DIV4/6: CAPITALISM AND SOCIALISM

CAPITALISM

This refers to a situation where all the means of production like industries, schools, banks are owned by private individuals.

MERITS

• Capitalism encourages people in the country to work very hard so as to get the basic necessities of life like food, clothing and medical care.
• Capitalism is of advantage because it allows private ownership of property which eventually may lead to presence of employment opportunities to the people in the courts.
• Capitalism is good because it leads to good quality production of goods in the country due to presence of competition.
• Capitalism is advantageous because it reduces on the government expenses as majority of the means of production is under private investors. This gives way for the government to concentrate on the few institutions it can manage well like security.
• It plays a vial role in widening the government revenue collections normally got from the private institutions such as schools, hospitals, industries and bars.
• Capitalism is good because it allows many investors to come and invest their capital in a given country.
• Capitalism plays a very big part of increasing people’s creativity. People have opportunities of setting up personal small scale businesses.  Thus reducing on unemployment rate in the country.
• Capitalism is advantageous in that the system helps the government to be supplemented by the private owners in provision of services like health and education and road improved where it would be so hard.

• It is a good system because it also promotes the tourism sector. As more foreigners come as investors, even the tourism industry is boosted as these foreigners also bring in foreign exchange.
• Also capitalism is of advantage because it allows most of the people in the country to respect the principle of saving in case they work hard and earn a good salary, wage, profit or commission.
• In a capitalist state, workers tend to have proper accountability and proper use of resources. The employers tend to be very strict with the employees such that they produce qualitative and quantitative products and give clear accountability.
• Capitalism enables consumers to have a variety of products on which to make selection. Thus each company works hard always to have the majority customers.  This competition applies mostly in schools and hospital services offered.
• In a capitalistic business, workers are encouraged to be honest if they are paid in a just wage.
• Capitalism has encouraged/enabled many people to jump from one class (poverty line) to a higher class of middle income earners.
• Capitalism enables business persons to get surplus or abnormal profits from the sell of excess produce beyond boarders. For example BIDCO in Jinja gets a lot of profits from selling soap and cooking oil beyond Uganda to neighbouring states like Somalia, Sudan, Rwanda.
• Capitalism helps t control monopolistic tendencies. So its rarely heard that there is scarcity of goods because of the many producers existing.
• In a capitalistic state, there is freedom of the entrepreneur to decide on the kind of goods and services to offer on the market but provided he/she fulfills government conditions standards and even pays taxes.
• In a capitalistic state, its easy to make decisions by the business owner(s). The bureaucracy as found in government controlled enterprises may not be necessarily applied here.
• In capitalism situation, production and consumption of goods isn’t controlled by the government but the demands of market consumers and owners.

SHORT COMINGS OF CAPITALISM

• Capitalism tends to promote unnecessary competitions for resources or customers resulting into hatred of one another. For example during the preparation for the wedding of Kabaka Ronald Muwenda Mutebi II of Buganda in 1997 coca-cola donated 700creates of soda and demanded that Pepsi cola products be rejected or else they don’t give theirs.
• In a bid to accumulate as much profits as possible, there has been high duplication of products. Many products which are duplicates are found on market from the same manufacturers especially from China.
• Sometimes capitalistic economies produce poor quality output because of the desire for profits. For instance n Uganda its had to buy original smart phones or flat iron.
• Capitalists’ desires for greater profits make them underpay labourers in order to minimize costs but on their side, they accumulate huge profits. For instance Mehta companies make a lot of money in sugar production but pay a very small wage to its employees.
• Capitalism is disadvantageous because it widens the gap between the rich and the poor. For instance many houses or mausion found in Muyenga hills and Akright estates are for the rich people who have partly accumulated their capital from exploiting their poor workers.
• The capitalist states like USA have created more gaps for the poor. This has pushed many people to streets and even carrying out pick-pocketing.
• Very oftenly capitalism erodes the moral fabric of society since its motivated by profits. For instance in France there are many people who have invested in Brothels and they came to Africa and recruited women to serve as prostitutes there.
• Cases of forced reshuffles or retrenchment of workers are common. The entrepreneur easily cuts off some workers where he/she sees that labour force isn’t balanced with needed output.
• Capitalistic economies make workers a beast of burden, who is compelled to work been on days of worship like Sabbath. For instance at Uganda breweries Ltd production isn’t paused/stopped/suspended because people want to go church on Sunday.
• Capitalism sometimes doesn’t promote regional balance especially rural areas aren’t well catered for.

SOCIALISM

It refers to a situation where all the means of production . That is to say, industries, banks, schools and factors are owned by the state.

MERITS OF SOCIALISM

• Socialism brings about equal regional balance in the country. The government tends to plan well for both rural areas and also urban centres.
• Socialism is relevant because it reduces on divisions among the people in the city . That is to say, the poor and the rich.
• Socialism is advantageous in that it reduced on foreign dependence in the country since in most cases socialistic societies are against foreign aid.
• The system of socialism is good because it reduces inflation tendencies to take place in the country since in most cases the government sets price for the goods.
• Socialistic societies are advantageous because it reduces on the high rate of illiteracy to take place in the country since education is universal.
• Socialist societies are relevant to the extent that they reduce on the high rate of death due to existence of free medical services . That is to say, free immunization.
• It is an advantage because it plays a very big role to reduce on the high rate of substandard goods in most cases the government normally intervenes in the production of the goods.
• Socialism has an advantage of controlling the high rate unemployment in the country. It’s the government in most cases which employs the people in various government sectors like teachers and doctors.
• Also socialism reduces on unnecessary competition in the country since it’s the government responsible to set up some firms where necessary.

DEMERITS OF SOCIALISM

• Socialism reduces on government revenue collection base since it discourages private ownership of property.
• Socialism is of disadvantage because it encourages to take place in the country among the people since it’s the government to extend all services to the people.
• Socialism is irrelevant because it denies people the fundamental human rights . That is to say, right to property.
• Also socialism system is a demerit because in most cases it acts as a road block for the economic development to take place in the country due to absence of competition.

• The system of socialism is irrelevant because it reduces on people’s creativity as it’s the government only to plan for its people which eventually increase the rate of unemployment in the country.
• Socialism in most cases reduces in the rate of tourism development in the country since government doesn’t respect foreign investors.
• Socialism is irrelevant to the extent that it takes log periods of time for the service to be put in consideration since it is characterized by high levels of consultations . That is to say, regular debates.
• There are a lot of corruption practices among socialistic states. Officials tend to misuse government funds for personal gains because there is little supervision done.
• In socialistic states, tribalism is highly practiced by the government officials. Better services like good roads, hospitals and schools are likely to be more developed depending on the president in power.