What is the difference between capitalist and socialist economy.
Capitalist economy: It involves private ownership of economic activities, private interest and the profit motive, in this all the factor of productions are owned by the private persons and they utilise them to maximise their benefit, the government have minimum control over these. It increases competition among people to maximise their benefit, which provides freedom of choice to choose profession work and provide more options to consumers. Every individual work in the self-interest of profit making. It divides the society in 2 classes, rich and poor people and over the year class difference increases, U.S.A, England, France, etc. have a Capitalist Economy.
Socialist Economy: A system of the economy where all means of production are owned by the whole society, decisions are taken by the central authority and the collective interest is desired, it is also called centrally planned economy or even economy. The purpose of this economy is collective benefit and welfare of society, in this economy, all the factors of production are owned by a central authority, called the government, which decides what to produce and how much to produce, all the resource are owned by the government. As the government produces only those goods which are for collective benefits, the consumer has fewer options available. It works on the principle of equal pay, equal wages which reduces the class gap, but people have less motivation in this economy. China had adopted this model of the economy earlier.
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