The features of capitalism, socialism and mixed economy
Answers
Capitalism is an economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state.
Features :
Two class system - Capitalist society was characterized by the split between two classes of individuals—the capitalist class, which owns the means for producing and distributing goods and the working class, who sell their labor to the capitalist class in exchange for wages.
Profit motive - The motive for all companies is to make and sell goods and services only for profits. Companies do not exist solely to satisfy people's needs.
Minimum government intervention - Capitalist societies believe markets should be left alone to operate without government intervention. However, a completely government-free capitalist society exists in theory, only.
Competition - True capitalism needs a competitive market. Without competition, monopolies exist, and instead of the market setting the prices, the seller is the price setter, which is against the conditions of capitalism.
Willingness to change - Technology has been a game-changer in every society, and the willingness to allow change and adaptability of societies to improve inefficiencies within economic structures is a true characteristic of capitalism.
Socialism is a economic theory of social organization which believes that the means of production, distribution, and exchange should be owned or controlled by the community or the society.
Features :
Collective ownership - In socialism, all means of production are owned by the community, i.e., Government, and no individual can hold private property beyond certain limit.
Equality - Under socialism, there is almost equality between rich and poor. There is no problem of class struggle.
Economic planning - Under socialism, government fixes certain objectives. In order to achieve these objectives, government adopts economic planning. All types of decisions regarding the central problems of an economy are taken in the economic plans.
No Competition - Unlike capitalistic economy, there is no cut throat competition. It means lack of competition as state is the sole entrepreneur.
Maximum social welfare - The sole objective of socialism is the maximum social welfare of the society. It means that there is no scope of exploitation of labour class.
Mixed economy is that economy in which both government and private individuals exercise economic control.
Features :
Co-existence of private and public sector - Under this system there is co-existence of public and private sectors. The government encourages both the sectors to develop simultaneously.
Personal freedom - Under mixed economy, there is full freedom of choice of occupation, although consumer does not get complete liberty but at the same time government can regulate prices in public interest through public distribution system.
Private property is allowed - In mixed economy, private property is allowed. However, here it must be remembered that there must be equal distribution of wealth and income.
Economic planning - In a mixed economy, government always tries to promote economic development of the country. For this purpose, economic planning is adopted. Thus, economic planning is very essential under this system.
Profit and social motive - In mixed economy system, there are both profit motive like capitalism and social welfare as in socialist economy.