Capitalist Economy

Capitalism or a capitalist economy is not a new concept and dates back to the industrial
revolution. It is termed as an economy where the government does not take part in any kind of
production process and entrepreneurs are encouraged by the government.
As the winds of industrial revolution started blowing over Europe, entrepreneurs rose to
prominence and enslaved the resources from the new colonies and technology that was
developing everyday. These entrepreneurs were often termed as capitalists and their power was
further boosted by charters granted to them by their respective crowns and the enactment Joint
Stock Companies Act that was passed in Great Britain.

The capitalists, thus, fulfilled the functions of employing resources and labor for the manufacture
of goods and services that was done with the help of technology and scientific advancement that
was developed by scientists.

What is a Capitalism

In the pre-world war I era, most of the economies in Europe were capitalist is nature. Even today,
many economies have reformed their demerits but have remained capitalist. It must be noted that
100% capitalist countries, where the government plays a laissez-faire role no longer exist.

In a capitalist country the government does the duty of collecting taxes and safeguarding the
security of the country. In fact, some essential public functions such as public transport, taking
up construction of roads or dams were also handed over to the private sector.

Advantages and Disadvantages of Capitalist Economy

There are some advantages as well as disadvantages of capitalist economies that were realized
during the industrial revolution itself. Such advantages and disadvantages have been enlisted in
the following paragraphs.

Advantages
The first and foremost advantage is that rapid economic growth is observed in the nation. The
second advantage is that all capitalists make an attempt to dominate the overseas markets. This
brings in large amounts of wealth into the nation. A capitalist market also mobilizes almost all
possible resources, monetary and non-monetary, by enslaving it into the production process. The
capitalist system has also lead to the development of science and technology which enhances the
standard of living of an economy.

Disadvantages
The capitalist system first of all makes a huge gap in between the rich and the poor. Exploitation
of labor is often noticed in such an economy. In addition to that there are also cases where strikes
and intense class violence is observed. A capitalist market economy often puts a lot of pressure
on the natural resources and the environment. A looming energy crisis is often a grave threat to
the economy. Fraudulent, unethical and often life-threatening practices by capitalists are
observed in the economy.
There are many politicians who observed that having a totally capitalistic economy is not exactly
very healthy. However, there are many different mixed capitalist market systems that have
evolved as a result. There are many such mixed capitalist economies that concentrate on the
phenomenon of capitalism but maintain appropriate legislation in order to curb all the ill effects
of capitalism. In addition to that such governments also undertake all tasks that are considered an
absolute necessity. Such tasks include, education, health, defense and infrastructure. The
remaining sectors are open for the private sector.

There are also many other political ideals such as communism or socialism that you may like to
refer to. In the modern era, post the cold war, people at large have realized the importance of
having elements of both socialism and capitalism blended in their economies. Such ideals have
definitely paved a way for better economic, political and social conditions in any given capitalist
market economy in the world.