Within any growing economy, every system share similar goals and that is to achieve efficiency whether it is industrial production, military, or trade, each system has one way or another to achieve it.

The main difference between capitalism and Socialism is how far the government intervenes within the economy. A capitalist economic system is characterised by private ownership of business and its assets. In capitalism, an economy relies on free-market which gives individuals the ability determine, price, incomes, wealth and distribution of goods to achieve economic efficiency. In a socialist economic system, liquidable goods are owned and controlled by the government and determine how resources are distributed to society equality wise. In theory, both economic systems are driven by strong ideas and principles that both have similar core ideas but opposing views. Based on the principle of social rights and the system of laissez-faire, meaning to “let it be”, capitalism opposes complete government intervention in economics because capitalists believes it to be inefficient. With little to no restriction on who may own capital, production of any goods is privately owned, operated, and traded to generate profit for the owners or shareholders.

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Capitalism puts emphasis on individual profit rather than the workers or society as a whole. In a socialistic standpoint, all individuals should have access to basic needs of consumption and public goods to allow self-actualization. Industrial manufacturers act as a collective effort for the government and in return, these industries must benefit society as a whole. Over time, the concepts that defines capitalism has changed immensely, as well as being dependent on the political perspective adopted by the individuals who’ve greatly influenced the economic systems. Considered to be one of the first theorist of modern capitalism, Adam Smith proposed that the free market, where producers are free to produce as much as they want and charge consumers the prices they want, would result in the most efficient and desirable economic outcome for consumers and producers alike due to the “Invisible Hand.

“(Prabhat S.)Smith’s reason for this proposal was that each individual will try to maximize their benefits and capital by reacting to certain incentives and spending their resources based on the value of their benefits. Smith theory, the economy market will always be in equilibrium and the benefits for consumers as well as producers would be maximized, therefore producing more wealth among nations.


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