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Capitalism is sometimes defined as an economic system in which individual actors own and dispose of the property following their interests. Supply and demand freely decide market prices in a way that best serves the public interest. The profit incentive is the most crucial element of capitalism (Rioux et al., 2020). Fixed assets such as factories, mines, and railways may be privately owned and controlled in a capitalist economy, labor is purchased for money in the form of wages, profits from capital go to private owners, and prices allocate capital and labor among competing uses. While this system has many advantages, it may also harm the economy in America and globally.
Even though capitalism has numerous advantages, it is heavily criticized in a moral society. Motivation, competitiveness, and invention are examples of these. Higher efficiency and production may lead to increased earnings. Of course, a person is motivated not just by the desire to earn more but also by the chances that await them if they succeed in doubling their monthly income. Many rivals may beat the companys owner if they simultaneously provide a cheaper and better product. As a result, the organization is always striving to improve. The proprietor is continually searching for better solutions and greater abilities since that is how capitalism works. Because discovering the greatest solutions in business requires innovative thinking, the competition encourages it. In this situation, capitalism outperforms communism because it is more adaptable and can modify its plans. However, it is worth noting that practically everyone may engage in invention under capitalism.
In this economic system, there are huge disparities between the well-off and the poor, which can be a significant disadvantage and a danger to the world economy. A person born into a poor household has a lower chance of success since they need more financial resources to attend top educational institutions. Although such occurrences are rare, proponents of capitalism cite several examples of a person from a poor household becoming extremely wealthy due to his cleverness, determination to achieve, and talents. This is why capitalist countries have designed perks for low-income individuals. It is a social equalization mechanism that allows disadvantaged individuals to escape starvation and focus on greater global aspirations. In practice, however, benefits recipients need to be more capable of innovating. However, no practical solution for equitable opportunity has yet been discovered in a capitalist society.
It is worth noting that market volatility is common under capitalism. The unexpected and exponential capital rise leads to a very uncertain market evolution. Furthermore, the market needs to be more supplied with products and commodities or stagnate. Marxists perceived tensions between the market economy and industrialization as well. They felt that an abundance of food and trade in the market corrupts society and that society suffers much more when the market fails. The increased incidence of crises might equally be viewed as a negative. When an emergency occurs, unemployment is unavoidable. Unemployment, in turn, exacerbates the problem and creates a vicious spiral that is difficult to break free from.
Thus, capitalism is an efficient economic system but has many disadvantages. It is the one that brings progress and lifts the economies of countries. Innovation and the competitive market are examples of this, bringing about development. However, inequality, crises, and market instability can be significant reasons to abandon capitalism. These disadvantages can lead to a deterioration of the economy, a decrease in public satisfaction, and other economic problems. This is a danger not only for the individual country but also for the world.
Reference
Rioux, S., LeBaron, G., & Verovaek, P. J. (2020). Capitalism and unfree labor: a review of Marxist perspectives on modern slavery. Review of International Political Economy, 27(3), 709-731. Web.
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