This results in supposed benefits for a free market economy as well as society in general when individuals compete to make wealth and innovate in their respective niche to get ahead of their competition.Ĭapitalists believe that western advancements in technology and other sophisticated services are primarily a result of capitalism. The assumption stresses that human beings are rational actors who want to make wealth and multiply it and are primarily driven by this impulse. The assumption rests on Adam Smith’s treatise : An inquiry into the nature and causes of the wealth of nations, where capitalism traces its roots. Socialism is thought to impede innovation because it is thought to take away the incentive to innovate as society loses its competitive edge due to collective ownership of means of production rather than individualistic and private ownership.
In practice however, it is not clearly defined, is subjective and encompasses a whole range of different economic policies and even exists parallel to capitalism in some countries through what can be described as a pragmatic approach to socialism. This is the textbook definition of socialism. The core essence or principle in socialism is to shape society based on cooperation and welfare rather than on free market capitalist competition and “exploitation”. Socialism is an economic theory that stresses the ownership of means of production by society instead of private individuals. You can skip our detailed analysis about state of socialism, and go directly to the 5 Socialist Countries that Have Succeeded. In this article, we take a look at 15 socialist countries that have succeeded.
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