The Economic Systems
Capitalism, mixed economy and socialism systems differ in features, ownership and distribution of resources. Capitalism entails an economic system where the means of production and distribution of goods are owned by a minority (Jain & Khanna, 2007). The capitalists tend to maximize their profits through the utilization of capital that they own. In a Socialism economy, the means of production are owned by the state or are collectively owned by all the people within an entity such as township, village, and neighborhoods. The state distributes the resources in this system. On the other hand, a mixed economy is a system that entails both the government and private control. This system reflects the features of both socialism and capitalism (Jain & Khanna, 2007). A mixed economy, just like capitalism, has market forces influencing the economy; however, the market forces are monitored by the government.
The recognition of individual rights must focus on banning the use of physical force, where human relationships exist. In capitalism, there is an individual right to solicit wealth through utilizing private means of production; hence, there is no use of physical force. Besides, in a mixed economy, individuals have the right to create wealth since the government is partly in control of the means of production. However, in socialism, there is no freedom of individuals creating personal wealth since the state has full control of resources.
Comparing socialism and capitalism systems, socialism is likely to create a higher standard of living compared to capitalism. This is because, in capitalism, every individual works toward achieving own wealth while, in socialism, all individuals work for wealth that is distributed equally (Jain & Khanna, 2007). This implies that, in capitalism, those without the means of production will have lower living standards than those owning the resources. This will create a vast inequality. On the other hand, a mixed economy is likely to create a higher standard of living since the intervention of the government helps in achieving a balance amid social goals and individual initiative.
Jain, T.R. & Khanna, O.P. (2007). Economic Concepts and Methods. New Delhi: FK Publications.