Introduction
The world’s nations implemented and changed their economic and political systems throughout the centuries. Three economic models are the most discussed, debated, and analyzed in the latest decades: capitalism, socialism, and communism. While these approaches are starkly different, many states have found a way to implement some elements of multiple or all approaches into their economic strategy. The 20th century saw a rise of capitalism, socialism, and communism and their clash – capitalism prevailed over the other two systems, but communist and socialist ideas remained crucial to societal prosperity.
Capitalism
Capitalism is an economic system based on a market relationship between businesses and individuals. As outlined by Adam Smith, this approach is based on self-interest and prosperity (“Economic Systems”). Therefore, the role of the government in regulating the market is minimal or non-existent.
In contrast, individuals and firms make decisions that increase their wealth or diminish their expenses. Some of the main principles of capitalism include the supply-demand balance, private ownership, and personal motivation. Thus, high-demand products are believed to increase in supply and price. Consumers have a free choice to purchase what they want, which regulates the costs of goods. Demand, supply, cost, consumption, and other elements rely on the market.
Communism
Communism and socialism take a different approach to the economy. Communism is a model in which the government controls the production and distribution of most goods. Therefore, government-owned fabrics and stores supply people with goods according to their needs (Resor).
The main principles here are the absence of privatized businesses, a planned economy, and self-reliance. First, as the government controls the means of production, there is no place for companies to operate in the market. Second, planning for production involves looking at people’s needs and distributing the workload accordingly. Finally, communist economies do not work within the terms of supply and demand, regulating costs at the government level.
Socialism
The third central economic system is socialism – a term often describing a combination of capitalism and communism. As a strategy that uses elements from both systems, socialism supports public ownership of factories but does not eliminate private businesses. The government may take on many important ventures, such as healthcare, education, banking, sanitation, and more (Amin).
However, small companies may exist to provide people with unique goods that they may enjoy or require. Socialism is similar to communism as it believes in equal wealth distribution and communal existence. However, it also gives more power to the workers rather than government officials.
Evolution of Systems
The three models were present before the 20th century, but the two world wars and other conflicts created tensions between nations with different economic systems. Europe, Japan, and the United States were firm supporters of the free market, and this model later spread across all continents, instituting some form of capitalism in most states (Abdelfatah and Arablouei; Amin). However, communism and socialism also contributed to the development of the world. The conflict between socialism in the Soviet Union and capitalism in the United States became tense, and the world was separated into two groups for several decades (Amin; Resor). As a result, the followers of both systems created alliances, creating a specific political and economic climate that can be seen today.
Conclusion
In conclusion, capitalism, communism, and socialism are distinct economic models. While capitalism gives power to private businesses and places all responsibility on the market, the other two models highlight the value of public ownership and equal distribution. However, communism restricts people’s ability to decide and institutes the government as the sole authority figure. In contrast, socialism increases citizens’ power and allows them to choose which needs should be met. The three models influenced the conflicts in the 20th century, with capitalism and communism dividing the world.
Works Cited
Abdelfatah, Rund, and Ramtin Arablouei. “Capitalism Has Become an Ideology in Today’s America. Here’s How It Happened.” NPR. 2021. Web.
Amin, Samir. “The Political Economy of the Twentieth Century.” Monthly Review. 2000. Web.
“Economic Systems: Capitalism, Communism, and Socialism.” This Matter. Web.
Resor, Cynthia. “Capitalism, Socialism, Communism: Distinguishing Important Economic Concepts.” Social Studies. 2021. Web.