Compare and contrast the two major economic systems. Identify a shortcoming of e

(1) Capitalism is based on the private ownership of the means of production, the pursuit of profit, and market competition. Pure capitalism, also termed laissez-faire capitalism, exists when market forces operate without government interference. Welfare or state capitalism, exists when the means of production are owned by private citizens to pursue profit, but they must operate under market restraints that limit what they can produce or sell. This system of laws is designed to protect the welfare of the population. One of its major shortcomings, however, is that it increases the levels of economic inequality in society.

(2) Socialism is based on the public ownership of goods and services without a profit motive. Everyone works for the government, and a central committee decides what will be produced, how many of each product will be produced, the cost of the product, and where it will be distributed. While there is greater economic equality in a socialist economy, it does not often respect individual rights. Central planning is often inefficient, and the system does not allow for production of much wealth.