Question

Discuss some of the challenges of capitalist systems..

Answer 1

Capitalist System is a market economy wherein all goods and services are produced and sold by corporates and private individuals. Government doesn't have any role in the capitalist economy. Market Economy is an economic system in which all means of production are under the ownership of private individuals. In Market Economy or Capitalist Economy, the market mechanism or price mechanism decides what to produce, how to produce and for whom to produce. The producers and consumers decide through the forces of demand and supply what to produce, how to produce and when for whom to produce.

Challenges in Capitalist System

Profit motive : This drives businesses to produce and sells only for the purpose of making profits. Customer satisfaction is gained yet all income group of customers are not given equal priority.

Income distribution : Income and investments are given major priority towards the high profit making structures and neccesary area are not given much preferences due to less profit chances.

Production of goods : There will be a gap among produced and sold goods. High amount of goods are wasted in the process of production and during the storage and retrieval.

Unemployment : Job certainity is very much less in capitalist system. As only people with goods skills are only given importance the rest are unemployed.

High price : Eventhough market prce is determined by the forces of demand and supply, some of the neccesary commodities are priced higher due to its demand which might lead to starvation etc.

Economic inequality : The pile of wealth will be contained by the richer groups of people while the poorer people will become even poorer.