Economic Systems: Capitalism Essay

1315 words - 6 pages

Seraphina O’Leary
Capitalism
Capitalism is an economic system where people and private businesses are able to control their own trade and means of production for profit. It emerged as technology, production and trade began to increase. During the industrial revolution, capitalism started to influence people more. Some characteristics of capitalism are capital accumulation, competitive markets and wage labor. The government isn’t supposed to interfere with trade. Individual markets raise or lower their prices due to competition and demand for goods. There has been a lot of debate over the usefulness of capitalism. Some believed capitalism had negative effects while others saw more benefits. ...view middle of the document...

Paintings, books, songs, etc. kept the proletariats busy and focused on other things instead of the pain and struggle of work.
In 1848, Karl Marx and Friedrich Engles wrote the Communist Manifesto where he pushes for a communistic society. Capitalism relies on production and trade; if there was an overproduction or underproduction of goods it will hurt the economy greatly. Overproduction leads to a waste of resources, labor, time, and money. Underproduction leads to a smaller profit that what could have been made. The Communist Manifesto also argued about class conflict. Throughout history, there has always been class struggle not just between the proletariats and bourgeoisie. Marx saw this struggle and believed that society would benefit if there were no class separation. He thought that the proletariats would overthrow the capitalistic society and remove private property (Weber 15). Marx believed that labor was where the value of goods came from and the proletariats would realize that. They would revolt so there would be no more classes and everyone would be treated fairly. Collective ownership would be used so everybody would have an equal distribution of wealth. Karl Marx believed having economic competition and the pursuit of self-interest causes problems and inequality between people (Weber 24). He believed that people would work not just for themselves, but for each other.
One of his notable and more contentious theories – the labor theory of value – claims that the value of a good or service is directly connected to the amount of labor required for its production. Capital-capitalism was a form of robbery (profits come from amount not paid to workers for what they produce)
Unlike Karl Marx, Smith believed in a capitalistic society and believed wealth would trickle down. Adam Smith was born in 1723 in Kirkcaddy, Scotland (Weber 27). He was against mercantilism and believed the government should stay out of the way of economics. He was a strong supporter of capitalism and believed that people should be able to produce whatever they please in whatever quantity they decide. They should be allowed to charge buyers at the prices they want also. He believed that this economic system would be the smartest and most beneficial one to society. Adam Smith called his idea the “Invisible Hand” because it would benefit people without them realizing (Weber 32). Everybody would be looking out for their own interests and try to get as much profit as they can. A consumer will only pay a certain amount depending on the value of the good. If potatoes were $50 a pound, nobody would buy them because it wasn’t worth it. The merchants have to find a price that people will still buy their goods, but a profit is still made. If you pay $10 to get potatoes in your store, you have to earn more than $10 to gain a profit. Consumers and merchants will go back...

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