The main difference between socialism and welfare capitalism is that socialism is an economic system based on public ownership of the means of production, whereas welfare capitalism refers to the application of a welfare state to a capitalist economic system.
A welfare state is a form of governing in which the government plays a major role in the protection and promotion of the economic and social well-being of the citizens. Capitalism is an economic system where a country’s trade and industry are controlled by private owners for profit.
Key Areas Covered
1. What is Socialism
– Definition, Features
2. What is Welfare Capitalism
– Definition, Features
3. Difference Between Socialism and Welfare Capitalism
– Comparison of Key Differences
Key Terms
Socialism, Welfare Capitalism
What is Socialism
Socialism is an economic system where everyone in society has equal ownership of the factors of production, i.e. entrepreneurship, natural resources, capital goods and labour. This type of public or state ownership takes place through a democratically elected government. Moreover, in a pure socialist economic system, everyone works for wealth, and there is an equal distribution of wealth among everyone. In addition, the underlying premise of a socialist economic system is that “what is good for one is good for all”. In other words, it highlights the fact that everyone in society should have a right to decide on how resources should be used and consumed.
Furthermore, in a strictly socialist economy, the government makes all production and distribution decisions (in terms of legality), and people depend on the state for everything from food to healthcare. The government also decides the goods and services and their pricing levels. It’s also important to note that the system of socialism is in direct contrast to capitalism.
What is Welfare Capitalism
The term welfare capitalism has two meanings. It can either refer to the combination of a capitalist economic system with a welfare state, or private businesses providing welfare-like services to employees. A welfare state is a form of governing in which the government plays a major role in the protection and promotion of the economic and social well-being of the citizens.
According to Gustav von Schmoller, the 19th-century German economist, welfare capitalism refers to the government providing for the welfare of workers and the public via social legislation. Esping-Andersen classified three different traditions of welfare: social democracy, Christian democracy, and liberalism. Although these models or traditions receive many criticisms, these are the most commonly used models of welfare states. Regions like Western Europe, Canada, Scandinavia, Australia, and New Zealand are well-known for their welfare state provisions. Some other countries in the world also have elements of a welfare state like universal healthcare.
The second meaning of welfare capitalism, i.e., the business-favoured policy that considers the private sector can provide social welfare programs, is also known as industrial paternalism. However, the benefits offered by these welfare programs are often inconsistent and vary from company to company. Moreover, the concept of welfare capitalism is especially common in the American context.
Difference Between Socialism and Welfare Capitalism
Definition
Socialism is an economic system based on public ownership of the means of production, while welfare capitalism refers to the application of a welfare state to a capitalist economic system.
Capitalism
Moreover, socialism is in direct contrast to capitalism whereas welfare capitalism is an attempt to reform capitalism in some aspects.
Conclusion
The main difference between socialism and welfare capitalism is that socialism is an economic system based on public ownership of the means of production, whereas welfare capitalism refers to the application of a welfare state to a capitalist economic system.
Reference:
1. “Welfare Capitalism.” Wikipedia, Wikimedia Foundation, 17 May 2021, Available here.
2. “16.1H: Welfare State Capitalism.” Social Sci LibreTexts, Libretexts, 16 Dec. 2020, Available here.
Image Courtesy:
1. “Socialism in pictures” By Rcragun – Own work (CC BY 3.0) via Commons Wikimedia
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