|
S. No |
Characteristic of the System |
Capitalism |
Mixed Economy |
Socialism |
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|
1 |
Economic Markets |
Freedom to compete with right to invest, free competition. |
Limited competition with State- owned industries. |
Absence of competition, State-owned markets and industries |
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2 |
Individual incentives |
Profits and wages in relation to one’s ability and willingness to work. Goal is personal profit. |
Profits, recognized, wages set by State, based on workers’ needs. Major gains accrue to State. |
Profits not allowed. Workers urged to work for glory of the State. Bonuses for exceeding quotas. All gains accrue to State which distributes among individuals. | ||||||
| 3 | Capital Sources |
Capital invested by owners who may also borrow on credit. Capital may, be reinvested from profits. Depreciation is legal. |
Obtained from owners and from State-issued bonds for State-owned industries. Depreciation permitted. | State provides all resources to start a business owned by the State. No depreciation. | ||||||
| 4 | Labor |
Workers generally free to select an employer and an occupation independent union. |
Workers allowed selecting occupation; State planning encourages employment. Restricted right to unions. | The State determines one’s employer and employment. State controls occupational choice and unions. | ||||||
| 5 | Management |
Managers selected on basis of ability. Managers have freedom to make decisions. |
Managers in State owned industries must answer to the State. Non-monetary rewards emphasized. | Key managers must be party members to qualify. Absence of freedom to make decisions. Managers appointed by the State. | ||||||
| 6 | Business Ownership | Individuals have a right to own a business and to contract with others. Private ownership of means of production. | State owns basic industries including steel, mines and transportation. Other businesses may exist privately |
State owns productive capacity including communes. |
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| 7 | Risk Assumption | Losses assumed by owners; May transfer business risk to other business through insurance. | People assume risks of State-owned industries. Losses taken from taxes. |
Economic production owned by the State. Risks assumed by the State, losses reduce standard of living. |
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| 8 | Central problems | Decided market mechanism By | Decided by a combination of market system and State planning. |
Decided by centralized planning by the State. |
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| 9 |
Consumer’s sovereignty |
Full freedom of choice
|
Limited freedom of choice. |
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