Economic Systems: Capitalism & SocialismOwnership is key to both capitalism and socialism. In a capitalist economy, the means of production, facilities, technology, land etc., are privately owned. The primary goal is for the owners to make a profit (Smith, 1910). Though that is not to say that owners are the only beneficiaries in aa capitalist economy. According to George Reisman in his Treatise on economics, you do not have to own a means of production to receive their benefits, you merely have to be a consumer in the marketplace. He says there is a general benefit when consumers can buy the products produced by the capitalists (326).In contrast, a socialist economy is distinguished by the major means of production being owned by the state. People do not work for their own good, but for the good of everyone else as well. Wealth that is earned is then distributed among everyone in the society. Some of the advantages of a capitalist system include greater consumer choice in the marketplace. Economic efficiency as well, since goods and services are produced based on demand, it gives producers the incentive to cut costs and avoid waste. Economic growth is also possible in a capitalist system. When the economy grows and the GDP (gross domestic product) rises, living standards are observed to increase as well.As well as advantages, there are some disadvantages as well. These include the creation of monopolies. When a business business becomes a monopoly they can, and most likely will, use this power to charge more for their products, even if their production costs haven’t increased in any way to justify their increases in price. Another disadvantage is inequality, a fact that socialism is most interested in.The advantages and disadvantages of Socialism tend to be the opposite of capitalism. Where capitalism is generally believed to be efficient, many believe socialism not to be. The belief being that without the expectation of increased profits, producers will have little motivation to innovate or improve their products.One of the benefits of socialism is great equality. Socialism reduces wealth disparities by distributing wealth. Also, there could be less waste in production when the state dictates what Capitalism and socialism both have their advantages and disadvantages, which is why most real-life economies are not 100% capitalist or socialist. Most economies tend to be mixed, where the government doesn’t have complete control over the economy, but does plan how some resources will be used, will intervene to prevent monopolies, and implement regulations. Even the United States which is generally acknowledged as having a capitalist economy has some characteristics of a central-planned system (State). The government has partial control over education with public schools. The U.S. government also provides subsidies to certain industries, for example, the energy and agriculture sector. Individuals, depending on their profession, must sometimes acquire a government-approved license to legally work in their field, real-estate agents are an example. Almost every company is affected in some way by government policies, labor laws being a major one.Capitalism is a market-based economy, where the free market reigns, and the government has a very limited role. Most capitalists believe that the main functions of government are limited to maintaining law and order, providing national security, and protecting the right to private property (Smith). In a free market decisions to produce, invest, distribute, and even the prices of goods and services are guided by supply and demand. Supply and demand is determined by the interactions between producers and consumers in the economy. For the most part, consumers always try to get the best return on their investment. Basically, they try to get the best value for their money. Producers, on the other hand, look for the best price for their products that will turn over the largest profit for them.Socialism is a central-planned economy, where the government makes decisions for the market, since the socialist belief is that markets don’t operate in the interest of the people on their own. In turn, the government decides how much and at what price goods and services are to be produced.