Capitalism and Socialism

We explain what capitalism and socialism is, the most important economic systems, and what their differences are.

  1. Capitalism and Socialism

There are many ways to explain the differences between capitalism and socialism , two opposite economic and philosophical systems. Let’s start by defining them both.

CAPITALISM : Capitalism is a system that is based on private ownership of the means of production and the accumulation of capital as a way to the wealth of nations . In this system, supply and demand , elements that make up the logic of the market, regulate the distribution of capital and, therefore, the allocation of resources.

It emerged as a result of the rise of the bourgeoisie as the ruling class in the Modern Age and especially after the Industrial Revolution , which allowed the emergence of the industrial consumer society.

SOCIALISM : For its part, socialism is a political and economic doctrine that promotes social and community ownership of the means of production , as well as its administration by the working class, the proletariat, in order to build a society devoid of social classes , in which equality prevails in the distribution of resources and opportunities.

Socialism also comes from the Bourgeois Revolutions and Liberalism born of the French Enlightenment , but it would not be until the twentieth century, with the contributions of Karl Marx and Federico Engels, that socialism would embrace a “scientific” logic, that is, a model and a procedure, and thus cease to be simply a way of criticizing the prevailing system.

Socialism is also known as communism , although both terms are not exactly the same.

  1. What is the difference between them?

The great distinction between these two systems points, first of all, to the economic functioning model and the role of the State in it . While the capitalists defend full economic freedom , letting the market determine the needs of production and consumption , and therefore where wealth flows, the socialists prefer an economy intervened and controlled by the State, which would act as an entity guardian to avoid social inequality .

In this protectionist role of the State, the capitalists see it as an artificial intervention that does not really allow a productive balance of the productive and consuming forces, but benefits some artificially through the imposition of taxes or trade restrictions.

In addition, they allege that the State never manages resources as efficiently as business and that the distribution of economic aid to the less favored, of social plans and other forms of social investment, only makes the disadvantaged more dependent on the support of the State.

For their part, the socialists accuse the market of not building stable societies at all , but of favoring only the powerful, those who control the means of production and the great national and international capitals. Capitalist society is, in its view, a great factory of poverty, since the privileged life model of the upper classes can only be sustained from the exploitation of the labor force of the lower classes.

One could say that the socialists advocate communal property and the principle of solidarity above all, while the capitalists defend freedom and individualism to everything, even in spite of the injustices that may result.


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