The main features of capitalism

THE MAIN FEATURES OF CAPITALISM

Introduction

Capitalism is an economic, political and social system which is practiced in many countries of today. Some of the countries where this system is practiced include, but is not limited to, the United States of America, Britain, France and Germany. In this system, the means of production and distribution of goods and services are in the hands of private individuals. The main motivation of the players in this system is to make profit.

THE MAIN FEATURES OF CAPITALISM

Private ownership

In a capitalist system, those who own the means of production, those who distribute the goods and those who engage in the business of the exchange of goods and services are private individuals. Mostly, these are relatively few and they are referred to as the capitalists.

Highly competitive

Another feature of a capitalist system is the presence of competitive spirit among the various players within industries. Each investor is interested in taking a fair share of the economic advantage that is available.

Very little government participation

In a capitalist system, the government concentrates on the provision of the enabling environment that makes it possible for the capitalist to easily operate. The government provides infrastructure such as constant electricity, good and durable roads and generally provide the regulatory environment for business people to function.

Market forces determine price

The little or no direct participation of government in a capitalist system encourages the determination of the prices of goods and services by the forces of the demand and supply. The producer decides when he wants to flood the market with goods and when to hold on. This way, he or she can get the best price for his or her goods or services.

Ability to adapt to change

Over the many years within which capitalism has operated, new technologies have emerged and even newer ways of doing the old things have been developed. One of the hallmarks of the system is its ability to adapt to the changes that come. Old factories have been retooled, reshaped and generally modernized to embrace new trends and be abreast with the times.

Production is determined by consumer behavior

In a capitalist system, businesses do not just produce; they produce based on the taste and the needs of the consumers. This is especially so because when goods that are not consumed, then there is a loss. The capitalist, whose sole aim is profit, would research into consumer preferences to determine what he or she produces and at what time. For example, one cannot produce winter clothing in summer.

SAMPLE QUESTION(S)

1. What are the main characteristics of capitalism?

2. Highlight six features of capitalism

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The advantages of a capitalist economy

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