Capitalism vs Socialism

The main difference between capitalism and Socialism is the extent of government
intervention ion the economy. There are also different aims of the economic systems.

Economic
Capitalism Socialism
System
Socialism is concerned with
Capitalism is unconcerned about
redistributing resources from the
equity. It is argued that inequality is
Equity rich to the poor. This is to ensure
essential to encourage innovation and
everyone has both equal
economic development
opportunities and equal outcomes.

The State will own and control the

main means of production. In
Private businesses will be owned by some models of socialism,
Ownership
private individuals ownership would not be by the
government but worker
cooperatives.

It is argued that the profit incentive It is argued that state ownership

encourages firms to be more efficient, often leads to inefficiency because
Efficiency
cut costs and innovate new products workers and managers lack any
that people want incentive to cut costs

In capitalist economic systems, the Employment is often directed by

state doesn’t directly provide jobs. the state. therefore, the state can
Unemployment Therefore in times of recession, provide full employment even if
unemployment in capitalist economic workers are not doing anything
systems can rise to very high levels particularly essential.

Prices are determined by market In a state managed economy

forces. Firms with monopoly power prices are usually set by the
Price Controls
may be able to exploit their position government this can lead to
and charge much higher prices. shortages and surpluses