Pros and Cons of Capitalism

Capitalism is defined as an economic system that is based on private ownership of capital. In a capitalist economy, the means of production are distributed to private persons and the functioning of the market determines the production and pricing of goods and services. Let us look at the pros and cons of capitalism.

Pros of Capitalism

Capitalism promotes economic growth by providing an open competition in the market. It provides individuals with far better opportunities of raising their income and thus achieving economic growth.

Capitalism results in a decentralized economic system. This is considered as one of the greatest advantages of capitalism. In a decentralized economy, individuals are open to more number of options in business. They are exposed to competition and have to face different challenges and find solutions to them to stay in competition. It is in a capitalist economy that hard work is rewarded. Entrepreneurs who pitch well and are able to better their business are the undoubted winners.

Capitalism gives rise to an economy where the consumers regulate the market. Many consider this as one of the greatest strengths of a capitalist economy. A competitive market provided by capitalism facilitates the manufacture of a wide variety of products and the formation of a wide range of services. Consumers are happier in a capitalist economy. It encourages people to work towards financial freedom.

Cons of Capitalism

Some consider the fierce competition brought about by capitalism as its major drawback. They believe that a capitalist economy can give rise to unfair competition.

Capitalism makes an economy money-oriented. Business corporations look at the economy with a materialistic point of view. Profitability remains their only primary business goal. Business giants take over smaller companies. Employment rights are compensated with the sole aim of higher productivity.

Some economists believe that capitalism may lead to a depletion of the resources on Earth, as it requires continuous economic growth.

There are different views about capitalism. Some believe in its strengths, while others complain about the unfair distribution of wealth it may lead to. A mixed economy can perhaps serve as the golden mean.