Socialist and Capitalistic Ideologies

Capitalism is a political and economic system in which private individuals own and control the means of production, trade, and industry. Capitalists believe in a free market economy in which buyers and sellers govern the economy. The market, not the government, determines what is delivered and sold to customers (Hoppe 7). Government intervention is only expected when it comes to establishing laws and procedures for doing business in the country. Capitalists believe that the government lacks the ability to handle economic resources properly, and that it is therefore preferable to leave them in the hands of private firms.  On the contrary, socialism economic idea or theory trusts the government with economic resources and advocate that the state should be mandated to plan for production and distribution of products (Hoppe 39). Under this ideology, the role plays by market forces in determining the allocation of factors of production and prices of commodities is negligible since all directives are given by a centralized authority leading to the centrally planned economy or command economy. According to socialists, an economic system left in the hands of private individuals would result in economic inequality in the society which is anti-development and would subject people to endless poverty. The only way to correct the economic inequality in the society is by making the government responsible for distribution of economic resources in order to benefit the poor who would be disadvantaged if the private sector were to control the economy.

Both capitalist and socialist ideologists are concerned with resources distribution, and they are keen to find the best way of ensuring fair allocation of resources to benefit people by solving economic problems, but they differ in their approaches. Primarily, capitalism focuses on innovation and personal pursuits, while socialism considers societal equality and fairness as the best way to run the economy in a nation. Capitalism recognizes income polarity as a way of achieving high performance and motivating individuals to come up with new ideas desirable for economic development in society. Contrary, a socialist economy uses policies to balance wealth and ensures that each person receives adequate food, income and other necessities for survival (Csillag, Tamás & Iván 18).

A socialist economy is characterized with minimal cases of unemployment since the government ensures that people are not out of work by assigning jobs to them through financial planning (Csillag, Tamás & Iván 31). In every financial year, the government allocates funds to create jobs for citizens. The case is different in capitalism where some level of unemployment is inherent by the employers’ requirements. One need to have experience, education to qualify for the position.

Consumer choice and efficiency of economics which is being experienced in capitalism are some of its advantages. In capitalism, the economy is largely pure. The market prices are influenced mainly by the consumers through forces of demand and supply rather than regulations from the government or companies. But in a socialist economy, consumers are barred from setting market prices by direct control from the government. The government uses policies such as price floors and price ceilings to standardized prices of various commodities in the marketplaces. The intervention by the government have some negative impacts such as excess supplies of certain goods that are favored by the law. Shortages can also be seen in the marketplace where the government involvement hinders the production of the specific product (Hoppe 167).

Works cited

Csillag, Tamás, and Iván Szelényi. "Drifting from Liberal Democracy: Traditionalist/Neoconservative Ideology of Managed, Illiberal, Democratic Capitalism in Post-Communist Europe." Intersections: East European Journal of Society and Politics 1.1 (2015): 18-48.

Hoppe, Hans-Hermann. A theory of socialism and capitalism: economics, politics, and ethics. Springer Science & Business Media, 2013: 1-259.

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