Capitalism And Socialism

An economy is one of the strong forces to balance the standard of living and political power, so it is important to understand how an economy functions. An economic system is defined as a group of people following the same principle to facilitate economic activities with identical purposes. Capitalism and Socialism are types of economic systems which provide effective methods to organize markets. However, Capitalism is a better form in terms of authorities, price control, and competition. First of all, the primary area Capitalism and Socialism are different is an authority to control the cost and an amount of products. Capitalism allows private companies or individuals to own and operate their businesses independently while governments

Capitalism tends to do businesses to gain the maximum profits. Goods and services are produced to make a profit, and the cost of products is based on decisions of owners and the markets, which means demand and supply play an extremely important role in this system, so the price of products is varied, and this system usually can attract more customers by using marketing and advertisement. At the same time, the wage rate is also diverse and high. Moreover, Capitalism significantly helps economic growth and expansion of economy by increasing gross national product* (GNP) as a domestic economy flows and native people earn a high income. In other words, the more an amount of money people receive from working is the higher gross national product. This leads to the higher standard of living as

There is high competition in the Capitalism system because prices are based on markets, which means each company will have to come up with their own strategies to beat the demand in order to attract as many as customers. As a result, it causes a gap between the poor and the rich in a country, but there is an advantage that Capitalism can encourage people to work harder in order to access to wealth and success. The more they concentrate and put effort on their work are the higher possibility to be successful. Unlike the Capitalism, Socialism has low competition in businesses and has no gap between rich and poor people because of political controls. However, this could lead a problem to individuals and countries as residents have a lack of inspiration at work. For this system, no matter how hard people work, they will receive the same paid as another worker, so those may not pay enough attention when they work. As a result, it could affect the development of a country to be slower as