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Features of Capitalism

Capitalism is an economic system based on the private ownership of the means of production and their function for profit. Central features of capitalism include capital accumulation, competitive market, pricing system, private property, recognition of property rights, voluntary exchange and wage labor. In this article we will learn the Features of Capitalism and the consequences of capitalism.

Features of Capitalism

Features of Capitalism

1. Private ownership of property

In a capitalist economy, every citizen has the right to acquire property, to own it, to use it as he pleases, or to sell it if necessary. So everyone tries to make their life happier by accumulating more and more wealth.

2. Inheritance system

The recognition of the right to private property in the capitalist economy gave rise to the practice of inheritance rights. According to the inheritance system, every citizen of the country can bequeath his property to his wife, children or close relatives after his death. The Inheritance Rights Act encourages the citizens of the country to build more property.

3. Financial freedom

In a capitalist economy, every citizen has complete financial freedom. This means that every person has complete freedom about how to earn income, how and how much to spend, how much and where to save and invest. Also, producers have complete freedom to decide what, how much and where to produce it. But this freedom has to be enjoyed by the producer or the consumer within the framework of law.

4. Freedom of financial purposes

The concept of economic man is accepted in capitalism. That is, it is believed that economic motives are at the root of the various transactions that a person makes.

In fact, there are economic, social, political, moral, religious and humanitarian principles or objectives behind what man does in his daily life. But in capitalism, man is said to conduct all transactions motivated by financial motives. Ordinary people, traders, consumers, workers and producers, all sections of the society are carrying out their transactions keeping in view the economic objectives.

5. Uncontrolled economy

The capitalist economy is uncontrollable. Because the citizens of the country have complete freedom in financial transactions, the government cannot impose any kind of control on them. There are no restrictions on dental consumption, production, exchange and distribution. But if the government has made some rules for the benefit of the society, then everyone has to abide by them.

6. Profit is the inspiration

Profit is the lifeblood of capitalism. All capitalists are motivated by the desire to make a profit. Every action of the capitalists is for profit. Therefore, capitalists produce the same goods which produce more profit. At times, they even produce unnecessary items for their own benefit, sacrificing the social good.

7. Perfect competition

The perfect competition is found in the capitalist economy. Every customer strives to get cheaper goods while every seller strives to sell his goods at a higher price. As there is competition between both the consumer and the seller, there is perfect competition in the market.

8. Cost effective

In a capitalist economy, the price system is effective. All product decisions are made by the pricing system. The higher the price of the commodity, the higher the production of the commodity and the higher the value of the commodity, the more the goods are sold. Production of a commodity whose price has fallen is stopped. Thus production is regulated and controlled by the price system.

9. Existence of trade cycle

In a capitalist economy, just as consumers have freedom of consumption, so do producers. By anticipating demand, manufacturers decide how much to produce a particular product. Sometimes this guess is wrong. Therefore, sometimes over-production leads to a recession and sometimes under-production leads to a boom. Thus in a capitalist economy the cycle of ups and downs is always on.

10. Lack of social welfare

In a capitalist economy, production is done for maximum profit. Therefore, social welfare is of no importance in this economy. Often anti-social items like alcohol, marijuana, opium, garda are produced only for the sake of profit, ignoring social welfare.

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