Under socialism, the means of production is commonly owned, and the economy is controlled centrally by government. Economy refers to the social institution through which a society’s resources (goods and services) are managed.

Under capitalism, private owners invest their capital and that of others to produce goods and services they can sell in an open market. Convergence theory seeks to explain the correlation between a country’s level of development and changes in its economic structure

economy — the social institution through which a society’s resources (goods and services) are managed. capitalism — an economic system in which there is private ownership (as opposed to state ownership) and where there is an impetus to produce profit, and thereby wealth. socialism — an economic system in which there is government ownership (often referred to as “state run”) of goods and their production, with an impetus to share work and wealth equally among…. means of production — commonly owned, and the economy is controlled centrally by government.