Question

What is the primary goal of capitalism? What is the primary goal of socialism? What do you think are the pros and cons of each?

Answer 1

Ans) Capitalism ÷ Capitalism is where private entities own the factors of production. Capitalism works on the principle of competition and self interest. Person will be benefitted according to his ability to compete. Further, forces of demand and supply decide the market price and allocation of resources is done on basis of that.

Goal ÷ self interest and maximising personal welfare.

Pros÷

• Freedom to choose what, how and how much to produce.
• Best product and variety of products can be enjoyed but at best cost.
• Increased competition drive innovation.
• Big Firms can reap the advantage of economies of scale.

Cons÷

• Those who cannot compete are at disadvantages position. Like for eg- elderly people.
• Although free competition drives capitalism, yet it does not provide equality of opportunity.
• Market outcomes are not always the best and are prone to failures.

Socialism ÷ Here factors of production are owned by government which is democratically elected and it decides what, how and how much to produce. It also controls the price. Not the self interest but the needs of people is the centre of focus. It values collective well being and not individual's. It focuses on central planning and collective/public ownership.

Goal ÷ promote welfare of people, equality , economic security etc.

Pros÷

• No Exploitation of workers.
• Those who are not competitive are not left behind.
• Eliminate poverty.
• Equal access to health and education.

Cons÷

• Not much choices are available.
• No incentive to innovate.
• Too much power to the government. And Wishes of people are suppressed.
• Resources do not go to people who value it the most.