Chus I. V., Lakey I. M., Lobanova V. V.

Oles Honchar Dnipropetrovsk National University


This theme has a real importance and its and actuality cannot be stressed enough because capitalism is the dominant economic system of today's world, however this fact does not necessarily imply that it also is the supreme.

The 20th century has been marked by justifying the validity of capitalism. World powers have disagreed and still disagree about the benefits and drawbacks of the system.

It ostensibly seemed that the capitalist system had proven its victory over socialism when compared to the economic failures and horrors of the former Soviet countries. However, despite a dip in interest during the late 80's and 90's, the debate has not lost its relevance and was vividly revived with the 2008 financial crisis; due to the crisis' severe consequences of mass-unemployment there was a renewed urge in questioning the validity of the western capitalist economic system.

But nevertheless capitalism has its strong points. First of all the market should determine the price of products and services.

A free market gives the power to the people to choose and decide what products and services should be offered to them. If many people want the same thing the demand will be higher and it will be profitable to offer them on the market since it will sell, therefore the people are in command of what products are being offered to them through their own want. The market is decided upon what people need and therefore there will be no excess products or services offered.

Secondly, incentive in form of profit benefits society as a whole.

The strongest motivational force a human being can feel towards work is a potential reward for their effort, because of this those who work hard and contribute most to society should justly also gain the most in form of increased wealth. When work is uncoupled from reward or when an artificial safety net provides a high standard of living for those who do not work, society as a whole suffers. If those who work will benefit equally as the ones who do not there will be no reason to work and the overall productivity will be lowered, which is bad for society. Incentives are therefore necessary since it increases the overall standard for the whole society in form of material wealth, the fact that individuals are driven to succeed and earns what is rightfully theirs is in all our interest.

But, on the other way, socialism provides a more sustainable way of living.

With its imperative to constantly expand profitability, capitalism always acts on the cost of nature and its ecological balance. Capital reduces the majority of the world's people to a mere reservoir of labor power. The present capitalist system cannot regulate, much less overcome, the crises it has set going. It cannot solve the ecological crisis because to do so requires setting limits upon accumulation. But socialism requires self-determination, community, and a meaningful existence.

Apart from this socialism is a more secure system than the free market in Capitalism.

 Financial crisis is inherent in the capitalist system. The economy undergoes a crisis whenever productive economic sectors begin to undergo a slowdown resulting in falls in profits. A socialist system would not produce over consumption since its aim is not profit but human needs, it would not have a reason to fabricate an investment for the sake of keeping up the profits and would not cause a capitalist crisis.

In general each system has its own benefits and drawbacks. Many countries have mixed economic system with elements of both capitalism and socialism. This fact proves that both this systems are very important nowadays.