Capitalism
and Socialism are two distinct forms of government that effectively illustrate
the degree of merger between politics and economy. Capitalism is characterized by general
production of goods, private ownership of land, and market mechanism as an
economic tool while socialist features public ownership of land with more
emphasis on planning mechanism.
Capitalists
argue that private ownership of land provides a degree of security to the owner
and allows for a means to provide for the family in future. Whereas socialists
propose that since the state is responsible for the provision and security of
its citizens, private ownership should not be allowed. However, the lack of
private ownership in most of Africa, for example, has hampered economic growth
since there is no incentive to invest.
Similarly,
the market is left to decide the prices in capitalist economies which sometimes
result in the formation of monopolies and oligopolies with the benefits shared
by a handful of people. On the contrary, the exploitation is rectified when the
states decide the prices in Socialist economies. Nevertheless, there is a
greater probability that the state miscalculates the prices resulting in
inefficient prices.
A good
example of capitalist state would be of United States of America while China
would be a suitable paradigm for socialist economy with both the economies
emerging as world powers presenting that they have been successfully running
their governments. . But since both do not represent their respective forms of
government in their purest form, one cannot say with certainty as to which one
is the preferred form.
2 comments:
I disagree that china can be viewed as a suitable paradigm for a sociliast economy. The economic boom china has witnesed in recent years as been purely due to increasing application of capitalist principles. Even though the state sector in china is quite strong, in recent times the free market has increasingly become dominant. I agree that the private sector in china is still no way near the strength of the one in the US. But the chinese economy is increasingly becoming capitalistic.
Interesting point of view. However, it's important to know that both extremes of the spectrum can not exist in it's actual form, and therefore there's also a synthesis of ideas that is adopted by modern day governments. One such example can be price-regulation by the government as to prevent exploitation and welfare benefits to the needy. Both of these can occur in free markets.
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