Question

Capitalism (1 point) Independent farmers in colonial New England consumed two products: food and clothes. They could produce either themselves, or they could grow crops to sell for the clothes rather than producing the clothes themselves. Show the circuit of production for these independent commodity producers. (1 point)

What determines how much these farmers work? Is there a tendency for them to increase their production?

c. (1 point) A capitalist hires farmers to work in a factory making clothes. He pays them wages to work for a set amount of time. The farmer-wage workers use their wages to buy food and clothes; and the capitalist sells the clothes they make, he hopes at a profit. Show the circuit of production for the capitalist and for the farmer-wage workers. Where does the capitalist’s profit come from?

d. (1 point) What does the capitalist do with his profit? What determines how much he will produce? Is there a tendency to increase production in a capitalist economy? What challenges does this create for a capitalist?

Just need the answer to d, the last part

Answer 1

Capitalism is prevalent everywhere now a days. Here, the means of production, distributing etc all lies in the hands of few people. The rights rest within a class of society. The working class is expected to produce goods and services and they are paid against it and these goods are sold for profit. A Capitalist uses this profit again in reinvesting and producing more goods and services so that he can earn more profits out of it and part of it is taken by him and they try to accumulate more wealth.

The efficiency of the working class and the profits made by selling the goods and services produced by them is what determines the production in capitalism. It is also based on the supply and demand in the general market. Central planning is not the base for production in capitalism.

The ratio of making profits to increase production is more rather than increasing production to profits. As few private owners are the people behind it, the part of profits are taken by them and the remaining part is only reinvested which decreases the production, therefore, making profits and accumulation of wealth is more important than increasing production.

In this whole process, a capitalist has to face many chanllenges. In the race to accumulate more wealth he decreases his production level therefore creating a deficit and more losses in future. His idea is more revolving around his own profit so the working class is upset as they are not paid as per their output so their level of contribution also decreases which is shown in the production level. People working with them are not happy so a capitalist has to face it. In the long run it happens that the production falls drastically and a capitalist has to incur losses.