Question

7) What are the three crucial parts of capitalism? Put these into your own words! a) b) c) 8) Is it possible to "name and analyze" capitalism in an unbiased way?

Answer 1

Three crucial parts of capitalism:

a) Profit-oriented : In a capitalistic society companies exist to earn profits. The main motive behind the existence of companies is to produce and sell goods and services to earn profits. In a capitalistic economic system, companies do not focus on satisfying consumer's needs rather they get involved in satisfying their desire to earn profits.

b) Government Intervention: According to capitalistic society there should be less government intervention in markets. But a completely government-free capitalist society is not possible. There are some industries which are controlled by government, so no private companies can exercise their own control to earn maximum profits. In contrary to this, capitalism needs a free market where there is no government intervention. It sets the price according to the laws of demand and supply.

c) Ready to become adapted : The last feature of capitalism is the capability to accept change. Adaption of new technology means acceptance of change in the current system, which acts as a strong booster to achieve economic efficiency and earning profits.

8) It is not possible to name and analyze capitalism in an unbiased way, because capitalism is not just an economic system based on private property, market competition and other financial instruments, it is an economy controlled by the capitalists or run in the interest of capitalists. It does not want the government intervention in controlling market economy. In capitalistic economy, market is controlled by the forces of demand and supply, if there is high demand for a particular product then the companies raise their product price to earn maximum profits, whereas if there is less demand then companies reduce their price to a certain extent so that they do not have to face a huge loss for their products. The ultimate aim of capitalism is to earn profit not to fulfill the needs of public.