CAPITALISM: WHY IS IT BAD?

By Faith Pascual

I. ABSTRACT

This paper argues that long-term human development, in incomes, social conditions,
security and so on. The big issue is not state versus market, or growth versus equity, or dynamism
versus security. It is the jointly determined functioning of both capitalism and the state. It is in
particular a consequence of the extent to which both capitalist and state behavior is oligarchic,
extractive, exploitative and divisive as opposed to being inclusive, innovative, accountable,
responsive and effective at mediating distributional conflict. This is a product of the historically
shaped interaction between political and economic elites, and between these and various social
groups. Specific policy designs of course matter, whether in terms of market-related policy,
regulation, designs for social provisioning. But the ways in policy and institutional choices work,
and indeed the choices societies make, is intimately linked to the nature and functioning

II. INTRODUCTION

We live in such an unfair society. There are many reasons why Capitalism is bad but few in favor,
which also explain why anything good is worse than it does. Capitalism can cause inequality, market
failure, damage to the environment, short-termism, excess materialism and boom and bust economic
cycles. While capitalism has certainly helped propel innovation and prosperity in modern society, it can
also create inequalities and contribute to market failures. Have you ever noticed that instead of telling you
how they intend to solve the numerous problems that capitalism has created, they simply tell you why
they believe socialism is bad?

Like always, there are different classes in this system. The rich (capitalist) class, who owns the
means for producing and distributing goods, and the working class, who sell their labor to the capitalist
class in exchange for wages. People at the top of the pyramid, are the ones who control the capitalism.
But the main question is that, is capitalism good or bad? The system has good and the bad sides to it, but
mainly, the people at the top of the hierarchy pyramid is the most important since they are the ones who
made this system.
A. INTRODUCTION TO CAPITALISM

Capitalism requires a free-market economy driven by supply and demand. There is a lack of
government intervention. Competition helps keep prices moderate and production efficient. This stands
in opposition to socialism, a system in which the means of production are owned by the state.

Profit is the primary goal of capitalism. Capitalism values private property ownership and opposes
government intervention in the economy. Cultural myths hold that capitalism is bad because it has resulted
in a large separation of wealth from the wealthiest individuals in a country. Although the separation of
wealth is not a myth, I believe that blaming capitalism and wealthy individuals for society's economic
woes is.

Capitalism is the economic and social system (and also the mode of production) in which the
means of production are predominantly privately owned and operated for profit, distribution, and
exchange, is in a mainly market economy. It is usually considered to involve the right of individuals and
corporations to trade (using money) in goods, services, labor and land.
Capitalism requires a free-market economy driven by supply and demand. There is a lack of government
intervention. Competition helps keep prices moderate and production efficient. This stands in opposition
to socialism, a system in which the means of production are owned by the state.

Thus, according to Karl Marx, capitalism is based on the exploitation of workers by the owners of
capital, and under his theory of historical materialism, represents just one of the stages in the evolution of
a society which would be overthrown as the workers gain class consciousness and take control over the
state.

B. THE HISTORY OF CAPITALISM

Some form of capitalism has been dominant in the western world since the end of feudalism in the
Middle Ages, and has provided the main, although not exclusive, means of industrialization throughout
much of the world. Its rise to prominence arose from mercantilism in the 16th to 18th centuries, and
coincided with the rise of liberalism and laissez-faire economics in western society.

Even if certain elements of the capitalist organization existed in the ancient world, between the
16th and 19th centuries in England capitalist economic practices became institutions, spreading across
Europe, across political and cultural borders.

The classical tradition in capitalist economic thought emerged in the late 18th century in the United
Kingdom, with Adam Smith, David Ricardo (1772-1823), and John Stuart Mill, as well as in France with
Jean-Baptiste Say (1767-1832). John Locke's earlier work, which argued that the right to private property
is a natural right, made significant contributions to the theory of property.

C. CHARACTERISTICS OF CAPITALISM
i. Freedom of Enterprise

Individuals and companies have the right to own, use and earn and spend property. Private
companies are here allowed to obtain resources, to manufacture and sell the product to anyone in any way.
There will be no government or other limitations on private individuals' freedom and ability to carry out
a business in this type of system.

ii. Private Ownership

In this type of system production factors, land, labor and capital, are private, that is, freedom of
personal property ownership. The protection, control and enforcement of private property in this case. The
right to own property also holds the right to make use of the property.

iii. Profit Motive

Under capitalism profit motive acts as a basic barometer. Persons invest capital into business to
earn profit. In a capitalist economy, the person is free to select any occupation he is qualified for. This
freedom of choice enables the individual to earn profit from his own started business. The owners of
means of production enter that field in which property yields maximum profit. More resources flow into
those areas where yield is more.

iv. Competition

Sellers and buyers compete in an ideal capitalist system. The tough competition between
manufacturers forces them to best use production factors and produce at minimum costs in order to achieve
maximum profits. Competition is therefore considered necessary in a free market economy in order to
safeguard the consumer and maintain a flexible price system.

v. Limited Role of Government

In ‘Laissez Faire’ form of capitalist system, the government does not interfere in the working of
the economy. Manufacturers and consumers are free to decide. But the government provides general
directions towards the economy by fiscal and monetary policies in modern capitalist systems (regulated
and mixed capitalism).
 III. CONCLUSION

In conclusion, Capitalism does not work for everyone. It benefits a few and leave the rest to
scramble for the scraps. And the lack of access to opportunities in capitalism is unfair, and unjust. Is
government essentially helpless, taking a back seat to the informal norms and practices of a society? Why
are we so addicted to money, rank, social classes, and power? What gets us into trouble isn't what we don't
know, it is what we believe to be not, but actually is. Capitalism ranks us into different classes, it makes
us greedy, it makes us believe that we’re different from each other, and that with the ones that are high in
the classes, are the only the ones who’s deserving of respect. Capitalism turns us into monsters, it makes
us unstable, in a way wherein wealth, opportunities, and needs are disproportionately distributed.