Economic systems are the backbone of any society of the world. Since the dawn of civilization, society has developed. Gradually, the economy has been built by several countries.
Now in different countries, different economic systems are found. Capitalist, socialist and mixed economies are a few examples of the several systems present in the world.
- Capitalist economies prioritize private ownership and free markets, with minimal government intervention, promoting competition and individual choice.
- Socialist economies emphasize collective ownership and government control of resources and production, aiming for wealth redistribution and social welfare.
- Mixed economies combine elements of both capitalist and socialist systems, balancing private enterprise with government regulation and social programs to address inequalities and support economic growth.
Capitalist vs Socialist vs Mixed Economy
The difference between capitalist, socialist, and mixed economies is that a capitalist economy gives the right of factor and production to the individuals, whereas a socialist economy divides those rights to each person present in the society. On the other hand, the mixed economy bears features of both economic systems. The distribution of property in capitalism is unequal, whereas, in a socialist society, the distribution is equal. The mixed economy also shows the sign of inequality but in fewer numbers.
The capitalist is an unjust economic system where private sectors are the leading realm, and in addition to that, the monopoly prevails in the market.
Here the distribution of wealth is not just, and at the same time, the exploitation of the labour class can be observed much often.
The Socialist system is the complete opposite of the capitalist system. Here the government body stands responsible for providing the citizens, and all the sectors are public.
Each one of the society has the right of possession over the property and other services.
A mixed economy, just as its name suggests, includes mixed features of capitalist and socialist economies. Both public and private sectors can be found here, and the rate of social injustice is lower here.
Profit has its place in this system, but social welfare is also a part of it.
|Parameters of Comparison||Capitalist||Socialist||Mixed Economy|
|Definition||In this economy, the factors of production are owned by businesses and individuals.||In this system, the factors of production are owned by each person in the society.||This system has elements of both capitalist and socialist economies.|
|Ownership||Here the ownership is private.||Here the ownership is of the state.||Private as well as state ownership is seen.|
|Government||Here the Government has a limited role to play.||Here the Government has a functional role.||Here the Government comes in only when it’s necessary.|
|Main goal||Personal profit is the goal here.||Social welfare is the goal of this economy.||Both profit and social welfare have a place here.|
|Distribution of income||Here the distribution of the income is not equal at all.||Here the incomes are distributed equally.||Here the income distribution has inequality but in less amount.|
What is Capitalist?
To define the capitalist economy, we can say it is a system where individuals occupy and enjoy capital goods and natural resources. This happens by exploiting the labourers.
Therefore, social inequality is very prominent here. Here the production and services are solely dependent on the supply and demand of the market.
Sectors are private in this system. The property, capital, competitive markets, a price system, everything is the possession of individuals.
In the present world, we can notice more than one form of capitalism. The concept of free-market is regarded as the most distinguishable feature of capitalism by economists.
If we observe, then we will see most of the countries now include a fixed form of capitalism where some amount of government rule prevails.
For the benefits of capitalism, one can see that it produces products in bulk and that too, for the best prices. But how the prices are so less? It is cheap because of the capital inequality and exploitation of labour.
Capitalism gives a particular class a monopoly over society. These people are less in number. They enjoy all the advantages while the rest of the country suffers. The social injustice in this system is undeniable.
What is Socialist?
A socialist economy is a much more just social-economical system. Here the ownership of property, capital, competitive markets, and the price system bear the essence of equality.
Each one of the society enjoys the possession. We can say it is the opposite of a capitalist society.
To achieve this public ownership, the state needs to elect a democratic government. The government must have fair means. In this society, people work to get wealth.
The distribution of wealth includes everyone equally. No sort of personal interest gets encouraged in this system.
Government plays an important role here. The decisions taken by the governing body focuses on the well-being of everyone in the state.
In this system, the state is responsible for providing food and health care benefits.
What is Mixed Economy?
In a mixed economy, you will notice characteristics of both capitalist and socialist economies. This is the reason behind the name of it.
It stands somewhere between the aspects of socialism and the elements of capitalism. Here you can see the prevalence of private sectors that remain under the control of government regulation.
The government comes into the picture when it is critical.
Here the production is meant to earn profit. However, this profit does not cost the well-being of every person living in society. The profit is taken seriously as well as social welfare.
Therefore the unjustness of this economy is less than a capitalist system. The government of his system controls the public domains completely and private sectors partially.
Main Differences Between Capitalist, Socialist and Mixed Economy
- In a capitalist economy, production is the possession of businesses and individuals, while in a socialist economy, production is the possession of the people of the society and a mixed economy holds both features in half.
- Under the rule of capitalist society, the exploitation of labour is a common problem, but socialist economies are against this, and a mixed economy focuses on social welfare.
- In a capitalist economy, the government does not have a significant role to play. A Socialist economy demands the government to be functional, whereas, in a mixed economy, the government takes entry when it is required.
- The main purpose that the capitalist economy pursues is gaining personal profit while the socialist economy aims at social welfare, and both these goals are followed by the mixed economy.
- The dominance of the private sector is seen in the capitalist economy, but in a socialist economy, the public sector is seen, whereas the mixed economy has both sectors present in it.
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Emma Smith holds an MA degree in English from Irvine Valley College. She has been a Journalist since 2002, writing articles on the English language, Sports, and Law. Read more about me on her bio page.