There have always been debates on the question of what economy is morally better: socialism or capitalism. First, it is necessary to understand the definitions.
Capitalism is an economic system based on private property and the factors of production, and distribution of the manufactured product, as well as goods, benefits and services, provided mainly by the market. Free enterprise, competition, and the desire of producers and sellers of services and goods to make profit, are peculiar for capitalism. Capitalism is characterized by the free market, competition, minimum of government interference in the economy of the country, private equity, property, and lack of state monopolies. The private insurance companies mainly provide social benefits. It is an unplanned market, reactively regulated when needed.
Socialism is an economic system, when the process of production and distribution of income is under the control of society. It is based on public ownership of the means of production, replacing private property. Socialism is characterized by a big amount of state monopolies; the competition is minimal (maximum in small business), possible bans on business, a ban on the ownership of land, the lack of the free market, “manual” economy control by officials. Socialists’ strategy is a proactive planned market strategy.
That is, capitalism is a system of economic relations, the purpose of which is the accumulation of money, and socialism is the socio-political system characterized by the interaction and mutual responsibility.
Capitalist system solves a great number of global challenges.
Overall, for almost five centuries of evolution of the capitalism economic system, the productive forces have reached such level of development, that none of the pre-capitalist formation could do so.
It particularly made significant progress of primary productive force - a man (educational and cultural levels), and the most dynamic incentives to work were created. It also improved the living standards of employees and the life expectancy increased.
The main engine that motivates capitalism is competition. To my mind, the competition produces the best results for society. Intra-organizational competition helps to solve the problem of producing low-quality goods and achieve corporate success, because people are highly motivated by self-interest and competition harnesses is the best motivation.
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Capitalism is justified by the fact that capitalism is a productive game that we have chosen on the basis of the fact that it is more productive on the whole than any alternative. Some behaviors that would be immoral outside the context of a game are moral within the context of the game.
However, the capitalist economy system has several shortcomings. One of them is monopolization of a small part of society of the vast mass and their use as an instrument of exploitation of the labor of other population, i.e. the existence of private property. The other is legal freedom of workers who are deprived of the means of production and livelihood, in order to feed themselves and their family, are forced to sell labor. The worker is under control of capitalist, who is the owner of the manufactured product. The other defects are the alienation of laborers from production management and property and capitalists’ appropriation of the bigger part of products. Mass unemployment, a significant stratification of citizens, economic crisis and others are also considered to be disadvantages of capitalism.
Capitalism is in the long-term an unsustainable form of economy because it depends on the promise of future growth and thus requires the economy to speed up the consumption of its resources to a non-replenishable rate. This will result in economic collapse unless we gradually wean ourselves away from capitalism with increased regulation of the economy.
Capitalism is unfair because some people have more resources to succeed than any others do from the outset. It is like the game of Monopoly that some people start already owning property.
A great defect of capitalism is that it overlooks the value of cooperation, as opposed to competition and the economy, both inter-organizationally and intra-organizationally.
The other defect is that capitalism underestimates the moral legitimacy of ownership of one’s work, as opposed to the material ownership or ownership of the means of production.
The capitalist theory is that free market mechanisms will always guide an economy to the most beneficial outcome. Every country needs domestic food production for its own national security and independence. Some countries’ agricultural producers cannot compete with international large-scale agricultural producers. That is why some countries have to place protectionist’s tariffs on their agricultural imports. This proves that the capitalist theory is false.
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Health care should be universal or socialized, because it is a vital service that should not be left up to the whims of free market forces, which will make delivery of services inconsistent and unevenly distributed.
Sometimes we ought to turn to socialist management strategies, because capitalist market forces cannot lead to the best results in some major markets.
So, some socialist mechanisms are required to lubricate or prepare the rest of the market to reduce a good result for society when operating by free market force. Socialism is preferable for small-scale economies because the small scale can be effectively planned, and whatever can be effectively planned should be.
There is also a fact of coexistence of these two economical systems-socialism and capitalism. Modern society combines capitalist and socialist elements in economy, as well as in other spheres of life. It is a bridge between the systems, mostly based on private properties (capitalism), to the society with mostly socially controlled properties. The confrontation of the private and public sector stems mainly in politics and the economy in the form of a kind of competition. In cases where the company or institution that are in different sectors produces the same services, the battle results in the usual classical competition. It takes place on the market in the fight for the consumer. Who will provide the best quality or lower price, comes out as the winner. A somewhat different situation is in the infrastructure sectors - health, education, transport, etc. Consumers often have to choose between quality and price. The existence of the competition between the two systems leads to their mutual enrichment.
The twenty-first century, in general, can be described as the age in which the majority of goods and services will be made by the private sector, i. e. with the capitalist mode, and distributed by the socialist one. In other words, capitalism is better to use in production, and socialism in distribution. The purpose and character of the distribution of the production of the product by the country demonstrate the social orientation of the society. The ideals and principles of socialism (rather similar to the Christian), occupied a dominant position in the structure of society - in politics, ideology, art, government, and public. And this trend will continue. Social principles will be introduced into practice wider and fuller, which will guarantee the satisfaction of a much broader list of needs than it is now.
Such system will change the attitude to work. Motivations will be not a capitalist exploitation of workers, but the demand for labor, which is shown by members of religious, charitable and humanitarian organizations. An abundance of free time will lead to the development of art and all other branches of human development.