Capitalism and Socialism - Essay Example

It is also referred to as a free market system. Prices and distribution are controlled by competition. (Britton, 2012)

Characteristics of Capitalism

• •The system controls what to produce, how to produce it, and the final consumers.
• •The system must be in a position to adapt to changing economic climates
• •Individuals have the right to own property (private property)
• •There is the freedom to make various economic decisions
• •The system provides room for competition
• • There are limited government regulations
• •The system set prices for goods and services
• •The system gives room for the destruction of unwanted resources. (Britton, 2012)

It is expected that every economic system should address fundamentals such as; the type of goods and services which are produced within the economy, it must be in a position to address how these goods are produced within the economy and finally the source of demand for these goods. All these requirements are addressed by the capitalist economic system. The system recognizes the issue of scarcity within the society and therefore the question of opportunity cost.

Socialism

Socialism economic system, advocates for common and public ownership of resources. It advocates for common ownership of property and other important resources in the economy. The production arrangement is designed to meet the demands of the common man.  With this kind of arrangement, all the goods required by the populace will be produced.

Differences between socialism and capitalism

Socialism fosters communal ownership of resources. It gives power to the citizens to control the means of production. Therefore, there are no wide gaps, i.e. the haves and proletariats. Capitalism is a free-market system that fosters the private ownership of property. Means of production and distribution are wholly under private ownership. The system is characterized by the sole motive of competition to make a profit. (Britton, 2012)

The oil in the United States of America is handled in a form of capitalism. The production is majorly driven by the need to make a profit. The full control of oil is purely private ownership-based. In Mexico, the oil industry is partially competitive and profit-driven and another hand, communal well is driven. It is operated as a mix of both the capitalist system and the socialist system. It is important to note that in Mexico, the government has a keen interest in oil and therefore subjects some regulations. Norway, one of the wealthiest countries in the world operates a mixed system that gives room for private investors to exploit the resources fully. At the same time, the government is in a position to legislate some regulations to ensure that the locals also benefit. Oil is operated through the mixed system. (Britton, 2012)