The economy of the nation is directly associated with the political system. The people in power decide what type of economy system will be prevalent. Over the years, different economic systems are being observed across the globe. Capitalism, Socialism, Islamic and mix economic system are some of the prominent examples of different economics system. Here we’ll be differentiating between two of the oldest economic systems, capitalism, and socialism. According to the historians, capitalism was first under the practice in the 14th century in Europe. On the other hand, Socialism has its origin associated with France; it ages back in the 18th century when different revolutions were sparking all around. The capitalism is the economic and political system under which the trade and industry of a country are owned by the individuals, not by the state. Contrary to this, the socialism is the economic and political system in which the government owns and regulates factors of production, distribution and the other economic activities within the country.
What is Capitalism?
Capitalism is one of the most ancient political and economic systems, which first came in practice in Europe in 1400 AD. Nowadays this economic system is absent from our societies, and more of the developing countries have switched to the mixed economy system. The real reason behind the collapsing of this economic system was the exploitation of workers and lack of social welfare. As the democracy prevailed, people looked out for the more stable economic system which has equality for all of the people, regardless of gender, race or age. The capitalism was the economic system following which the individuals or private companies controlled the trade and industry of the country. In this system, the principal of individual rights were given principal importance, and the freedom of owning health was given to the people. In other words, we can say that, in this system, the people were free to make their economic activities and own as much as profit they can. The government interference was minimum, and sense of competition or setting monopoly between the companies was more likely in this system. This economic system was seen as a friendly economic system for the investors, entrepreneurs and different corporate. To gain more and more profit, was the sole purpose of the investors and leaders of this economic system, whereas the companies exploited the rights of workers.
What is Socialism?
Socialism is the economic and political system which first came into the mainstream in the 18th century in France. As we know that all of the Europe, especially France witnessed several revolutions; the people were seeking for the better economic system, which could benefit the society as a whole. The people got more know-how about the rights in this time, and rather than one’s individual rights, people were asking more for the equal rights. The sole purpose of this economic system coming under practice was the strict vigilance of the economic activities by the government itself, and the distribution of market share among people in such a way that brings socioeconomic harmony among classes of all the people. In the socialism, the government has the ownership of different economic activities, and the government themselves regulates the factors like production and distribution. The prices and production values are decided by the government and the profit to individuals is lower in this case as more of the profit is socially owned in this case. The equal distribution o profits or income I this economic system was the remarkable step to bridge the differences between rich and poor living within the society.
Capitalism vs. Socialism
- An economic and political system in which a country’s trade and industry are controlled by private owners for profit, rather than by the state is called capitalism. On the other hand, a political and economic theory of social organization which advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole is known as the socialism.
- In capitalism, the individual’s right is the basic principal, whereas, in socialism, the equality among people is the basic principal.
- There is more sense of competition among companies in capitalism as compare to that in the socialism.
- The government inference in capitalism is much low, but in socialism, the government own the different economic means and also makes the regulation in this regard, so the interference is maximum.
- In capitalism, the maximum profits and incomes are for the investors or the individuals, whereas in socialism, the equal distribution of wealth among the people of the country.