Weighing the Pros and Cons of Capitalism

It's hard to not have an opinion on Capitalism.  Either you think it works, or you don't.  However, regardless of your feelings about capitalism, here are some pros and cons to consider. 

One of the biggest pros, and cons depending on your point of view, is the ability of capitalism to reward those who work hard.  The harder you work, the better your reward. That's one of the reasons capitalism works so well.  When people have a hand in their own rewards, they are usually more motivated to work hard. 

Capitalism also encourages competition.  Competition results in better products at lower prices.  When people are free to choose in a purely capitalistic market, they will usually choose the best product for the price.  Because of that, companies work hard to make a better, cheaper product. 

One of the most common cons you hear is that it promotes greed.  Both individuals and companies end up being all about "me".  Unfortunately, that doesn't really explain the whole picture.  Individuals tend to reward companies that have moral and social agendas similar to their own.  The best way we reward a company is to buy their product.  So companies end up with a vested interest in keeping their customers happy, both with the products they provide, and their footprint on the world.  A company's environmental footprint and their employee right's footprints become directly impacted by capitalism.

Another con that is often heard is that it exploits developing countries and the underprivileged.  However, here again, the common "truth" may not be all that true.  Developing countries wouldn't develop as quickly without capitalism.  That doesn't make the process always work as it should, or necessarily in the best interest of the people in the short term.  However, a non-developing country doesn't do much to improve the lives of its people either.  Amazingly enough, as countries are developing, and more companies become interested in their workforce, that natural competition causes earnings to rise.  People generally want to work for a company that treats them better and pays them better.  As capitalism is allowed to progress along its natural course within a developing country, the wages and living conditions dramatically improve over time.

People will often point to a major recession in a capitalistic economy such as the United States as an example of why capitalism doesn't work.  What they fail to notice is that usually capitalism fails when a country's government assumes control of companies during the normal ebb and flow of economics.  Companies don't always grow.  Sometimes they retreat a little.  The dips indicate areas that can be improved.  However, as governments step in to help "regulate" a self-regulating market, they throw off the normal dynamics.  Then the resulting economic downturn is used to "prove" that capitalism doesn't work. 

A truly free economy usually runs best.  Companies and people are free to enrich their lives as they see fit.  They are free to make their own choices.  They are free to search for those things that make them happiest and enjoy life in their own way.  Companies will seek to improve their products AND their company's way of life in order to retain the best employees and ensure that people continue to buy from them.  A capitalistic company rewards entrepreneurship, which in turn spreads rewards down the line by providing new jobs.


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