flaws of capitalism

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Page 1: Flaws of capitalism

• Submitted by: Abdul Hadi

• Roll No: Ms48 5367

• Submitted to: Maliha Khaqan

Page 2: Flaws of capitalism

FLAWS OF

CAPITALISM

Page 3: Flaws of capitalism

TYPES OF ECONOMIC SYSTEMS• Capitalism

• Socialism

• Mixed economy

Page 4: Flaws of capitalism

CAPITALISM• “Capitalism is an economic system in which trade, industry, and the means of production

are largely or entirely privately owned and operated for profit. Central characteristics of capitalism include private property, capital accumulation, wage labor and, in many models, competitive markets.”

Page 5: Flaws of capitalism

SOCIALISM• “Socialism is a social and economic system characterized by social ownership of the

means of production and co-operative management of the economy, as well as a political theory and movement that aims at the establishment of such a system.”

Page 6: Flaws of capitalism

MIXED ECONOMY• “There is no precise definition of a "mixed economy". Theoretically, it may refer to an

economic system that combines one of three characteristics: public and private ownership of industry, market-based allocation with economic planning, or free-markets with state interventionism.”

Page 7: Flaws of capitalism

• Socialism is concerned with redistributing resources from the rich to the poor. This is to ensure everyone has both equal opportunities and equal outcomes.

• The State will own and control the main means of production. In some models of socialism, ownership would not be by the government but worker cooperatives.

• It is argued that state ownership often leads to inefficiency because workers and managers lack any incentive to cut costs.

• Employment is often directed by the state. Therefore, the state can provide full employment even if workers are not doing anything particularly essential.

• In a state managed economy prices are usually set by the government this can lead to shortages and surpluses

• Capitalism is unconcerned about equity. It is argued that inequality is essential to encourage innovation and economic development.

• Private businesses will be owned by private individuals.

• It is argued that the profit incentive encourages firms to be more efficient, cut costs and innovate new products that people want.

• In capitalist economic systems, the state doesn’t directly provide jobs. Therefore in times of recession, unemployment in capitalist economic systems can rise to very high levels.

• Prices are determined by market forces. Firms with monopoly power may be able to exploit their position and charge much higher prices.

DIFFERENCE BETWEEN CAPITALISM AND SOCIALISM

Capitalism Socialism

Page 8: Flaws of capitalism

ORIGIN OF CAPITALISM

• According to some historians, the modern capitalist system has its origin in the "crisis of the fourteenth century.

• According to some historians capitalism can be traced back to early forms of merchant capitalism practiced in Western Europe during the middle Ages.

• Traders in Amsterdam and London created the first chartered joint-stock companies driving up commerce and trade, and the first stock exchanges and banking and insurance institutions were established.

Page 9: Flaws of capitalism

LIST OF BIG COUNTRIES USING CAPITALIST ECONOMIC SYSTEM• America (USA)

• India

• South Africa

• Thailand

• Australia

• Korea

• Russia

Page 10: Flaws of capitalism

BENEFITS OF CAPITALISM Efficient Allocation of Resources

Efficient Production

Financial Incentives

Growth

Page 11: Flaws of capitalism

DRAWBACKS OF CAPITALISM• Inequality

• Anti-Social

• Pollution

• Manipulated Demand

• Lower Employment Ratio

• Inflated Costs

• Exploitation

• War

• Propaganda

Page 12: Flaws of capitalism

CAPITALIST ECONOMY IN DESTRUCTION OF AMERICAIn America

• 37 million people live below the official poverty line that is 12.6 percent of the total population.

• The richest among them has more wealth than the bottom 45 percent of the household combined.

• Outrageous taxation and prices are being put on products that shouldn't be put on those products

• Capitalism has put small business owners into the poorhouse and forced them to do something else that they never planned for.

Page 13: Flaws of capitalism