Facebook Pixel Code
x
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Advantages and Disadvantages of Capitalism and Socialism Essay Example

Show related essays

Advantages and Disadvantages of Capitalism and Socialism

Advantages and Disadvantages of Capitalism and Socialism. Every economic system has its strengths and weaknesses and capitalism is not an exception. Some of the pros of capitalism include economic freedom that spills over to become political freedom when the means of production and price determination is in the government's hand, it gives the government a lot of power that leads to the bureaucracy that may be evident in other parts of life as well. Capitalism experiences efficiency as firms is motivated to be efficient in producing goods according to demand. Such incentives encourage cost-cutting and reduced wastage (Pettinger par. State firms have a tendency of being inefficient as they lack the motivation, for instance, to reduce the surplus work force and venture into innovative methods of production.

As individuals and companies encounter motivation to work hard, this leads to innovation and expansion of the economy, consequently this aids in the increased actual growth of the GDP and improved standards of living. As wealth increases the standards of living also improve, theoretically, everybody seems to benefit from the wealth increase base on the trickle-down effect, from the “have” to the “have not” (Pettinger par.The flip side of capitalism is equally worth considering, with the most outstanding one being monopoly power. Privately owned companies tend to gain the power to monopolize labor and product markets. This might lead to these firms misusing these powers to charge higher prices at will. With these powers firms can opt to pay low wages to the workforce and as commonly seen, there always seems to be great imparity between those who own capital and those working for these firms. The capital base economy tends to ignore social benefits. Negative factors such as pollution are likely to be ignored by privately owned firms hence undermining living standards. On the other hand, they can ignore positive factors such as health when producing their goods, education and public transportation, and this is likely to lead to resource allocation that is not efficient. Advantages and Disadvantages of Capitalism and Socialism.

Works Cited

Diffen. Capitalism vs socialism. 2013. Web. http://www.diffen.com/difference/Capitalism_vs_Socialism

Farooq U. What is socialism, advantages and disadvantages of socialism. 2011. Web. http://www.studylecturenotes.com/management-sciences/economics/243-what-is- socialism-mba-economics-notes

Hunt E. K. History of economic thought: : A Critical Perspective. New York. M.E. Sharpe, 2002. Print.

James C.J. Freedom in the UK, section 2: political systems. 2002. Web. http://dspace.dial.pipex.com/town/street/pl38/sect2.htm

Lamb, Peter & Docherty, J. C. Historical dictionary of socialism. Lanham, Maryland, UK; Oxford, England, UK: Scarecrow Press, Inc, 2006. Print.

Pettinger T. Pros and cons of capitalism. 2013. Web. http://www.economicshelp.org/blog/5002/economics/pros-and-cons-of-capitalism/

Close ✕
Tracy Smith Editor&Proofreader
Expert in: Social science, History, Media
Hire an Editor
Matt Hamilton Writer
Expert in: Social science, Philosophy, Politics
Hire a Writer
preview essay on Advantages and Disadvantages of Capitalism and Socialism
  • Pages: 6 (1500 words)
  • Document Type: Research Paper
  • Subject: Social science
  • Level: Undergraduate
WE CAN HELP TO FIND AN ESSAYDidn't find an essay?

Please type your essay title, choose your document type, enter your email and we send you essay samples