Can somebody define Capitalism and its advantages and disadvantages?
It is a term widely used in Marxist theory meaning that the 'means of production' are privately owned, operated for profit and that the benefits of production therefore accrue to the owners. We often refer to factories, machines etc as 'the capital stock'.
In contrast, socialism is where the ownership of the means of production are held in common. Usually by the Government but can be by some other social enterprise.
These days capitalism is usually understood to mean a system in which the allocation of resources is dictated by the mechanism of markets, including financial markets, driven by the profit motive.
The advantages come from the fact that it is the most efficient way people have found to generate productive output. No other system has generated such prolonged economic growth.
And the 'invisible hand' of Adam Smith works to ensure that everybody working in their own interest generates the most efficient allocation of resources, maximing total potential welfare (even if that is not distributed evenly).
Some disadvantages come from market failures. People working in their own interest may not take account of side effects - like pollution for example, or depletion of the worl's resources. Also, market forces only really work when there is free competition - but people following their own interest then leads to monopolies etc which generate inefficiencies . Also, capitalism rewards those with natural scarce abilities not just hard work, and can lead to huge inequalities in income and wealth. Also, capitalism usually allows people to pass on wealth to their children - so people can be born with an advantage/disadvantage that is nothing to do with their own efforts. Most governments now try to allow capitalism but try to offset the worst side-effects, inequalities etc. The trick is to keep the incentives which capitalism generates whilst producing a fairer distribution/outcome.
"Capitalism" is a slur invented by Karl Marx. It is free enterprise. It means an economy is allowed to operate with little or no interference from government.
The advantage: a person has unlimited opportunity to prosper. I do not believe there are any disadvantages.
both of the above answers r correct. although you could argue that a disadvantage of capitalism is that only the rich will prosper. The workers (bourgeuiosee [prob not spelt correctly]) will always b trapped as workers getting paid liitle for their efforts thus being kept in the poverty trap. a socialist or communist ideal would that people would get paid equally for all efforts, eg, in basic terms skilled and unskilled workers will all draw profit equally financially for the good of the county (Government would 'own' the rights for profit made on the market place). hope this helps take a look at the other side of the arguement.
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