The Pros and Cons of Capitalism
Even though capitalism is the clear winner when in competition with other types of economies, capitalism has major disadvantages that are often overlooked. So, I think it would be a good idea to review both the advantages and disadvantages of capitalism.
The Advantages of Capitalism
- Free Competition: Just by allowing any person or company to compete with any other person or company is a major freedom that should not be unnoticed.
- Decentralization: The decentralization of capitalism allows the economy to be much more dynamic to changes and competition, thus capitalism is much more stable than other alternatives.
- Self Regulation: By allowing buyers to buy want they want from who they want helps businesses to regulate themselves to the customers' changing needs.
- Innovation: In an effort to increase market share and profit, companies are more will to attempt innovation and fund research and development.
- Cost Cutting: Again to increase profit, companies often attempt to cut costs to increase revenue.
- Products and Services: Capitalism allows for a much wider range of products, prices, and quality for all goods and services. Thus, capitalism gives customers a wider choice.
- Equality: Any person or existing business can start a new business, assuming sufficient funds and resources.
- Money: With luck, anyone can become wealthy. Or at least earn a respectable self sufficient income.
- Globalization: With a worldwide market, workers and buyers can be found everywhere, thus bringing modernization everywhere too.
- Improving Society: All businesses and workers provide some sort of improvement to society, customers, and employees.
- Politics and Religion: Capitalism can, yet not always, reduce the religious and political influences on the economy, that more often hinder the economy than a free market.
The Disadvantages of Capitalism
- Class Gap: The greatest gap between the ultra wealthy and the averages workers are greatest under capitalism.
- Needs: To capitalistic businesses to succeed, they need luck, innovation, inspiration, education, talents employees, existing wealth/capital, resources, contacts, etc. just to name a few needs.
- Unfair Pay/Exploitation: To increase profits, some companies often tend to reduce wages to unlivable levels. Or some companies may even exploit child labor despite laws and morality.
- Unsafe Working Conditions: Again to increase profit margins, some companies do not provide safe working conditions to their employees.
- Environmental Impact: Capitalistic businesses tend to harm the environment more.
- Mega-Corporations: Larger companies tend to purchase or force competitors to close by being more cost competitive due to their size.
- Monopolies: As a result, mega-corporations tend to become monopolies without competitors that could help provide alternatives, innovation, and reduce prices.
- Greed: Wanting more and more money is a natural outcome of any successful business or person, however greed is self consuming and never ending.
- Automation: Automation of factories by machines enables cost reduction yet also reduces the number of jobs too.
- Democracy: In capitalistic economies, governments tend to serve the rich more than the majority. Thus the economy becomes more important than the people, and the government becomes anti-democratic.
by Phil for Humanity