point of view. This will be made clear from the information that will be provided in the following provisions.
Contrary to the capitalism, socialism society calls for a great role to be played by the government whereby the society is given to the ownership of the social property such as banks and factories. The ownership however, it is not private but it is accomplished by means of the government (Boswell & Chase-Dunn, 2000). The resources of the society with a socialism system are owned by the workers being utilized for the general benefit of the society’s economy, a factor that is not found in a capitalism society.
While the government plays the role of only protecting the rights of the citizens in capitalism, the socialism society believes that the government should be in control of production and economic activity. In line with this, the workers are given to the job of deciding what to produce, where to produce it as well as how much to produce along with the fact that the fair distribution of product to the benefit of all the members of the society (Boswell & Chase-Dunn, 2000). The best definition given to the socialism society is equal distribution of goods in equal terms should be the achievement as well as the accomplishment of the government.
The main focus of the socialists is the achievement of freedom directed to every member of the society. Admittedly, every member of the society is entitled to basic necessities which comprise of food, clothing, shelter and employment (Boswell & Chase-Dunn, 2000). This is not the case with capitalism, as it is reliant to the government intervention in distribution of wealth and resources. Remarkably, there are incentives that are entitled to hardworking workers who end up working hard for the benefit of those incentives. In respect to this, socialists and capitalists are quite the opposites. The main areas of differences stem from the issues to do with materialism, competitiveness and individualism. These three areas mark the main basis of the differences that exist between the two forms of economic systems.
In order to effectively establish the differences that exist between the two systems is good to examine what the critics have said in regard to the systems. Particularly, the capitalists have criticized the socialists and thus one can draw the differences and points of conflicts between the two systems. According to capitalists, the socialists seek to sacrifice their own notions to the benefit of the whole economy while socialists in defense argue that they work hard towards eliminating and fighting against the corporate greed brought about by capitalism (Haslett, 1996). Whereas the socialist work for collective benefit of all, the capitalists work to gain wealth for themselves. The issue of individualism and more wealth tending to be concentrated to smaller number of hardworking people has been associated with the capitalists; this is a point of criticism on this type of system. Socialists see capitalism as a means of depriving some of the members of the society employment, wages and benefits from a general point of view. From the point of view of a capitalists, the socialists work together to carry out labor exploitation in that monopolies in labor and production coexist (Novak, 1979). According to some critics, since capitalism is not regulated, it can easily exploit workers as they are not protected by the government. In this context, the socialist’s workers are protected by the government. Divergent from the socialists’ point of view, the capitalist are criticized to potentially promote racism. In the same line of thought, since firms and business have a sole aim of making profits, exploitation is inevitable especially to the workers. In this connection, socialists are seen as the better option to eliminate exploitation.
Another point that has arguably been addressed is the fact that the socialist economy has no room for discrimination while capitalism is associated with the promotion of this. Although the socialist may blame the capitalist in this matter, the fact is that capitalism provides room for the workers to choose where they can work (Haslett, 1996). Occasionally, it has been pointed that capitalism has been associated with poor working conditions owing to the fact that it is an unregulated economy. With capitalism, socialists see it as a means of perpetuating unfair, unhealthy and unsafe business activities as the businessmen only seek to make profits without necessarily caring that they exploit their workers as well as consumers. In case of accidents in a capitalist society, there are no insurance policies to protect the workers as it is the case in a socialist community.
Despite the fact that capitalism has been criticized over time, it helps in enhancing the production of quality goods and services. Since there is the element of competition in the market, the companies will tend to work hard to ensure that it achieves the best quality goods and services that will attract more customers. In order to keep up and hold a market share, in a capitalist society, the companies will seek to produce goods that have the same quality with the ones already being produced by the existing companies, or they produce goods that are of higher quality thus making profits appropriately (Boswell & Chase-Dunn, 2000). In combination with this, since competition leads to innovation, the socialist community may have a limited room for expansion in terms of innovations as the element of competitiveness is suppressed.
In regard to socialism, property is publicly owned and as a result, issues to do with pollution may not be subjected to check. This is to suggest that people can pollute rivers, oceans, land and air irresponsibly as they are publicly owned. This is not the case with capitalism as property is owned by individuals who can easily avoid pollution as no one is allowed to get into somebody else’s property without being permitted(Haslett, 1996). Dumping garbage to somebody else’s property can be translated as a violation of one’s right and therefore contrary to socialism; capitalism can effectively help to reduce pollution.
As far as socialism is concerned, there are several points that have been put forward. This is to suggest that socialism system has a lot in terms of what the proponents have to say. Since the system seeks for equality of all, it is seen as a good system that will not put some people as more rich and others very poor (Novak, 1979). According to a socialist stand point, a society as such ensures that working conditions of the workers are put under check. At the same time, socialists believe that workers have been given a room for voicing out their claims in case of unfavorable working conditions. This means that workers can complain about low wages, poor working conditions and in the broader perspective any form of exploitation they may experience. It has been argued that discrimination is not part and parcel of a socialist community be it on the basis of sex, color, race and religion; this is generally treated as illegal.
