Question

Compare the pros and cons of two economic systems.

Answer 1

The two economic systems which many countries use to their economies and production are Capitalism and Socialism. In the first one, government doesn’t play much role in the decision making in terms of how much to produce or what to produce or when to produce. Thus, this motivates people to have self-interest and have a balance among competing inclinations, to have fair role. Whereas, socialism is a more centrally controlled system, to take decision. The first system offers more incentives to the individuals, greater efficiency and production which help in innovation and maximize the profits and economic growth and self-sustained approach but in the second system it is not sure whether everyone’s need is fulfilled or not. Socialism system helps in fulfilling the basic needs but with lesser incentives. Hence, Capitalism favors the market mechanisms or interventions whereas Socialism limits the private control of the resources.