Socialism is an economic system where the means of production, such as money and other forms of capital, are owned by the state or public. Under a socialist system, everyone works for wealth that is, in turn, distributed to everyone. Under capitalism, you work for your own wealth. A socialist economic system operates on the premise that what is good for one is good for all. Everyone works for their own good and the good of everyone else. The government decides how wealth is distributed among the people.
In a socialist economy, there is no market as such. The government provides for the people. The taxes are usually higher than in a capitalist system. There may be government-run health care and a complete system of government-operated education. It is a misconception that people do not pay for these services. They do pay for them through ...view middle of the document...
A competitive market results from capitalism and consumers are presented with a wide array of products and services to choose from. Consumers and companies regulate the free market. This is often seen as one of the strengths of a capitalist society.
Socialism seeks to promote equality among people by providing them with many of the same social benefits. Examples of benefits that individuals in a socialist society are provided are educational, health care, and care for the elderly and the vulnerable. Socialism means paying for things without necessarily expecting a financial return, just for the greater good. One of the pros of socialism is that it seems to be a way of achieving slow, but peaceful, progress. That is, at least, a goal of socialism.
The Cons of Capitalism and Socialism
Capitalist economies are money-driven without much regard for people unless they are owners or shareholders of business firms. In a capitalist economy, there is fierce competition and, perhaps, unfair competition. There is a tendency, in capitalist economies, for big companies to get bigger and for monopolistic behavior to occur. Unfair labor practices may occur since companies are driven by the profit motive. Since capitalism requires continual growth, environmental damage may occur as the resources of the earth are depleted. Some say capitalism makes the rich richer.
Socialism is economically inefficient as it does not reward entrepreneurs. Instead of rewarding entrepreneurs for creating wealth, it punishes them by making them pay higher taxes. Socialism can actually lower the living standards of all by not rewarding work and by making public assistance available to more than the neediest.
Many countries have mixed economic system with elements of both capitalism and socialism. In the U.S., predominantly a capitalist system, there are still social programs such as social security and Medicare. In many socialist countries, there are private business firms.