Both socialism and capitalism are two different political ideologies, adopted by various nations, as a means of social and economic development. In order to get better insight, here I’m going to explain difference between socialism and capitalism.
Socialism emphasizes more on egalitarian approach by focusing need of the society as a whole, while other rewards merits of individuals to accelerate the pace of progress.
Political ideology — meaning, types and examples
Ideology is a set of political or economic ideals used as a means by a group or state to achieve prescribed goals through elections or any form of change. Nowadays, there are various types of political ideologies or philosophies such as,
- Socialism,
- Democratic socialism,
- Communism,
- Marxism,
- Capitalism
- Facism
- Authoritarianism
- Totalitarianism
- Anarchism, etc
Understanding Socialism as political ideology and economic system
Socialism as a mainstream political ideology was emerged in the 19th century through the ideas of great thinker Karl Marx. Basically, socialism is propounded to address the issue of inequality in the society.
But, it is quite moderate compare to communism. Generally, it was the reaction against the negative drawbacks of the capitalist industrial economic system.
Communism Vs. Socialism
Communism advocates the idea of “proletariat dictatorship” to attain greater equality in the absence of personal liberty and private property institutions.
On the other hand, socialism do not opposes the idea of personal liberty and private property, but emphasis on the needs of society without economic inequality.
It largely focuses on the reduction of inequality by nationalisation of core industries, imposition of progressive taxes, and provide affordable social services like health and education.
Nevertheless, like capitalism, it doesn’t rewards ability of individuals but needs of group or society. It is also well-known for price control and can’t hand over the responsibility on the private players to provide employment.
But, the example of China is a typical case where single communist party is ruling with greater support for private property institutions.
Explanation of Capitalism with meaning and examples
Capitalism is somehow contrary to the ideals of socialism. As I stated earlier that capitalism mainly relies on the private players to determine prices, jobs, and growth. It openly rewards individual’s merits and personal liberty. And, it advocates the idea of free market and greater degree of economic progress.
In this system, there is greater scope for innovation and economic growth in the absence of restrictions and lesser taxes. But, chances of inequalities, and monopolies cannot be ruled out.
For example, in the USA where handful technological giants are controlling huge chunk of economy, living little room for others. At the same time, the chances of unemployment remains high in the time of recession.
Understanding capitalism political and economic system
Capitalism is a political ideology as well as economic system that describes how political and economic system interacts in the process of planning, strategy of production, and economic development.
Or, it is a political or economic system where productive forces of nation controlled by private player and no interventions by governing agency.
Almost all the means of production are under the aegis of private players, and production is largely determined by the market forces.
Individual abilities, skills, and merits are rewarded, and societal needs are left on the mercy of rate of employment opportunities and state welfare programmes in need.
Here, perfect competitive market makes consumer as well as producers as price takers and no possibility of monopolies by single firm.
In short, all productive potential is intended to unlock the leadership of the country by the means of capitalistic form of economic system. Now, let’s understand the major characteristics of capitalism.
Explaining of major characteristics of capitalism
Here, I’m going to explain the major characteristics of capitalism one by one…
1.Freedom of business
No need for permission. You can start business or enterprise in field you like. There is totally free entry and exit.
But, lots of competitors and identical products may make difficult for fresh entrents. Undoubtedly, cutthroat competition is the most important characteristics of capitalism we must assume blindly.
2.Passive role of government
No regulations, interventions, and supervision by the government agencies. Instead, governing agency will offer you level playing field without discrimination to launch your business you prefer.
Due to less or negligible liabilities of barriers, the firms only concentrate on the market demand and product affordability to capture more market power to be successful.
3.Consumer welfare and employment opportunities
Both are interconnected and interdependent. The chances of employment opportunities are high because of concentration of lots of productive activities.
Comparative advantage, effect of economies of scale and lower opportunity cost reduce the cost of products. So, it results in more surplus for producers and consumers.
This is the reason why there is higher rate of capital formation and purchasing power of consumers. Ultimately, improvement in living standards is inevitable.
