quality goods. Demerits of Capitalism . Concentration of Wealth and Income: Capitalism causes concentration of wealth and income in a few hands and thereby increases inequalities of income. .
Wastage of Resources: Large amount of resources are wasted on competitive advertising and duplication of products. . Class Struggle: Capitalism leads to class struggle as it divides the society into capitalists and workers. .
Business Cycle: Free market system leads to frequent violent economic fluctuations and crises. . Production of non essential goods: Even the harmful goods are produced if there is possibility to make profit from them. .
. Socialist Economy (Socialism) The Father of Socialism is Karl Marx. Socialism refers to a system of total planning, public ownership and state control on economic activities. Socialism is defined as a way of organizing a society in which major industries are owned and controlled by the government, A Socialist - - Introduction to Macro Economics economy is also known as ‘Planned Economy’ or ‘Command Economy’.
In a Socialist economy, all the resources are owned and operated by the government. Public welfare is the main motive behind all economic activities. It aims at equality in the distribution of income and wealth and equal opportunity for all. Russia, China, Vietnam, Poland and Cuba are the examples of socialist economies.
But, now there are no absolutely socialist economies. Features of Socialism: . Public Ownership of Means of Production: All resources are owned by the government. It means that all the factors of production are nationalized and managed by the public authority.
Karl Marx - Father of Socialism