Bangladesh University of Professionals (BUP)

Assignment – 01
1st Semester 2022
Course Name: Introduction to Business (ALD – 1102)
Topic:
Assignment on Capitalism and Socialism

Submitted To:
Sirajum Munira Chowdhury Otosi
Lecturer
Faculty of Business Studies (FBS)
Bangladesh University of Professionals (BUP)

Submitted By:
Name: Syed Radeeyal Kabir
BBA 2022 (Accounting & Information Systems)
ID: 2221141111 (Roll – 111)
Submission Date: 21st August, 2022

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WHICH ONE SHOULD
BANGLADESH FOLLOW?
SOCIALISM OR
CAPITALISM? WHY?
INTRODUCTION:
Bangladesh is a country situated in southern Asia, in the northeastern part of the Indian
subcontinent. After gaining independence from Pakistan in 1971, Bangladesh is still considered
as a Least Developed Country (LDC) and is expected to gain the status of a Developing country
(DC) by 2026. The major characteristics of Bangladesh would be that it is commonly known as
one of the most densely populated areas in the world with high levels of unemployment, income
inequality and a reliance in imports. An economy is an area or system where production,
consumption and distribution takes place to determine the allocation of resources. The four
different types of economies are: Capitalism, Communism, Socialism and Mixed. Most countries
are actually mixed economies, falling somewhere between pure capitalism and socialism. In this
topic, we will be concentrating mostly on capitalism and socialism. Before thinking about which
type of economy suits Bangladesh better, we first need to know what a Capitalist or Socialist
economy is.

CAPITALIST ECONOMY:
Also known as laissez faire or free market economy, is a situation where almost all businesses,
property and capital are owned and controlled under private supervision. So, the means of
production are in the hands of private individuals. Here, the volume of goods and services
produced and their prices are determined by the market forces of demand and supply. Therefore,
products will be supplied and sold at the equilibrium quantity and price. In such an economy
there is a great emphasis on efficiency. Consumers will only buy the best quality products at the
cheapest possible prices. So, firms are constantly forced to be innovative and productive so that

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they can provide unique products at competitive prices. Some notable examples of capitalist
economies are: USA, Singapore, Australia, etc.

SOCIALIST ECONOMY:
Such an economy fundamentally differs from a capitalist one in terms of the role that the
government plays. A socialist economy, also known as a centrally planned or command
economy, is one where the government usually owns almost all means of production. The main
objective here is to meet the needs of the people and the government believes this can only be
possible through rigorous taxation, regulation and limiting private ownership. Thus, the main
aim of such an economy is to eliminate or limit income inequality by having strict supervision on
the distribution of wealth and implementing policies like free healthcare or education to benefit
lower income earners who in any other case may not have been able to afford such necessities.
Examples of socialist economies are Bangladesh, Russia, Norway, Denmark, etc.

WHICH ONE SUITS BANGLADESH BETTER?

Currently, Bangladesh falls under the category of a socialist economy. Therefore, most of the
major industries are owned by the government and economic activity is controlled through
regulation and taxation. As discussed, the main benefit of such a system is that it limits poverty
and helps out the lower income earners. So, it curbs income inequality and brings about an
inclusiveness of the members of society. On the flip side, it can be said that a socialist economy
suffers from its rigorous taxation and regulations which limit innovation and in turn economic
growth. In a capitalist economy, people will likely enjoy higher living standards as the market
will cater to the survival of the fittest. Through competition, businesses are forced to be efficient
and adaptable. Such a scenario will be absent in a socialist economy where publicly owned firms
are likely to be inefficient and lack innovation. To conclude, Bangladesh should move closer to a
capitalist system as such this can help promote foreign direct investment, innovation and
productivity. As a result, economic growth rates are likely to be sky high which is vital for such
an economy to one day reach the heights of the economic giants like USA or UK. Although
socialism can lead to full employment in the long run and eliminates the risk of a monopoly
exploiting consumers, capitalism is the way ahead in this innovative driven generation.

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