Global Capitalism Essay

Document Type:Essay

Subject Area:Economics

Document 1

Economic systems have to answer questions such as what to produce, how to produce, and the quantity to produce as well as for whom to produce. Such economic activities create and distribute wealth to individuals, households, and societies who use it to realize specific social and economic targets. There are many forms of economic systems including capitalism, communism, and socialism. In as much as global capitalism has been faulted in a number of fronts, it is by far the best economic system owing to the way it has improved people’s standards of living. Capitalism Capitalism is an economic system that is characterized by private ownership of resources, be they human or non-human. They also suggest that no society can operate wholly on a commanding principle and hence the need to embrace voluntary cooperation (Friedman and Freidman 97).

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According to Friedman and Freidman (4), also, economic freedom leads to political freedom. The goods and services produced in a capitalist system are usually in accordance with the taste, preference and the demand of the customers. The other argument by proponents is that, in a capitalist system, the best products are produced for the best prices. This is mainly because every producer in such a market aims to gain as much profit as possible by increasing the output as well as introducing newer innovative products to the market. The argument is in line with J. Schumpeter's argument that capitalism influenced creative destruction, i. e. if firms are inefficient and less innovative, they are bound to go out of business (Pfarrer and Smith 51).

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Capitalism critics There are, however, those who are opposed to the attractiveness of capitalism. The other factors pointed out by critiques include wasteful competition, the threat of over-production, the neglect of social benefits, monopoly practices, economic fluctuations and unbalanced growth (Seth). Prompt answer In as much as it is to some extent true that capitalism has quite a few flaws, the merits it has outdoes the demerits. As a result of increased free market trade policies championed by the World Trade Organization (WTO), the rates of extreme poverty and child mortality have lowered significantly. When global corporations open up factories and other businesses in the developing countries, there is an increased demand for labor which reduces unemployment and consequently decreases the poverty levels.

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