What is capitalism and how does it affect citizens?
Capitalism is a type of economic system where the government allows their citizens to control the economy, rather than the government. This is different to an economy like socialism where the government controls business.
Another name for capitalism is the free-market system[1]. The “free” in free-market system means that the market is free to work itself out without government intervention. Businesses can decide what products to make and how much to sell them for. People can decide what products to buy and how much they want to pay [1]. An example would be Jeff Bezos. He owns Amazon which produces wealth by using resources to create a service. Steve jobs produced wealth by founding a company that turns resources into a product that people wish to buy. A farmer owns a farm that utilizes resources to produce a product.
The main motive for Capitalist economies is profit, so naturally, supply and demand is one of the basic ideas of capitalism[3]. Supply and demand is how capitalism sets prices. When the supply of a product increases, the price of a product decreases and the demand for the product may go up because it costs less. At some point, too much demand for the product will cause supply to diminish. As a result, prices will go up. The product will then become too expensive, demand will drop due to the price and the price will drop. Ideally, supply and demand should find a balance where the amount of goods being supplied is the same amount being demanded[3].
The type of impact capitalism has on your life depends on your financial status in society. For someone who owns a business and employs other workers, capitalism can make sense. The more profit your business makes, the more resources you have to share with your workers [2]. Again, everything is based on the principle of supply and demand. The problem is that many people that benefit from capitalism are not good at sharing wealth, which is why one of the major critiques of capitalism is that it makes the rich richer and the poor poorer [2].
[1] https://www.thebalance.com/market-economy-characteristics-examples-pros-cons-3305586
[2]https://www.google.ca/amp/s/www.teenvogue.com/story/what-capitalism-is/amp
[3] https://www.britannica.com/topic/supply-and-demand
[4] https://www.imf.org/external/pubs/ft/fandd/2015/06/basics.htm
Dear Saachi,
I remember leaving a response to your project plan – such a nice re-visit to your work. As mentioned before, I enjoy your differentiating question! Out of your sources, which would you say has been the most useful for learning about capitalism’s effect on people? I had read over this interesting blog post before, and I think you may find it has an interesting perspective as well: https://jacobinmag.com/2016/04/tax-the-rich-capitalism-marx-socialism
Looking forward to your 2nd round of research!
Best Regards,
Galicia.
Hi Saachi,
What an interesting question! I was recently learning about more ideologies when the question of economic strength and growth came up. It seems that the competition of a capitalist or socialist economy is prevalent in several countries.
Perhaps for your next rounds of research, you can do more comparisons of different types of economies and how they compare to capitalist economies.
Here’s a source that might help: https://courses.lumenlearning.com/wmopen-introductiontobusiness/chapter/economic-systems/
Great job on your first round. I look forward to reading more!
Rasee