(a) The first and the most important distinction between Capitalism and Socialism is that “the means of production in a Capitalist economy remain in private hands.” (the capitalists or the industrialists). The Socialist thinkers hold that the material resources of the country (land, coal, iron, railways, road- transport, and banks etc.) should be nationalised, i.e., brought under State-control.
(b) The spirit of capitalism is Market Economy. The economic life is organised according to the forces of demand and supply. The capitalists produce even those goods which are of no utility for the society. It leads to the wastage of valuable resources. The Socialists, on the other hand, placed too much emphasis on a planned economy.
(c) Profit maximisation is the main motive for an industrialist. Under a Socialist economy even such things shall be produced, for the benefit of the poor and the needy, whose production costs more and yields lesser gains or no gains at all. The State, through Fair Price Shops, sells goods even at a loss, e., a) a price which is less than it costs to produce some of the goods.
