Capitalism and Socialism - Term Paper Example

Petras (2004) says that the debate between socialism and capitalism is still pressing and he even claims that the battle of ideas has begun to intensify. Petras (2004) continues that the social indicator show that the real capitalism is considerable worse than the full employment and steady employment rates that existed during the socialist period. Another author Bala (2009) argues that critics of capitalism describe it as unfair and distribution of wealth and power. Capitalist economic system has the tendency to create market monopoly or oligopoly.

Bala (2009) observes that capitalism can also lead to imperialism, various forms of economic and cultural exploitation. An example of this kind of exploitation is the outsourcing business. U.S companies have discovered that Indian engineers for example can handle the production as professionally as any U.S specialist, however price twice as lower. Thus, many corporations outsourced their business to India and Chine in an attempt to cut costs. Critics of capitalism argue that the imperialism which is associated with this system can also establish social alienation and inequality.

Bala (2009) quotes such statements expressed by many socialists as irrational, because the economy has no direction and is unplanned, consequently it can create internal contradictions and inconsistencies. Over the last 20 years the countries from the former Soviet Block in Eastern Europe are trying to transit from socialism to capitalism. All basic industries from energy, mining, communication, trade to infrastructure have been taken over by private corporations. However, this transition and privatization do not seem to reflect the capitalist ideas and many countries from Eastern Europe are not swept by massive unemployment, gang groups, uncontrollable migration waves, relative economic instability, money laundring and illegal transfers.

Bala (2009) poses that socialism is mainly criticized, because it is incompatible with civil liberties and it political model is not efficient with the general social, human performances. Friedrich Hayek (cited by Bala 2009) argues that a socialist economy can not adequately communicate the information about the productive quotas due in most cases to shortage in price mechanism. Furthermore Hayek (cited by Bala 2009) debates that the social control over the distribution allotment of wealth and private property preached by socialists can not be accomplished without a considerable reduction in prosperity and loss of economic and political freedom.

This statement is proved by the Soviet Union socialist satellite countries which after the fall of the regime seem to have been lost in their attempts to revive their economies. Another negative aspect of the socialism is that it creates authoritarian regimes. All sectors of the economy are operated by the one personality usually the head of the state. The supporters from each of the commented economic systems argues that life is more satisfactory under their preferred system. Vivier (2003) says that capitalists refuse to agree that imposing capitalists values and economic doctrines on the "Third World" countries, only made their economic status worse.

It increased their misery and poverty and the labor force was directly pushed into the hands of Western industrial capitalists. The capitalists values