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Pros and cons of capitalism | Advantages

Capitalism is an economic structure that permits and promotes the private ownership of profit-generating enterprises. However, Private land ownership rights, open markets the rule of law, freely functioning capital markets, low corruption. In addition, the price discovery mechanism is all characteristic of capitalism, also knowns as the capitalist economy. So, here this article gives the pros and cons of capitalism to better understand this topic.

Pros OR Advantages of Capitalism:

  1. Incentives to be rich encourage innovation.
  2. Firms have incentives to be efficient.
  3. better than alternatives.
  4. Capitalism gives people an incentive to work hard.
  5. Prevents a large bureaucratic government.
  6. People are allowed to accumulate wealth.
  7. Lower tax rates compared to other political regimes.
  8. Individual performance is valued.
  9. Capitalism encourages competition.
  10. Consumers free to choose the products they desire.
  11. The efficiency of markets is maximized.
  12. Good environment for international investors.
  13. Capitalism can help to increase GDP.
  14. Lower consumer prices.
  15. Encourages international relationships.
  16. Buildings will be of better quality on average.
  17. Capitalism provides high levels of freedom.

Cons OR Disadvantages of Capitalism:

  1. Firms can gain monopoly power and exploit consumers.
  2. Firms with monopsony power can pay low wages.
  3. Prone to boom and bust in economic cycles.
  4. Tends to lead to large inequality.
  5. Externalities can damage the environment
  6. May lead to more homelessness.
  7. Workers may get exploited.
  8. Capitalism does not care about minimum wages.
  9. Capitalism may increase the income and wealth gap.
  10. Higher unemployment rates during economic downturns.
  11. Capitalism leads to an excessive focus on consumption.
  12. Higher rents.
  13. Bad for low-skilled workers.
  14. Higher property prices.
  15. People will not get equal chances in life.
  16. Capitalism can increase social tension in our society.
  17. May contributes to many environmental problems.
  18. People will not get equal chances in life.

Thank you for reading this article. If you have any queries regarding our article on the pros and cons of Capitalism then do comment in the comment section below.

Explore more information:

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  2. Characteristics of a market economy
  3. Pros and cons of democracy
  4. Carbon tax pros and cons
  5. Pros and Cons of Mixed economy
  6. Immigration – Pros and Cons
  7. Communism – Pros and Cons
  8. Federalism- Pros and Cons
  9. Utilitarianism – Pros and Cons

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Divya Chauhan
Divya Chauhan is an expert writer with 10+ years of experience as a content writer. They specialize in making complex topics like IT, Health, and general topic easy to understand. Divya has written over thousands of articles to help people with their content. Prior to joining Way2benefits’s editorial team in 2020, Divya worked as a Professor of BCA college and freelancer blogger.