Pros and Cons of Capitalism and Socialism - Essay Example

Capitalism is the idea whereby the possession of capital i.e. the means of production are usually owned and determined by private individuals with little or almost no interception from the government. The entire world can be considered to be operating under the capitalist system. According to the Capitalist system, a small proportion of the entire world’s population controls the resources of the world. This leads them to dictate their terms and accumulate and increase their respective wealth and fortune.

Many commentators consider this to be a major flaw of Capitalism. Commentators are of the view that the working classes within the economy are negatively exploited as a result of this undue power. Exercising such undue power usually results in Monopolies within the economy and these monopolies lead to an increased benefit being gained by charging higher prices for different goods and services. Except for this, there are other negative aspects of Capitalism which include discriminative distribution of wealth amongst the economy whereby some people are favored over others.

Proponents supporting the Capitalism system consider the economic system to increase the economic growth of society (Hyman, 2010). Socialism on the other hand is a system that has increased government interception with respect to the use of capital/ resources and the income is distributed amongst the people as desired by the government. Advocates favoring socialism consider the system to be a proper distributor of wealth and income amongst the public/economy. People favoring Socialism are of the view that the system has always led to an equal allocation of responsibilities.

The negative aspect of Socialism is the fact that government intervention may lead to many different factors such as decreased growth, reduced flexibility, and unclear price signals. These unclear price signals may not be good enough to perform economic calculations and predict the uncertain market trends. Socialism has always been pointed out for its budget-constrained attribute. This lack of budgets leads to reduced innovation and growth because of the reduced incentives for the people (Hyman, 2010).

Economies around the World have always been found to operate under the Socialist economic system. Those economies with a view that they are following the Capitalist economy are merely facing a delusion as there is not a single country in the current era that operates without government intervention. Karl Marx’s idea of socialism was to hand the power to the working class and by means of such power; the working class would be able to derive their respective pay scale. According to Karl Marx, the consciousness of the working class would only be altered by a change in their working conditions such as pay scales and for a successful implementation of a proper socialism system; the capitalist system should be over-thrown i.e. possession of resources should not be confined to a limited minority (Hyman, 2010).

Proponents around the world are of the view that the socialism view has not been properly implemented to gain proper advantages from it. On the contrary, the existing system has led to chaos within the global economy resulting in different financial and economic issues around the globe. A documentary released by some Greek theorists suggests that the economic system wrongfully portrayed as a socialist system has led to the Greek Financial Crisis.