Questions what is the main features of the socialist economy?

Disadvantages of capitalism?

Key words: inequality, market failure, monopoly
There are several disadvantages of capitalism. For example:
a) Monopoly power. Private ownership of capital enables firms to gain monopoly power in product and labor markets. Firms with monopoly power can exploit their position to charge higher prices.
c) Social benefit ignored. A free market will ignore externalities. A profit maximising capitalist firm is likely to ignore negative externalities, such as pollution from production. This can harm living standards.
d) Inherited wealth and wealth inequality. A capitalist society is based on the legal right to private property and the ability to pass on wealth to future generations. Capitalists argue that a capitalist society is fair because you gain the rewards of your hard work. But, often people are rich, simply because they inherit wealth or are born into a privileged class. Therefore, capitalist society not only fails to create equality of outcome but also fails to provide equality of opportunity.
e) Inequality creates social division. Societies which are highly unequal create resentment and social division.

7. 
   Differences between socialism and capitalism?
   

Key words: ownership, equality, prices
Answer: The main difference between capitalism and socialism is the extent of government intervention in the economy. A capitalist economic system is characterised by private ownership of assets and business. A capitalist economy relies on free-markets to determine, price, incomes, wealth and distribution of goods. A socialist economic system is characterised by greater government intervention to re-allocate resources in a more egalitarian way. Equality
Capitalism is unconcerned about equity. It is argued that inequality is essential to encourage innovation and economic development.
Socialism is concerned with redistributing resources from the rich to the poor. This is to ensure everyone has both equal opportunities and in some forms of socialism – equal outcomes.
Ownership
Capitalism – Private businesses will be owned by private individuals/companies
Socialism – The state will own and control the main means of production. In some models of socialism, ownership would not be by the government but worker co-operatives.
Price controls
Prices are determined by market forces. Firms with monopoly power may be able to exploit their position and charge much higher prices.
In a state-managed economy, prices are usually set by the government this can lead to shortages and surpluses.

8.