Comparing Capitalism and Socialism Law Essay

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What is capitalism?
Capitalism is an economic system in which the means of production in society are in private hands such as corporations and small enterprises (Fraser & Jaeggi, 2018). In a capitalist society investors are free to invest in whatever venture they please while consumers are free to consume or ignore whatever they desire. Some of the system’s characteristics include private property ownership, free exchange of labor, market determination of prices, open competition, etc.
However, capitalism has a number of benefits that characterize its operations. First, the system encourages innovation based on expected rewards to innovators. Capitalist countries display some of the most innovative creations in the world as there is a strong profit incentive for those who invent and sell their innovations to the public. Second, capitalism encourages competition which breeds efficiency among companies that want to stay in business. This drives economic growth as productivity and employment rise to keep up with the demands of competing businesses. Third, there is minimal government interference in productivity which encourages the populace to be aggressive in setting up and running successful ventures.
On the other hand, capitalism has various drawbacks. First, it gradually creates an unequal society in which the rich grow richer while the poor grow poorer due to minimal government intervention. Second, capitalism can also lead to monopolies in certain industries if regulation does not prevent this. Such monopolies end up pursuing profits for their shareholders at the expense of society as a whole and even the environment, leading to massive pollution. Third, it destabilizes politics when rich corporations fund politicians for office in exchange for legi...