This can be facilitated by gaining an understanding of the internal mechanisms by which each operates and exerts its power over the minds and actions of people. Capitalism rests on the bases of private property and the competition of the free market. The free market provides for individuals to buy and sell their property by entering into voluntary transactions with one another. The basic assumption is that these individuals are rational utility maximisers, which means that they will not enter into transactions detrimental to their own well-being. By implication the government has no role to play in this free market, except to establish the conditions under which the market can function unfettered.
Socialism rejects the notions of private property and the free market.
Instead of allowing the economic forces of competition to regulate the market and fix the price of labour, goods and services, socialism opts for collective ownership of the means of production and central planning of the economy. Socialism also rejects both the notion of profit and the practice of competition between individuals for personal gain. Instead, socialism emphasises that the common good should be achieved through cooperation, and that wealth produced by the economy should be distributed evenly throughout society. Capitalism answers that egalitarianism is a formula for disaster in the economy and therefore in society. An even distribution of wealth provides no incentive to work and guarantees stagnation.