What is a Capitalist Economy? It is difficult to give an exact answer to this question. But from the features that appear in the capitalist economy, the meaning of capitalism can be explained as follows.
What is a Capitalist Economy
An economy in which the consumer has the freedom to choose goods and services, the individual has the freedom to choose a business, the individual can establish private property rights, the competitive market exists, the market maintains a fair price and the government adopts a policy of non-intervention is called capitalist economy.
Equilibrium price is established by the actions of the market, hence such economy is also called ‘Market Economy’. In this economy people have free freedom, no government intervention. Therefore, this economy is also called ‘Free Economy’.
According to George Hamms, “it seems more appropriate to call capitalism a ‘free economy’ that provides private economic freedom.”
Definition of Capitalist Economy
Different economists have defined the capitalist economy as follows –
According to Prof Behnam, A Capital Economy is the anti-thesis of an economic dictatorship. There is no central planning at production as a while subject to the limitations imposed by the state, everybody is more or less free to do what he likes. The economic activities of the community are determined by the apparenty unco – ordinated decisions of a multitude of different persons, since each owner of a factor of production is free to use it as he pleaser.
According to Prof Loucks & Hoot, “Capitalization is a system of economic organization featured by the private ownership and the use for private profit of man made and natural resources.”
According to Prof. Karl Marx, “An economy that combines labor slavery, profit-based production and surplus value is called a capitalist economy.”
According to Prof. G. D. H. Cole, “Capitalism is a system of production for the purpose of profit, in which the means and materials of production are privately owned. Production is carried out by hired labor. Production is owned by the capitalists.”
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