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Nicolas Murati Research

I.

Advantages of Capitalism

A. Economic The economic freedom provided by Capitalism helps political freedom. If


governments own the means of production and set prices, it invariably leads to a
powerful state and creates a large bureaucracy which may extend into other areas of life.
1) Efficient Allocation of Resources
Consumer choice - Individuals choose what to consume, and this choice leads to more
competition and better products and services.
2) Efficient Production
In a market system, firms have incentives to be productively efficient cutting costs to improve
competitiveness and productivity. If firms dont remain productive and efficient they will go out of
business.
3) Dynamic Efficiency
This is efficiency over time. Firms in a capitalist system need to respond to changes in
consumer preferences and respond to new consumer trends.
4) Financial Incentives
Evidence suggests that people work hardest when there is a personal financial incentive. For
example entrepreneurs only take risks in setting up businesses because of the potential for
large financial reward. If this scope for private profit is absent then new firms wont be set up.

B. Social

1) Equality
No matter where you start in life, everyone has an opportunity to make it big. The basic
principle is that the harder you work, the greater your reward.
2) Freedom
Capitalism offers individuals the opportunity to choose any desired career. In School you
selected your favorite subjects and could study them as far as you wanted, followed by applying
to a job you chose from the widest variety ever seen in history.
3) Human Nature
It works perfectly with human nature or, more specifically, greed. Greed is rewarded with large
amounts of money and the entire economy is fuelled by people working hard to supply their own
needs. In addition, greed causes competition, which is an essential part of advancing the human
race.
4) Social Good
It might seem at first glance that everyone is selfishly working for their own money, but if you
look in closer it becomes apparent that every job has a benefit for someone else. Factory
workers produce the products that we cant live without; the police work to protect us and make
sure we live in a lawful society. Even unpopular and overpaid professions such as city bankers
and sportsmen have a positive effect on society, whether it be helping us manage our money,
entertainment or something else. The bottom line is that no matter the job; highly or poorly paid,
glamorous or dirty, competitive or easy; everyone can have the satisfaction that they, as much
as the well-known public figures, are doing their bit for society.
5) Happiness
Studies done by scholars show that the foremost democratic, capitalist countries like the USA,
Canada, New Zealand and the whole of Europe are the happiest in the world. Along with many

other factors that make this possible, a big influence on this is the fact that in these countries,
thanks to the free-market, whatever products people want, they can get.

C. Politic
1) Democracy
One of the greatest things about capitalism is that it works perfectly with democracy: everyone
gets 1 vote, and thus equal power politically, whatever their race, political views or gender.
2) The government should not interfere in the economies of the free market, meaning,
the market determines investments, production, distribution and decisions, and
government interference is only allowed when making and enforcing rules or policies
governing the conduct of business.

II.

Disadvantages of Capitalism

1) Inequality
Inequality in the distribution of national wealth. Capitalists argue that a capitalist society is fair
because you gain the rewards of your hard work. But, often people are rich, simply because
they inherit wealth or are born into a privileged class. Therefore, capitalist society not only fails
to create equality of outcome, but also fails to provide equality of opportunity. The rich are more
likely to stay rich and the poor to stay poor theres never going to be economic equality under
capitalism.
2) Social Division

Inequality creates social division. Societies which are highly unequal create resentment and
social division.
3) Monopoly Power
Private ownership of capital enables firms to gain monopoly power in product and labor
markets. Firms with monopoly power can exploit their position to charge higher prices.
4) Monopsony Power
Firms with monopsony power can pay lower wages to workers. In capitalist societies, there is
often great inequality between the owners of capital and those who work for firms.
5) Waste
In a society where resources are not evenly distributed, there is always going to be the wealthy
who have an excess of resources. While occasionally these resources are given to the poor,
often this excess is wasted. Millions of dollars worth of food is wasted by those who have more
than they need, while there are many others who desperately need it.
6) Starvation
If some have an excess of the resources in society, there are others who do not have enough. In
Third World countries, many are starving because they cannot afford to feed themselves, while
those in Western countries fatten themselves with an excess of food, and waste the rest of it.
There is enough food in the world to feed the entire world population.
7) Selfish Competition
If people are worried about whats in their own pocket, they will avoid helping their fellow human
beings because theyre concentrating on looking after themselves. People feel the need to put
themselves first because they think no-one will be there to help them if they lose all their money.

III.

Argument

One of the strongest arguments working in favor of democratic capitalism is that

there is no alternative politico-economic system which has proved itself to work in


our modern age. Almost every attempted implementation of communism has
failed (for example, look at China they abandoned total communism long ago
and are slowly creeping towards capitalism) and any central government risks
large amounts of corruption. Whats more is that if, for example, America became
socialist and imposed many strong measures on corporations to regulate their
behavior, the largest companies (Trans-National Corporations) would most likely
move their industry elsewhere, and potential entrepreneurs would be scared to
invest in capital, irreparably damaging Americas economy. So as you can see,
changing the economic system isnt even an option.

IV.

Criticisms

Capitalism creates poverty


Core capitalist myth: greed is good
Capitalism only considers wellbeing of shareholders, not society at large
Public debate about poverty focuses on the individual rather than on the
economic system in which it occurs

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