Capitalism and Socialism are two differing methods of wealth distribution. Where the capitalist system is strongly individualized, Socialism places the responsibility of distributing the wealth on the shoulders of the government. The system of capitalism has its own strengths and weaknesses. For example, in a capitalist system, people are encouraged to do well and make things better. In the system of socialism, the drive to succeed is significantly weaker due to the limits on gain. On the other hand, socialism provides to all equally, where a worker in a capitalist system may find themselves without money if they cannot perform in the work environment. While the American economic system has its weak points, the benefits often outweigh the downsides for the citizens.
The powerful force behind capitalism is that there are no limits on gain. A worker who starts sweeping streets may one day become the owner of a multi-million dollar corporation. The amount of money you get is only controlled by your skills and ability to work. Therefore, people are encouraged to do well, in order to gain. Rather than having the government give them work assignments, a worker is free to do whatever he believes will make him the most money. This drive to do well creates a nation of people who will constantly seek new and better ways to do things, in order to gain more. In a society that pushes for betterment, people often have a high quality of life.
One of the best ways that capitalism provides this quality of life is the user driven market. In order to succeed, a business in the capitalism system must anticipate and deliver the customers’ needs. Since the government is not deciding the direction of goods, businesses and consumers decide the flow of goods. This control of goods and services is done through a process of supply and demand. When the demand for a good or service goes up, and more people begin to make it, the price will naturally fall within an average. With this, the price and availability of goods is determined by the people buying and selling it.
The user driven nature of capitalism is also its greatest weakness. Unlike socialism, gaining wealth in capitalism is solely based on the person. A worker or business that cannot compete in the market will not have the money to survive. In the capitalism system, the changing nature of a market could render a product obsolete, or create a better method of providing a service. When the market changes, those who do not, or cannot, adapt to the new conditions quickly become overtaken by the people who do adapt. In addition to the market flucations, it is not uncommon for those who do have money and goods to gain even more, even as the people who do not have money lose even more of it. Capitalism is a system of opportunity, but often at others expense.
A second problem lends into the first, the lack of stability for the citizens. People who fall between the cracks of the competitive drive often end up with nothing. Just like there are no limits in capitalism, there are no guarantees. Much as a poor man can become a millionaire, a millionaire can lose everything he owns in a matter of days. While such drastic events rarely occur, it is not uncommon for someone with a stable job to lose that job because the company has to change to meet the demands of the market. The government of a capitalist economy has minimal power to prevent the sudden loss of wealth and quality of life. The very lack of control that makes capitalism a free system prevents it from protecting the citizens from loss due to market changes.
Capitalism works best when combined with the political system of Democracy. In order for a free market to truly be user-driven, the government must be elected by those same consumers. In a free country, people are driven to collect and become better than their neighbors. To fill this desire to collect more goods, people would provide goods and services to trade for more money and goods. In addition to this, a person with the desire to collect stuff would also want a government that would allow them to gain more. In this way, a free government and a free economy support and maintain each other.
Now with a basic understanding of capitalism and how it works in America, we can see that capitalism is the best economic system to start a business in. While it does lack the security of socialism, small businesses have much more to gain under a capitalist system. In fact, where a socialist country would provide a business with what to produce and how much, capitalism allows the freedom to choose how to distribute goods and services. This freedom, while a little overwhelming to the new business owner, is a great asset to becoming wealthy. With the freedom to produce new ideas to market to customers, the quality of life will naturally increase. As a result of this improved quality of life, people spend more to continue to improve their own quality of life. An innovator in this self-sustaining system could stand to make a lot of money by providing products and services in new and better ways.
This was written by me. All my words.