Dissecting Capitalism And Socialism

“Before capitalism, the way people amassed great wealth was by looting, plundering, and enslaving their fellow man. Capitalism made it possible to become wealthy by servicing your fellow man”, said late American Economist Walter E Williams who believed that Capitalism is morally way superior to other economic systems. He believed that “Socialism is just another form of Tyranny”. There is a constant never-ending debate over which system can serve better interests to all. 

Hence it’s important to individually understand these two:

Capitalism refers to an economic and political system that affords complete economic freedom, supporting the economic idea of a market economy. With vast consumer choice and immense opportunities for economic growth, it is made up of two parties: the consumer and profit induced private and corporate-owned companies, with the state having no role. The government’s sole role is to set rules and regulations about the conduct of business, it does not interfere with the market. The absence of government means that resources are allocated solely by the market forces of demand and supply and the market determines the investment, production, and distribution. It is believed that a government cannot effectively allocate resources as the market forces can. The capitalist economy offers a wide range of choices to the consumers and the consumer choice determines the production leading to competition and better quality products which benefit the consumers as well as increase profits for corporates, these profits are reinvested in the economy.

Capitalist economies have a wide scope for growth as it blooms in a climate of innovation and economic expansion.

Socialism is a planned economic system planned by the central planning authority, the state here has absolute control. A central planning authority allocated the resources based on consumer needs and economic demands. The state owns means of production instead of private individuals. Socialists argue that income inequality in an economy has adverse effects on society and that the state must be given the responsibility to reduce the gap between the rich and the poor using benefit schemes for the poor. The system in the former Soviet Union was closely associated with the concept of socialism however with the disintegration of the Soviet Union marked a setback for the Marist brand of socialism. However different versions of their ideologies continue to hold influence people even today.

Market forces allocate resources far more efficiently than a restrictive economic scheme by the government can. Hence while I do not consider Capitalism as a completely flawless economic system, it is undeniably a far superior system to socialism. However, I also agree that to succeed a modern-day utopian society needs both elements of capitalism and socialism. For instance countries like Japan and The United States are considered strong examples of capitalist economic societies, economists believe that every capitalist economy has an essence of socialism within.