Critically examining a socialist system, it is important to state that it tends to limit the freedom of the citizens. This is to bring out the fact that a socialist society encourages the aspect of dictatorship by the state. In a situation whereby the government is a totalitarian one, the workers may be heavily exploited. Since every member of the society works for the benefit of whole society, little innovations will be realized (Novak, 1979). Owing to the fact that the society dictates what to produce, where to produce and what to produce along with the fact that minimum wages per worker is set, much damage can be done when it comes to a dictatorship leadership. Unlike capitalism, the socialism system encourages laziness as many people can receive financial aid from the government.
This is not to dispute the fact that socialism system has its own advantages, however, capitalism is one of the best types of economical systems owing to its given advantages. Outstandingly, the capitalism has many benefits that entail issues to do with the valuable goods and services that are produced under this system (Novak, 1979). It has also been pointed out that the rewards for hard work have been found with the capitalism system along with the fact that the system is initiative. More to capitalism is the benefit of creating higher standard of living for all as there is the promotion of economic growth and production of better and quality goods as well as the services.
Unpredictably, capitalism has been noted to lead to the narrowing of the gap between the common person and the wealthy. This factor can be attributed to the fact that the system encourages hard work which encourages more people to work hard hence improving their way of living. Another factor that makes capitalism society to be beneficial is the fact that it offers an opportunity for the population to realize the kind of dreams they have along with their desires. On the opposing point, with a socialist system, one keeps on doing the same thing with the same pay, an attribute that can make workers to lose morale.
In most cases, the socialists do not experience the advent of new technologies as people are not hard working. There have been some critics who have questioned the aspect of capitalism and have condemned it as unfair and immoral system, yet, from a close examination of capitalism, it remains to be the only moral standard system that will lead to economic growth, new technologies and the innovation with high quality goods and services. In a state regulated economy, there is no element of competiveness of which it is the catalyst for economic growth and innovations (Novak, 1979). Think of people like Bill Gates who have amazed the whole world in softwares and computers, such new technologies are not achievable in a socialist society as such dreams are suppressed by low wages as well as limited room for expansion. Following the innovations of computers and improved technologies, many other people have come up to seek to provide more efficient, cheap and quality computers and softwares. As such, economic growth is inevitable.
Above and beyond, the only benefits of socialism are the even distribution of wealth as it is well thought of, increased rights especially to workers and decrease in poverty from a general point of view. In addition, the socialism society allows room for stable economy of which this differs from the dictates of capitalism which gives room for economic growth and expansion. Equally, the increased taxes that people are entitled to pay in a socialist society along with the increased bureaucracy hinder innovation and emergence of new technologies.
From the perspective of the extreme socialist societies, totalitarian governments lead to forced labor for survival (Smith, 1990). Again in line with this, the infringement of human rights can occur in extreme cases. Accordingly, monarchy of which it can be termed as dictatorship may result in a state owned economy as forced labor can result as the only option. Likewise, democracy may be hindered in such like an economy thus oppression and exploitation by the government being the only option. On the other hand, there are various advantages or rather benefits of capitalism that have been pointed out. As compared to socialism, capitalism has more advantages which have economic values than the socialism. Generally, societies have keen interest of making the economy to grow rather than stabilizing it. It is from this factor that one’s choice on which economic system to use is found. If a society anticipates for economic growth and innovation along with the discovery of new technologies, the viable option will be capitalism.
Similarly, if a society is to be free from forced labor and low conditions of living, then capitalism can eliminate this factor (Smith, 1990). Correspondingly, capitalism will perpetuate a way for hard work and improved standards of living as each one’s efforts are rewarded. In the same manner, as opposed to socialism, in a capitalism society, people are able to meet their dreams and desires and different skills and talents can be discovered. Living standards are improved in a capitalists society thus narrowing the gap between the common man and the wealthy as the things that come along with high living standards are availed to the common man.
Whereas property is privately owned in a capitalist society, the socialist society has the property publicly owned being controlled by the state (Paul, Miller& Paul, 1999, p. 306). The rights of workers, their wages and working conditions are regulated by the government while capitalists do not believe in a government controlled economy but rather believe in the courts for purposes of solving conflicts. Whereas the socialism society offers room for its workers to be free from racism and discrimination in general, capitalism does not as it is not regulated by the government. Issues to do with morality of capitalism have been explored, nonetheless, it should be noted that failing to work hard and exploiting the naturally given talents and skills is immoral (Smith, 1990).
It beats logic of ethics to consider socialism as a moral way of living as a society. Nevertheless, socialism encourages and more specifically promotes the caring of the poor in the society (Paul, Miller& Paul, 1999, p. 307). This may be a good idea, but, it should not be taken to a point of depriving a society initiative and room for economic growth. Altogether, it is vital to state that both socialism and capitalism as economic systems have both advantages and disadvantages. The differences between the two are quiet many and almost an exact opposite of each other. However, capitalism far outweighs the socialism economic system as highlighted.