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Question
Differentiate between the capitalist and the socialist models of development.
Solution
Capitalism Socialism Philosophy: Capital (or the ‘means of production’) is owned, operated and traded for generating profits for private owners or shareholders. Emphasis is on individual profit rather than on workers or society as a whole—from each according to his ability to each according to his contribution. In Socialism, emphasis is on profit being distributed among society or workforce to complement individual wages/salaries.
Economic System: Market-based economy combined with private or corporate ownership of the means of production. Goods and services are produced to make a profit, and this profit is reinvested into the economy to fuel economic growth. The means of production are owned by public enterprises or cooperatives and individuals are compensated based on their contribution. Production may variously be coordinated through either economic planning or markets.
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