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There are several economic systems, which include capitalism, socialism, and communism. Capitalism is a form of the economic system based on the will of the owner to exchange his property on the market. Communism is whereby the owners own the means of production. Socialism is also a mixed system in that both the state and the individuals control it. Hirschman views capitalism as a form of dictatorship where people have to follow orders and no one dares to question the law. He continues to argue that communism depends on the views and opinions of the people making it democratic in nature.
According to the various researchers, there have been no existences of either pure capitalism or communism. This appears true in the case of Russians, as the workers did not own everything. In their case, the state had most of the powers hence making them employees. U.S also is not a pure capitalist because people suggestions matter as well as their opinions counts. Citizens are entitled to the right of speech and freedom of movement as long as they do not take the law into their hands.
Economic system deals with the production of goods and services. These include the product, production method and the consumers. In capitalism, everyone has the free will to do whatever pleases him as long as the key results are maximization of the profit. Competition from other firms is also a regulator factor. If the level of competition is high then the goods produced and the services rendered should be of the best quality.
Capitalism does not influence the economy in any way hence the poor and the rich are all in the same level. Allocation of public goods and services is according to the way the government pleases while the private ones the owners have the final say. In the Russian case, those that have their own properties can do whatever they please, with them, but in the case of the poor, they have to accept whatever comes their way. The production process depends on what the government or the rich individual produces. Sometimes the poor have to produce their own products because they are not able to afford those produced by the government. The survival for the fittest is the strategy since those with high incomes has greater opportunities.
Communism depends on common ownership of the resources. In this economic system, distribution of income is according to the various needs of the people. In Russian, government has control of most resources as well as the production means. This gives them the right to allocate resources to whomever they please as allowed by this system. A good example of this system is the Soviet Union. The labor done by employees’ yields value, used to improve the living standards of people by creating more job opportunities and additions to their wages. Those who have high positions receive proper treatment as well as enjoying different privileges like their kids going to the best schools.
These economic systems also have some factors that are common to each other. In both capitalism and communism, there are different personnel who bear the burden of the losses incurred. The slackers in capitalism bear the loss while in the case of communism; the victims are the entrepreneur leaving the only way out being democracy. They also share a common fact that they are all forms of market. Capitalism is depended on the level of competition in the market while communism focuses on the distribution of the various resources produced.
The profits in the capitalism structure belong to the private owner while those in the communalism are equally shared among all its members. This is so because the private owners have control over their resources while in the other case, the government is in control. The community also has the power to control the whole process of production. For communists, the freedom of an individual is below the society while the reverse is true for capitalist, which is also self-regulated. Everyone has equal rights in communalism while in capitalism; there is a gap between the rich and the poor.
Scarcity of resources forces individuals such as consumers and producers to make choices in their day-to-day lives regarding consumption of various goods and services. Since consumers have a wide range of wants, it is the duty of the producer to satisfy those needs. Communism ensures that they know their clients properly, and their preference to satisfy them. In case what they want is not readily available, an alternative is ready. On the other side, capitalism provides what it has produced without putting into consideration the preferences of the customers.
Each system has its own way of allocating its various resources. Communism allocates its resources from the ones that most need them to the least. In capitalism, those that are rich and have a high social status take the first priority. Those that enjoy these privileges also may be those that have their own private resources such that they cater for their own expenses. They are able to do so because they define their own destiny without having to consult anybody.
Capitalism is a stable form of economic system and it is internally stable in regards to its consistency with the behavior of human beings. In a capitalist nation, the system rewards those who work hard in the community and nobody waits for free packages. On most occasions, a norm embraced by capitalist nations is that, “nothing comes for free.” The only incentive that makes people to like this system is that anyone can succeed if they work hard. This system adjusts according to innovations in the market and obeys the rules of the supply and the demand curve. Large and diverse societies, for instance America tilts towards structures that adhere to hierarchy and capitalism adjusts to such social organizations. On the other hand, communism adapted in nations like Russia needs rules that will dictate the equal sharing of resources. This system is very effective in small population because diverse populations and hierarchies challenge equal resource allocation.
In conclusion, economic system differs according to the one that is in charge this includes either the state or the society. The system whereby the state or the government is fully in control is the capitalism while the one that the society is in charge is communism. Socialism is the combination of both state and society in control. Depending on a state, it is able to choose what suits them best because all economic systems have different advantages and disadvantages as discussed above. However, it is easy to note that communism can be remedied by a small society whose composition is homogeneous. At the same time, the hierarchies should be minimal. The second remedy dictates that communism can only exists if a nation or society prohibits external cultural influences and trade. Failure to block contact of a communist society with the “outside” world results into the collapse of such nations. A good example is the fall of the former communist giant state, the USSR. Capitalism can be remedied through the creation of systems for those who cannot fit into this form of economy. This system requires that the elite should be educates on giving out to charities to reverse the imbalance created by capitalism.