The main difference between the capitalist-socialist and the mixed economy is ownership of the factors of production. A capitalist economy is characterized by private ownership of production factors, while the socialist economy is characterized by state ownership of production factors. The mixed economy, on the other hand, is characterized by private and state ownership of production factors.
Socialist economy and capitalist economy are two opposing systems, and the mixed economy lies somewhere between these two economies.
Key areas covered
1. What is the capitalist economy - definition, characteristics 2. What is the socialist economy - definition, characteristics 3. What is a mixed economy - definition, characteristics 4. Difference between capitalist socialist and mixed economy - comparison of main differences
key terms
Capitalist Economy, Socialist Economy, Mixed Economy
What is a capitalist economy?
A capitalist economy is one in which corporations and individuals own the factors of production. Factors of production here refer to entrepreneurship, natural resources, capital goods and labor. In a capitalist economy, the production of goods and services depends on supply and demand in the general market. The main characteristics of a capitalist economy include private property, competitive markets, capital accumulation, wage labor, the price system and voluntary exchange.
In addition, there are several forms of capitalism in the modern world, including free market capitalism , state capitalism , and welfare capitalism . Economists consider free market capitalism to be the purest form of capitalism. In this type of economic system there are unrestricted individuals who have the power to decide what to produce and sell, where to invest, and the prices of goods and services. Most countries in the modern world, however, have a hybrid of capitalism with some degree of government regulation.
The main advantage of capitalism is its ability to offer the best products at the best prices. In a capitalist economy, there is also an intrinsic reward for innovation. But this economy also has some drawbacks. Private property in capitalist economies enables corporations to gain monopoly power over product and labor markets, which creates great injustice in society.
What is socialist economy
A socialist economy is an economy in which every person in society has equal ownership of the factors of production. A socialist economy is the direct opposite of a capitalist economy. This type of public or state ownership is done by a democratically elected government . In a purely socialist economic system everyone works for wealth, and wealth is evenly distributed among everyone. Furthermore, the underlying premise of a socialist economic system is: "What is good for one is good for all".
Furthermore, in a strictly socialist economy, the state makes all decisions about production and distribution, and people depend on the state for everything from food to health care. States also have the power to decide on goods and services and their price level.
What is mixed economy?
A mixed economy is an economic system that contains elements of both capitalism and socialism. It's on a continuum somewhere between pure socialism and pure capitalism. Mixed economies usually allow private property and control of most of the means of production, but are subject to government regulation.
But unlike in socialist economies, the state does not own all the means of production. The state only intervenes by regulating the economy when it is necessary.
Difference between capitalist socialist and mixed economy
definition
A capitalist economy is an economic system in which corporations and individuals own the factors of production, while a socialist economy is an economy in which every person in society has equal ownership of the factors of production. A mixed economy, on the other hand, is an economic system that contains elements of both capitalism and socialism.
Factors of production
A capitalist economy is characterized by private ownership of production factors, while a socialist economy is characterized by state ownership of production factors. A mixed economy, on the other hand, is characterized by private and state ownership of production factors.
Private vs. Public Sectors
In a capitalist economy the private sectors predominate, while in a socialist economy the public sectors predominate. However, in a mixed economy there is a coexistence of the public and private sectors.
motive
The main motive of a capitalist economy is profit, while the main motive of socialism is social welfare and the motive of a mixed economy is both profit and social welfare.
Role of government
The government plays a limited role in pure capitalism, while the government has a high level of involvement in socialism. In addition, in a mixed economy, the government intervenes where necessary.
job
There may be labor exploitation in a capitalist economy, but a socialist economy seeks to prevent labor exploitation. In a mixed market, however, production in the state sector is guided by social assistance.
Distribution of income
The distribution of income in a capitalist economy is unequal, while the distribution of income in a socialist economy is equal and the distribution of income in a mixed economy is somewhere in between.
diploma
A capitalist economy is an economic system in which corporations and individuals own the factors of production, while a socialist economy is an economy in which every person in society has equal ownership of the factors of production. A mixed economy, on the other hand, is an economic system that contains elements of both capitalism and socialism. So this is the main difference between capitalist socialist and mixed economies.
Reference:
1. Chappelow, Jim. " Capitalism Definition ". Investopedia. 2. Barnier, Brian. " Mixed economic system ". Investopedia.
Image courtesy:
1. " Economy-Finance-Success-Business-1792514 " (CC0) via Pixabay2. " Economic Systems Typology (v4) " By Sean Ahluwalia (Battlecry) - Own work (CC BY-SA 4.0) via Commons Wikimedia3. " Fundamentals of Business - Fig. 2.2 - Economic Systems " Developed by Brian Craig for Virginia Tech Libraries - Originally published in Fundamentals of Business by Stephen J. Skripak (CC BY 4.0) via Commons Wikimedia
