What are some of the negative aspects of Capitalism?
I'm looking for answers besides health care and insurance. I am a Democrat, but it seems to me that there are a lot of advantages to capitalism, such as competition. I realize there are wrongs in Free Enterprise, but what can be done to fix them?
Answer:
Some basic problems with Capitalism:
It provides an incentive to serve (provide goods and services for) only those who can pay, so without intervention (e.g. government programs) there's no incentive to serve the very young, the very old, those too sick to work, etc.
It does a poor job of accounting for what economists call externalities. Those are benefits or costs associated with an economic situation that don't get accounted for in determining profit and loss. For example the pollution created to serve person A which harms person B. Or the fact that I get to enjoy my neighbors beautiful landscaping but I don't have to help pay for it.
Another problem with "pure" Capitalism is that there is an inequity of power which tends to result in a great inequity in wealth. This was a big factor in the Great Depression. The very rich ended up with almost everything while the poor had nothing. There's then no incentive for those with capital to put it to use (it won't be profitable) which leads to greater unemployment, less spending power, less incentive to serve, and on and on.
Some of the mechanisms that have been developed to deal with these shortcomings including trust-busting (breaking up monopolies), unemployment insurance, ...
Some of the most interesting ideas of late include attempting to quantify externalities. If the costs of production can be made to better reflect externalities that can lead to decisions that better reflect a businesses total impact on society. It doesn't allow a company to ignore the harm it does in order to serve those who will pay.
capitalism is cannibalism.
Encouragement of huge class distinction. the poor v the wealthy. Fix this? Social programs such as universal health care for a start..
Well, it encourages greed, oppression, social division, resentment. It is good for those who become rich, and bad for everyone else. Which explains why Republicans swear by it and call anything else un-American.
I can't think of any negatives for a free market system. It gives equal opportunity to all. That's why a person born poor can become a millionaire if they really desire it and work hard towards it. It's called the American dream, but it's due to economic freedom and capitalism.
If you need to find fault with capitalism, think in terms of what happens to it when it becomes over-regulated and the profits that would go to the stock holders and investors gets taken away by a greedy government.
Overall, capitalism is good because it gives everyone, regardless of background and even education, a chance to be a success.
Capitalism makes better products and services, but as you look around America, does it look like most are happy?
A major negative aspect of capitalism as an economic system is the fact that unemployment is a necessity. With true full employment, high inflation will always happen. High inflation will lead to economic chaos, which in turn leads to an economic recession or depression - which then leads to unemployment.
By "true" full employment I mean a situation where everyone is employed in full time employment. Often unemployment numbers are hidden by the fact that many of those 'working' are really only working part time - even though they may be seeking more hours.
As soon as everyone is as employed as they want to be (and it is the level of want that counts here because economics, in the end, comes down to peoples preferences) they have more power to charge employers as much as they like. This is what leads to wage inflation - which then filters out through the entire economy.
No regulation can ever change this fundamental aspect of the capitalist system.
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Answer:
Some basic problems with Capitalism:
It provides an incentive to serve (provide goods and services for) only those who can pay, so without intervention (e.g. government programs) there's no incentive to serve the very young, the very old, those too sick to work, etc.
It does a poor job of accounting for what economists call externalities. Those are benefits or costs associated with an economic situation that don't get accounted for in determining profit and loss. For example the pollution created to serve person A which harms person B. Or the fact that I get to enjoy my neighbors beautiful landscaping but I don't have to help pay for it.
Another problem with "pure" Capitalism is that there is an inequity of power which tends to result in a great inequity in wealth. This was a big factor in the Great Depression. The very rich ended up with almost everything while the poor had nothing. There's then no incentive for those with capital to put it to use (it won't be profitable) which leads to greater unemployment, less spending power, less incentive to serve, and on and on.
Some of the mechanisms that have been developed to deal with these shortcomings including trust-busting (breaking up monopolies), unemployment insurance, ...
Some of the most interesting ideas of late include attempting to quantify externalities. If the costs of production can be made to better reflect externalities that can lead to decisions that better reflect a businesses total impact on society. It doesn't allow a company to ignore the harm it does in order to serve those who will pay.
capitalism is cannibalism.
Encouragement of huge class distinction. the poor v the wealthy. Fix this? Social programs such as universal health care for a start..
Well, it encourages greed, oppression, social division, resentment. It is good for those who become rich, and bad for everyone else. Which explains why Republicans swear by it and call anything else un-American.
I can't think of any negatives for a free market system. It gives equal opportunity to all. That's why a person born poor can become a millionaire if they really desire it and work hard towards it. It's called the American dream, but it's due to economic freedom and capitalism.
If you need to find fault with capitalism, think in terms of what happens to it when it becomes over-regulated and the profits that would go to the stock holders and investors gets taken away by a greedy government.
Overall, capitalism is good because it gives everyone, regardless of background and even education, a chance to be a success.
Capitalism makes better products and services, but as you look around America, does it look like most are happy?
A major negative aspect of capitalism as an economic system is the fact that unemployment is a necessity. With true full employment, high inflation will always happen. High inflation will lead to economic chaos, which in turn leads to an economic recession or depression - which then leads to unemployment.
By "true" full employment I mean a situation where everyone is employed in full time employment. Often unemployment numbers are hidden by the fact that many of those 'working' are really only working part time - even though they may be seeking more hours.
As soon as everyone is as employed as they want to be (and it is the level of want that counts here because economics, in the end, comes down to peoples preferences) they have more power to charge employers as much as they like. This is what leads to wage inflation - which then filters out through the entire economy.
No regulation can ever change this fundamental aspect of the capitalist system.
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