"Self-interest is the basic motivator of human action" – Adam Smith
Capitalism is defined as an economic system characterised by private or corporate ownership of the means of production, investment decisions based on private rather than public interests, and prices determined by the factors of supply and demand in an unrestricted market. In a theoretical capitalist society, there is an extremely strong profit incentive which leads to the accelerated development of new products and technological advances which benefit not only those who are strong enough to succeed but also the consumers who use the products. Capitalism in practice leads to high unemployment, alienation, the business cycle, poverty and crime.
Capitalism is a political system in which factories, companies, land, etc. are owned privately in order to create profit for the owners. Prices of goods and services fluctuate depending on the desire of the consumer and the availability of the goods. In a capitalist society there will be significant differences in wealth and power between those who have capital and those who do not.
In 1776, Adam Smith, a Scottish economist, described the workings of a capitalist society. He believed that a country’s wealth depends on all people pursuing their own interests. Smith thought that governments should promote free trade and not interfere by protecting certain industries from competition. These policies were adopted by much of Western Europe and continue to be fundamental components in the thinking of most right-wing governments today.
Clearly Capitalism has its benefits because of accelerated economic growth and prosperity and rapid progress in science and technology. The strive to create an acceptable product at an affordable price to compete with other service providers helps to keep the cost of products low yet industries with few competition can sell products at excessive prices. Capitalism is controlled by supply and demand — where there is a strong demand for something, the product will make it there. You will not find any long lines waiting for bread in a capitalist society. In a socialist-based economy, a strong demand for a product in a certain area does not have the same motivational impact on suppliers because there is no profit-factor. Also, the amount of wealth, which we are able to accumulate from our efforts, gives us a measure of accomplishment. Many people use wealth as a measure of their success by comparing their material wealth with those around them. Aspects of modern capitalism such as the stock exchange and banks greatly enhanced the efficiency of economy.
To keep prices low, and to compete, management must prey upon labour, keeping wages low, automating jobs out of existence, and exporting jobs to other nations which still have slave-wage labour. This leads to inferior products from discontented and untrained labour who realize that management only cares about their output. A person who makes the effort to contribute to a society should be truly rewarded for his effort. Capitalist economy now exhibits a wider gap between rich and poor than it has at any other time since World War II. Workers in first-world countries must compete with workers from developing countries who are willing to work for very little pay.
Statistics show that at least a third of the American senators are millionaires and most other ones came from the upper-middle class. As a result of the capitalist system, the wealthy have more political power. Only the rich can afford the high campaign cost and the education required to become a politician. Nevertheless, this system usually yields qualified and experienced representatives instead of the average person with limited political background and education.
One point that must be acknowledged is that capitalist governments are in power in almost every country in the world and show little inclination to change their system.