Socialism vs. Capitalism

Definition: Socialism is according to the Merriam Webster Dictionary " any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods."Socialism could also mean "a system of society or group living in which there is no private property."Socialism could also be defined as "a system or condition of society in which the means of production are owned and controlled by the state." "a stage of society in Marxist theory transitional between capitalism and communism and distinguished by unequal distribution of goods and pay according to work done"[1]: http://www.merriam-webster.com...Capitalism is "according to the Merriam Webster Dictionary Capitalism is "an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market." [2]: http://www.merriam-webster.com...Arguments:While Capitalism isn't the perfect system either and has flaws, that socialism has more flaws and will always fail to achieve it's idealPrices:Mark. J Perry wrote an article in Freeman and wrote about how socialism fails since, "the only alternative to a market price is a controlled or fixed price which always transmits misleading information about relative scarcity. Look at what happened during the 1970s when U.S. gas prices were controlled. Long lines developed at service stations all over the country because the price for gasoline was kept artificially low by government fiat. The full impact of scarcity was not accurately conveyed(3)." This example shows how when a government tries to control the gas pipes of a nation and make them artificially low which is the ideal behind socialism.If it were a capitalist system on the other hand, then "the information transmitted by higher oil prices provided the appropriate incentive structure to both buyers and sellers. Buyers increased their effort to conserve a now more precious resource and sellers increased their effort to find more of this now scarcer resource.(3)" This happened for example, when the OPEC cartel restricted the supply of oil in the 1970s. This show that even though the ideal of letting everyone have it is good, in practice it never works.[3]: http://www.fee.org...Profits and Losses:"A profit system is an effective monitoring mechanism which continually evaluates the economic performance of every business enterprise. The firms that are the most efficient and most successful at serving the public interest are rewarded with profits. Firms that operate inefficiently and fail to serve the public interest are penalized with losses. By rewarding success and penalizing failure, the profit system provides a strong disciplinary mechanism which continually redirects resources away from weak, failing, and inefficient firms toward those firms which are the most efficient and successful at serving the public. A competitive profit system ensures a constant reoptimization of resources and moves the economy toward greater levels of efficiency. Unsuccessful firms cannot escape the strong discipline of the marketplace under a profit/loss system. Competition forces companies to serve the public interest or suffer the consequences.(3)"The profit system and incentives, are the whole ideal behind free-market and capitalism. Incentives and the profit system are of the utmost importance in capitalism, but don't exist in socialism. as said later. "Under central planning, there is no profit-and-loss system of accounting to accurately measure the success or failure of various programs. Without profits, there is no way to discipline firms that fail to serve the public interest and no way to reward firms that do. There is no efficient way to determine which programs should be expanded and which ones should be contracted or terminated. Without competition, centrally planned economies do not have an effective incentive structure to coordinate economic activity. Without incentives the results are a spiraling cycle of poverty and misery(3). " So instead of getting better by competitiveness, incentives and the profit system, because of it's ideology to have nothing to do with the free market, economy grinds to a halt, businesses collapse and socialism falls into a vortex of inefficiency and failure. So because they deny incentives the whole economy crashes.[3]: http://www.fee.org...Private Property Rights:Another horrible flaw with socialism is the cornerstone of socialism itself. The 'Tragedy of the commons.' The “tragedy of the commons” refers to the British experience of the sixteenth century when certain grazing lands were communally owned by villages and were made available for public use. The land was quickly overgrazed and eventually became worthless as villagers exploited the communally owned resource. This will always happen, because it's in human nature, as "When assets are publicly owned, there are no incentives in place to encourage wise stewardship. While private property creates incentives for conservation and the responsible use of property, public property encourages irresponsibility and waste. If everyone owns an asset, people act as if no one owns it. And when no one owns it, no one really takes care of it. Public ownership encourages neglect and mismanagement(3)." Since socialism is by definition a system whose ideology is “common ownership of the means of production,". the failure and stagnation of the economy can be traced back to it's ideology. [3]: http://www.fee.org...So by it's own ideology, socialism is flawed and even though it sounds nice will never work in practice, as was proved multiple times in history, because of human corruption.