B010909006 (NORTEY CECIL NII NORTEY) BTE LEVEL 300 (GROUP A)

Discuss the capitalist and socialist economies using a country as an example in each what are the advantages and disadvantages in each market? To be able to define the economy of a country you must be able to answer some three basic questions, first, WHAT goods and services they produce, HOW do they produce these goods and services and for WHOM are the goods and services produced for. The way a country answers these questions will define their economy. The answer of these three questions will help us know what a capitalist and a socialist economys are. Capitalist economy known by some as the market economy can be defined as an economy where the means of production are owned by private individuals and groups. Means of production here refers to resources including money and other forms of capital. It can also be defined an economic system characterized by private ownership of businesses and marketplace competition. Under capitalism, companies live by the profit motive. They exist to make money. Here the capacity to produce goods and services are owned and controlled by individuals or groups. In this type of economy, consumers influence the market through their demand and ability to purchase goods and services. There is very little government intervention. The next economic system is the socialist economy which is also known by some as the command economy. The socialist economy can be defined as system where the means of production, such as money and other forms of capital, are owned by the state or public. There is increased government involvement in peoples lives and the economy. Under a socialist economic system, everyone works for wealth that is, in turn, distributed to everyone. The main goal is to keep prices low for all people and to provide employment for many. Everyone works for their own good and the good of everyone else. The government decides how wealth is distributed among the people. In a socialist economy, the taxes are usually higher than in a capitalist system. People have the misconception that in a socialist economy certain services like health care and a complete system of government-operated education is free. In actual fact they do pay for them through higher taxes. A more extreme form of socialism is communism.

Every nation on the planet one way or another practices a type of economic system. As stated in the introductory paragraph the way a nation answers what goods & services should be produced? How should society go about producing goods & services? For whom should these goods and services be produced? Helps you know if it is a socialist or capitalist country. For a capitalist country, I would like to use Canada as my example. In Canada companies that do not issue publicly traded shares in are a huge part of the economy this tells us most the business are owned by private individuals or groups. The working class is the vast majority of the population. Workers own no means of production having no principal source of income other than their capacity to work. With this I will like to highlight some of the pros and cons within the capitalist economy. Capitalism increases the opportunities in the marketplace for personal economic growth. Like in the case of Canada it has given opportunities for entrepreneurs to increase their personal wealth and for societies to grow as well. It creates competition. A competitive market results from capitalism and this drives companies to work harder and better their products and it also presents consumers with a wide array of products and services to choose from. Now, in others words one could say that the capitalist economy is based on the concept survival of the fittest and this are not too good. The economy is money-driven without much regard for people unless they are owners or shareholders of business firms. Successful capitalistic systems tend to be open and competitive. If a capitalist economy is not too successful the competition within the market turns out to be negative, there is fierce competition and, perhaps, unfair competition. There is a tendency, for the big companies to get bigger and for monopolistic behavior to occur. Since capitalism requires continual growth, environmental damage may occur as the resources of the earth are depleted. Because companies are profit minded they will not really think about the damage being made to earth but how they rather acquire every last bit of resource within it. Some say capitalism makes the rich richer.

One good example of a country with a socialist economy is Cuba. Cuba is one of the most Socialist nations, as it has a mostly state-run economy, universal healthcare, government-paid education at all levels, and a number of social programs. It does not have a stock exchange, this means nothing basically go out to an individual. One of the pros Socialism seeks to promote equality among people by providing them with many of the same social benefits. Examples of benefits that individuals in a socialist society are provided are educational, health care, and care for the elderly and the vulnerable as in the case of the Cubans. This creates a fair society. This is evidenced by the material improvement in the standard of living Cuban workers and peasants now enjoy. Another advantage of socialism is that it seems to be a way of achieving slow, but peaceful, progress. Socialism is economically inefficient as it does not reward entrepreneurs. Instead of rewarding entrepreneurs for creating wealth, it punishes them by making them pay higher taxes. Socialism can actually lower the living standards of all. More taxes mean a bigger government, bigger bureaucracy, and more power in the governments hands. Since governments are slow to change, big government tends to mean stagnation and less innovation that individual small companies could more easily attempt or adapt, this is also likely to make them power greedy as they control everything as the government. If such things such as power greediness are not well controlled it can leads to instability within the country.