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

autocratic coachingexample of skimming pricingcapital turnover ratio calculationdifference between equity shares and debenturesadvantages of autocraticpayback method definitionhorizontal and vertical analysis of financial statementsconsigner meanswholesale banking definitiontariffs vs quotasadvantages and disadvantages of industrializationprivatisation definewhat are the characteristics of monopolistic competitionwhat are the advantages and disadvantages of globalisationonline banking advantages and disadvantagesa characteristic of capital budgeting iscapital turnover ratio calculationhorizontal communication flowrules of bank reconciliation statementadvantages and disadvantages of inventoryexample of conglomerate integrationwhat is crr and slrnormal goods inferior goodsbenefits of merging companiesunearned revenue deferred revenueprestige pricing definitionbetdirectadvantages of capitalism and socialismprestige pricing definitioncompetitive advantages and disadvantageswhat is an indirect quotationcost of deflationhorizontal mergersdifference between bank loan and bank overdraftcash inflow examplesslr and crraccrued income examplesunitary elasticity of demanddifferent types of profitability ratiosinferior and normal goodsbarter system meansdirect and indirect currency quotescost push inflation examplesprivatelizationadvantages and disadvantages of joint ventureadvantages and disadvantages of debit and credit cardscapitalism advantages and disadvantageshow to calculate crrunqualified audit reportadvantages and disadvantages of monetary systemwhat are rrbsideal debt equity ratio for banksdistinguish between capital expenditure and revenue expenditureexample of conglomerate mergerebit financedisadvantages of e bankingdemerits of socialismcapital turnover ratio calculationadvantages of mergerswhat is systematic and unsystematic riskabsolute advantage in international tradecomplementary goods exampleautocratic leadership advantages and disadvantagesbills receivable accountcurrent asset turnover ratiobill of exchange drawerlimitation of absorption costingdirect quotation currencywhat are normal goods and inferior goodsadvantages and disadvantages of autocratic leadershipmerits and demerits of line organisationdevalutionwikipedia in hindi narendra modifullform of tdsadvantages of authoritarian leadershipwhat is fdi and fiinet worth calculation of a companyborder fence pros and consadvantages of unrelated diversificationprestige pricing advantages and disadvantagesadvantages and disadvantages of activity based budgetingwhat are examples of current liabilities