What are the benefits of Capitalism?What are the benefits of Capitalism?

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Ashley Kannan eNotes educator| Certified Educator

In my mind, the overwhelming benefit to capitalism is that it is an economic order that fits very well with a globalized setting.  With a world where boundaries are disappearing with technology and time is disappearing with increases in speed, it seems that with its emphasis on individual startup and self initiation, capitalism is an economic order that is aligned with this setting.  Globalized businesses which move at a rapid speed are capitalist endeavors that are able to utilize the individual freedom that is a part of capitalism systems.  Government or socially controlled systems involve far too much institutional "red tape" or slower processes that are not conducive to the globalized system that is now enveloping the world and all competing economies.  In this light, I think that capitalism's flexibility to work with this new system affords it one benefit that other systems do not have.

pohnpei397 eNotes educator| Certified Educator

In my opinion, the benefits of capitalism are the following:

  • People have the most possible freedom to do what they want in economic terms.  They are able to do more or less what they want with their property and with their talents.
  • People are able to buy the widest possible variety of goods.  If there is any sort of demand for something, capitalism will provide it, even if it seems really stupid (like pet rocks, for example).
  • People are able to buy the highest possible quality of goods.  With companies having to compete against one another, there is pressure to produce the best possible goods (for the lowest possible price).  Otherwise, people will just buy from someone else.

None of these is true of economic systems that are not controlled by market forces.

litteacher8 eNotes educator| Certified Educator
Capitalism allows buyers and sellers to find each other. In a free market, the buyer and seller will come together to find a price both agree on. When there is the same number of buyers and sellers, the market has reached equilibrium, and it's a perfect system.
krishna-agrawala | Student

Capitalism or capitalistic system is an economic system in which the means of production are owned and controlled privately by individuals or groups. We can contrast the capitalist system with the socialist system in which the means of production owned collectively by the people and controlled on their behalf by the government. None of these systems exists in reality in its pure form. Also both systems have their owns strengths and weaknesses. Thus the best economic system for any society need to combine features of both these pure systems.

The benefit of capitalistic system include the following:

  • It rewards individuals and firms in line with their capabilities and efforts towards contributing t the total production in the society.
  • It provides direct and strong motivation to individuals because of direct link between their efforts and rewards.
  • Decision making in a capitalistic system is fast because it is decentralized.
  • No expensive overheads of a large central organization are required manage the vast base of all the productive resources of the economy.