Posted by Chester Morton / Sunday, 6 May 2018 / No comments
What are the disadvantages of a capitalist economic system?
THE DISADVANTAGES OF CAPITALISM
The definition of capitalism
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, Germany, to mention but a few. 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 DISADVANTAGES OF CAPITALISM
Capital in few hands
One of the disadvantages of capitalism is that wealth and
the control of the means of production is concentrated in the hands of very few
individuals. The rich families always control the wealth of the society. In the
United States of America, which is the bastion of capitalism in the world, according
to the New York Times, the richest 1% of the total population of the country
controls roughly 38% of all privately held wealth. On the other hand, 73% of
the debt owed in the U.S. is owed by 90% of the population.
Too much focus on the making of profit
Another disadvantage of capitalism is that there is too much
concentration on profit-making for just a few individuals in the society.
Capitalism does not have any human touch. It does not care about the social
needs of the mass of the people.
Unequal distribution of wealth
In a capitalist system where the means of production and distribution
of goods and services is owned by just a few members of the society, the wealth
of an entire nation could be controlled by just a few wealthy individuals and
families. The rest of the people, who depend on the largess of the rich through
jobs offered to them, live from one pay cheque to the next. The wealth of the nation is not
evenly distributed among the bulk of the people.
Cost to the environment is huge
The drive for profit in a capitalist system sometimes pushes
the captains of industry to go to the extremes, all for the sake of profits. The
by-products of some of the business entities are harmful to the environment but
these by-products are not disposed of properly, therefore causing harm to the
environment. Some producers of drugs are so greedy for profit that they go
ahead with commercial production even when it is proven that the particular
drug has side effects for users. The social cost of capitalism is therefore very high too.
Labour is under-valued
In a capitalist system, the desire to make profit all the
time results in the rich industrialists not paying their workers according to
their level of productivity. The workers too, sometimes, are not able to
bargain with the owners of industry to pay them what they are really worth, all because they do not have the bargaining power.
Even in countries where the rights of the workers are protected, it is still
not that easy.
Propensity for industrial unrest
There is always a power play between the owners of industry
who want to pay less in wages and salaries to enhance their profit margin and
the workers who believe their wages must be increased in consonance with the
efforts they put into the production of goods and services. This power play
results in industrial unrests that can affect the peace of the society.
SAMPLE QUESTION(S)
1. What are some of the disadvantages of capitalism?
2. a. What is capitalism?
b. Give five reasons why some people do not
practice capitalism.
The main features of capitalism
The advantages of a capitalist economy
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