Posts Tagged ‘Economy’

After the amendment in the Indian Constitution in 1976, India was declared a socialist state, along with being sovereign secular democratic republic. Being a socialist state, India implies social and economic equality. Social equality means that there cannot be any discrimination based on caste, creed, color, sex, language or religion. Every citizen has equal rights, status and opportunities. Whereas, economic equality means that the Government will strive for equal distribution of wealth and provide a decent standard of living for all.

The theory of socialism advocates common ownership and cooperative management of the means of production and allocation of resources. It is an economic and political system in which the production and distribution of goods are controlled substantially by the Government rather than the private players.

There are different types of socialist states. Some do not tolerate capitalism at all, while some allow it as far as the Government maintains its dominance. It is interesting to note that all communists are socialists, but all socialists are not communists. The term socialist state differs as defined by various theories. According to Marxism, a socialist state is a state that has abolished capitalism and is moving towards communism. But, there are some countries, including India that use the term ‘socialist’ in their Constitution without claiming to follow communism or any of its derivatives.

India has adopted a socialistic and mixed economy and the Government has framed many laws to achieve the aim. Because there are several branches of socialism, the view has been so-far-unsuccessfully challenged since 1994 in the many courts in India.

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Capitalism is a difficult phrase that is more than just a set of social and economic practices. It is rather, a way of thinking that is fundamentally individualistic, meaning that the individual is the center of capitalist endeavor.
Basically, capitalism is a situation in which the power lies in the few hands of people who have accumulated the capital. Capital here means land, materials, tools, profits as well as money, which are also the means of production and distribution in a market. The property-owners of these means of production are called “capitalists”. They believe that the market is powerful enough to function without any interference. The role of the State is simply to regulate and protect.

This economic system called capitalism is defined by a few characteristics like: means of production and distribution are privately owned, individuals and companies internally compete for profits, free market forces determine the prices, and all decisions are taken by the private players of the market rather than the central planning by the Government. However, a debate goes on as a group of people define capitalism as an economy where all the resources are privately owned while another group loosely says most of them are in private hands.
Economists generally emphasize that capitalism is a state wherein the Government has no control over the market (called Laissez Faire) and on the property rights. The market is controlled by the competition and the demand and supply ratios. Also, there is a basic agreement that capitalism encourages Economic Growth, Political Freedom and Self Organization and is a Morally Imperative system.

However, criticisms are bound to be present as the other side of the coin. Critics argue that capitalism is unfair distribution of wealth that leads to monopoly, exploitation, inequality, unemployment and economic instability.

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