Socialism is a form of economy that works for equality among the members of society by pooling the resources of the people to be collectively controlled by the state or the public through communes or councils. There is no market in a socialist economy and therefore, there is no competition. The quantity of products produced and distributed is regulated, including the price that the consumer will pay for the products.
Capitalism, on the other hand, is an economic and political system that is based on the principle of individual rights. It believes that it is inequality that will drive the people to be more innovative and productive. Resources in a capitalistic society are privately owned by individuals or groups of individuals. These individuals or groups of individuals freely trade in a market that has a level playing field. The government stays in the background and allows the forces of supply and demand to freely operate with the guidance of laws and regulations. The law of supply and demand provides that if the supply is greater than the demand for a particular commodity, the price of that particular commodity will go down. Conversely the price of a commodity goes up if there is less supply than the demand.
