While both capitalism and socialism are different, each of this system has its advantages. Capitalism, for example, is better than socialism in the way it addresses incentives and information (Mueller, 2012). Concerning incentives, the profit motive that capitalists pursue is a reliable way of increasing production, cutting expenses, inventing, and meeting unmet wants. While companies can motivate people to work for things such as moral commitments, this technique cannot be applied widely for a country’s economy given that transforming the psychology of people using propaganda fails to produce long term effects. Another advantage of capitalism is that the system uses local information better and disseminates global information inexpensively. The information does not move to a central bureau but is disseminated to various stakeholders in the economy through the price system. Prices automatically emerge due to exchanges in the market.
Socialism is also better than capitalism in areas such as wealth and income inequality, literacy levels, and basic healthcare. The production means in socialism are owned socially to allow all people to have equal access to the required needs to live better lives. The result of this is that people in socialist societies have less income and wealth inequality, can equally attend any school to acquire education, and can equally access basic health care. Socialism offers economic equality where ordinary people control the economic resources and structures. Socialism ensures justice for all by eliminating obstacles to opportunities to allow all people, not just the privileged ones to access major resources and basic needs, which leads to social equality without significant differences in income and wealth, the education level, and access to healthcare (Lott, 2016). While socialism is not perfectly egalitarian as it sometimes supports unequal income distribution for unequal work, such as in the USSR, the system still encourages greater equality since land and financial capital belong to the state.
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References
Lott, B. (2016). Relevance to psychology of beliefs about socialism: Some new research questions. Analyses of Social Issues and Public Policy , 16 (1), 261-277.
Mueller, D. C. (2012). The Oxford handbook of capitalism . Oxford: Oxford University Press.
