Anonymous asked in Politics & GovernmentPolitics · 1 decade ago

What makes Capitalism better than Socialism?

In Capitalism, people can buy and sell products and services in a free market and make a profit for themselves privately.

In Socialism, people are unable to make a profit for themselves privately, but instead work to create wealth for the government to spread evenly out to everyone, thus everyone remaining in equal status.

So my question is, what makes Capitalism better than Socialism? Or if you believe the other way around, what makes Socialism better than Capitalism?

37 Answers

  • 1 decade ago
    Favorite Answer

    Hi Danny. This is a really good question! There was some misinformation in some of the answers and in your question.

    First, socialism is an economic system, where as communism is a political AND economic system. Therefore, comparing socialism to communism can sometimes be like comparing apples to oranges if one is not careful.

    Second, what you describe as socialism in your question is actually communism. Socialism operates on the following principle: "to each according to his contribution". In other words, it does not believe in spreading the wealth around to everyone equally (which is what communism is). It believes in giving out wealth based on each person's individual contribution to society. More productive workers get more money. Doesn't sound too bad right? Well, the reason many oppose socialism is because the production and the economy are controlled/owned by the government. In it's purest form, socialism calls for public ownership of production. Negative side-effects include stagnation, limited private enterprise, and government corruption. Positive side-effects include: providing equal opportunities to everyone, all people are treated equally, and wealth does not become centered on an upper middle class. These side-effects are theoretical. Actual experiments have not always produced these results.

    In a capitalist system, production is privately owned. In other words, you and me own it, corporations own it, etc. It also differs from socialism because it believes in free-market enterprise where goods and services are created and sold in a market instead of by the government. The government has no involvement in the market or it's regulation. Negative side-effects include: wealth concentrated on the upper and middle class, recessions and inflation. Positive side-effects include rapid growth, innovation, and enterprise (i.e. you can easily own your own business). These side-effects are theoretical. Actual experiments have not always produced these results.

    In case you asked this question to better understand current economic policies in the US and why people keep calling Obama a socialist, here's some clarification: The US has never been entirely socialist or entirely capitalist. We've basically always run a system of economics that incorporates both. We function with free markets (capitalism) that in the past have either been heavily controlled by our government (leaning more towards socialism) or somewhat controlled by our government (leaning more towards capitalism). But, government has always been involved in our free-market. The NYSE is the free-market. The Federal Reserve is the government involvement. Our government also provides some goods and services to the public (something that parallels socialism). Examples would include the postal service, welfare, and education.

    So, why do people call Obama a socialist? Because he wants the government to provide more goods and services to US citizens (i.e. healthcare) and his economic polices call for government regulation of the free-market, which, by definition, makes it 'un-free'.

  • 1 decade ago

    Capitalism is the only system that is a wealth generator. Socialism, in all of its various forms is nothing more than a method of rationing existing wealth. That is why the Soviet Union collapsed under its own weight and why China, having now adopted Capitalist reforms, is gaining wealth and has an emerging middle class.

    Self-interest is a powerful motivator. There is no self-interest in Socialism so there is little motivation. While American businesses are always looking for ways to become more efficient to compete, resulting in lower prices, Socialist industries are more about simply providing employment. So, there is little incentive to be more efficient and the workers cannot get more pay for being more productive so there is not incentive there either. Thus, no wealth is generated. This results in a two class system. The Ruling Class, small in number and living in luxury and everyone else who live at the bare necessity level rationing dictates.


  • Anonymous
    1 decade ago

    I believe capitalism is the best form of economy.

    Capitalism rewards people for having good ideas, good work ethic, determination and/or good luck. If you are going to get what you need regardless, why should you work any harder? Socialism leads to a stagnation in the economy and society. Besides, we should not trust the government to fairly spread out the wealth.

    Capitalist nations also tend to be freer socially than socialist nations. The kind of government that comes to power in a socialist nation (the kind where the government has the power to distribute wealth and run the economy) tends to be more power hungry than those that come to power in capitalist nations.

