Socialism and Capitalism (Essay Sample)

Socialism and capitalism
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Socialism and capitalism
Models of organizing economic activities for any given country have two different alternatives, Capitalism and Socialism. Capitalism is referred to control, and private ownership of production means whereas socialism is the joint ownership and control of means of production (William, 2008). Socialism is usually known as government ownership and direct control of production means. The two systems have their disadvantage and disadvantages, and it is not possible that the economy have pure socialist or capitalistic system (Peter, 2003).
There is Market efficiency in a capitalistic economy as supply and demand is achieved, and shortages and surplus are maintained at a minimum (Peter, 2003). A good example is the case of demand for food, which is met by food suppliers and food is made available to those who can afford. The other advantage is Economic freedom and prosperity. Every person can benefit from the success through private accomplishments. Capitalism gives every citizen an opportunity to create personal wealth because of the chance to build one’s own wealth.
Capitalism is associated with economic inequality and countries that practice it have a wide gap between ultra-rich and homeless people. The other disadvantage is the fact that there are unfair economic competitions. In capitalism, infant firms suffer very harsh competition, as in the case of Wal-Mart (Peter, 2003). Capitalism encourages outsourcing of services from overseas resulting to unemployment in the country practicing capitalism. It also encourages greed among the players as everyone fights to accumulate as much wealth as they can even at the expense of other people.
On the other hand, socialistic system unlike capitalism ensures that there is economic equality by ensuring that everyone gets equal payment. Every person has equal opportunity to the benefits of public services such as social security, universal health-care, public transit and many others (Peter, 2003). Though it does not occasionally occur, socialism ensures that whoever wants to get a job gets the job of choice.
Socialism has a number of disadvantages and the first is the difficulty in managing large organizations. It is because geometric proportion increases with the increase in size (William, 2008). Most of the governments that practice centralized control affect motivation and creativity of individuals in a negative way. Under this system, people usually suffer from little to no incentives, as payment is the same regardless of the work one has done. The other disadvantage is inefficiency resulting from government intervention, for example, by setting prices below the market price, which leads to a shortage. Socialistic system bestows much power on the government, and the citizen cannot trust government in most cases as they are usually influenced politically (William, 2008). Finally, there is an in...