The main difference between capitalism and Socialism is the extent of government intervention ion the economy. There are also different aims of the economic systems.
|Equity||Capitalism is unconcerned about equity. It is argued that inequality is essential to encourage innovation and economic development||Socialism is concerned with redistributing resources from the rich to the poor. This is to ensure everyone has both equal opportunities and equal outcomes.|
|Ownership||Private businesses will be owned by private individuals||The State will own and control the main means of production. In some models of socialism, ownership would not be by the government but worker cooperatives.|
|Efficiency||It is argued that the profit incentive encourages firms to be more efficient, cut costs and innovate new products that people want||It is argued that state ownership often leads to inefficiency because workers and managers lack any incentive to cut costs|
|Unemployment||In capitalist economic systems, the state doesn’t directly provide jobs. Therefore in times of recession, unemployment in capitalist economic systems can rise to very high levels||Employment is often directed by the state. therefore, the state can provide full employment even if workers are not doing anything particularly essential.|
|Price Controls||Prices are determined by market forces. Firms with monopoly power may be able to exploit their position and charge much higher prices.||In a state managed economy prices are usually set by the government this can lead to shortages and surpluses|
- Different types of capitalism – turbo capitalism, state capitalism, popular capitalism, responsible capitalism
- Mixed Economy