Table Of Contents
1. Meaning Of Capitalism
2. Origin Of Capitalism
3. Features Of Capitalism
4. Advantages Of Capitalism
5. Disadvantages Of Capitalism
Meaning Of Capitalism
Capitalism is an economic/political system in which all the needs of production and distribution are owned and controlled by private individual. The government or the state participation in this system are relatively low. In this system private individual’s plays greater roles than the governments in decision making processes of what, how to produce and distribution of what has been produced.
Examples of capitalist states or nations are: Japan, North America, New Zealand, Western Europe, Australia, etc.
Note: In this countries, profit making is the main motive for both private or state participation in productions of goods and services.
Also note that: In capitalist society we have two essential class of people: The proletarial and the bourgeoisiers.
Origin Of Capitalism
Capitalism started in 19th century during the industrial revolution in Europe. There was a rapid growth and development in businesses and other economic activities. The capitalist is concerned with the profit he makes at the end of ever business. Karl Maex was seen as the propounder of the socialist theory which was of the view that what ever remains a profit or surplus value should be for the state and not for the privilege class.
Classes Of Capitalism
The following classes exist in a capitalist society:
1. Bourgeoisies Or Bourgeois: This is the richest class in capitalist system, the members control the political power and they are divided into two: The commando and national bourgeois.
2. The Proletariat: This is the middle or working class for which the sale of labour power is the only source of livelihood.
3. The Peasants: This is the poorest class and they are mostly farmers exploited in the capitalist system.
Features Of Capitalism
The features of capitalism are as follows:
1. There is private ownership of all the means of production and distribution.
2. There is freedom of enterprise that permit private business enterprise.
3. There is freedom of choice to consumer, workers, owner of property to buy, work, use whatever they like.
4. Government plays limited role in the production and distribution of means of productions.
5. There is domination of labour by capitalist (ie) capital is rated by higher than human labour in production process.
Advantages Of Capitalism
1. It promotes freedom of enterprise.
2. Capitalism encourages rapid economic development.
3. It encourages hard work because of profit making tendencies.
4. It promotes quality goods produced.
5. It encourages economic competition among producers and ensures the best consumers.
6. It encourages effective use of talent and skills.
Disadvantages Of Capitalism
1. It leads to individual or private monopoly.
2. It encourages few rich individual’s at the expense of the poor (majorly).
3. There is inadequate distribution of income.
4. In a capitalist economic system, profits are made at all cost at the expense of the consumer.
5. Capitalism encourages exploitation of many people by few privilege individual’s in the country.
Comparison Of Capitalism And Socialism
1. Production and distribution is owned by private individual’s in Capitalism, Whereas in Socialism It is owned by the state.
2. In Capitalism, economy is not centrally planned but permits free market economy. While In Socialism, Economy is centrally planned.
3. Socialism ensures the welfare of citizens. While the main aim is profit maximization in Capitalism.
4. Political power is decentralized in Capitalism But In Socialism, political power is centralized.
5. In Capitalism, Economic power controls political power. While In Socialism, Political power controls economic power.
6. There is economic equality among individual’s in Socialism Whereas In Capitalism, There are different classes of individual’s in the upper, middle and lower class.
7. There is multi-party system in Capitalism While There is one party system in socialism.