Capitalism is a type of economic system. It is also referred to as free market economy. The United States champions capitalism, which has become the system in most countries of the world. Capitalism allows private and publicly traded companies to own and operate land, natural resources, businesses, homes and services. Production of goods, delivery of services, distribution and even pricing of goods and services are determined by businesses and people, not by the government. Like any type of economic system, there are certain capitalism pros and cons.
List of Pros of Capitalism
1. Capitalism allows people, who are private citizens and not government appointees, to own businesses.
They can purchase land, develop infrastructure, run their own enterprises and make investments. While there are regulations in place that everyone must abide by, there is no direct government interference. The government doesn’t own any private property, asset or commodity. People are empowered to earn their livelihoods in a legally permissible way without depending on the government.
2. Capitalism allows anyone to open a business to make money.
There is absolute freedom to operate a business anywhere one chooses and other than paying the taxes there are no liabilities or commitments to the government. Of course there are federal and state regulations pertaining to the quality of products and services but those don’t infringe on a person’s right to run a business.
3. Capitalism is fair as it provides a level playing field for anyone and everyone to make money.
No one, including the government, has the exclusive right to operate a certain kind of business, to produce a certain kind of product or to offer a particular type of service. Unless one is infringing on copyright or patent of someone else, there is a free market to produce, sell, buy and offer any product or service.
4. Capitalism frees up the world of business from political interference.
One doesn’t have to lobby to get a license. One doesn’t need political patronage to start or run a business. The government doesn’t say how much to produce, what to sell, how to sell and at what price one would offer the products or services. An individual running a business or the owners can decide what is best for their enterprise and perform their tasks accordingly. No government authority has any right to dictate terms or influence the business to do anything that it doesn’t want to.
5. Capitalism allows companies to come up with products or services that they want based on what the people want or don’t want.
The businesses can assess the demand and accordingly work on supply. There is no shortage of goods or services because if there is a demand that is not met then people can open up businesses to meet that supply requisite.
List of Cons of Capitalism
1. The system is not foolproof.
There are loopholes. Almost every type of freedom is exploited so the freedom to run a business in any way one wants and to whatever end goals that one decides is also exploited. There are many businesses, rather people, who take advantage of the free market. Companies can indulge in unfair practices at the workplace. Labors don’t always have the best treatment meted out. They could be poorly paid or unreasonably paid. There can be workplace injustices and no way for employees to fight back. Unless there is something seriously wrong that is deemed legally tenable, employees cannot really sue the employer. Other than the minimum wage, companies don’t really have to adhere to any wage standard. Also, minimum wage doesn’t apply to every industry or type of job.
2. Capitalism leads to thwarting of labor unions.
There are no labor unions in large businesses that are privately held. Labor interests may not be the priority of the companies. There can be unsafe work conditions, painstaking work hours, professional hazards and people may not be paid fairly.
3. Capitalism makes way for large companies to control not just their business but the market.
Large corporations can buy out smaller companies, put them out of business using various tactics and can just ruin the prospects of the competing firms using various nefarious but not illegal methods. From buying out media space to renting shelf space, by consuming the supply of raw materials to even predatory pricing in certain cases, large corporations would always have an advantage over small to medium businesses. In that sense, capitalism only benefits those with deep pockets. The ordinary citizens are not really empowered.
Since large companies can control the market, they can control the prices, the kind of products and services that eventually become available to the masses, they can lobby for certain policies to be initiated by the government not to benefit the consumers or ordinary citizens but to suit the interests of the company. A capitalistic system tends to work solely for profits at the cost of everything else.