Economy refers to the means through which production, consumption, and creation of wealth are exhibited in different countries for prosperity purposes. Various countries around the world favor different economic practices, which include; socialism, capitalism, communism, and a mixture of both socialism and capitalism. This essay will focus on establishing the significant similarities between socialism and capitalist as different forms of economies.
What is Capitalism?
Capitalism refers to an economic or political system in which the trade and industrial practices of a country are controlled by private owners rather than the government. It is important to note that this form and system of market operations allows people to practice marketing activities without government interference like price control and government-owned organizations. People can accumulate as much wealth as they can while agencies earn profits, which are later shared, to shareholders in the form of dividends.
Some characteristics of capitalist economic system include
- There is ownership of private properties
- Forces of demand and supply determine prices
- Freedom of production and occupation
What is Socialism?
Socialism refers to the political or economic system, which advocates for the means of production, distribution, and the community as a whole should own exchange. In this mode of government and political system, all resources gained are distributed equally to all the people in the country under the supervision of the state and other institutions mandated to act on behalf of the government when it comes to collect the resources and to distribute them to the people around. There is no right to ownership of private property since the government controls and owns everything.
Some characteristics of socialism economy include
- Collective ownership of factors of production and properties
- No competition
- Economic, social, and political equality
Similarities Between Capitalism and Socialism
- Similarities in “Democracy” between Capitalism and Socialism
One of the most profound and significant analogy is that the two forms of governance are supported in countries with mature democracy despite it not being necessary. In a capitalist political system, a democratic government, allows people to own factors of production while at the same time using those elements to create their wealth. In a socialist system, an aspect of democracy is exhibited where there is an equal distribution of wealth and all the factors necessary to produce wealth. Besides, all the governments are democratically elected through a democratic mechanism.
- Similarities in “Government” Intervention between Capitalism and Socialism
It is worth noting that the two forms of controlling the factors of production and wealth creation have some level of government intervention although not to the same degree. Socialism form of government is highly controlled by the government, and the state controls the factors of production. In a capitalist system, despite the role of government being restricted, state intervention is necessary to institute rules and regulations that prevent monopolistic ventures, exploitation of consumers (through prices and product quality), and protection of companies through hostile takeovers among others factors.
- Similarities in “Reward” between Capitalism and Socialism
In the two political systems, there exist a kind of compensation whereby, capitalism system allows people to accumulate much wealth and property concerning the effort applied. The same can be witnessed in socialism economy where everyone receives a fair share according to his ability and his contribution. Everyone in society gets a share of the production based on how much they have contributed. This helps in increasing motivation and morale so that they can work long hours for them to receive more.
- Similarities in “Autonomy” between Capitalism and Socialism
The matter of independence has been discussed in various debates for a continued period where policymakers have stated that there is no economic system can purely exist on its own. This is profoundly seen in capitalism system where government taxes individuals in the country with the aim of improving the social welfare of its citizens. The government promotes social amenities like hospitals, sports facilities, provision of education, the supply of water and power among others. Similarly, small-scale private enterprises are allowed to exist in socialist systems, and they can make their own decisions hence refuting the claims of pure socialism.
- Similarities in “Scarcity” of Resources between Capitalism and Socialism
In both forms of governance and political system, there exist limited supply of goods and services and a shortage of the factors of production. For this inadequacy, the government must devise means to ensure that wealth is evenly distributed, especially in socialist systems. Additionally, the government also plays a vital role in providing that wealth is spread to other parts of the country to cater for basic needs despite those areas contributing lowly through taxes.
Conclusion : Similarities between Capitalism and Socialism
- History has proved that socialism political and government system is not the best as it has been shown through the fall of the Soviet Union and the poor conditions of socialism countries like Venezuela, Cuba, and Vietnam.
- However, the economic crash of 2008 proved that capitalism form of the financial system has its deficiencies through economic recession experienced even in countries like the USA.
- A mixed system that supports both socialism and capitalism is the best as demonstrated by Singapore, which did not experience a recession in 2008 despite not having natural resources.
Author: Jecinta Morgan
Jecinta is an experienced writer who has been writing for more than three years and she has a degree in Finance and Accounting.