Question

Two headlines from October 7, 2020 read as follows: “Billionaire wealth hits $10 trillion for first time ever thanks to government stimulus” (Forbes) and “Extreme poverty set for first rise since 1998, World Bank warns” (BBC).

a) identify some assumptions of capitalism and associated concerns, and use those points to explain how the situations described in these headlines have arisen.

Answer 1

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Question:

Answer:

Capitalism:

Capitalism is an economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state.

Two Assumptions of Capitalism:

1. Production For Exchange and Private Ownership:

The purpose of production is not to fulfill people’s needs, but to create profit from exchange on the market. The most of the democratic nations have adopted the capitalism economic system. The democratic nations are promoting maximizing social welfare and based on equality, liberty and brother hood. But in the capitalism economic system equality (economic equality) harm most and its increase income inequality globally and damage the concept of maximizing of social welfare. The private owners investment, production and distribute on the demand and supply basis but their main objective are maximizing profits not social welfare. The wealth of nation are getting polarize and few % of of people have most of the % of national wealth.

2. Wages:

The distribution of wages in capitalism economy is very unfair. The wages gap between senior employees/executives and junior employees is very big. This gap has unbalanced the distribution of income within the society and the national wealth got polarized. In the Capitalism system richer become more rich and poor become more poor.

Now we wills discuss about two headlines from October 7, 2020 read as follows: “Billionaire wealth hits $10 trillion for first time ever thanks to government stimulus” (Forbes) and “Extreme poverty set for first rise since 1998, World Bank warns” (BBC). During the economic recession the government inject money/liquidity in the economy through stimulus packages and support producers. But These stimulus packages and other support like tax benefits do not helpful in increasing become opportunities and the benefits could not reach to have the lower level or weaker section of the society. But at the same time these packages add value in the wealth of corporate players and increase their wealth. The same things are happen during this COVID-19 crisis in the US and other countries. In the capitalistic nations corporate lobby are very strong and the corporate world directly affect the decision of the government and try influence the government in their own favor and get success most of the times. These support create more social values or social surplus or maximize social welfare when it reach at the every section of the society but in realty uts not happen. According to the research, between April and July, billionaires grew their wealth by 27% from $8 trillion at the beginning of April. During the recession million of people lost their Jobs on the name of cost cutting and other million of people have faced the problem of pay cuts. Employment will increase and unemployment will decrease when production will increase but producers will not increase production until profitability (prices) increase. But still the government are injecting money in the corporate world and making richer more rich.

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