Capitalism vs

Socialism
Name: Tasin Khan Kolin
ID: 1731443011
  Capitalism is an economic system where private entities own
the factors of production. The four factors are
What is entrepreneurship, capital goods, natural resources, and labor.
 The owners of capital goods, natural resources, and
capitalism? entrepreneurship exercise control through companies.
Individuals own their labor. The only exception is slavery,
where someone else owns a person's labor. Although illegal
throughout the entire world, slavery is still widely practiced.
 Characteristics of Capitalism

• Capitalistic ownership means owners control the factors of production and

derive their income from their ownership. That gives them the ability to
operate their companies efficiently. It also provides them with the incentive
to maximize profit.
• In corporations, the shareholders are the owners. Their level of control
depends on how many shares they own. The shareholders elect a board of
directors and hire chief executives to manage the company.
 Characteristics of Capitalism

• The owners of supply compete against each other for the highest profit.
They sell their goods at the highest possible price while keeping their costs
as low as possible. Competition keeps prices moderate and production
efficient.
• Another component of capitalism is the free operation of the capital markets.
The laws of supply and demand set fair prices for stocks, bonds,
derivatives, currency, and commodities. Capital markets allow companies to
raise funds to expand.
 Market- In free market and laissez-faire forms of capitalism,
markets are used most extensively with minimal or no
regulation over the pricing mechanism. In mixed economies,
which are almost universal today, markets continue to play a
dominant role, but they are regulated to some extent by the
state in order to correct market failures, promote social
welfare, conserve natural resources, fund defense and public
safety or other rationale. In state capitalist systems, markets
are relied upon the least, with the state relying heavily on
5 main things
state-owned enterprises or indirect economic planning to of capitalism
accumulate capital.
 Profit motive- The profit motive, in the theory of capitalism, is
the desire to earn income in the form of profit. Stated
differently, the reason for a business's existence is to turn a
profit. The profit motive functions according to rational choice
theory, or the theory that individuals tend to pursue what is in
their own best interests. Accordingly, businesses seek to
benefit themselves and/or their shareholders by maximizing
profit.
 Private property- The relationship between the state, its
formal mechanisms, and capitalist societies has been
debated in many fields of social and political theory, with 5 main things
active discussion since the 19th century. Hernando de Soto is
a contemporary Peruvian economist who has argued that an
of capitalism
important characteristic of capitalism is the functioning state
protection of property rights in a formal property system
where ownership and transactions are clearly recorded.
 Market competition- In capitalist economics, market
competition is the rivalry among sellers trying to achieve such
goals as increasing profits, market share and sales volume
by varying the elements of the marketing mix: price, product,
distribution and promotion. Merriam-Webster defines
competition in business as “the effort of two or more parties
acting independently to secure the business of a third party
by offering the most favorable terms.”
 Economic growth- Historically, the emergence of the capitalist
system has coincided with economic growth as measured by 5 main things
gross domestic product (GDP), capacity utilization or
standard of living. The attribution of this growth to capitalism of capitalism
was a central argument, for example, to Adam Smith's
advocacy of letting a free market control production and price
and allocate resources.
  Capitalism results in the best products for the best
prices because consumers will pay more for what
they want the most. Businesses provide what
Advantage customers want at the highest prices they’ll pay, and
prices are kept low by competition among
of businesses. They make their products as efficiently
as possible to maximize profit. Most important for
Capitalism economic growth is capitalism's intrinsic reward for
innovation, including new products and more efficient
production methods.
 Examples
 The United States is one example of capitalism, but it doesn't rank among the 10 countries
with the freest markets, according to the Index of Economic Freedom. It bases its ranking on
nine variables, including​a lack of corruption, low debt levels, and protection of property rights.

 The top 10 most capitalistic countries are:

 Hong Kong
 Singapore
 New Zealand
 Switzerland
Example of
 Australia Capitalism
 Ireland
 United Kingdom
 Canada
 United Arab Emirates
 Taiwan
 The United States ranks 12th. Its weakest points are its massive government spending and
poor fiscal health. It's also weak in its tax burden that restricts taxpayer freedom. Its strongest
points are labor freedom, business freedom, and trade freedom.
  Socialism is an economic system in which the factors of
production are valued in relationship to their usefulness to
people. Socialists take into account both individual needs and
greater social needs. They allocate resources using central
planning, as in a command economy.
What is
Socialism?  Examples of greater social needs include transportation,
defense, education, health care, and preservation of natural
resources. Some also define the common good as caring for
those who can't directly contribute to production. Examples
include the elderly, children, and their caretakers.
 Types of Socialism

• Democratic socialism- In democratic socialism, factors of production are

under the management of an elected administration. Vital goods and
services such as energy, housing, and transit are distributed through
centralized planning, while a free market system is used to distribute
consumer products.
• Revolutionary socialism- The running philosophy of revolutionary socialism
is that a socialistic system can’t emerge while capitalism is still in play.
Revolutionaries believe that the road to a purely socialistic system requires
a lot of struggle. In such a system, the factors of production are owned and
run by workers through a well-developed and centralized structure.
 Types of Socialism

• Libertarian socialism- Libertarian socialism works on the assumption that

people are always rational, self-determining, and autonomous. If capitalism
is taken away, people naturally turn to a socialistic system because it is able
to meet their needs.
• Market socialism- Under market socialism, the production process is under
the control of ordinary workers. The workers decide how resources should
be distributed. The workers sell off what is in excess or give it out to
members of the society, who then distribute resources based on a free
market system.
 Types of Socialism

• Green socialism- Green socialism is protective of natural resources. Large

corporations in a green socialistic society are owned and run by the public.
In addition, green socialism promotes the development and use of public
transit, as well as the processing and sale of locally grown food.
  A socialistic system ensures that no worker is exploited. How?
Well, each of the workers in the community has a say on how
the resources are managed, and each person receives and
contributes based on an individual’s potential.
Advantages of  The system disapproves discrimination, and each person does
Socialism what he is good at or what he enjoys best. If there are jobs that
should be done and there is no one to perform them, a higher
remuneration is provided. Natural resources are protected for
posterity.
 There are no countries that are 100% socialist, according to the
Socialist Party of the United Kingdom. Most have mixed economies Examples
that incorporate socialism with capitalism, communism, or both.
 The five Nordic countries—Norway, Finland, Sweden, Denmark,
of Socialist
Iceland—have strongly socialist systems. The state, on behalf of the
people, owns a large percentage of the economy. It spends a large
Countries
portion on education, housing, and public welfare.
 But these countries also incorporate many aspects of a capitalistic
economy. As a result, its inhabitants are among the happiest in the
world, regularly placing among the top 10 on lists of the world's
happiest people.
Difference between Capitalism & Socialism

 List something kind about your

partner.
 List something interesting about
your partner.
Conclusion