Modern Era Economics-2: Capitalism

A Brief Overview of Capitalism and Capitalist Economics

What is Capitalism?

Capitalism is an economic system where the means of production are owned by individuals, and private corporations, and that it is the job of the state to ensure “Freedom of Private Property”. In a Capitalist system, it is argued that to ensure progress and prosperity, “Freedom of Private Property” should be strongly guarded. Capitalism allows consumers a wide range of choices due to the capitalist systems being against the intervention of the state and control of the means of the production by the state. This leads to competition, which leads to prosperity, according to the Capitalists.

However, like all economic systems’ capitalism is also divided due to disagreements regarding certain aspects. The first and oldest type of capitalism is the “Laissez-Faire Capitalism”. Laissez-Faire Capitalism argues for the state to ensure the “Freedom of Private Property” and should intervene in the economy minimally.

Another type of capitalism is the “Social Market Capitalism”. Social Market Capitalists state that the function of the government is to ensure the “Freedom of Private Property” and that the markets should be left alone and not be intervened. However, unlike the Laissez-Faire the Social Market Capitalist argue that the state should address economic and social inequalities by providing free universal healthcare service and strong labor rights.

A much more radical version of the Social Market Capitalism is the “State Capitalism”. State Capitalism is the type of the capitalism where the means of production are mostly owned by the state rather than private corporations, this system is often called the “21st Century Chinese Economic Model”.

Lastly, there is the corporate capitalism, where the government and the corporations align in certain aspects and that the state helps the corporations with government contracts etc. However, this system is generally associated with corruption and lack of transparency.

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