The Pros And Cons Of Capitalism

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State that has freedom of choice and limited government intervention is usually termed as a democracy and because of its capitalistic goals, it is usually economically developed and successful. The US has ever since been an advocate of freedom of choice and capitalism. These have been their two main goals since the beginning of the Cold War, if not before that. Capitalism as opposed to communism, may increase the divide between the rich and the poor, as crtiticized by the Marxists, however, it does a really good job of developing the State economically via technological innovation and other means. As Adam Smith has stated in his theory of the invisible hand, everyone is selfish to satisfy themselves and thus, do exactly that. This in return, benefits society as a whole, because consumers aim for more choice and better prices which leads to competition, workers work hard in order to maximize their pay and benefits and society benefits as a whole as there is more variety of goods, lower levels of unemployment, better standards of living and a thirst for more allocatively efficient goods. This is why firms aim to lower cost by investing in better and more efficient machinery, and the lack of government intervention aid this process. Communism has been called the ‘ideal’ in erasing the gap between the rich and the poor. This is usually done by taxing the rich, subsidizing the poor and dividing the goods and services equally. However, this can hinder the economic development because people do not stay motivated anymore. They do not have goals, and they do not want to make more money or invest in better technology just to get taxed even more. Therefore, this means that the relationship between a non-democratic State is inversely relate... ... middle of paper ... ...cratic government has these present, then the country will thrive and see economic development. The first one is ownership stability, which refers to the property rights of a society. They should be present and protected. Secondly, legal stability is extremely important, so that action can be taken against the ill-doers/criminals, so that economic growth is not hindered. Moreover, this is extremely important in order to attract international investors. And the last one is linked to this point and that is social stability. If there is ay kind of social unrest, then the whole society may suffer. Crimes, riots, protests, civil wars and/or strikes can lead to huge losses and damage the productivity of the society. These are the main factors that need to be present in any society, whether democratic or non-democratic, in order to promote economic development and growth.

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