Socialism And Capitalism - Essay Example

The paper will also review features of welfare capitalism. Capitalism Capitalism is an economic system in which ownership of property is in the hands of private sectors. This means that private individuals or entities and not the government significantly drive the market forces. Private parties in an ideal capitalistic market, who are in most cases driven by the need to make profit, regulate production. As a result, productivity is a factor of market forces of demand and supply that determines prices of commodities and the revenues and profit that can be generated from production.

Another consequence of a capitalistic economy, which results from the freedom of the private sector to regulate the market, is the level of productivity in an economy. This is more significantly felt when a single producer dominates an industry or a few number of suppliers as defined by monopolistic and oligopolistic set ups. Unlike in a competitive market, oligopoly and monopoly induces the supplier’s powers to regulate supplies in order to control market prices. Producers therefore significantly determine the productivity level.

The market forces of demand and supply however generally regulates the productivity levels of capitalistic economies based on producers’ profit margins. . 1). The capitalist class is the set of individuals who owns and controls economic resources. The working class is employed by the capitalists to facilitate the production process for consideration in wages. There is however a wide gap between the income earned by the capitalist class and the cost of production due to the working class. This defines a high level of exploitation by the capitalist.

The system is therefore stratified into two classes in which the capitalist class is powerful and exploitative over the working class. The economic system also defines inequality in economic power between the capitalist class and consumers. This undermines the general perception of demand and supply forces as determinants of capitalism. The production process is mostly influenced by the need to make profit rather than demand for the products. The major driving factor in capitalism is identified by the need by the capitalist class to maximize their profit margins, to safeguard their class and to protect their investments.

Demand is therefore a means to an end in protecting the interest of the capitalist class (World, n.d.). Another feature of capitalism is the level of government control over property and the production process. The government in an ideal capitalist market only has a facilitator role in the market system, not a controller. There are however both direct and indirect influences from government agencies over the market system. The government, for example, establishes a framework through which the market operates.

Political structures formulate laws that govern the market system and the government facilitates implementation of the rules. The government