Capitalism and Socialism

Economic systems are regulatory systems that manage various areas of production,
distribution, and capital allocation, with the goal of preserving people's way of life by
determining the optimum ways to share products and services. Capitalism and socialism are the
two primary economic systems. For example, the United States of America is considered a
capitalist country, but Sweden is considered a socialist country (Hayes, 2023). Both economical
systems judge the economy based on wealth and capital. Capitalism and socialism are both aim
to organize and control economic activities for the benefit of society as a whole; however, they
differ greatly in terms of societal well-being, wealth distribution, and means of production.
One of the main differences between socialism and capitalism is in term of social welfare.
Capitalism prioritizes capital and profit over social wellbeing and this can lead to inequality,
labor environment exploitation. Companies in a capitalist society only tend to maximize their
profit and pay little attention to the labor force. In some cases, workers are forced to work under
cruel conditions just to service. Moreover, the workers are not compensated for what they
produce and they receive a tiny portion. On the other hand, the main goal of socialism is to
increase equality among the citizens (Hayes, 2023). It provides basic health services and free
education and, retirement, permeant and temporary disability and unemployment pensions
provide safety net and social security for people. Therefore, socialism tend to pay more attention
to social wellbeing of people while capitalism tries to gain profit.
One of the areas that socialism and capitalism differs is how wealth is distributed. In a
socialist society most of the businesses are owned by rich individuals instead of governments and
they control the majority of the wealth. According to Statista Search Department, in 2023 66.6%
of the total wealth in the United States is owned by the top 10 percent of the business owners
(Statista Research Department (2023). Meanwhile, in a socialist society, the people generate
wealth and which is then distributed among the citizens since the government and owns all the
economic resources and manages the economic activities as a result poverty is relatively reduced.
So, it can be said that wealth in capitalistic and socialistic countries are managed really
differently.
The last dissimilarity between the capitalism and socialism is how goods and products are
produced. In a capitalistic society goods and services are produced based on what profits the
most in a demand and supply chain. The market decides which goods should be produced and
decides the prices as well. In capitalism people are encouraged to consume and buy more since
the prices are lower and goods are high quality (Hayes, 2023). However, in a socialistic society,
the government mostly controls what to and manages the prices as well. The production of goods
is directly to satisfy human needs. Hence, production is socialist country is to meet human needs
while in a capitalist society is to maximize profit and efficiency (Hayes, 2023).
In conclusion, despite the similarities between capitalism and socialism there are major
differences. How and which goods should be produced differs in the two economical systems.
While wealth is owned by small numbers of people in a capitalistic society, in socialist society
government owns the wealth. Lastly, socialism focuses to an equal and just society however,
capitalism tries to increase profit.
Hayes, A. (2023, September 25). Capitalism vs. Socialism: What's the Difference? Investopedia.
https://www.investopedia.com/ask/answers/020915/what-are-differences-between-
capitalism-and-socialism.asp#toc-both-systems-exist-on-a-spectrum

Statista Research Department (2023, December 20) Wealth distribution in the United States in
the third quarter of 2023 [Infographic]. Statista.
https://www.statista.com/statistics/203961/wealth-distribution-for-the-us/#:~:text=In
%20the%20second%20quarter%20of,percent%20of%20the%20total%20wealth.
 Capitalism and Socialism

Economic systems are regulatory systems that manage various areas of

production, distribution, and capital allocation, with the goal of preserving people's way
of life by determining the optimum ways to share products and services. Capitalism
and socialism are the two primary economic systems. For example, the United States of
America is considered a capitalist country, but Sweden is considered a socialist country
(Hayes, 2023). Both economic systems judge the economy based on wealth and capital.
Capitalism and socialism are both aim to organize and control economic activities for
the benefit of society as a whole; however, they differ greatly in terms of societal well-
being, wealth distribution, and means of production.

One of the main differences between socialism and capitalism is in term of

social welfare. Capitalism prioritizes capital and profit over social wellbeing and this can
lead to inequality, labor, and environmental exploitation. Companies in a capitalist
society, people only tend to maximize their profit and pay little attention to the labor
force. In some cases, workers are forced to work under cruel conditions just to provide
service. Moreover, the workers are not compensated for what they produce and
receive a tiny portion. On the other hand, the main goal of socialism is to increase
equality among citizens (Hayes, 2023). It provides basic health services, free education
and retirement, permeant and temporary disability and unemployment pensions
provide safety net and social security for people. Therefore, socialism tend to pay more
attention to the social wellbeing of people, while capitalism tries to gain profit.

One of the areas in which socialism and capitalism differ is how wealth is
distributed. In a socialist society, most of the businesses are owned by rich individuals
instead of governments, and they control the majority of the wealth. According to
Statista Search Department, in 2023, 66.6% of the total wealth in the United States is
owned by the top 10 percent of the business owners (Statista Research Department,
2023). Meanwhile, in a socialist society, the people generate wealth, which is then
distributed among the citizens since the government owns all the economic resources
and manages the economic activities; as a result, poverty is relatively reduced. So, it
can be said that wealth in capitalistic and socialistic countries are managed really
differently.

The last dissimilarity between capitalism and socialism is how goods and
products are produced. In a capitalistic society, goods and services are produced based
on what profits the most in a demand and supply chain. The market decides which
goods should be produced and the prices as well. In capitalism, people are encouraged
to consume and buy more since the prices are lower, and the goods are of high quality
(Hayes, 2023). However, in a socialistic in society, the government mostly controls and
manages the prices as well. The production of goods is directly intended to satisfy
human needs. Hence, production is socialist country is meant to meet human needs,
while in a capitalist society is to maximize profit and efficiency (Hayes, 2023).

In conclusion, despite the similarities between capitalism and socialism, there

are major differences. How and which goods should be produced differs in the two
economic systems. While wealth is owned by small numbers of people in a capitalistic
in socialist society, the government owns the wealth. Lastly, socialism focuses on an
equal and just society; however, capitalism tries to increase profit.

References:

Hayes, A. (2023, September 25). Capitalism vs. Socialism: What's the

Difference? Investopedia. https://www.investopedia.com/ask/answers/020915/what-are-
differences-between-capitalism-and-socialism.asp#toc-both-systems-exist-on-a-
spectrum

Statista Research Department (2023, December 20) Wealth distribution in the United
States in the third quarter of 2023 [Infographic]. Statista.
https://www.statista.com/statistics/203961/wealth-distribution-for-the-us/#:~:text=In
%20the%20second%20quarter%20of,percent%20of%20the%20total%20wealth.