Question

Being students of business and economics, you should be familiar with the concepts of capitalism and socialism, or generally speaking, command and market-based economies. What would like you to do is list 2 benefits and 2 drawbacks to each system, and then briefly explain why examples of pure socialism and pure capitalism tend to be more theoretical in nature and less likely to be found in reality. In order to receive full credit on this discussion board, you will also need to comment (respectfully) on at least one other student's post.

Answer 1

Capitalism is an economic system based on market mechanism. Under capitalism, least government intervention is preferred. The basic economic problems in capitalist economy is solved automatically by market forces of demand and supply.Capitalism stood for private ownership, price mechanism, profit motives and liberal economic policies. The capitalism evolved out of feudalism and merchantilist system of Europe. Capitalism uses the market forces of demand and supply in creation of wealth. Free market and laissez faire system is the purest form. Efficient utilization and optimum allocating of resources happens in capitalist structure.The 21st century witnessing structural changes in capitalist mode of operations. Apart from traditional views, some government regulations are preferred in the capitalist economy. Pure capitalism is mearely a myth. For example, during the time of 2008 economic recession capitalist economy allowed strict control in financial areas. The role was not nominal as in traditional. The advancement of technology propelled the growth of capitalist economy.
In capitalist structure economic and political freedom are interlinked. The present century witnessed rise in income levels of all capitalist countries. Investment are higher in capitalist countries because of flexible economic and political polices.

Socialism or command economy is an economic system based on government control and intervention. The basic economic problems are rectified by centralised planning process. The entire economic scenario revolves around the government. The fiscal policy act as a strong mechanism under capitalism. The main benefits of socialist economy is that it focusses more on the welfare aspects of the citizen. The current economic situations all over world enhanced the dominant role of government.
Pure socialism seldom exist in the world. Even in the socialist economies, the neo liberal policies are gaining more and more importance. The flexible and lower economic polices of several socialist economies are the examples . In reality , a pure socialist cant exist in the real economic situations.