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

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

Expert Solution

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.

Hayet Jeridi answered 1 year ago

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