Capitalism and Socialism

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You buy a house. You choose your job. You shop for the groceries and toys that your income allows you. We take these basics of American life for granted, but these liberties are all because of capitalism. Capitalism is an economic system that enables consumers to determine which products will be sold, lets firms decide how to produce them, and allows markets to guide who gets them. IN the United States, oil is an example of an industry that is run by this principle. Life would be different, however, if the nation was socialist. Socialism is an economic theory that mandates that the governing body, rather than the consumers and firms, control some of the firms on behalf of the community. For example, in Norway and even in capitalist Mexico the oil industry is owned or controlled by the government. Capitalism and socialism are two very different systems in theory and in practice; the one enabling the consumers and the individual firms to turn market gears, and the other relying heavily on government involvement and interference.

It is important first to notice that capitalism’s defining characteristics imply some pros and cons. The premise that capitalism revolves around is that the invisible hand, or the markets, should control how the economy is run. Businesses make what the consumer wants. This system upholds the sanctity of private property ownership. Capitalism believes in laissez faire. The government stays out of businesses’ business, generally speaking. Profit is the main focus of firms. However, competition keeps firms in check. Competition is what drives businesses to produce cheaper or better quality products, as well as to advertise their product, so that consumers will buy. Unfortunately, this competition inherently pr...

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Huberman, L. (1968, January 01). Introduction to socialism. Monthly Review,

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