Question

What is the primary goal of capitalism? What is the primary goal of socialism? What do you think are the pros and cons of each? 20 points

Answer 1

CAPITALISM

Capitalism is an economic system based on private ownership of means of production. People and companies make most of decisions and own most of property, government plays only secondary role.

Primary goal of capitalism is growth and to provide personal economic growth through production and sale in market.

Capitalism include characteristics like private ownership ,capital accumulation, capital concentration, voluntary participation, free markets, wage labour, competition, welfare

Pros - Gives people strong incentives to be productive, efficient, and to improve things.

- tend to result in economic growth and improvement in standars of living.

- capitalism is the only economic system which allows every individual an equal chance of success regardless of inherited social class.

- consumer choice ie individual choose what to consume,this choice leads to more competition production will be better.

- good and services produced on demand create incentives to cut costs and avoid waste.

Cons -monopoly power

- since profit maximization is biggest motive they may reduce costs unethically by polluting environment or by exploiting workers.

- can result in high concentration olf wealth in hands of small group of people.

- good and services that are not profitable will not be produced.

- produce economic bads and may have few incentives

,- govt policies can mitigate these issues with regulations ,taxation and spending programs that are designed to improve quality of life and reduce economic bads.

SOCIALISM

Socialism refers to any system in which production and distribution of goods and services is shared responsibility of a group of people.

Main aim of socialism is planned economy, greater equality, and ownership of income producing property by state or government.

It is based up on economic and political theories that advocate for collectivism.

There is no privately owned property.

Means if making, moving and trading wealth should be owned by government as a whole.

Main features are collective ownership, economic , social and political equality, economic planning, no competition, positive role of government, work and wages according to ability and need.

Pros - since government controls almost all functions ,it can make better use of resources ,labor's and lands.

-reduces disparity in wealth

- excess or insufficient production can be avoided

- prices can be controlled in a proper extent

- can tackle unemployment to greater extent

Cons - slow economic growth

- less entrepreneurial opportunity

- reduced incentives, causes reduced prosperity and has low feasibility.

- dependance on cooperative pooling

- lack of competition and innovation