The Concepts of Capitalism and Socialism

The current global economic system is characterized of capitalism, where properties and production are owned privately by individuals and companies. The free market determines the demand, supply, and prices of all the products. Capitalism is made of different features like the right to own private property like machines, plants, or factories. Another essential element of capitalism is the price mechanism, where it is the supply and demand of products that determine the price. In capitalism, the main motive is to make profits. Therefore, companies are ready to adjust and compete with each other to make profits with low input costs. 

The advantages of capitalism include the innovation of better products and efficient methods of production. It also results in the production of high quality products with the perfect price. Another advantage is that consumers have the freedom to choose the products they want to buy. On the other side, capitalism has various disadvantages. For instance, those who do not have adequate competitive skills like children and the elderly are not provided for. Additionally, it majors mostly with inequality where some people have more opportunities than others. It also has ignored some of the external costs like climate change and pollution, which leads to the depletion of natural resources over time.

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With socialism, the government makes all the legal productions and any distribution decision necessary. Therefore, individuals are dependent on the state for their healthcare, food, employment, and anything else basic they need. Thus, the government will determine the output, the supply of the items, and their prices. 

The main pros of socialism include the availability of free healthcare, where citizens are entitled to basic care for their health. Moreover, socialism helps in maintaining the proper living standards for those people who are poor, thus reducing relative poverty. Another pro of socialism is the emphasis that people put on conserving the environment. Individuals put a high value on the environment that helps in reducing concerns such as pollution. Similarly, socialism has its negative side. For instance, the healthcare services may be rationed, considering the number of people who require them at a go. It may also lead to failure by the government to provide all the needs of its citizens. Another problem with socialism is the lack of incentives where people do not have enough incentives to start businesses or work.