Kiana Cornish
October 2008
Capitalism is something that is seen everyday in America. It is a social-economic system in which production and distribution has private ownership, there is a profit motive, and free market. One of the main factors of capitalism is the motive for producing goods and services to sell them for a profit, not to meet different individuals needs. The products of capitalist production have to find a buyer of the product, so they can therefore make a profit off of the product and end up with more money then was originally owned. The free market role that takes place in capitalism is based on supply and demand, with little or no government interference. Supply is the availability for sale of a commodity at all prices, and demand is the amount purchased at a commodity at all prices. A commodity is something that can be bought or sold in the market place. There is also something called the Equilibrium in which there is a price where both agree on. A completely free market is the ideal form of a market economy where buyers and sells are allowed to buy, sell, and trade freely based on a mutual agreement on price without any state intervention in the form of taxes, subsidies or regulation. Some factors that also contribute to capitalism is land, labor and capital. Land is the natural world and natural resources that are used to make the product that is either being bought, sold or traded. Labor is all the work that is necessary to produce and distribute the product, and capital are the factories as well as transportation methods that are used to transfer materials.
When referring to capitalism there is a simple order that can help to get a better understanding of how it works. Wealth, capital, profit, and increased wealth. Capitalism is global, and comparative advantage is why capitalism does globalization. The Invisible Hand also plays a role in the result of capitalism. This helps individuals make improved products, because they are interested in making more money. This therefore helps the market deliver better products than usual, but at a lower rate. The invisible hand can cause competition between companies, because they then compete to make the product that consumers will like the best. This means the companies then decrease products prices, or increase product quality in order for their product to be the best. Overall, capitalism can be very appealing to many individuals across the globe, because it gives them the idea that everyone can have an equal chance at earning plenty of money, while producing goods that society depends on, which appeals to the consumers.
Quotes:
“The forces in a capitalist society, if left unchecked, tend to make the rich richer and the poor poorer” Jawaharlal Nehru quotes ( Indian Prime Minister. 1889-1964)
“Capitalism knows only one color: that color is green; all else is necessarily subservient to it, hence, race, gender and ethnicity cannot be considered within it” Thomas Sowell quotes
(American Writer and Economist, b.1930).
“Capitalism needs to function like a game of tug-of-war. Two opposing sides need to continually struggle for dominance, but at no time can either side be permitted to walk away with the rope.”
(Pete Holiday quotes)
