Capitalism is a kind of modern economic system in which private organizations, independent individuals have full ownership of goods. The production of goods and rendering of services is based on the demand of the market. In other words, the market plays an important role in determining the economy of the market which is directly proportional to the economy of the country. Capitalism is also known as the planned economy and the most genuine and purest form of capitalism market is the free market which is also known as “laissez-faire capitalism “ but thre may be pros and cons for capitalism.
In today’s economic structure, countries which have followed capitalist system, the government indirectly get involved in the market in the form of rules and regulations. So there are certainly pros and cons for setting up the capitalist system by a country.
What Are The Pros and Cons For Capitalism In Business?
It encourages the resident of a country to have innovative ideas that can really help in promoting of ideas that can be put into practice which can help in improving the growth of economy and country in fields of science, arts etc. The government basically gives the individuals to ability to choose their own business models and work towards it. It can help in improving the trade among the community and also in trade exchange with other countries. There is variation and innovation in the production of goods, and consumers are free to choose to purchase products that are available in the market but it does mean that pros and cons for capitalism the government must know how to balance it . So it helps to eliminate the division of classes as no one can be stopped from making purchases and setting up businesses.
There are cons also that cones with adopting capitalism model are that when the private organization becomes powerful there is the possibility of corruption in the organization and government officials. The firms can exploit innocent customers because the government gives freedom to a business organization for setting up prices of services and products. When it comes to workers, the companies can pay less wages to them. This can happen when the organization is corrupted and have monopsony power. Since the government doesn’t involve in the work process of organizations it can cause serious issues carbon imprint, inequality of workforce, payments, irregular in paying tax etc. These are some of the pros and cons for capitalism when it is adopted in the economic model of a country.
Capitalism can definitely improve the economy of a country and can help in easy in doing business with other countries. United States Of America (USA), France, Germany are countries that follow the Capitalist Economy.