Table Of Contents
1. Meaning Of Capitalism
2. Features Of Capitalism
3. Origin And Development Of Capitalism
4. Advantages Of Capitalism
5. Disadvantages Of Capitalism
Definition Of Capitalism:
Capitalism can be defined as an economic system in which the means of production, exchange and distribution of goods and services are in hands of private persons providing or borrowing the necessary capital and taking the profits after the costs of the production have been met.
The government has minimum contribution and participation. Capitalist countries include: U.S.A, Japan, New Zealand, Australia, Israel, Nigeria etc.
Features Of Capitalism
1. Means of production of goods and services, distribution and exchange are in the hands of private individuals.
2. Much economic competition and waste in the economy.
3. High level of exchange.
4. Labour is a marketable commodity.
5. Government play limited roles in the production and distribution of goods and services.
6. Choices are made by the people, they decide how to spend their money.
7. What to be produced is based on consumer’s choice.
8. The basic motive in production is profit-making.
9. It is highly specialized system coupled with a high degree as efficiency.
Origin And Development Of Capitalism
Capitalism is said to have originated as off short of production. This came as a result of the need and quest for individual or workers pleasant participation in production, distribution and exchange of goods and services after the much taught about the high landed feudalism.
This is the third stage of the five stages of economic development of societies, feudalism gave rise to capitalism.
Advantages Of Capitalism
1. The system is open and it encourages competition. Effort is geared towards having the best for the consumers.
2. There is specialization and handwork in the system.
3. The people have a choice to make in almost everything needed or demanded.
4. Economic development is rapid because the system is all embracing.
5. Initiatives are encouraged. They are supported not killed.
6. The people can contribute to the political and economic growth of the system.
7. Capitalism is democratic. Individuals are free to pursue any goal or to go into production without any hindrance.
Disadvantages Of Capitalism
1. The system is outrightly exploitative. Examples some companies exploit their employees by paying them peanuts even when they are making enough profits.
2. Producers make excessive profits to the detriment of the consumers.
3. There is political and economic inequality in the system. The gap between the rich and the poor is very wide.
4. There is large scale unemployment in the system.
5. There is unhealthy rivalry among producers of different or same products in capitalist system.
6. Income is not justifiably distributed in a capitalist system.
7. Capitalism introduces and produces insecurity, for example the lives of some rich people are not secure.
Comparison Of Socialism And Capitalism
1. Capitalism is in the hands of private individuals While In Socialism, The state controls the economy.
2. In Capitalism, Political power is highly decentralised. In socialism, Political power is highly centralised.
3. In Capitalism, The economy of the state is not centrally organised. In Socialism, There is central planning of the economy.
4. In Capitalism, There is duplication of economic activities and wastes is evitable. While in Socialism, Duplication and waste are avoided because of central planning.
5. The market is open and competitive in Capitalism. In Socialism, The market is not open, it is a state of monopoly.
7. In Capitalism, Economic power determines political power. While In Socialism, Political power is used to control and shape economic power.
8. In Capitalism, The system is democratic, Two/more political powers exist. In Socialism, The system is totalitarianism with one political party.