What is capitalism?
Welcome to the world of capitalism, dear readers. In this article we will dive into the world of capitalism and make conclusion whether it is good or bad. Let's see what capitalism means first....
Capitalism is an economic system in which private owners and individuals control property and businesses in accord with their interests, with minimal government interventions. Prices and the distribution of goods are feely set according to the demand and supply in markets. The core idea of capitalism is motive to make a profit.
Capitalism is ideally meant to function as a free market economy, in which competition among several companies and businesses result in the cheapest and highest quality products.
The term capitalism originates from word capital which takes its roots from Latin word “capitale” meaning “head”. It basically referred to sum of money, funds, stock of merchandise.
But how capitalism actually emerged? History of capitalism.
Capitalist practices existed for many years in different forms. For example: in the form of merchant, renting and lending activities and occasionally as small-scale industry with some wage labor and trading.
The modern form of capitalism emerged from agrarianism in 16th century England and mercantilist practices by European countries in the 16th to 18th centuries. Globalization of Capitalism continued during 19th-20th, with Industrial Revolution and World War I, II playing essential role in its development.
Adam Smith is often identified as the father of modern capitalism. Smith believed that economic development was best fostered in an environment of free competition and each individual would choose to engage in the economic activity in which they had a comparative advantage and that would best benefit them.
What countries are capitalist?
· The United States of America.
As you can see most developed country adopt capitalist economy, since there are more opportunities to compete and make a profit in global scale.
In the US, big corporations like Apple, Microsoft, and Google are owned by private individuals and, thus, have unleashed productivity in many industries. Even though these companies are quite profitable, they are still pursuing programs that benefit their employees, the environment, and all of society.
Benefits of capitalism
Capitalism is driver of innovation, wealth and prosperity in modern era. Since there is huge competition between private owners and companies, both will try to constantly make innovation, adopt new practices, implement state-of-the-art technology and improve quality of production and services. Capitalism meets the needs of the people and is beneficial for societies as a whole. Importantly, there is opportunity for taking risk which is essential in development of both businesses and economy.
Another positive side of capitalism is that it is self-regulated through competition, which means government will not set restriction for setting up new company or business. It allows choice and freedom, where consumers have rights to choose products they need or desire.
Market is more flexible and mobile. Position of individuals in the wealth hierarchy can change and is not established by law or custom. There is more chance for economic prosperity and improvement.
Drawbacks of capitalism
Capitalism is based upon economic inequality and does not promote equal opportunities for everyone. Some big firms and companies may control production sector, overshadow small one and weaken competition, essential feature of capitalism, and may result in monopoly.
Capitalism sometimes ignores social needs, which means people who are disabled or unable to work (retired) may end up with fewer opportunities or money, because main priority here is profit over the needs of people.
Capitalism may be harmful for environment as private owners aim for monetary gain and promotes mass consumption and extensive usage of natural resources.
In conclusion, even though there are disadvantages of capitalism, it is main factor in the prosperity and development of country. In capitalist economy, people can own and control private property such as land, houses, stocks and bonds, since central government will not take away property and set restrictions on performances of businesses. Capitalism facilitates freedom and opportunity and consumers have rights to choose and decide what and how much to buy. Price of goods and services may rise and drop (fluctuate) as much as quality, since competition between companies will contribute to better, cheaper and high-quality products.