Today we tell you about capitalism. This is the name of a system that runs the country. Today in this post we will tell you about capitalism, the advantages of capitalism, the disadvantage of capitalism, and the characteristics of capitalism. If you interested to know about capitalism, read this article carefully.

Do You Know About Capitalism?


Capitalism is the oldest form of economic system prevailing in most of the countries of the world. In the modern world, the commencement of this system took place by the name of a free economy. This system “capital” is the most important factor while “humans” rank in the second category. In this system, the status of a human is measured through capital or wealth. A person possessing a higher amount of capital is more powerful while having less amount of capital is assumed the weakest in society. The definition of capitalism can be made in the following words.


1. Private Ownership:

Under this system, every individual of the country has the right to own, buy, or sell the property. In case the owner of a company will die so all the property will transfer to his interior.

2. Freedom of actions:

In capitalism every individual has full freedom actions, Any decision about economic, personal, and social life can be taken without any restrictions from the government.

3. Price determination:

The determination of prices under this system is free and fair. Demand and supply is basic reason on increase and decrease price. The government never intervenes in price setting.

4. Competition:

Since in this system the investors are entitled of the whole profit they earn, therefore, a hot war of competition starts among the various investors or rivals related to the same industry. In this war at last the consumers win as they succeed to get quality products on reduced prices.

5. Class conflict:

As a result of capitalism, society is divided into two. extreme classes, rich and poor. One class consists of those who have resources, property, and money and the second class comprises of those which are called labor class or salaried workers.

6. The sovereignty of consumers:

Since these are consumers who consume the goods made by the producers, therefore the consumers decide according to their likes and dislike what to buy and what not to buy. Because of this upper hand of consumers, the producers yield only those goods and services which are a quality full, low priced, and according to the desire of consumers.

7. No Interference of Government:

Usually, in Capitalism the public activities, their likes, dislikes, and selections are free from government restrictions and government interference. The government only intervenes where she needs.


In the prevailing materialistic development of humans, capitalism has played a big role. The main merits of this system are as follows:

1. Innovative and modern Production:

Since in this system the capitalists are entitled to the whole profit they earn, therefore the attraction and expectation of profit motivate the capitalist to produce the goods according to the likes and dislikes of consumers by creating innovation and modernization in the production of goods and services.

2. Best usage of resources:

In capitalism the sole right of property and profit goes to the owners, therefore, the loss of the wastage of resources have also to be beard by them, that’s why a producer particularly cares for the resources he uses in the process of production and tries his utmost to minimize the wastage of his resources.

3. Encouragement for able and hard-working people:

Under this system the total right of the ownership of profit goes to public, therefore able and hardworking people utilize their best abilities to produce quality goods and services and in this process, they prefer the satisfaction of consumers.

4. Right of choice:

In capitalism, every person has the sole right of adopting any profession of his own choice whether he chooses highly recognized or lowest professions of the society. Likewise, every person has the freedom of choosing any form of business ownership whether in the form of sole proprietorship or partnership or corporation.

5. Development of Economy:

Because of the right of earning a total profit, not only capitalists invest their capital inside the country in the industries but also the capital from abroad flow to come in huge amounts and penetrate in those firms and mills where the investors expect high profit to earn. In this way, new industries take place in the country and people get employment in large numbers. The percentage of unemployment goes down, per capita income increases, prosperity strong its roots, and above all the economy gets stronger.

6. Freedom of Choice for Consumers:

The consumers have full authority for buying any goods. They purchase whatever they need. Under this system, the consumer decides what to buy and whatnot. On the other hand, the producers are forced to produce the goods by keeping in view the desire, expectation, and likes-dislikes of consumers. In this way, the democratic values grow.

7. Flexible system:

This system is a natural system therefore very flexible and comes on the balancing position after a big crisis.


This system has not only its merits but causes many social, and economic vicissitudes. It results in many individual and collective losses. There are disadvantages of capitalism;

1. Wastage of resources due to competition:

Since this system gives full authority to the investors, therefore, the hope and willingness of petting higher profit create free and immense competition among the businessmen, Because of such a high magnitude of completion, unlimited economic resources go waste. For example, a huge amount in millions and even in billions is consume in the advertisement.

2. Class Conflict:

In capitalism, society divides into two parts. One is the richer’s class and the second is the poorer. In other words the 1st one is the landlord or capitalist class and second is laborers class. The difference between these two classes keeps increasing as time passes.

3. Unfairness with Consumers:

The concept that in capitalism, consumers always get benefits due to competition is wrong a certain extent. The consumers become slaves because of the monopoly, immense advertisement, cheating, and fraud on the part of the producers. In this way the right of the consumers of free selection is immensely affect.

4. The evil of interest:

Capitalism is fully based on interest. Interest is the core in capitalişm which causes various evils. Interest creates social unevenness and economic differences between rich & poor class widens.

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