Asked in Socialism

What are the advantages and disadvantages of socialism?


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Disadvantages of socialism:

  • The lack of a profit motive lowers the incentive to invest in further production and capital as in capitalism.
  • Socialism focuses on coordination and cooperation of resources as opposed to competition, which creates less efficient allocations of goods in some situations.
  • Free rider problem occurs, like public good distributions in capitalism, because socially-controlled resources require coordinated payments and purely profit-motivated agents have little incentive to pay.