We use cookies to give you the best experience possible. By continuing we’ll assume you’re on board with our cookie policy

What is a capitalist economy Essay Sample

essay
The whole doc is available only for registered users OPEN DOC

Get Full Essay

Get access to this section to get all help you need with your essay and educational issues.

Get Access

What is a capitalist economy Essay Sample

The capitalist system operates on the basis of the private ownership of the country’s wealth. The driving forces behind the capitalist system are based on private enterprise in the pursuit of making profit. It is a system in which individuals, who privately own resources, can use these in whatever manner they choose, as long as they do not violate the minimal legal restrictions.

The Characteristics of the Market Economy:

Looking broadly at the Capitalist System, it could be seen that there is a great amount of economic freedom granted to individuals concerning the ownership of resources as well as private property. Thus, one could question how does such an economic system with this amount of freedom not lead to confusion.

1. The System of Private Property: In the Capitalist system, property is owned by individuals or groups of individuals, indicating that the state is not the predominant owner of the property. This private ownership is harnessed by the country’s legal system and police force, so that the individuals are free to do whatever they choose with their property, as long as they do not violate the property rights of others, determined by the government of the capitalist country such as the United Kingdom and the United States.

2. Free Enterprise and Free Choice: This means that individuals have the right to allocate resources, process them, and sell a product to the market, without restrictions by the government. Similarly, any individual in the market can buy whatever good he/she chooses. Based on this it could be seen that it is the consumers themselves who decide what products are to be produced. This occurs based on the idea that demand determines the products being supplied.

3. Competition and Unrestricted Markets: Competition is rivalry between sellers in the aim of attracting consumers to buy their products. For this to occur, it is necessary that there is a large number of sellers, and that theses sellers have the freedom to enter or leave the market whenever they find it fit. Having a large number of sellers ensures that no one buyer or seller can influence the price of a certain product in the market. According to “Economics Explained”, competition imposes limits on the self-interest of buyers and sellers. Competition then is the regulating force in Capitalism. This regarded to the European Union market.

4. Self-Interest: Self-interest means that the different parts of the economy function in the pursuit of the maximum profit and the minimum losses. Thus, it is an idea of self-interest that “is the guiding light of Capitalism”1. Examples of these market are in the Middle East market.

5. The Pricing System: The Capitalist system is based on the prices set for products, which are determined by factors, including competition, supply, demand, and monopolies. Since the prices are not fixed, incentives and motivation of the entrepreneurs and manufacturers increase.

6. The Limited Role of the Government: The role of the government is to protect the property rights of the workers and entrepreneurs, and to keep control of the property vested with the owners. Therefore, it is necessary that the government plays a role in the economy, but in a restrained way. This could be called “Laissez Faire”, which means that the businesses and the economy should be ‘left alone’ by the government.

Examples of Countries with the Market (Free) Economy:

The Market Economy is seen most clearly in countries like Hong Kong, the USA and Western Europe. Other countries, which formerly had Centrally Planned Economies, such as the USSR, and China, are moving gradually towards a more Free Economy. However, it is necessary to note that none of the examples given above are pure Capitalist Economies. In practice, all economies involve a mix of planned and private sectors, though these sectors vary from country to country. Britain, though technically a Capitalist Economy, under the current labor party, it seems to be a good example of a rather mixed economy.

Some Disadvantages of the Market Economy:

Despite the characteristics mentioned above, a capitalist economy could lead to extremism in the sense that wealth may be concentrated in the hands of a few businessmen, thus, creating extreme wealth versus extreme poverty. This disparity in wealth could, in the long run, lead to recession or even depression in the economy. Furthermore, a common feature of a Market Economy is the rise of monopolies and the setting of unfair prices. Moreover, since the driving force of capitalism is profit making, some industries, albeit not profitable but still necessary, may be ignored. Examples include keeping a non-profit-making factory open so as to avoid lying off workers, or extending a bus service to a remote part of the country.

Nevertheless, it could be said that the market economy is one that has benefited millions throughout the world. However, the question as to how far this system is a good one remains a controversial issue.

We can write a custom essay

According to Your Specific Requirements

Order an essay

You May Also Find These Documents Helpful

Peculiarities of various assignment types

The educational process is diverse and full of interesting writing tasks which help students develop their academic abilities. Different assignments types are created by professionals in order to enhance students’ level of analytical, critical and writing skills and to vary the learning process. As a student, you will encounter numerous tasks of diverse complexities throughout your student life. Sometimes, maybe, too complicated! They have different peculiarities, structural...

Making decisions in health and social care

Critically analyses the concepts, features, and importance of costs and accounting in making decisions in health and social care Cost accounting is a method used in accounting to capture a company’s or organisation’s production costs. It assesses the input costs of every step in production, fixed costs like depreciation of capital equipment. Cost accounting measures and records costs individually then compare the input results via...

Сhildren development

Physical development 7-12 years By the age of 7 a child enjoys things such as bike riding and rollerblading they are now able to tie and untie shoelaces without adult help, they are now starting to understand what rules are and are able to follow simple rules. At 8-12 years a child improves the physical skills that they have already developed and start to see...

Forex international trading market

Introduction Forex exchange is on the rise in Namibia; resulting in more people wanting to learn how to trade to try to increase their income so that they can enhance their standard of living. Forex Foreign exchange identifies the process of converting domestic currency into international banknotes at particular exchange rates (Bofah, 2017, para.1). As the number of foreigners in Namibia is increasing, more Namibians...

Aristotelian idea of God

This image produced in 1544 shows emerging's of the Judeo-Christians and Aristotelian's traditions. Aristotle was very interested in the idea of motion and said “The world is in a constant state of motion and change”. An example of how the world is changing is the growth of trees and plants. Aristotle believed in a prime mover, which is the being which creates change in the...

Get Access To The Full Essay
icon
300+
Materials Daily
icon
100,000+ Subjects
2000+ Topics
icon
Free Plagiarism
Checker
icon
All Materials
are Cataloged Well

Sorry, but copying text is forbidden on this website. If you need this or any other sample, we can send it to you via email.

By clicking "SEND", you agree to our terms of service and privacy policy. We'll occasionally send you account related and promo emails.
Sorry, but only registered users have full access

How about getting this access
immediately?

Become a member

Your Answer Is Very Helpful For Us
Thank You A Lot!

logo

Emma Taylor

online

Hi there!
Would you like to get such a paper?
How about getting a customized one?

Couldn't Find What You Looking For?

Get access to our huge knowledge base which is continuously updated

Next Update Will Be About:
14 : 59 : 59
Become a Member