CAPITALISM

 

CAPITALISM

Capitalism is an economic system.  It is the opposite of socialism and communism.  It is also different from mercantilism. In the capital system of economy the business and industry of a country are controlled by private players. Its main motive is profit, the lion’s share of which goes to capitalists who invest money and establish businesses and industries. As a result they  become richer and richer, while the workers become poorer and poorer. Some capitalists have monopolistic businesses and industries and face no competition, because there are no rivals.  Otherwise, competition is a good check on quality and pricing.

In capitalism, a government has very few enterprises in its own hands. For example in India, railways are controlled by the Government, but most of the other industries are in private hands.

The revenue of the Government comes from taxes , like income tax, sales tax, GST, etc., levied on business companies, manufacturers, and even individuals who earn a lot of money through any means.

Adam Smith (1723-1790) is considered to be the main supporter of capitalism. In his book The Wealth of Nations, he offers the view that the real wealth of nations is not gold or silver but the land and its resources. This is a deviation from mercantilism where  the emphasis is on exports to other countries and thereby increase  of the country’s stores of gold and other precious metals. In modern times, this system is almost extinct.      

In capitalism, private players enjoy a lot of freedom regarding pricing and payment of salaries and wages, etc. There are only a few laws whereby prices are controlled a little bit as in the case of some medicines.  There are also laws like company law to exercise some control over business enterprises. Labour laws and minimum wages act, employees provident act,  also exercise some control over the profit motive of the private players, yet there remains a conflict between the owners of private owners of trade and industry regarding scales of pay, rates of wages and other service benefits.

Karl Marx (1818-1883) calls capitalism the main cause of class struggle. He was the father of communism. He wanted the working  classes to unite themselves and  achieve dominance in society. He believed that workers are exploited. They don’t get the wages which they deserve. Moreover, there is inequitable distribution of the products of his labour by the owners of the means of production. He therefore pleaded for communism according to which the state, i.e. the government should control the means of producing everything on behalf of the people and every individual should be treated equally.

  Most  of the countries are so far capitalistic. Communism has not been able to succeed as much as it was expected. The biggest blow was struck by the disintegration of the Soviet Union. The most important capitalist country in the world today is the United Sates, and the most important communist country is China.