Question

What are the main principles of the capitalist and the socialist system? Discuss the advantages and disadvantages of both.

Answer 1

ANS- PRINCIPLES OF CAPITALIST SYSTEM-

• Private property
• Private control of the factor of production.
• Capital accumulation
• Competition accumulation.

This system is controlled by market forces.

ADVANTAGES- An individual can choose according to her/his wish and his/her choice leads to more competition. Creation of incentives by the production of goods and services based on demand.

DISADVANTAGE- Different firms and some monopoly powers can misuse their position and can charge high prices. In this system, a small group is having wealth and that wealth passes down to the same group.

PRINCIPLES OF SOCIALIST SYSTEM

• Equal opportunity is given to all.
• The production center is owned by public enterprises.
• Activities of the economy are planned by the central planning authority.

ADVANTAGES- It focuses on the benefit of the public. The government controls the function of the society, by this system resources are utilized in a proper manner. This system makes better use of resources, laborers, and lands.

DISADVANTAGES- Economic growth slows down, low competition, less motivation, less opportunities for entrepreneurs.