Question

does capitalism does create wealth inequality? please write a paragraph.  

Answer 1

Capitalism is a type of economic system in which resources (factors of production) are privately owned by people with legal rights to acquire and hold them. Private gains are a major motivating factor for the owners who look to maximise them. There is freedom of occupational choice in a capitalist economy with minimal intervention from the government. Competition promotes efficiency by encouraging people to work harder and innovate which is always good for economic growth.

Despite the positive impact of Capitalism on the economy, the concentration of power in a few hands leads to unequal distribution of income. As owners supply capital to a free enterprise and workers supply labour, both control some part of the resources of the economy. However, the owners have more bargaining power than workers which results in workers receiving only a small portion of the owner’s gains. As a result, wealth in a capitalist economy remains unequally distributed.

Thus, the benefits of productvity in a capitalist economy aren't shared equally with all the segments of the economy, leaving wealth concentrated in a few hands. The unfair distribution of wealth is one of the major drawbacks of the capitalist system.