Which is Better, Capitalism Or Socialism (Answered): While there are good numbers of Economic and political systems, Capitalism and Socialism are the most common practicable by the governments of various countries across the globe. The efficiency of both systems as well as the demerits has lingered the debate of which of these System is better and should be practiced by countries of the world.
This Article, therefore, sheds light on these two systems, giving a considered view of which of them is a better system.
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Table of Content
Meaning of Socialism
Socialism is an economic and political theory propounded by Karl Marx, wherein means of production, distribution, and exchange is owned and regulated by the society or Government.
Socialism can also be simply defined as an economic system whereby means of production are owned by the Government of the state. Hence, in this system, the Government owns and controls all means of production in the state and evenly distributes resources to citizens of the state. This is in order to eliminate economic inequality and ensure that resources benefit the poor in the state.
Socialism is practiced in countries such as North Korea, Russia, Sweden, Venezuela, Vietnam, and Bangladesh.
Meaning of Capitalism
Capitalism otherwise known as free-market economy; is an economic and political system whereby means of production and distribution are controlled by private individuals.
In a Capitalist state, monetary goods and means of production are owned by private individuals. Capitalist states include United States, Switzerland, Hong Kong, Germany, Japan, Singapore, amongst others.
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Difference between Socialism and Capitalism
a. In Socialism, means of production are owned by the Government, while in Capitalism means of production are owned by private individuals.
b. In socialism, there is equal distribution of income, but in Capitalism, income is not equally distributed.
c. In socialist system, Government set the prices of goods and services, while in a Capitalist System, Prices are determined by the economic forces of demand and supply.
d. In Capitalism, there is a free-market competition. However, that is not the case in Socialism
e. Capitalism is a free market economy, meaning that goods are produced and distributed based on the law of demand-supply. But that’s not the case in Socialism.
f. In a Capitalist system, there is the principle of individual rights, but in a socialist system, there is the principle of Equality.
g. In a capitalist system, ownership and production of goods are for profit, while in a Socialist state, the end product is maximizing welfare and satisfying societal needs.
h. In a capitalist system there is a limited tax based on individual income, but in a Socialist system, there are high taxes imposed to be paid for public service.
Which is better between Socialism and Capitalist system?
There have been unending divergent opinions with regards to the systems of Socialism and Capitalism, with some preferring one system to the other and vice versa. This leads us to the question which forms the subject matter of this article ‘which is better between Socialism and Capitalism?’
It is my considered opinion that Capitalism is better than Socialism for the following reasons:
1. Effective production: A Capitalist system results to effective production and rendering of services, due to the competition in the market. This stiff market competition puts producers on their toes to ensure that they produce goods that are to the taste of the Consumers.
2. Innovation: Basically, there can be no renovation in a country without a thought of innovation. Innovation is therefore the life wire of development in a Country, as may be exemplified by the fact most problem-solving ideas in most countries of the world emanated from individuals allowed to carry out their businesses. Thus, Capitalism breeds innovation, unlike Socialism where there is little or no innovation.
3. Merit: Capitalism is a system that upholds meritocracy over mediocrity. The Capitalist system therefore ensures that you earn according to how you work, deserve or wish to earn. This is preferred to a system where there is equal distribution of income, and the indolent are afforded the same economic opportunities as the diligent.
4. Rewards Hardwork: In addition to the fact that Capitalism upholds Merit, it also promotes hard work as individuals are driven by the financial incentive in the long run, and as such encouraged to work harder so as to ensure that their companies or businesses attain new heights.
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5. Ensures efficient allocation of resources: In reality, Capitalism is a better system for the efficient allocation and distribution of resources. This is largely due to the fact that resources are produced and distributed according to Consumer preferences.
6. Dynamism: Capitalism promotes dynamism as producers always respond to changes in the preferences of the Consumer, and the latest trends. These, therefore, promote Dynamism and accounts for a strong reason why the Capitalist system is preferable to the Socialist system.
7. Economic freedom: Capitalism is a preferred economic system to Socialism because, in a Capitalist state, Economic freedom, monopoly, and the rights of a person to control their business are guaranteed. This is however not obtainable in a Socialist state.
8. Productivity: Capitalism is preferred to Socialism because in addition to the Economic freedom and rights it incorporates, the system is productive to the citizens of a state; offering them the opportunity to earn good money and come out from poverty.
9. Consumer Choice: Finally, Capitalism is considered a better system than Socialism because Capitalism incorporates the choice of a consumer. That’s to say the right of a consumer to choose their product.
This choice leads to more competition in the economy thereby resulting in the production of more goods and rendering of better services.
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Conclusively, it is important to note both Capitalism and Socialism have their highs (benefits) and lows (shortcomings). However, by placing these two systems side by side, and based on the reasons considered in this article, amongst others. Capitalism seems to be a better system than Socialism. So therefore the question which forms the subject of this Article is resolved in the light that Capitalism is better than Socialism.
Edeh Samuel Chukwuemeka ACMC, is a Law Student and a Certified Mediator/Conciliator in Nigeria. He is also a Developer with knowledge in HTML, CSS, JS, PHP and React Native. Samuel is bent on changing the legal profession by building Web and Mobile Apps that will make legal research a lot easier.