Socialism and capitalism represent the two extremes of economic systems that can dominate a political system. Often, the denominator that distinguishes socialism from capitalism lies in the market structure and the contribution and intervention of government in the running of the country’s economy. This paper shall discuss the differences between socialism and capitalism. It shall engage the audience employing two countries for illustrative purposes. These will be the United States of America representing capitalism and Sweden representing socialism. It is the contention of this paper that none of the systems can operate in isolation and that each of the systems needs a blend of the characters inherent in either system of government.
Socialism is a political system that is responsive in nature. It takes care of the social welfare of the society. In socialist systems, resources are a means of production for the benefit of the entire citizenry. In these systems governments play a more interactive and interventionist role. The market is not left to the dictates of the equilibrium of supply and demand. In these markets, the price can be controlled for the overall good of the society. The system is influenced by the need to protect and provide for the citizenry. One salient characteristic arising from this approach is the low disparity between the haves and the have-nots. It should be appreciated that while in this political system, the classes naturally exist and, however, the differences in terms of economic parity is not as large.
The state suffices for the sole purpose of controlling and regulating the market. The approach that determines market operations is based not on profit accumulation, but on the need to avail services to the citizenry. In this context, the citizenry are the main constituents of society. In this political system, government owns most of the property. Individual ownership is minimal with most property being vested on the government which owns the property on behalf of the people. This system is much more people centred. It often impresses on the majority through the Kantian philosophy. In that regard, government would carry on policy formulation and implementation skewed in favour of the citizenry. A good example is the taxation system in the socialist political systems. The tax regime is progressive and is aimed at redistributing income as well as enabling the provision of basic amenities.
Sweden best exemplifies the socialist system of government. In Sweden, the citizenry inform the motivation and origin of policy formulation and implementation. Swedish citizens pay the highest tax rates in the world paying taxes at around sixty percent of the incomes. In addition, in Sweden the property regime does not lean towards individual ownership. While the law appreciates individual ownership of property, most of the legal regime is in favour of government ownership. In addition, the Swedish government is more reactive and interventionist to the market dynamics. The government often intervenes in favour of protecting the citizenry from adverse market dynamics. The GDP of Sweden as at 2011 stood at $290 billion while its per capita income stood at $32000.
On the other hand, a capitalist system is inclined towards individual accumulation. This political system advances for the government to play the minimal roles in the market and leave the dynamics of the market to balance in the equilibrium of supply and demand. In this political structure, the government does not intervene to market dynamics. The government merely provides facilitative services to trade. This include elements such as security, road infrastructure, education, among others. In the same vein, in this system the citizenry are left to their own devices. They need to pay for basic services such as education, health and infrastructure. In this system the social classes are alive as are the economic disparities wide. The gap between the haves and the have-nots is huge. The government does the minimum possible to upset this status. Instead a capitalist system would require that people struggle to exit one class in succession to another. Economic individual accumulation is supported. The property legal regime is embracive of individual ownership and least supports government ownership of property. In this system the tax regime may not be progressive. The tax may merely be proportional and in adverse cases, the elite often at the top may use the law to ensure their wealth is protected against redistribution effects of taxation. In the capitalist system the market dynamics cannot be controlled. Issues of price control, market regulations, among others are kept at the minimum level possible.
The United States of America best exemplifies a capitalist system. In America the free trade and enterprising prevails and government intervention is kept at minimum levels possible. In addition, the class struggles in America continue to characterise the political terrain with movements such as Occupy Wall Street coming up to fight the effects of capitalism. In addition, the American citizen continues to pay for basic services such as health, education and infrastructure often dearly. An example can be seen in the high university education costs that limits the entry of lower class citizens to private university only on scholarships. The GDP of the United States of America as at 2011 stood at $13,060 billion while its per capita income stood at $43680.
Dietz, D. (2013). Sweden's Socialist-Based Society Can Be a Model For America. Capitalism Nature Socialism, 24(1), 4-9.
Mann, G. (2013). Who's Afraid of Democracy? Capitalism Nature Socialism, 24(1), 42-48.