Communism, Capitalism And Socialism Essay

7010 words - 28 pages

Capitalist Economic SystemCapitalism is an economic system that is based on the private ownership of capital goods, or the means of production, and the creation of goods and services for profit. Elements central to Capitalism include capital accumulation, competitive markets, and a price system.There are multiple variants of capitalism, including laissez-faire, welfare capitalism and state capitalism. Capitalism is considered to have been applied in a variety of historical cases, varying in time, geography, politics, and culture. There is general agreement that capitalism became dominant in the Western world following the demise of feudalism. The term capitalism gradually spread throughout the Western world in the 19th and 20th centuries largely through the writings of Karl Marx.Economic elementsThere are a number of different elements in the capitalist socio-economic system. Capitalism is defined as a social and economic system where capital assets are mainly owned and controlled by private persons, where labor is purchased for money wages, capital gains accrue to private owners, and the price mechanism is utilized to allocate capital goods between uses. The extent to which the price mechanism is used, the degree of competitiveness, and government intervention in markets distinguish exact forms of capitalism.Capitalism and capitalist economics is generally considered to be the opposite of socialism, which contrasts with all forms of capitalism in the following ways: social ownership of the means of production, where returns on the means of production accrue to society at large, and goods and services are produced directly for their utility (as opposed to being produced by profit-seeking businesses).Factors of productionA product is any good produced for exchange on a market. A commodity refers to any good exchanged in a market, but more recently refers solely to standard products such as raw materials.There are two types of products:capital goods (or the means of production including intermediate goods)consumer goods capital goods (i.e., raw materials, tools, industrial machines, vehicles, and factories) are used to produce consumer goods (e.g., televisions, cars, computers, houses) to be sold to others.The three inputs required for production are:labor (including human capital)land (i.e., natural resources, which exist prior to human beings) andcapital goodsCapitalism entails the private ownership of the latter two - natural resources and capital goods - by a class of owners called capitalists, either individually, collectively or through a state apparatus that operates to maximize profits or that serves the interests of capital owners.Money, capital, and accumulationMoney was primarily a standardized medium of exchange, and final means of payment, that serves to measure the value of all goods and commodities in a standard of value. It is an abstraction of economic value and medium of exchange that eliminates the cumbersome system of barter by...

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