Socialist vs. Capitalist Approach to Social Issues Essay

Abstract

While researching articles about Socialist and Capitalist economies, I came across four authors who had discussed the topics. Some of these authors outlined the benefits of capitalism while others redefined the socialist economy. My goal in this paper is to compare and contrast capitalism and socialism based on three social issues, namely; personal property, company, and retirement pension.

To achieve this goal, I have organized my paper into four sections. In the first section, I discuss the concept of capitalism. I also describe the concept of socialism. In the second section, I explain the differences between the two concepts. In the third section, I discuss the similarities between socialism and capitalism. I state their strengths and their weaknesses. I conclude my paper in the fourth section. I also include a list of references after my conclusion.

Introduction

Capitalism refers to an economic system defined by privately owned resources. Blumenthal (8) defines capitalism as the freedom to exploit one’s resources. Capitalism also refers to a system where the economy is independent of the state (Ross 237). Capitalists argue that everyone has the right to own land, property, and housing among other private possessions (Blumenthal 247). Capitalism is based on the assumption that those who do not work should not eat (Pierce 387). Most Capitalists fail to consider the fact that the government cannot secure everyone’s employment. A country’s natural resources are not always evenly distributed (Ross 85).

Pierce (16) defines Socialism as a system where the government evenly distributes a country’s wealth and resources. Socialism refers to a process through which material wealth is controlled by the government (Kronenwetter 63).

Differences Between Capitalism and Socialism

Private Property

Capitalist countries have very strict policies on the private ownership of property. Capitalism leans toward private investment and innovation (Ross 128). Unlike Socialism, Capitalism provides an environment that is conducive for people to buy and sell their possessions.

Countries that practice Socialism does not have Property Rights (Kronenwetter 67). Some scholars argue that Socialism discourages people from investing in their commercial activities (Pierce 214).

Blumenthal (267) argues that Capitalism encourages creativity through the unequal distribution of resources. People with limited access to resources tend to work harder than those who have ample resources. On the other hand, Socialists give the hard-earned wealth and resources of the rich to the poor (Pierce 229). Blumenthal (114) therefore asserts that some lazy Socialists exploit their hard-working counterparts.

In a Capitalist economy, intellectual property can be patented. Capitalists are free to do as they please as long as they do not infringe on the rights of others (Blumenthal 28). In a Socialist economy, the intellectual property belongs to the government. No one is allowed to monopolize the economy (Pierce 38). The government decides how intellectual property is used.

Some scholars argue that Capitalism rewards entrepreneurs. Pierce (178) asserts that self-motivated members of a capitalist economy are more likely to generate income than their lazy counterparts.

Company

The companies that are part of a country’s stock exchange define a capitalist market. Anyone is allowed to buy and sell shares in a capitalist economy (Blumenthal 67). The government does not distribute privately owned resources. On the other hand, a Socialist environment does not encourage private ownership (Ross 145). Government-controlled resources, therefore, define socialism (Kronenwetter 182).

In a Socialist economy, the government controls the distribution of a country’s resources. Everyone has access to healthcare and education among other social amenities. The government caters to everyone’s needs. Socialism can therefore be termed as a socially indiscriminate phenomenon (Pierce 72).

Capitalism encourages companies to maximize their profits and minimize their losses (Ross 314). Most Socialist companies do not care about the bottom line because the government controls their profits.

Capitalist companies encourage creativity among their employees. Workers in a Capitalist economy are more efficient than workers in a Socialist economy (Blumenthal 115). Capitalists are rewarded for their hard work and their resilience. Socialists are generally ineffective because there are not motivated to work harder (Pierce 227).

In a Capitalist economy, prices are determined by the market (Blumenthal 302). Prices are therefore determined by the concept of supply and demand (Ross 26). Companies are free to raise the prices of their commodities when the demand for such items is high. Companies are also required to lower the prices of their commodities when the supply outweighs demand (Pierce 224).

In a Socialist economy, the government regulates the prices of commodities (Pierce 222). Socialist governments monopolize their country’s resources. They decide how money is spent and how it is distributed among the people.

The government is not entirely responsible for creating jobs in a Capitalist economy (Blumenthal 117). Private investors create most of the jobs in a Capitalist economy (Ross 248). In a Socialist economy, the government is responsible for providing employment regardless of the country’s economic state of affairs (Pierce 216). Even unemployed Socialists are entitled to food and healthcare (Kronenwetter).

Retirement Pension

Capitalism encourages people to plan for their retirement in advance. Most organizations give their employees a retirement pension based on the nature of their work. Capitalism, therefore, rewards retirees depending on the work they did before their contracts expired. In a Capitalist economy, a retired doctor would receive a more substantial retirement pension than a janitor in the same economy.

A Socialist government caters to the needs of retirees regardless of the work they did. In a Socialist environment, everyone is entitled to the same level of care. The government is like a welfare office. Retired doctors and janitors are entitled to the same retirement pensions.

Similarities Between Capitalism and Socialism

Private Property

Both Socialism and Capitalism are defined by the distribution of resources. The resources in a Capitalist economy are exploited by those who can afford to do so. The government evenly distributes the resources in a Socialist economy.

Socialism can be ineffective because the government decides how resources are distributed. A socialist government can therefore take the earnings of employed individuals and give them to the unemployed members of society (Ross 42).

Capitalism can also seem ineffective because wealth is not evenly distributed. The government has little control over how a country’s resources are exploited. Private business owners tend to monopolize the economy (Kronenwetter 142).

Company

Both concepts are based on the idea that the market can be monopolized. The richest companies control a capitalist market. In a Socialist economy, the government controls the market (Blumenthal 231).

In both cases, private parties run companies. The government has the final say in a Socialist economy. The government can also influence private companies in a Capitalist economy.

Retirement Pensions

In a Capitalist economy, private companies and government organizations provide pensions for people whose contracts have expired. In a Socialist economy, the government caters to the needs of both the retired and the unemployed.

Conclusion

Capitalism encourages innovation through competition. However, the Capitalist approach can be cruel and Darwinian (Kronenwetter 303). Capitalism is based on Darwin’s ideology of the survival of the fittest (Pierce 217). Socialism is based on the concept of brotherhood. The Socialist approach ensures the even distribution of resources. However, it also contributes to widespread laziness and apathy among socialists. Both ideologies have strengths and weaknesses. Socialists should embrace the concept of a hard day’s pay for a hard day’s work (Pierce 34). Capitalists should likewise, embrace the concept of sharing. Perhaps a hybrid of the two ideologies would offer a lasting solution to the problems that they face.

Works Cited

Blumenthal, Max. Republican Gomorrah: Inside the Movement that Shattered the Party. Minnesota: Minneapolis, 2009. Print.

Kronenwetter, Michael. Capitalism versus Socialism: Economic Policies of the US and The USSR. California: San Francisco, 1986. Print.

Pierce Charles, P. Idiot America: How Stupidity Became a Virtue in the Land of the Free. Massachusetts: Yarmouth, 2009. Print.

Ross, John. Murdered by Capitalism: A memoir of 150 Years of Life and Death on the American Left. California: San Francisco, 2006. Print.