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Market economies and socialist economies differ by their logical underpinnings, stated or implied objectives, and structures of ownership and production. Several philosophical questions lie at the heart of the debate between socialism and capitalism: What is the role of government? What constitutes a human right? What roles should equality and justice play in a society?

Functionally, socialism and free-market capitalism can be divided on property rights and control of production. In a capitalist economy, private individuals own the means of production and the right to profit from them; private property rights are taken very seriously and apply to nearly everything. In a socialist economy, the government owns and controls the means of production; personal property is sometimes allowed, but only in the form of consumer goods.

Socialists and free-market economists tend to agree on fundamental economics the supply and demand framework, for instance while disagreeing about its proper adaptation. Both sides claim that the opposite system of coordination leads to undesirable economic outcomes.

Market economies rely on the separate actions of self-determining individuals to determine production, distribution and consumption. Proponents say that freely floating market prices direct resources towards their most efficient ends. Profits are encouraged and drive future production.

Socialist economies rely on either the government or worker cooperatives to drive production and distribution. Consumption is regulated, but it is still partially left up to individuals. The state determines how main resources are used and taxes wealth for redistributive efforts.

There are many points of contention between these two systems. Socialists consider capitalism and the free market to be unfair and possibly unsustainable. Capitalist economists counter by suggesting that socialism is impractical and inefficient.

For example, most socialists contend that market capitalism is incapable of providing enough subsistence to the lower classes. They contend that greedy owners suppress wages and seek to retain profits for themselves.

Proponents of market capitalism argue that it is impossible for socialist economies to allocate scarce resources efficiently without real market prices. They claim shortages, surpluses and political corruption will lead to more poverty, not less.

See the article here:
What are the main differences between a market economy and a socialist economy?