One of the advantages of market capitalism is efficient allocation of resources due to a major role played by the forces of demand and supply. Market capitalism also promotes hard work since individuals can reap the rewards of their labor. Market capitalism also encourages risk taking due to the potential of great rewards. The economic output is also higher under capitalism because there is greater emphasis on production efficiency as compared to socialism. As far as the disadvantages are concerned, some goods and services may be shunned by the market players due to limited profit potential and many such goods and services are public in nature. Another disadvantage of market capitalism is lower job security because the focus of businesses is profit maximization and they may not hesitate to lay off employees, especially, during difficult economic climate.
As far as socialism is concerned, one of the advantages is greater degree of economic equality as compared to market capitalism. Socialism also results in higher job security because one of the primary responsibilities of businesses is to provide employment to citizens. Socialism also does a better job of providing essential public goods and services to the public such as education and healthcare. As far as the disadvantages of socialism are concerned, there may be greater waste of limited resources due to several factors such as less accountability, bureaucracy, and higher job security. Socialism may also result in lower quality of life because the focus of the government is primarily on essential goods and services as opposed to luxuries. There is also lower degree of entrepreneurship in the economy due to factors such as high taxes, difficulty of starting own business, and unfavorable regulations such as labor laws that make it difficult to lay-off employees.
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