CAPITALISM

Capitalism is an economic system based on the private ownership of the means of production and their
operation for profit. Characteristics central to capitalism include private property, capital accumulation,
wage labor, voluntary exchange, a price system and competitive markets.

Main Features Of CAPITALISM

1. Private Property and Freedom of ownership:

2. Right of Private property.
3. Price Mechanism.
4. Profit Motive.
5. Competition and Co Operation goes side by side.
6. Freedom of Enterprise , Occupation and Control.
7. Consumer’s Sovereignty.
8. It arises Class Conflict.
9. Leading Role of Joint Stock Companies.
10. Important Role of the Entrepreneur.

Merits of Capitalism:
1. Production According to the Needs and Wishes of Consumers.
2. Higher Rate of Capital Formation and More Economic Growth.
3. There is Complete Freedom of Choice in a Capitalist Economy.
4. Optimum Utilisation of Resources Available.
5. Efficient Production of Goods and Services.
6. Varieties of Consumer Goods.
7. In Capitalism there is no Need of Inducement or Punishment for Good and Bad Production.
8. It Encourages the Entrepreneurs to Take Risks and Adopt Bold Policies.
9. It Provides the Best Atmosphere for Inventions.

De-Merits of Capitalism:
The main de-merits or dis-advantages of capitalist economy are as follows:
1. Inequality of Distribution of Wealth and Income:
2. Class Struggle as Inevitable in Capitalist Economy:
3. Social Costs are Very High:
4. Unnecessary Multiplicity and too Much of Competition:
5. Instability of the Capital Economy:
6. Unemployment and Under-employment:
7. Working Class does not have Adequate Social Security:
8. Slow and Unbalanced Growth:
9. No Bargaining Capacity of Labourers hence Exploitation:
 SOCIALISM
The term socialism refers to any system in which the production and distribution of goods and
services is a shared responsibility of a group of people. Socialism is based upon economic and
political theories that advocate for collectivism. In a state of socialism, there is no privately
owned property.

Main Features Of Socialism:

1. Public Ownership:
2. Central Planning:
3. Definite Objectives:
4. Freedom of Consumption:
5. Equality of Income Distribution:
6. Planning and the Pricing Process:

Merits of Socialism:
1. Greater Economic Efficiency:
2. Greater Welfare due to Less Inequality of Income:
3. Absence of Monopolistic Practices:
4. Absence of Business Fluctuations:

Demerits of Socialism:
1. Loss of Consumers’ Sovereignty:
2. No Freedom of Occupation:
3. Malallocation of Resources:
4. Bureaucratic: