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Introduction to Political Science

Assignment No 1
Socialism vs Capitalism

Submitted
by:
Musa bin Naseer
BS PA2020
346673
Submitted to:
Dated: December 7, 2021 Dr Uzair Hashmi

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Capitalism:

The word capitalism emerged during the industrial revolution, a time when the British economy
was experiencing great change. Mercantilism, a British policy of regulation of trade by the
government was abandoned in the 1830s and now the free market determined the production and
distribution of goods, this is what we call capitalism.

Features of Capitalism

 In capitalism, Individuals and private businesses own the means of production and
distribution and make economic decisions free from government regulation and
intervention, the private firms aim achieve maximum profits while keeping the losses
minimum.
 In order for a capitalistic economy to function efficiently, continuous production and
purchase are required..
 Usually aligned to the political right.
 Capitalists believe that government does not use economic resources as efficiently as
private enterprise.
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 The goods and services produced are intended to generate a profit, which is then
reinvested back into the economy.

Advantages of Capitalism:

 Consumer choice- Individuals choose what they consume, resulting in increased

competition and improved products and services.
 Efficiency of economics - Goods and services produced based on demand create
incentives to cut costs and avoid waste.
 Economic growth and expansion (which is possible in the capitalist economy system) -
This increases the gross national product and leads to improved living standards

Socialism:

Roots of Socialism also lie in the industrial revolution. In Early nineteenth-century socialists
were often disturbed by the economic and social changes caused by the Industrial
Revolution. The word socialism also began to be used in the 1830s, to describe a system
different from capitalism. Socialism held that groups of people should own and regulate the
economy for the benefit of all the members, not just a few

Features of socialism:

 Government owns the means of production and distribution to some extent and
regulates some parts of the economy for the benefit of the whole nation; and at the
same time Individuals and private businesses also their own make their own
economic decisions, keeping the profits and accepting the losses.
 There is equal opportunity for all. Large-scale industries are cooperative efforts, and
thus, the returns from these industries must be returned to and benefit society as a
whole.
 Economic activity and production are planned by the central planning authority and
based on human consumption needs and economic demand.
 Socialists believe that economic inequality is bad for the society and that the
government is responsible reducing it via programs that benefit the poor.
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 Usually aligned to the political left.

Advantages of socialism:

 Socialism lays emphasis on social equality and focuses on reducing wealth disparities,
unemployment, and inflation (through price controls), this promotes the collective
wellbeing of the society.
 Socialism advocates that centralized economic planning in an economy helps to
makegood use of land, labor, and resources, as well as avoiding excess or insufficient
production.
 Additional benefits of Socialism: Nationalization of key industries, redistribution of
wealth, social security schemes, minimum wages, employment protection and trade union
recognition rights.