Differences Between Capitalism and Socialism Assignment

Differences Between Capitalism and Socialism - Assignment Example Remarkable progress was achieved in the fields of infrastructure development and industrialization and the capitalist maximized their profits, but the state of affairs of the labor class of the society remained the same. As the standard of living of the elite class and the capitalists increased with the increased productivity, the disparity and discrepancy between different social classes went on to increase and the lower classes started to protest about their miserable status of living. This led to the development of another socioeconomic ideology which was later called socialism. Socialist thinkers such as Karl Marx and Friedrich Engels declared that state is responsible for safeguarding the basic rights of each and every individual of the society and the ultimate objective of the states should be to provide better services all the classes of the society, irrespective of their financial status (Balcerowicz, 1995). Capitalism Capitalism is a system of economics in which the producti on and the distribution is the ownership of individuals or corporations and the development is proportional to the accumulation and the reinvestment of the profits generated in a free market economy. In simple words the person or the group of persons who have invested its capital, and thus put their money on risk, are entitled to enjoy absolute authority over production and distribution and also the profits generated through the investment of capital. The industrial revolution compelled a considerable number of people living in rural areas to move to the cities in order to enjoy the advantages of industrial revolution. This led to the concept of buying the services of people in return of wages and thus a working class was created in the society, but in contrast to the aspirations of the common people, the working class could not improve their working conditions because they were considered as a means of maximizing profit by the capitalists and were exploited bitterly (Davis & Scase, 1987). The pioneers of capitalism advocate increase in productivity as the greatest advantage of this economic system which results in the economic growth of the society and thus the living standard of each and every individual is improved because resources are utilized to their fullest. Moreover the competition in a free market economy improves the quality of the product which is being produced. However, in the early days with the absence of labor laws and human rights protection agencies capitalism resulted in the exploitation of the labor class by the elite and the promises of better living conditions and improved quality could not be realized. The desire of the capitalists to maximize profits makes the economy money-oriented which promotes a materialistic approach of running the economy. This approach made capitalism very unpopular among the lower classes of the society in the 19th and 20th centuries and thus the new systems of economics like socialism and communism were adopte d as new social ideologies. During the later part of the 20th century, labor laws were formulated and made strong and human rights charters were adopted which greatly improved the state of affairs of the working class in capitalism. The development of these laws and some other laws related to trade and free market economy has helped capitalism to emerge as the strongest and the most-practiced system of economy and a new