Basics of CAPITALISM. it’s PROS & CONS.

Capitalism & its Basic Idea.

Photo by Robert Anasch on Unsplash

Capitalism, yes you heard it right!! In this 21st century, everyone is well aware of capitalism and its tendencies. By definition, we can say the economic system in which businesses are owned and run for profit by individuals and not by the state. The term emerged before the Industrial Revolution but gained its prominence after Industrial Revolution.

But how does it have its role in the modern world what are its key credentials, and what are its positives and negatives are the basic questions here.Here, we are learners, what are some key aspects we should be aware of economically is the key point!!!We should have basic economic knowledge to point out its presence in the modern world.

Some of it’s positive aspects

• Economic growth through the open competitive market provides individuals with far better opportunities for raising their income. For example- any new company can dive into business.
• It is a decentralized economic system. Individuals are allowed to compete hence leading to firms providing only the best. Eg- google & Yahoo are both search engines that work together.
• Encouraging innovations in technology and industry. New pursuits are appreciated.
• Consumers Choice- where individuals choose what to consume and their choice leads to a more competitive and better product and services.
• Here goods and services are produced in excess based on demands to avoid wastage.
• It can increase economic growth through increased competition. E.g.- The recent privatization of Space agencies across the world.
• Promotes globalization- facilitating international trade, people of different countries have come close to each other. E.g.- Cuisines, movies, etc.

Some of it’s negative aspects

• Inequality- tends to rise in disparity as the benefits of capitalism are not fairly distributed. I.e a large amount of wealth is confiscated by a countable number of people. Rich are getting richer poor remain poor.
• Irrational behavior- they are sometimes involved with the government to rapidly increase or decrease in price to favor their condition subjecting to failure in economic morality.
• Monopolistic Behavior- companies gain monopoly over power in a free market, allowing and exploiting customers with higher prices. They often pay lower salaries to laborers.
• Exploitation- no attention to social welfare in the beginning.
• Rapid Urbanization and compromise in sectors like health and sanitation.
• Excessive and increased population etc.

These are some of the basic pros and cons that made capitalism to self introspect. It was in the 1920s–1930s when capitalism saw its Great Depression and some countries turned toward Socialism or Socialistic Capitalism. However, closed economies like the USSR never experienced any kind of economic shock, it made capitalism adopt some of the characteristic features of Socialism to sail and protect its inherent Capitalistic values.

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