File Name: advantages and disadvantages of capitalism .zip
Individuals own their labor. Although illegal throughout the entire world, slavery is still widely practiced.
Producers have complete freedom to invest in any business or trade. Another advantage according to classical economists is an automatic system. Equilibrium point is automatically come with the forces of demand and supply. All the basic decisions of what to produce, how to produce and for whom to produce are taken by producers. Hence, there are large variety of goods and services; produced in the economy. All natural resources are used to their optimum level as production is undertaken with a sole purpose: of earning profit and no scope for wastages at all.
There is very tough I competition among entrepreneurs. They always encouraged to produce best quality of products. Thus, technical development will lead to increase in higher productivity as well as efficiency. Varieties of goods at cheap rates make it easy to be within the; reach of poor and weaker sections of society. This results in rise in their standard of living. In this system, incentives are given to the efficient workers in cash or kind.
This means every worker should get reward according to his ability. Hence, workers will try to work more and more, therefore, total output will also increase.
In this type of economy, there is ample scope of new invention. To get more profit every producer takes initiative to develop new techniques in production. The main defect of capitalism is the exploitation of labour.
Labourers get less wages in comparison to their working hours. The wages less than their marginal productivity are not sufficient for their livelihood. Hence, the continuous class struggle spoils the health environment of the economy. Capitalism is a wasteful competition. A lot of money is spent on advertisement and publicity for pushing the sale of the commodity.
Its burden ultimately is borne by the poor consumers in the form of increased price. The production is made on a large scale which cannot be changed in a short period.
Therefore, under capitalism, fear of over-production always exists. Being automatic in nature, capitalist economy always faces the problem of economic fluctuations and unemployment. This means the state of instability and uncertainty,. All the resources are put only to those channels where there is maximum profit. Other sectors of the economy are neglected. As there is no check on the economic system, the growth is unbalanced in nature. In capitalism, the sole motive is maximum profit, but not the public welfare.
Variety of goods are produced according to market demand, not for any welfare activity. This economic system has been criticised on the fact that it develops monopoly activities within the country.
Article Shared by Tushar Seth. Related Articles.
Capitalism is a political and economic system where the industry and trade for a country are controlled through private ownership. Profits are generated by this ownership instead of the control being mandated by the government. There are specific characteristics of Capitalism which make it a unique type of economic system. It combines the elements of voluntary exchange with capital accumulation, private property ownership, competitive markets, and pricing systems. Wage labor is included in this economy as well.
Disadvantages of Capitalism · 1. In a capitalist economy, wealth enjoys the prestige in the society, which results in erosion of human values. · 2. There is a large-.
Producers have complete freedom to invest in any business or trade. Another advantage according to classical economists is an automatic system. Equilibrium point is automatically come with the forces of demand and supply. All the basic decisions of what to produce, how to produce and for whom to produce are taken by producers. Hence, there are large variety of goods and services; produced in the economy.
If they decide to save it instead, then this approach struggles to survive because profit is the primary motive. Capitalism can create more segregation.