Q.Evaluate the Capitalist and the Socialist pattern of industrialization.

 Q.Evaluate the Capitalist and the Socialist pattern of industrialization.

 

Approach

    • Start the answer by briefly discussing capitalism and socialism.
  • Discuss the factors leading to the evolution of the Capitalist and the Socialist patterns.
  • Conclude Suitably.

Introduction

Capitalism is defined as an economic system in which the means of production, trade, and industry are owned and controlled by private individuals or corporations for profit. Also known as the free-market economy or laissez-faire economy.

Socialist Economy is defined as an economy in which the resources are owned, managed, and regulated by the State. The central idea of this kind of economy is that all the people have similar rights and, in this way, each and every person can reap the fruits of planned production.

Body

Capitalist Pattern of Industrialization

    • Capitalism is the first stage in the history of the world to coincide with the phenomenon of industrialization in its full brown form together, the new economic institutions (like banking insurance) and the new technology that transformed the world.
  • As a result of the renaissance in Europe in the seventeenth century, the methods of science, philosophy, and trade were being applied for utilitarian purposes.
  • This led to the new discoveries of markets, and subsequently the industrial revolution (dominated by heavy machinery which repealed manpower) in European countries.
  • The industrial revolution turned production by the masses to mass production.
  • However, this capitalist mode of production resulted in inequalities between the classes and imperialism across the globe.
    • This led to the development of the antithesis of capitalism by Karl Marx and Frederich Engels. However, socialism gets manifested after the Russian revolution in 1919 and the subsequent establishment of the USSR (now Russia).

 Differences between Capitalism, Socialism and Communism

Differentiating Factors

Capitalism

Communism

Socialism

Ideology

Maximisation of profit by any means necessary. It also believes in Laissez-Faire, a philosophy which emphasizes on leaving circumstance to run their natural course without any external intervention

From each according to his ability, to each according to his needs

From each according to his ability, to each according to his contribution

Economy Planning

In capitalist societies, the economy is planned as per the functioning of the free-markets

The economy is planned by the Central Government

The economy is planned by the central government

Ownership of Economic Resources

Private ownership of economic resources and property is actively encouraged with little to no government intervention

All economic resources are publicly owned and controlled by the government. Individuals hold no personal property or assets.

Individuals can own personal property but all industrial and production capacity is communally owned and managed by a democratically elected government.

Class distinction

There exists a distinct class whose standing in society is measured by the material wealth in their possession

Class is abolished. The chances of one worker earning more than the other are non existent

Classes exist but the differences between them are greatly reduced. It is possible for some people to earn more than others.

Religion

As per the ideology, it is indifferent towards religion, but bias thus exist towards religious groups who are well-off or as rich as another religious group

Religion is effectively abolished

Freedom of religion is allowed

Welfare

The welfare system is available only to those who have the wealth to pay for their services. 

Supports widespread universal social welfare with an emphasis on public health and education

The state will be for the welfare of everyone in the society without any discrimination 

Origins

The modern form of capitalism can be traced to the early Renaissance period in the 15th -16th Centuries. The wealthy merchants of Italian city-states engaged in small industry and wage-labour practices at the time

Although the concept of egalitarian societies existed since the time of Ancient Greece, the foundations of modern-day communism were established in 1848 by the German Philosopher, Karl Marx (May 5th, 1818 –14 March 1883).

The economy of the 3rd century BC Mauryan Empire was described by economists as “a socialized monarchy” and “a sort of state socialism”.

It became more prominent towards the end of the 18th century and after 1848

 

Socialist Pattern of Industrialization.

    • The Socialist pattern of industrialization emphasizes co-operative enterprise and various forms of community enterprise that would benefit the public as a whole.
  • It implied activity to strengthen trade unions, friendly societies, and labour syndicates with or without the assistance of political parties.
  • Nationalization was looked upon as a way of constituting an area of activity where the workers had no say.
  • Governments evolved with state control of the economy. These governments used public welfare as their reference point.
  • Hence the economy as it matured was called a planned economy.
  • However, most socialists had an abiding fear of the state and state control as a possible source of intensification of exploitation rather than a solution to it.

Conclusion

Capitalism leads to the creation of wealth but it advocates distinction between the haves and have-nots. Socialism fills the gap between rich and poor, but at the same time it wipes out the encouragement to work hard, due to which the country's Gross Domestic Product falls down and everyone turns out to be poor. Thus, as every coin has two aspects, it is very difficult to say which system is better than the other.

 

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