What is the difference between socialism and capitalism?

This question and answer originally appeared at Quora.

Socialism is where the government owns capital goods – the means of production. They would also tend to try and control our consumption via regulations and taxes.

The extreme end of Socialism is Communism is where the government owns everything – production and how much you can consume and when etc.

Capitalism is often misunderstood.

The Capitalism that we have experienced in the world is quite fascist – consumer and capital goods are privately owned, but are tightly controlled by government via regulation and policy.

Pure Capitalism of the free market kind has never truly existed. It would be an unrestricted free market where individuals can privately own the means of both production and consumption. In this world I expect there would be minimal property taxes and no other taxes, no real regulations, very little government (if any), no central bank and I doubt anyone would willingly accept any form of fractional reserve banking etc. I’d quite like to see this world – but I won’t be holding my breath.

Most of the world presently has varying combinations of Socialism and Capitalism (of the fascist kind).

I have Doug Casey to thank for explaining these points so simply and clearly.

I hope that helps

This answer first appeared here.

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Mark Underdown

Financial Planner, Small Acorn Money

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