In modern societies, there are mainly two types of economic systems, which are socialism and capitalism. However, in practice, no society is purely socialist or capitalist. Instead, societies tend to combine the elements of both systems, though the degree of mixing the systems vary from one country to another. Here is how socialism and capitalism economic systems differ.
Capitalism
In the capitalist system, the means of production, including technology, tools, land etc., are privately owned. The system’s goal is the quest for personal wealth and profit; hence when individuals strive to maximize their wealth, the whole soc
iety benefits. Businesses compete to attract demand for their services and goods by creating superior products, lowering prices and advertisement. Hence, this competition ensures that the people get better products at low a price which is to the benefit of society.
Socialism
This is an economic system where the means of production are owned collectively and in most cases by the government. The main goal of socialism is that work is done for the collective good of society but not personal wealth or profit. It’s considered that the needs of society supersede those of an individual.