Capitalism is defined as an economic system that allows private ownership of the factors of production
Capitalism is defined as an economic system that allows private ownership of the factors of production. In capitalism, “productive resources are owned privately and goods and resources are allocated through market prices” (Gwartney, et al., 2018). One county that has a capitalist economy is Canada.
Socialism is defined as an economic system where every individual in society equally owns the factors of production. Socialism allows for “the ownership and control of the basic means of production rest with the state and … resource allocation is determined by centralized planning rather than by market force” (Gwartney, et al., 2018). One county that has a socialist economy is China.
The main difference between capitalism and socialism is how goods and resources are allocated. Capitalism allows for market pricing while socialism utilizes centralized planning (Gwartney, et al., 2018).
Capitalism and socialism are being spotlighted in U.S. politics due to …Capitalism has allowed for 700 million people to be removed from poverty (DeWitt, 2015). Capitalism has also created disparities in the economy, which lead to regulations being implemented in order to get those forces under control.
Socialism is able to not only exist in its absolute form, but also in a version that is less. A government is able to utilize parts of the socialist set up, such as Social Security and Public Schools, without having to utilize the entire system. Both Social Security and Public Schools are managed by the government, which allows for everyone to have access to education. When there is an abundance of socialism, it could lead to individuals being dependent on the government making decisions that are best for the population.
Capitalism and socialism have both been used by politicians in an attempt to sway voters although, they are not political systems, they are used for political gain. Politicians often use these economic mechanisms to show how to proceed with the economy and close the equality gap.
The question of is wealth inequity bad, can be a charged question. Inequity can be seen as an incentive. Due to the level of education and knowledge that is required to be a lawyer, it would be unrealistic to pay a fast-food worker the same as the lawyer. Inequality can be a motivator which will lead to wealth gaps (Pettinger, 2014).
Resources:
DeWitt, A 14 July, 2015. 700 million humans have moved out of deep poverty in the 21st century. Thank capitalism. Retrieved from https://www.aei.org/economics/international-economics/700-million-humans-havemoved-out-of-deep-poverty-in-the-21st-century-thank-capitalism/
Gwartney, J. A., Stroup, R. L., Sobel, R. L., & Macpherson, D. A. (2018). Macroeconomics: Private and public choice (16th ed.). Retrieved from https://www.cengage.com
Pettinger, T. 2014. Inequality and Capitalism. Retrieved from https://www.economicshelp.org/blog/2935/economics/inequality-and-capitalism/
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