CAPITALISM PROMOTE ECONOMIC GROWTH

Capitalism Promote Economic Growth

Capitalism Promote Economic Growth

Defining Capitalism

Capitalism is an economic system characterized by private property and freely functioning markets without central planning. Prices in capitalist economic systems are determined by the free and open exchanges of buyers and sellers guided by self-interest but constrained by both an ethical consensus and the rule of law. While capitalism is widely viewed as the most effective system for generating wealth and higher material standards of living, capitalist economies also go through periods of instability, some of which have raised concerns about the overall appeal of the system.

In addition to concerns rooted in these periodic cycles, other concerns have been raised regarding broader social issues such as the distribution of income. Most economists believe that the benefits of capitalist systems have far outweighed the costs but this article will present both sides of the argument. To understand capitalism in its present form also requires that we consider the historical developments, both intellectual and material, that gave rise to the modern capitalist system.

Three words can be used to define capitalism: a free-market system. This encompasses an economic setting, based on the private possession of manufacturing and allocation of goods, products, tangible items and units, typified by a free competitive market and motivation by profit.

Capitalism is based on the notion of free enterprise, which pertains that governmental intrusion should not be permitted and allowed, and that free market, based on the rule of supply and demand, will ultimately maximize and escalate consumer benefit.

Capitalism has existed in a limited form in terms of correlation towards, but to trace its immediate background and roots could be considered at the time of the Industrial Revolution that began in the 18th century, where the bourgeoisie—the bankers, merchants and industrialists of the time—began to dislocate landowners in political, economic and social importance, particularly in Great Britain.

Capitalism pressures liberty of self-based economic venture; however, government action and intervention has been and is undoubtedly required to curb and control its abuses respectively.

Understanding Crony Capitalism

Moving to crony capitalism, the term is considered pejorative, describing a supposedly capitalist and industrialized economy, where success and development preferably depends on the close connections, rapport and contacts between businessmen and government bodies and officials. Such a phenomenon may discern and become visible in situations such as government grants, legal permits, special tax breaks, and so forth.

When understanding this occurrence, the simplest of examples could be of the collusion and agreement of market players. While being lightly engaged in competing against one another, they'd present themselves as a unified group of firms that make the industry and may ask for aid or subsidies, which are defined as grants of money from the government in order for them to function smoothly.

Freshmen on the market may find it thorny to find loans or acquire shelf space to sell their products, since the ones existing in the market have already set their benchmark and made strong and close contacts with the dealers ...