Question

Which of these can be considered main difference between capitalism and socialism?

• A. Capitalism exploits the worker and socialism exploits the property owner.
• B. Capitalism relies on the market to make economic decisions and socialism uses central planning
• C. Capitalism grows through rent seeking and socialism grows through government direction
• D. Capitalism leads to communal tension but socialism leads to social harmony

Answer 1

The correct option is B Capitalism relies on the market to make economic decisions and socialism uses central planning

The main difference is that Capitalism relies on the market to make economic decisions and socialism use central planning because:

1. Capitalism lets the market and its participants make their own economic decisions without any governmental interference

2. Whereas in Socialism, the government plans everything ensuring the social welfare of all and central planning of the how the resources will be used and distributed becomes extremely important.