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The Pros and Cons of Capitalism and Socialism as Economic Systems

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Capitalism and Socialism are two very different economic systems that have been around for hundreds of years. Each system is unique in their own way and each offer advantages and disadvantages. Capitalism is an economic system that involves the use of privatized companies with little to no government interference. Free markets is another term used when describing capitalism. All manufacturing firms from your small (mom and pop stores), to your medium and finally your large corporations (Amazon, Boing, General Electric) are all owned privately or through public exchange commissions (stocks). The government has little control over what these companies can do (unless fraud occurs) and how they make a profit. Socialism is quite the opposite when it comes to capitalism. Socialism is an economic society where the means of businesses are owned and controlled by the government. With socialism, the government can dictate how many businesses can be allowed in one city or on one block. The government will dictate what they can sell, control the price of the items being sold, how many are allowed to be sold on one day, how many items one individual can have, etc. Mostly all rights have been given up for the “greater good” of the society.

As with any economic society, there are pros and cons to each. When it comes to a capitalistic society one of three pros can be the opportunity to become wealthy and live a wholesome life. To become wealthy in a capitalistic environment (without the help of family or friends through inheritance) would be to put forth the willingness to work hard and make smart life choices or create innovating items or businesses to benefit the consumer. Amazon is a prime example of a business created to ease the stress on consumers. Individuals can find cheaper items then they would in stores and have them delivered for free to their front doorstep. A second pro is a fact that consumers have the opportunity to choose what they want. A great example of this would be the everyday shopping mall. King of Prussia Mall in the outskirts of Philadelphia is one of the largest of it’s kind. It is nearly impossible to visit every store in one shopping spree because there are so many choices for the consumer. Same could be said with restaurants. With so many choices of different food types, oneself can always find the right restaurant for their appetite. A final pro for capitalism would be the economic growth potential. America has been a great example of how far capitalism can take a country. With companies/individuals facing incentives to work harder and be more productive, it creates a continued economic expansion that benefits all over the long term. Not all economic systems are made in perfect however and capitalism sure has its downsides. First, corporations/firms/individuals can increase power to a monopoly state. This mainly happened in the beginning ages of capitalism (from right before the civil war up to the world wars) when Vanderbilt (railroads), Carnegie (steel), and Rockefeller (oil), JP Morgan (banking) roamed the earth. These men cornered their markets, buying up mostly all competitive so they could solely control their sectors. These men by far, are the definitions of monopolies and their names are forever sketched into the earth. A second con would be access to equal opportunities. With so much wealth and resources flying around in a capitalistic society, sometimes it is distributed unevenly. Individuals are sometimes blessed through inheritances from family members or friends that puts them way ahead of their friends. If you want to get a high paying job, an individual just needs to “know somebody”. Most of the time though, people just don’t “know somebody”. This can be used as an example of someone’s father, mother, or family friend who happens to know the CEO of a company and will put in a “good word”. Lastly, a final con within the capitalistic society is low pay for workers. Businesses ultimate goal is to make a profit. To do so, they need to sell their products for the highest amount they can while cutting expenses to a minimum. Unfortunately, expenses include salaries to workers. Most of the time, if a business can find someone to do the same amount of work for a lower wage, they will hire them over you. In the world we live in, there will be always someone willing to work for less.

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When it comes to Socialism, there are also pros and cons. One of the positives aspects of Socialism is that workers are not exploited as much. The reason for this is because they own the means of production. When it comes time for profits, they are spread evenly throughout the community according to personal contribution. A second pro with this economic idea is the system somewhat eliminates poverty. Since everyone is given a fair slice of the pie, effectively no one should go hungry. With equal access to healthcare and schooling, no one is discriminated against in any circumstance. A third and final pro to Socialism is individuals have the opportunity to work a job they enjoy or what they do best. If someone enjoys mowing lawns over-preparing balance sheets, they will be allowed to do so. If someone is better at coding for computers than they are teaching 4th graders English, they will most likely be assigned to code for computers. In some socialistic countries, for jobs that “unwanted” such as more dirty, back-breaking work, individuals are compensated more than others to make the work more worthwhile. When it comes to disadvantages though, there are some notable areas of concern. One in which is a Socialist country massively depends on the cooperation of the workforce to work. Once a large group of individuals stop working or go on strike, the whole system is tinkering on the brink of collapse. Once one workforce quits, others will begin too and the state will fail since the workforce is not cooperating. For the second con, socialism has a great tendency to not reward individuals for being entrepreneurial. Since this is an economic system of cooperation, no one seeks the opportunity to be innovative. This leads to many socialistic countries to severely lag behind capitalistic countries when it comes to new technologies and improvement to lifestyles. A third and final disadvantage with a socialist country is that the government holds all the cards. In other words, the government holds all the power. Since all the power is in the government’s hands, there is little say when it comes to the common people. With no say from the people, government official’s can become corrupt and put the country in harm’s way.

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