A Comparative Analysis of Capitalism, Planned and Market Socialism

This essay provides a comparative analysis of capitalism, planned socialism, and market socialism, highlighting their key characteristics, advantages, and disadvantages. It uses examples like the USA (capitalism), China (planned socialism), and India (market socialism) to illustrate the practical implications of each system. The essay argues that no economy exists in a pure form of any single system and that governments must strategically adopt elements from each to achieve inclusive growth, balancing economic freedom with social equity. It also addresses the potential pitfalls of each system, such as monopolies in capitalism, slow growth in socialism, and inequality in market socialism, emphasizing the need for a balanced approach tailored to the specific needs of each society. Desklib provides a platform to access similar solved assignments and study resources for students.

CAPITALISM, PLANNED SOCIALISM AND MARKET SOCIALISM
Capitalism, Planned Socialism and Market Socialism

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CAPITALISM, PLANNED SOCIALISM AND MARKET SOCIALISM
The triple transition scheme of eastern central Europe involved transition of the
economy through three phases viz. inclusion of democracy in politics, adoption of market
economy and finally establishment of a civil society (Offe, 2004). Critics have had different
opinions about this transformation over the decades. Nevertheless, evidence of all these
systems is seen today in most economies wherein a confluence of capitalism, planned
socialism and market socialism are witnessed at varying degrees.
A classic example of capitalism is that of the economy of the USA (Raeder, 2018).
The USA government has advocated economic freedom among organisations and freedom of
choice to consumer. Freedom of choice leads to tough competition, better products and
optimal usage of resources. This facilitates faster economic growth and improvement of
living standards. However, if unchecked, capitalism could lead to creation of monopoly or
oligopolies, not to speak of scandals arising due to the need for excellence like in case of
Enron. This could also lead to an unequal social divisions and higher economic fluctuation as
has been witnessed post the 2009 financial crisis.
Again cases like China, which thrive on planned socialism, defend their stance by
advocating that economic inequality amidst economic growth is not sustainable (Saith, 2008).
Accordingly, the central authority plans the economic activity and production by projecting
the requirements of the society. Advantages of socialism are social equity which helps to
reduce wealth disparities, unemployment and inflation. Besides, chances of production
anomalies or business fluctuations is less. However, socialism results in slow economic
growth, less innovative or entrepreneurial initiatives and lower competition due to lack of
motivation among individuals. As can be seen today, with greater power in the hands of

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CAPITALISM, PLANNED SOCIALISM AND MARKET SOCIALISM
government, there has been neglect of rural developments leading to greater inequalities and
infringement of freedom of society through manipulation of the Hukou system.
A third instance is found in some economies which follow market or liberal socialism,
a confluence of socialism and capitalism as has ben seen in India (Griffiths, 2006). Here,
enterprises are publicly owned but managed with a profit motive and hence influenced by
market dynamics rather than excessive government intervention. The advantage of market
socialism are markets perform efficiently providing consumers the freedom to choose and
democracy is maintained. Companies which fail to perform as per public needs may be
socialized. For example, the rail transport in India. Inclusive planning by government, in
these instances, provides the required impetus. This is a more feasible solution compared to
socialism since profit maximization provides motivation to the entrepreneur. However,
Inequalities could rise if too much attention is paid on profits as has been recently evident in
India’s case.
We do not find pure form of any capitalism, planned socialism or market socialism in
most economy today (Raeder, 2018). For example, in the USA, programs like Medicare,
provisions for unemployed persons etc. are examples of hints of socialism provided to bring
about equality in the society. Again, in China, many private companies have emerged which
solely perform through profit motive. In case of India, nationalized banks function alongside
private banks providing the necessary competition required for fair functioning. It is the
responsibility of the government of an economy to gauge the requirements of their society
and adopt the elements of each of these theories accordingly for a more inclusive growth.

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CAPITALISM, PLANNED SOCIALISM AND MARKET SOCIALISM
Bibliography
Griffiths, S. (2006). Market socialism in retrospect. 12(1), 25-44.
Offe, C. (2004). Capitalism by Democratic Design? Democratic Theory Facing the Tripie
Transition in East Central Europe. Social Research, 71(3), 501-528.
Raeder, L. C. (2018). Freedom and Economic Order: Capitalism and Socialism in Theory
and Practice. Lanham: Rowman & Littlefield.
Saith, A. (2008). China and India: The Institutional Roots of Differential Performance.
Development & Change, 39(5), 723-757.