Nowadays, you might hear how capitalism is a bad system that ruins our social and economic order. One might wonder if it is a part of the growing bundle of populism – simply saying that the capitalistic approach creates inequality, corruption, and pollutes our environment. That might sound appealing to many people. And yet, what is capitalism? Is it really a bad system? Is this system responsible for the corrupted behavior of humans and the inequality that has been created? And perhaps capitalism actually reduced inequality?
After all, it’s just a system… which by the way came to life from the mind of one of us, Adam Smith, the father of capitalism. And Smith actually pointed out about the bad apples in our social system though he believed these bad apples can contribute to the system.
A bruised apple is not all bad. It still has tremendous potential.
There’s no argument that Capitalism has many flaws harming our global society.
In simple terms, what is capitalism?
The most basic explanation of Capitalism says that it is an economic system based on the private ownership of the means of production and their operation for profit. In Capitalism, the government plays a secondary role as the power shifts to people and private corporation
First, the biggest flaw of Capitalism as a system is the word Profit, which in a way creates immoral values in an economic and social system.
Second, in comparison to other systems such as Communism and Socialism, In Capitalism, the government indeed plays a secondary role and people have more power. Even in terms of human rights and freedom, Capitalism is a much better system than most of the others (maybe Anarchism is the only social system that completely aims to take the power away from institutional authorities).
So, is Capitalism a bad system?
Well, yes and no. Capitalism is the ultimate way to combine natural behavior in our economic system, meaning the free market decides the supply, demand, and the price of a certain product or service. Before Capitalism, the price of any commodity was determined by the elite and there was state-sponsored mercantilism, Feudalism, and slavery. Moreover, Capitalism has contributed to rising living standards and the protection of human rights and property.
Generally, Capitalism has been proven to be good for society but it also has to be ensured that any manipulations and immoral values must be avoided. Therefore, the root of the problem of the capitalistic approach is in the way humans perceive it rather than how it has been implemented. Capitalists have been said to put money over the well being and best interest of the people and nature, however, we must wonder whether it is the system responsible for that injustice or human nature. Regardless, the system is being blamed for some of the most unjustified human developments in the past two centuries. Those include the long working hours of 9-5, the climate change and the destruction of nature by humans, and the lack of proper distribution of resources.
There’s a discussion of whether communism was ever implemented correctly in any society. The idea of communism is good but unrealistic, particularly with the growth of production and the extensive range of products and services. In that situation, a government cannot control the production and values of goods in the most effective way, unlike the original idea of Communism that aimed to control a narrow range of products.
However, Capitalism has also never implemented correctly. In the book ‘23 Things They Don’t Tell You About Capitalism’, the author Ha-Joon Chang talks about the flaws in implementing the Capitalistic system in the right way. One of the chapters – Capital has a nationality – Discusses how the lack of capital mobility causes a disruption in our Capitalistic globalized system. In that sense, a real Capitalistic system would be much effective and genuine in a small (closed) market. Ha-Joon Chang has a good point. Capitalism could never be achieved or run in the interest of the working class.
The bottom line, it’s a social-economic system. Capitalism is an economic system and therefore is lacking a moral sense. But Capitalism was not written in stone and can be adjusted according to humans’ needs and desires. Most ironically, Capitalism is not discussed these days in the way of ‘how to improve it’ nor it had been discussed by politicians, economists, celebrities, or public experts. Unfortanelty, even though the Capitalistic system is in use every second in any part of the world, the word Capitalism is a tabu. There are reasons as to why Capitalism has become a dirty word but as a matter of fact, we are all capitalists in one way or another. While some blame Capitalism to kill love between humans or taking the power from the people, others believe that Capitalism is the best alternative and is not responsible for these effects.
But just like any other social/religious system, Capitalism has many pros and cons. Here are some of them:
Capitalism – Pros and Cons
✅Capitalism encourages efficiency
✅An incentive economic system to produce, grow and innovate
✅A wider range of products and services
✅Encourages innovation and progress
✅Freedom to trade
✅An individual has natural property rights
✅Businesses and individuals can create things that benefit the society for profit
❌Tends to increase inequality between rich and poor people in a society
❌ Creates overproduction and overconsumption
❌ Capitalism creates immoral values in the society
❌Encourages the unrealistic idea of economic growth
❌Firms can get a monopoly in the market and take advantage of economic and political power
❌Businesses and individuals can create things that harm society for profit
The bottom line
The majority of the countries in the world have embraced the Capitalistic system in one way or another. Even China is partly capitalist and the Nordic countries that have deep routed to socialism operate their societies with a Capitalistic approach. Generally speaking, one might say that we haven’t yet found a better social-economic system than Capitalism, and when and if it will arise, a new economic system will slowly replace the current one. Meanwhile, the different opinions about Capitalism are all valid. We tend to believe that an economic system should be perfect, which is unreasonable belief. Capitalism is, in fact, good and bad and therefore it is a matter of an individual ideology and life perception, much similar to religion and the perception of love, war, and nationalism.
It is quite bizarre to use social systems that were invented a few centuries ago, particularly when new technologies and industrial tools have been added to the equation. The sharing economy is the latest ‘economic system’ that can be discussed, however, it can also be criticized due to injustice use of sources (such as Airbnb), and the rise in prices it creates. Cryptocurrencies are another tool that can make a huge difference but there is a question of what can be the impact of digital assets if the system remains the same.
The ideas of writing about Capitalism came as a result of the constant misuse of the word. The system is not definitively wrong but it’s far from being perfect. Yes, there are many flaws and immoral values that grew up from Capitalism, however, it also created freedom, a huge personal and technological progress, reduced governmental intervention, and created a positive individualistic approach.