  • Anonymous
    1 decade ago

    Technically speaking, capitalism is NOT better than socialism, nor is socialism better than capitalism. There must be a balance between the two (rational moderation). The problem with extreme socialism throughout history has been a lack of expansion or growth (stagnation), which is what happened to the U.S. under Bush/Cheney as well as under Reagan/Bush and Bush/Quayle as the wealthiest 1% of Americans reaped all the benefits, but all our manufacturing and industrial jobs were outsourced to other countries, more and more of our people--entire families--became homeless, the savings and loans industry collapsed (similar to the meltdown of 2008, but not as global and not as severe)... The problem with capitalism is GREED and CORRUPTION---especially when adhering to the con job GOP mantra of "less government" (meaning no oversight--no regulation) and, as happened under all of the last three Republican presidents, resulting devastation to our nation's economy (living on borrowed time, robbing from Peter to pay Paul, and juggling accounts to conceal the devastation until there is nothing left to juggle) "America What Went Wrong" by James Steele and Donald Barlett (available on In summary, there has to be a balance between the two in order for the checks and balances to kick in---which is yet another reason why President Obama's preference for a Public Option component to the health care/insurance reforms being proposed is important.

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  • Capitalism is better. Picture this:

    You work your butt off 6 days a week and every day put in about 6-9 hours each day. You make a pretty decent amount, right?

    Now, you're neighbor here, he works twice a week, and only puts in about 3-4 hours. Yikes! He's not making very much.

    With capitalism, you get your money (not including taxes) and it's yours, and your neighbor makes his, and though there is a very large ammount of difference in your money, you don't have to share.

    In socialism, say you have the same scenario, but, you both end up making both the same amounts of money. There is no way that is fair! Socialism promotes laziness.

    There is a reason why Jamestown almost died out.

    "Those who cannot learn from history are doomed to repeat it." -George Santayana.

    Plus socialism is always a baby step towards, communism. It always leads to that. There is not perfect balance of both, bull crap. Communism is socialism on crack.

  • 1 decade ago

    Capitalism: Say you work hard growing up in school to make good grades, you get out and go to college to be a doctor and spend many hard years working toward your degree and establishing a doctors office. You then reap the fruits of your labors.

    Socialism: You are expected to spend all the hard work as said above in pursuit of your degree but then you're expected to do the work but are only allowed to charge 'x' amount or for free. Obviously if there's no gain involved then you will not do it.

    Socialism is the fault of any civilization. It sounds good on paper but it is an extreme cut into a person's unalienable rights in order to spread wealth. If you enjoy doing what you want, when and how you want it then I suggest you fight hard against this monster. Once it is upon us and enforced it is hard to get rid of, but I assure you that freedom's vanguard will not sit quietly.

  • Shara
    Lv 5
    1 decade ago

    If corrupt people are not behind the scenes in either scenario, then either one would be great.

    However... Our current "capitalistic" system is REALLY corporatism.

    Politicians scratching the backs of their rich business owner friends who in turn scratch the politicians back.

    The politicians rig the laws to make new competition nearly impossible in some fields, bail out the big businesses (at the expense of ALL of us) rather than let them fail naturally and let the new ones take their place... In turn, these businesses give some of that taxpayer money back to the politicians when it comes to election time, and coerce their unions in to voting for them.

    Every time socialism has been tried, that is also ruled by despots and the rich become richer while the average people become poorer.

    Government is the problem. It's hard to find an honest politician.

  • Anonymous
    1 decade ago

    I think history has proven that neither is technically superior. A Capitalist free-market society tempered with socialist programs is the strongest system. Capitalism drives innovation, and carries with it natural incentives to work hard and succeed. Socialism, however, provides citizens with public services which are too important to risk. These include police and fire departments, road construction, military, schools, libraries, and hopefully, health care.

    You wouldn't want to give your whole paycheck to the government, but on the other hand, you wouldn't want to keep the entire paycheck and then have to pay to get on the freeway or have your house burn to the ground because you can't afford "fire control service".

  • 1 decade ago

    You are mislead. You likely meant to compare Capitalism to Communism. What most people fail to realize, is that the U.S. is not a purely Capitalist country. There is a degree of Socialism. We have Medicare, Medicaid, the Food Stamp program, government support for farmers, public schools, graduated income tax, etc.

    Pure Communism and pure Capitalism, in my opinion, are both evil, eventually. They may sound good, on paper, but, in reality they aren't

    If we had a purely Capitalist country, there would be no aid for the poor or the disabled, and no subsidies for anyone. It would result in utter chaos, and, eventually, revolution.

    Source(s): Socialism is not an evil system. It is the norm in most of the civilized world. Only the very rich and the ignorant oppose it.
  • Anonymous
    1 decade ago

    We need both. We need capitalism to create the capital for things we all share.

    I think a blended society like America is just fine. I would extend the socialism part in America to include health care.

    There's something not right about making a profit off of people dying and getting sick or hurt.

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