Capitalism is an economic system based on private property and the factors of production, while the distribution of manufactured products, goods, services is provided mainly through the market. Capitalism shares free enterprise, competition, the desire of producers and sellers of services, goods, to make profit.
In more narrow sense, capitalism is an economic and social system, which is closely linked to the socio-political system of the country, and sometimes highly prejudicial to the last.
Socialism (French socialisme, Lat. sociais meaning public) is the first phase of communist formations. The economic basis of Socialism consists of public ownership by the means of production, the political basis is the power of the masses of workers under the leadership of the working class led by Marxist-Leninist ideology. Socialism is social order, eliminating exploitation of man by man, and gradually evolving to improve the well-being of the people and the full development of each member of society.
Capitalism can take different forms:
- Private capitalism refers to the means of production and the profits they make (including by hired labor) belong to individuals.
- Community capitalism is the means of production owned by community and the profit are shared between the members of the community. The community members are the owners of a part of the means of production, but the community does not become an owner of this part. Community capitalism, is a set of closed joint stock companies.
- State capitalism, the means of production are owned by the state, and there is no profit at all (due to the lowest prices to offset the cost of goods only), or are assigned by the state and are distributed among citizens in the form of various allowances.
That is, capitalism is a system of economic relations, the purpose of which is the accumulation of money, while socialism is a socio-political system characterized by interaction and mutual responsibility, and, as a consequence, and mutual assistance. Under capitalism, the surplus value is adjustable only by supply and demand, resulting in some part of the population is in loss (ruined) if there is no increase in the money supply equal to the amount of surplus value. If the money supply is increased, so that no one was in the loss, then the excessive money supply is formed, which causes crises that occur from time to time in states with a predominance of the private capitalism.
Under socialism, all three kinds of capitalism are possible, but the private capitalism should have restrictions consisting in the private use of the means of production without involving the employment of the labour force. The administrative restrictions must be imposed on the amount of surplus value, to not form the excessive money supply and, subsequently, not to cause crisis, and the accumulation of money supply should correspond to the expected development of the society.
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