6 Biggest Pros and Cons of Capitalism
Capitalism is a type of economic system that just about every single country in the world currently operates under. Instead of the government running the economy and controlling the wealth in the country, individual people or corporations do it. This is the exact opposite of a communist economy. It is believed to be the best functioning type of economy, even though it certainly has it’s own unique flaws. Let’s take a closer look into the ins and outs of capitalism and the way that it works.
The Pros of Capitalism
1. Promotes Economic Growth
One of the biggest advantages of a capitalist economy is that it helps to boost the economy of the country and increase it’s standings. Since the government doesn’t control the industries, a strong amount of competition develops. This competition urges citizens to strive for more wealth, which will improve their quality of life. This also increases the amount of money circulating in the country, and increases the GDP of the country.
2. Competition Is Great For Everyone
Competition in business is a wonderful thing for everyone involved. It forces businesses to be much more creative and innovative in order to stand out from all of the rest. It also forces them to keep their prices low in order to compete with all of the other companies involved in the industry. This is a good thing for the businesses because it forces them to keep improving their company as well as the consumers because they are provided with competitive prices and innovative products.
3. Efficiency is Increased
All of the companies and businesses within a capitalist economy have some great incentives to stream line and make processes more efficient. It’s because of these incentives that capitalism works so well.
The Cons of Capitalism
1. Monopolies Are Dangerous
The biggest issue faced within capitalism is the fact that monopolies can emerge and take over the markets. When this happens, one company becomes so large that they control the entire industry. This is a negative thing because they squash out small and just starting out businesses, drive the prices up for the consumers, and slow down the rate of innovation.
2. Social Division and Poverty
When money is the driving factor of the entire country, social division begins to emerge very quickly. This social division causes crime rates to increase and discrimination to occur. Another thing that happens in capitalism is poverty. There are high levels of poverty because social benefits are not as looked after as they are in other types of economies.
3. Not Everyone Works For Their Money
The key characteristic of a capitalist economy is the fact that the harder you work the more wealthy and successful you can become. But as time has gone by, generations have passed, and the wealth hasn’t moved hands very much. This is because not everyone has to work hard for their money. People that are wealthy, and even corporations, have the ability to leave their wealth to future generations of people in order to keep it within their family and social class.