Difference between Capitalism and Socalism?
- The economic system, in which the trade and industry are owned and controlled by private individuals is known as Capitalism. Socialism, on the other hand, is also an economic system, where the economic activities are owned and regulated by the state itself.
- The basis of capitalism is the principal of individual rights, whereas socialism is based on the principle of equality.
- Capitalism encourages innovation and individual goals while Socialism promotes equality and fairness among society.
- In the socialist economy, the resources are state-owned but in the case of the capitalist economy, the means of production are privately owned.
- In capitalism the prices are determined by the market forces and therefore, the firms can exercise monopoly power, by charging higher prices. Conversely, in Socialism government decides the rates of any article which leads to shortages or surfeit.
- In Capitalism the competition between firms is very close whereas in Socialism there is no or marginal competition because the government controls the market.