Capitalism versus Communism

Capitalism versus Communism - Capitalism versus Communism...

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Capitalism versus Communism In any economic system, the manner in which an economy functions can be determined by a variety of factors. However, the most deciding factor of how goods and services are distributed and revenues are gained is the type of system which governs said economy. Of these systems, there are several variations, including socialism and fascism, however, the two most prevalent forms are those of capitalism and communism. Both methods serve to meet the same demands and work as the backbones of many nations, however, the manner(s) in which each system operates differ quite substantially between the two. To label one system as “better than the other” would be a hasty conclusion. Certainly, each has its drawbacks, but for a variety of reasons, each is beneficial in its own way. One may determine for themselves which system is the best, yet, time has shown that more often than not, capitalism is the most effective way by which to govern a society. In today’s free world, the economic system of capitalism is by far the most popular and is usually the most effective. There are many reasons for this distinction, including that under capitalism, it is simple to determine the state of the economy. Under capitalism, the economy has four main stages which comprise the business cycle. An economy may experience a period of growth called expansion, followed by a peak in economic activity. At this point a period of economic decline or recession ensues, and is sometimes followed by a period of near inactivity known as an economic depression. To determine the state of an economy and where it is headed, economic indicators, such as interest rates, unemployment, housing statistics, the Price Index (inflation), and the Gross National Product are used. However, the most simplistic explanation is that this system, more than any other, liberates business owners and individuals and empowers the consumer or the citizen to make the majority of economic decisions. Under capitalism, the
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economy is based upon the system of free enterprise, whereby an individual may own private property, may start a legal business as he sees fit, and may also participate in the market at his own desire. This practice gives much power businesses, but also, to consumer through the flagship of capitalism, money. Though it comes in many forms, this monetary factor serves a common purpose in all forms of capitalism, working as an incentive to fuel an economy. With this entity, consumers are, in essence, able to “vote” for which products are manufactured for them. Those goods and services which have the greatest monetary appeal are most often produced. In this manner, businesses exist to serve the wants and needs of the consumer, to which money is their incentive. With this revenue, businesses then pay taxes to the government, which, in turn, provides services to the public or businesses’ cliental. In this sense, the government is involved in business, but only to regulate, rather than to control. Another significant contributor to the success of capitalism lies in its subsystem of
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Capitalism versus Communism - Capitalism versus Communism...

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