CONCEPTS OF

GOVERNMENT
CAPITALISM
CAPITALISM
 PERFORMANCE OBJECTIVES

• Meaning of capitalism.
• Origin of capitalism.
• Features of capitalism.
• Advantages of capitalism.
• Disadvantages of capitalism.
 Meaning of capitalism.
• Capitalism is a political and economic system in which individuals own and control
the means of production and distribution of goods and services in a country.
• It is a free or an open market economy which is against government intervention
and control of the economy.
• Profit is the main motive behind the production of goods and services in a capitalist
society.
• The market forces of demand and supply determine the production of goods and
services under capitalism
 Origin of capitalism.
• Capitalism succeeded feudalism as a political/economic system.
• The Industrial Revolution in Britain and the Theory of Individual Rights
led to the emergence of capitalism.
• It is the third stage in the history of human development according to Karl
Marx’s analysis.
 Social structure in a capitalist society.
• A capitalist society is made up of three main social classes. These are:
• 1. The owners of capital (called the capitalists or bourgeoisie).
• 2. The workers (collectively called the proletariat), i.e those who work in the
factories or industries owned by the capitalists.
• 3. The masses or the vast majority of the ordinary people (who are called the
peasants).
• Usually, a capitalist society is characterised by conflict between the bourgeoisie
and the proletariat.
 Features of capitalism
• Freedom of enterprises.
• An open and free market economy.
• Profit is the main motive for production of goods and services.
• The quantity, quality and prices of goods are determined by the entrepreneurs.
• Political power is shared by many groups in such a society.
• Government’s role is limited.
• High degree of occupational specialization.
• A wide gap between the rich and the poor
 Advantages of capitalism.
• Offers people freedom to choose how to earn a living.
• Competition in the production, distribution and marketing of goods.
• High level of incentives.
• Level of economic growth is faster in a capitalist economy.
• Capitalism encourages specialization in production which leads to an
increase in production, efficiency and quality of goods.
 Disadvantages of capitalism.
• Capitalism widens the gap between the rich and the poor.
• Small scale enterprises cannot compete favourably with large scale
organisations.
• Industries and social amenities are often concentrated in the cities.
• Sometimes, there is excessive production of goods in a capitalist society.
• The capitalist system promotes a link of political power to wealth.