Question

Compare and contrast the general macro-economic theory of capitalism and communism. Who were the main theorists of each system? Why were they developed? What were the theoretical principles, characteristics and goals of each system? Where and when did the macro-economic systems exist? Were the theoretical characteristics and goals of the systems actually achieved when the systems were practiced? Did Communism produce a 'paradise on earth'? Did capitalism's 'self interest and invisible hand' always produce 'communal wealth'?

Answer 1

Compare and contrast the general macro-economic theory of capitalism and communism.

Comparison:

The major objective or the goal of both the theory have the same goal that is welfare of the nation and to produce enough quantity of good for each and every citizen of the nation.

Contrast:

In communism the ownership right of the factors of production is of the society, profit is equally distributed, the entire control over resources lies in the hands of society and there is no right for holding private property. On the other hand, in capitalism the ownership right of the factors of production is of private authority, profit is enjoyed by the private firms, the entire control over resources lies in the hands of private firms and they can hold the private property too.

Who were the main theorists of each system? Why were they developed?

In the mid-1800s Karl Marx and Friedrich Engels have developed the theory. This theory was developed to attain the equality among the society, to provide everyone the life with same advantage and equal opportunity for everything.

Adam Smith have developed the theory of capitalism. Capitalism was developed for the growth of large corporate and a small group of upper-class people who have the most resources and wealth.

What were the theoretical principles, characteristics and goals of each system?

Communism:

1. Abolition of property in land and application of all rents of land to public purposes
2. A heavy progressive or graduated income tax
3. Removal of the difference between town and nation
4. Education is free to all children
5. Centralized control over the all factors of production

Capitalism:

1. There is two class system in the society.
2. The major objective is to maximize profit.
3. Government interference Is minimum.
4. High competition prevails in the market.

Where and when did the macro-economic systems exist?

In the sixtieth to seventeenth centuries in north western Europe, mainly Flanders ad Netherlands, Great Britain capitalism came up. Communism came up during 1919 in Russia.

Were the theoretical characteristics and goals of the systems actually achieved when the systems were practiced?

Each and every system has its own advantages and disadvantages. Initially all the objectives are achieved but with the passage of time due to some loopholes some countries are shifted from one system t other.

Were the theoretical characteristics and goals of the systems actually achieved when the systems were practiced?

As every system has its own advantages and disadvantages but when systems were practiced majority of the goals were achieved.

Did Communism produce a 'paradise on earth'?

If communism is followed in its true sense and the objective is only welfare of the society then it can be said that it produces a paradise on earth.

Did capitalism's 'self-interest and invisible hand' always produce communal wealth'?

Though capitalism has its own drawbacks but the invisible hands works in the economy and control market forces and balances in the society. So ultimately self-interest and invisible hand produce communal wealth.