Definition of Capitalism
Capitalism is primarily an economic term describing an economy with the existence of free markets. Privately owned firms owning the means of production are a vital marker of Capitalism. However, practically there are specific government interventions required for the practical functioning and protection of private property in free markets. Certain policies also have to be formulated and abided by the smooth operation of a capitalist economy. There are specific characteristics that mark a capitalist society. Although Capitalism was a term formulated to explain an economic system, it has not remained restricted to the economy. Capitalism works as a political system simultaneously.
Pros of Capitalism
The pros of Capitalism have been enlisted and exempted by most capitalist countries existing in the world. Some of the unavoidable ones are enlisted below:
- Allocation of resources effectively: Distribution of resources is based on customer preferences. All firms are better more competitive and produce according to the customers' needs.
- Effectiveness: There are rewards for an effective production process in privately owned firms. Effectiveness includes cost-cutting, increasing automation, etc. for improving competitiveness. Unable to remain effective will drive a firm out of business.
- Dynamism inefficiency: Firms are bound to be updated with the market trend and updated demands of the consumers. Being responsive to changes and acting accordingly is a primary advantage of Capitalism.
- Incentives: Private profit and money-making is the crucial driving factor behind setting up of any private firm. This greed for financial rewards is the driving factor of a capitalist economy. Therefore, they are never out of motivation to work more and produce more.
- Overcoming discrimination: Although Capitalism works on similar lines to imperialism, it is a more inclusive process. To expand enterprises and play in a free market, trade with various nations and business groups become a mandate. This makes the capitalist ecosystem a non-discriminating one.
- Economic independence from political interference: A capitalist economy functions almost without the existing political interference. They have their own set of politics.
- Upgraded living standards: It has been observed that as the South-Asian countries adopted Capitalism and freed their market, there has been a steep rise in their revenue generation and earnings. Due to the same, the standard of living of a common man is also uplifted. There has also been a marked fall in the poverty level.
Conclusion
In conclusion, it can be inferred that Capitalism has worked subtly and engulfed most other forms of economies. There is hardly an option left other than Capitalism now. The rise of consumerism is also due to the rise and boom of Capitalism globally. Capitalism has played a significant role in altering the history of economics and politics around the globe. The pros of Capitalism have been exempted through all countries that have abandoned other forms of economies to welcome Capitalism.