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Socialism and capitalism is a system that has been used in many societies across the world and has both been successful and failed at different times.
In its definition, the capitalist system aims at making profits from its investments. As argued by Marx (1967) increasing capital investment and development of constant capital (such as land, machines, building, and raw materials). In this system, each person is supposed to make as much money as possible through free business. The government is supposed to offer security and not interfere in the businesses of its people. However, this system has been criticized as being individualistic and ignores the common good of people. It institutionalizes greed among people and promotes materialism. The capitalist is known to exploit the workers and the system creates huge economic inequalities.
A socialist system can be defined as a system based on the equal distribution of society’s wealth by the government. Under this system, the ruling class, top intellectuals, and social planners make decisions for the people (Thompson, 1993). Accordingly, they decide the needs of the people and then apply coercive power or state power to control people, tax them, and redistribute the wealth of those who have to those who do not have. Some scholars have criticized this system as legalized theft. It has also been viewed as a system that legalizes envy and self-sacrifice. According to Thompson (1993) socialism uses state power to take riches from the producer class to parasitical class.
However, in both capitalism and socialism, there is some form of regulations in terms of laws, licensing, and government tax. Though capitalism advocates for free trade, there exist a number of barriers to free trade in capitalist markets aimed at regulating the market, a clear attribute of socialism. Minimum wages, welfare system and equality in wages are just other examples of overlaps between capitalism and socialism
Marx, K (1967): Capital, vol. 3, edited by Frederick Engels. New York: International Publishers,
Thompson, B (1993).Socialism vs. Capitalism: Which is the Moral System On Principle, v1n3. http://www.ashbrook.org/publicat/onprin/v1n3/thompson.html