Advantages and Disadvantages of Capitalism

Capitalism is the most common form of system which is followed by majority of the countries in the world, it refers to that economic system where the factors of production are not owned by government but individuals and prices of goods and services are decided by market. Given below are some of the advantages and disadvantages of capitalism –

Advantages of Capitalism

  1. It leads to better use of resources because in this form of economic system a greater efficiency implies that much more profits and hence there is no question of under-utilization of resources.
  2. It encourages entrepreneurship because people can set up easily their own business under this as compared to other economic system.
  3. Under capitalism people have to work hard if they want to survive which is not possible in case of socialist economy where government provides amenities to people.

Disadvantages of Capitalism

  1. Biggest drawback of this system is that private companies become so big that they become almost monopoly in their field which leads to exploitation by them in terms of charging the price for product or service which they produce.
  2. In this system poor people are hit the hardest because the gap between the rich and poor keep rising under this system as there is limited government control.

It is due to the above disadvantages that many countries follow a mix of capitalist and socialist economic system where the important resources are controlled by government and rest are left to the market.

1 comment… add one
  • Arsenii Sivoshev

    Great layout and lots of usefull unformation. Really helped me with my homework.

Leave a Comment


Related pages


characteristic of monopolistic competitionautocratic coaching styledu pont identityexamples of explicit costadvantages of competitor based pricingmixed economy advantages and disadvantagesdiscounted cash flow techniqueconglomerate examplehorizontal integration advantages and disadvantagesforeign exchange quotationswot analysis disadvantagesweaknesses of command economyexamples of monopolistic competition marketswho is consignee and consignorconsignee definitionnormal good inferior goodautocratic advantagesdirect and indirect quotes in foreign exchange marketwhat is meant by consigneeadvantages and disadvantages of borrowing money from a bankwhat does consignee meanadvantages of convertible bondsmonopolistic competition meaningdisadvantages of direct investmentcash flow statement wikipediaunitary elasticity of demand examplepros of command economywhy do companies do a reverse stock splitadvantages and disadvantages of free market economiesprivatelizationconcept of capmdisadvantages of payback methodbenefits of payback periodfounder of icici bankmerit of capitalismmonopolistic competition meaningcharacteristics of urbanisationproprietorship ratiounitary demand examplemarket segmentation disadvantagesprofit ratiospositives of capitalismficitiousadvantages and disadvantages of gold standardadvantages and disadvantages of zero based budgetingmeaning of demand in hindiadvantages and disadvantages of communist economic systemmerits of industrializationadvantages and disadvantages of a capitalist economycapitalist socialist and mixed economyskimming pricing strategiesmeaning of cost push inflationfull form of rtgsppt on merchant bankingbarter system and its difficultieshow to calculate crrautocratic leadership styleexplain the law of diminishing returnswhat is autocratic leadercomplementary goods and substitute goodswhat is a major reason for conglomerate mergersmeaning of escrow account in bankunbilled revenue meaningpayback in financewhy is a trial balance preparedmeaning of forfeitingwho is a consignee and consignorexamples of semi durable goodscash inflows examplescharacteristics of job costingexplain fifo methoddebit card advantagesjournal entry for closing stockdifferent types of crossing of chequesmeaning of unsystematicconsigner meaningimplicit vs explicit costsexamples of law of diminishing marginal utilityexamples of nondurable goods