Socialism Vs. Capitalism

"The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries."

Nothing can better sum up the two political systems - socialism and communism, than this quote by Winston Churchill. Although, there are numerous systems adopted by countries today to run their economies, none are as debated, compared and discussed as socialism and capitalism. If we go by today's scenario - China, Cuba and North Korea are the countries which have socialist economies, i.e. based on socialism principles, while the United States of America, Canada and Great Britain have capitalist economies, based on capitalism principles. Have you ever thought how did these political systems emerge? Which has been the more successful one between the two? Let us compare socialism and capitalism on various counts, and find out the answers.

Socialism Vs. Capitalism: Origin
Although capitalism had always been present in previous civilizations, yet it was for the first time introduced as an economic and political system, by Adam Smith in "The wealth of nations", published in the year 1776.

Socialism came forth on its own, in the eighteenth century, during the industrial revolution when the workers lived in miserable conditions while the factory owners grew wealthier by the day. The workers formed trade unions and wanted a share in the profits of the factory owners. Socialism was formally introduced as a political philosophy in the 1848 book "The Communist Manifesto", written by Karl Marx and Friedrich Engels.

Socialism Vs. Capitalism: Definition
Let us compare socialism and capitalism by learning about their definitions. A capitalist economy is one in which the means of production are owned and controlled by a class of people, known as the "capitalists". The capitalists are the ones who have the capital to make investments in factories, machinery and who pay workers their salaries. In today's times, capitalism refers to a form of political system in which means of production are owned by the private sector and there is lack of central planning by the government, with regards to running the businesses.

A socialist economy is the one in which the means of production are owned and controlled by the workers. The ownership can be in the form of trade unions or cooperatives or through the state itself. In today's times, socialism refers to a political system where ownership and control of means of production lies with the people as a whole or with the state, with lots of emphasis on central planning, by the state. Communism, another social system, evolved from socialism.

Difference between Socialism and Capitalism
To truly understand what is socialism and capitalism, the difference between the two have to be completely understood. The capitalists believe that there should be a complete non-interference by the government in the economy. They believed that an economy can run efficiently on its own through the natural mechanism of demand and supply. Capitalism is a political theory that advocates competition - between the sellers to supply a particular good or service, and between the buyers to get the service or goods. The sellers compete among each other so that they make the maximum profit, buyers compete among themselves to get the best deal while purchasing the goods. Capitalists strive for a free market economy and also advocate "private ownership" of means of production.

Socialists, on the other hand, propagated that the state or the government is the one which should be in total control of the planning, production and distribution process. The political theory of socialism advocates cooperation rather than competition, which is capitalism's mainstay. Socialists believe that wealth or profits made from means of production owned by the state, will be used fairly and for the welfare of all the people, rather than just the elite class. Socialism is based on the philosophy that an individual will become more ethical and dedicated towards his work, when he is receiving what he wants and when he is working for everyone else in the society and thus, people do not need any kind of "competition" to propel them to work.

Pros and Cons of Socialism and Capitalism
If we go by history, capitalist countries have fared much better than socialist countries, though many social activists, journalists and political commentators may have us believe that it is an immoral system of running an economy.

Today, socialism is not adopted the same way as it was advocated by Karl Marx and other socialists of that era. In socialist countries today, there are a handful of bureaucrats, intellectuals and social planners, who decide on behalf of all the people, what is to be done and then using the power of the state, they redistribute and regulate wealth and decide on taxation for the people. Thus, in reality people do not have control over wealth, it is these different kind of "elites" who control everything and use state powers to coerce people. A good example here would be socialist China in which the centralized bureaucracy takes all major decisions and people are forced to follow whatever they propagate. Another example is USSR, which disintegrated because the people felt that they were being forced to work for the good of all the people by a group of people who had the actual powers. Thus, it is difficult for socialism to survive in the long run.

Capitalism, on the other hand has survived, for the simple reason that it is based on the inherent human nature of being selfish and working for self-interest. Also, capitalism does not force anything on people, instead people deal with each other as traders to gain more profits. Capitalism is a social system that values ability, skills, hard work, intelligence, discipline and achievement, thus, inspiring people to work more. Unlike socialism, in which people can afford to shirk their work, in capitalism, traits such as laziness, impracticability and inefficiency, are penalized.

Capitalism is clearly the winner. However, incorporating a bit of socialism in capitalism, will be ideal for the countries today. That is why we see countries like France passing a socialist law, making it hard for industries to lay off employees during this time of recession, or America, where workers pay a third of income as tax or Canada, which offers free health care. All these socialist policies are a means adopted by capitalist countries today for the welfare of their people.