4.Private property and profit motive
If you freedom to exercise right over what you own and where you spend, you can definitely think to maximize the resources you possess or own.
Unlike communism, capitalism is highly appreciated for Both private property and profit motive.
Profit is a natural incentives that encourage person to produce more to multiple benefits. So, more the profit, more the property. And, the person in question will find more means of investment with that freedom. Really, this is an important characteristics of capitalism or capitalistic form of economic system.
5.Dynamic labour market
Better flexibility for both aspiring employees and employers. There is no permanancy. Anyone can move away with better opportunities. And, when there are a lot of productive activities, the dynamism in hire and fire will be understandable.
Apart from these, economic inequalities, degradation of environment, over exploitation of resources, migration and social issues are also some fallouts of capitalism.
Difference between capitalism Vs communism
Once the world was halved between believers and non-believers of capitalism and communism. In cold war era, both political beliefs or ideologies gained attention more than required and bought the whole world on verge of war.
Differentiate between Political theories, ideologies and thinkers
After reading just three statements written below, you can easily differentiate between political theories, ideologies and thinkers.
1.Political theories help us to understand how quickly one could realise aspired goals by using different means and ways.
2.On the other side, political ideologies provide you the most suitable set of ideas or plans by the virtue of nation in question can march forward.
3.Thinkers belongs to political science field, always remain engaged to bring out most reliable and assured mode to reach at the goals.
This is the key differences between political ideologies, theories and thinkers.
Understanding difference between capitalism and communism
Capitalism is a political or economic mode by which planning, production, economic development, and social welfare are executed.
In such political system or belief, private players play pivotal role, government encourage the productive activities with lesser regulations.
In short, free market forces, free labour market, freedom to do business, market competition, consumer welfare and employment opportunities are the major characteristics of capitalism we observe nowadays.
Features of communist economic system
Communism, on the other hand, has restrictive sense of economic and social development. In other words, it is an advanced level of socialism where does and don’t matter more.
In simple terms, license rules or regulations, government interventions, no chance for private property and profit motive, labour market terms and conditions, planning and strategy of production is subject to government decisions are the major features of communist political ideology.
Religion and private property
Both capitalism and communism have contrasting views in terms of religion and private property.
Capitalism offers free hunting ground for individual either to possess as much as they can or profess and propagate any form of religious faiths they like. No question of restrictions.
Communism in particular is of different or contrasting to that of capitalism. Communism neither offer free hunting ground for profit seeker to accumulate unlimited and be the cause of emergence of class, nor it can permit to proliferation of any form of religious faiths.
Final thought on capitalism and Socialism
So far, we have learnt about the meaning, types, characteristics, and differences about the two major political ideologies and philosophies — Socialism and capitalism.
In short, communism is more concerned about the needs and classless society, whereas, capitalism rewards the efforts and abilities of individuals.
Second, one wants to think about society as whole without inequalities. But, other frees all the horses to unleash theirs potential.
Solved questions on difference between socialism and capitalism
Now, let’s see some useful examples of Solved questions on the given topic socialism and capitalism difference.
Q 1. What is the difference between Socialism and capitalism?
Ans: Socialism emphasizes more on egalitarian approach by focusing need of the society as a whole, while capitalism rewards merits of individuals to accelerate the pace of progress. Both are political ideologies having contrasting views.
Q. 2. What are the characteristic features of communist ideology?
Ans: Communism is an advanced level of socialism where does and don’t or restrictions matter more. Let’s see the major features of communist ideology.
- License rules or regulations,
- Government interventions,
- No chance for private property and profit motive, Labour market terms and conditions,
- Planning and strategy of production is subject to government decisions are the major features of communist political ideology.
Q.3. What are the major characteristics of capitalism as political ideology and economic system?
Ans: Freedom of doing business, entry and exit without restrictions, passive role of government means government makes policy for facilitates the economic activities, consumer welfare and employment opportunities, private property and profit motive, and dynamic labour market are the major characteristics of capitalism as political ideology and economic system.
Difference between Features and characteristics
Difference between Regime and government
Classification of Political ideologies