What is Capitalism?

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Capitalism is an economic system, in which the means of production like farms, factories, land, labour, capital and organization etc are owned and managed by the private individuals and companies. They are called capitalists. They are free to own, organized and managed their enterprises for personal gain. They are free to use any technique and produce any thing they like. Some times capitalists influence over the government as they control all the means of production.

It is a system in which the state does not interfere in the working of economic system. Economic activities, production, consumption, distribution and exchange are regulated through natural forces of demand and supply. However this system is not practiced anywhere in the world because the government or state interference does exists in every capitalists economy.

In this system state interference is common in the working of economic order indirectly through its economic policies and the planning of economic development.

In a capitalists economy individuals have the right to own property which is inheritable and transferable owner ship right motivate them to work hard and to save and invest. As a result concentration of wealth in the hands of few families is a common feature which gives dominating position to these families in the society.

An important characteristics of this economy is that the means of production are owned by private individuals they owned managed and organized them on the basis of profitability and ignore the interest of the common man and national interest as well wealth of cpitalists multiplies rapidly.

Capitalistic economy has economic freedom. Individuals are free to adopt any occupation of their own choice and liking. They contract each other according to their so in this way people divided into social groups.

High rate of competition is an important feature of this economy. Both producers and consumers complete each other because of competition only the best services in the market. During economic depression capitalists joined with each other to save themselves from loss ensure survival.

The risk of failure of enterprise lies with the owner. Therefore capitalistic economy always anxious to improve their working efficiency and organizational skills they always produce those goods which consumer like to consume.

Capitalistic economy invest their capital for profit motive, they want to produce more and earned more, sometimes they indulged in antisocial activities and ignore natural interest.

In capitalism the capitalist and laborers both are efficient and their success depends upon efficient control on supervision of the process of production and goods are produced under effective management.

In the capitalistic economy the producer maintained the superior quality of goods and continuously improves it to get stable position in the market.

In capitalism variety of goods are produced for greater output according to the taste and purchasing power of the consumer of different income groups and of social standard.

In capitalism cost of production is low because of control and effective supervision which minimized the waste. Because of market competition they reduced cost and keep the prices of goods at a low level.

In capitalistic economy the consumer wishes are respected and their like and dislikes are given real importance so the consumer are sovereign in capitalism.

Capitalism established monopolistic institutions which exploit the consumer. Consumers become helpless because they don't have any alternative.

In capitalistic economy a huge amount of money is spend on publicity which increases the cost and raises the price.

In this economy people are not getting equal opportunity to develop their potentialities so the talents are wasted for example a son of a poor father who has more potential cannot go for higher education.

Means of production in capitalistic economy is in the hands of capitalist and the income generated in the economy goes into the hands of this group of population.

The people in the capitalistic economy are divided into two distinct classes namely the capitalist and the laborers.

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