Capitalism is a social system based on the principle of individual rights. It is the system of laissez-faire (freedom). In regards to the legal system, capitalism embodies the rule of law as opposed to rule of man. From an economic standpoint, the free-market system exists. Socialism is common ownership. The world’s resources are owned in common by the entire global population. With Democratic control is essential in the meaning of socialism. Everyone has the right to participate in social decisions that affect them. In terms of production, everyone would have unlimited and/or free access to the goods and services designed to directly meet their required needs with no system of payment for the work that each individual would contribute to producing them.
Advantages of socialism relating to social equality include a focus on reducing wealth disparities, unemployment and inflation, through ...view middle of the document...
However, as soon as things go wrong in an economic system, it then becomes viciously inappropriate for someone else to do well once you are struggling. Yet, there is a specific positive outcome in the ideology of socialism that actually makes sense. In a socialist economy, no one has to go bankrupt and live in poverty due to inadequate healthcare coverage. Socialism removes the incentive to work hard, while others reap the same benefits with little to no effort. This contrasts heavily with capitalist ideas.
Capitalism has its own flaws as well. People ignore economic fundamentals but get caught up in speculative bubbles. Stock markets boom and bust of 1920s is a great example. A more recent example is the American housing market in the 2000s. Another issue is inequality. The benefits of capitalism are almost never equitably distributed. The wealth always tends to go to a small percentage of the population. In 2014, we call it the 1%. Lastly, monopoly behavior is also a problem with capitalism. A free market allows firms to gain monopoly power and exploit customers by charging them higher prices. More often than not, lower wages are paid to the workers. An example of this includes the nineteenth century American railroads exploited their monopoly power in setting higher prices.
It is clear that no single group, be it socialism or capitalism should be the primary government in America. However, capitalism would be a better fit in our society. Capitalists believe in limited government control. When governments attempt to control the economy, we end up with problems such as corruption, poor information, and lack of incentives. Capitalism ensures resources are distributed according to the preferences of consumers. People work the hardest when there is a personal financial incentive. An example of this would be entrepreneurs only take risks in setting up business because of the potential for large financial reward. If this scope for private profit is absent then new firms will not be set up.