Socialism and Capitalism.What are the merits and demerits of Capitalism and Socialism? how it effects the economy of any state in good and bad aspects as well..?

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tsakers eNotes educator| Certified Educator

Socialism has no merits; it's nothing more than a step towards "soft tyranny"

To suggest that socialism has no merits is incredibly narrow-minded. Public education, police and fire, the postal service, Medicaid and Medicare---we already utilize numerous aspects of socialism. Blind devotion to any one form of socio-economic system is short-sighted; despite popular belief, we are not a purely capitalist society. We pick and choose those aspects of various systems that best suit our needs.

swimma-logan | Student

Socialism has no merits; it's nothing more than a step towards "soft tyranny"

krishna-agrawala | Student

Capitalism and socialism are two alternative models of organizing the economic activities of a society or a country. Capitalist system of economy is based on private ownership and control of the means of production, usually called capital. In contrast socialism is based on public or joint ownership and control of means of production. In practice this amounts to government ownership and control of means of production.

Both the systems have their advantages and disadvantages. Further it is practically impossible for any economy to have pure capitalistic or pure socialist system. The capitalist system is often criticized because of vast disparities in Income it creates and the exploitation of the poor, weak and unprivileged people by the more powerful big businesses. The biggest advantage of capitalism system is the ease of decentralized management of private businesses and the role of competition in fostering efficiency. However it must be noted that this argument about efficiency is only partially true. Existence of monopolies and monopolistic competition in the capitalistic system can be quite inefficient for the economy as a whole.

The greatest limitation of socialist system include the difficulty in managing very big organizations. This difficulty of management increases in geometric proportion with increasing size. Also the centralized control by government dampens individual motivation and initiative.

As things stand today the economies that are primarily capitalistic are performing better than the primarily socialistic ones. But then there is also example of China, which in spite of its socialist system is poised to become the biggest economy in the world. Also it is important to take note of the fact that capitalistic societies all over the world, including countries like USA, are slowly but steadily moving toward increasing centralized regulation and control.

epollock | Student

Capitalism allows individuals to own the means of production, while socialism puts the control of the means of production into the hands of the government and state-controlled agencies. Capitalism allows for great profits through risk, while socialism allows for low profit and low possibility for ownership of anything,