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Step 1: Define capitalism and statism
Capitalism is an economic system characterized by private or corporate ownership of capital goods, with investment decisions made largely by private entities. The laissez-faire capitalism believes in minimal intervention by the government in the economy. Statism, also known as state capitalism, is an economic system where the state plays a dominant role in the economy, either directly owning and managing the means of production or heavily regulating and controlling private enterprise.
Step 2: Differentiate based on ownership
In capitalism, the means of production are predominantly owned and controlled by private individuals or corporations. This allows for a greater degree of freedom and flexibility in the economy, as businesses are generally free to produce and sell goods and services as they see fit. In statism, the state has significant control over the means of production. This can manifest in various forms, such as state-owned enterprises, nationalization of industries, or extensive regulation of private businesses.
Final Answer
Capitalism and statism are two distinct economic systems characterized by differences in ownership, government intervention, income distribution, and social welfare. Capitalism emphasizes private ownership, minimal government intervention, and individual liberty, while statism supports state control or regulation of the economy, and a more active role for the government in promoting social welfare and reducing income inequality.
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