Question

4. What are the primary characteristics needed for a successful capitalist system? How has capitalism enhanced worker productivity?

Answer 1

The means of production are owned and operated in a capitalist economic system by private individuals whose principal objective is to maximize profits. The key features of the capitalist economy are free trade, competition and private ownership of the land. Capitalism is also known as free economy of enterprise, or free market economy.

Also known as free enterprise economy, capitalism. This is because individuals and private firms have the right to own and utilize property under the capitalist system. They do have the right to earn, invest and spend revenues. They are allowed to obtain resources, organize manufacturing and sell the products in whatever way they like and to anyone. Here, there would be no government or other limitations on private citizens ' rights and right to conduct business. Therefore there is complete freedom of enterprise with regard to the choice of work, employment and enterprise.

Under capitalist economy, production factors such as labor, land, capital, and organisation, are private ownership. Private property is protected by law, is controlled and enforced. Individuals are entitled to own property, and free to use it as they like.

A person is free to pick any occupation in a capitalist economy. This freedom of choice allows individuals to enter the field in which they have knowledge and to buy the property which yields the maximum profit. This kind of freedom allows the businessmen to make money from their company. In those areas where yield is greater, more resources flow through.

The market system is the capitalist economy's most important characteristic feature. It is also called process of demand. Under capitalist economy, the resource allocation is driven by income, which is linked to market mechanism. Under this system the entire economic system moves within the mechanism of the market and around it. This system suffers from lack of proper planning for the economic resource distribution and coordination between production and consumption. The pricing mechanism defines demand, output, and distribution rates. It acts as the mechanism of regulation within capitalist society.

It is also the feature under capitalism that the consumer has the liberty to dispose of his personal income in whatever way he likes. He can spend even more than what he earns at a given time. He can save his income and can lend to anyone.

Competition between salespeople is another feature of the capitalist system. The rivalry between producers lets them make best use of production factors and produce products at minimal cost. They 're trying to get us to shine. Competition is thus considered an integral function of a free market economy to protect consumers and sustain a competitive pricing environment.