The word “Capitalism” can provoke some people, and can spark controversy. The question of whether it’s good or not is highly debated. Some people don’t even know what capitalism is, and they don’t even care. But, capitalism is very important on the world stage, and that’s why today, we are going to talk about what is capitalism, how it was originated, and its pros and cons.
Capitalism seems simple enough, but in reality, it’s a whole different case. As you might have noticed, capitalism has the word capital in it, and capital means financial assets and the place from which a government controls the country. The actual definition of capitalism is “an economic and political system in which a country’s a trade and industry are controlled by private owners for profit, rather than by the state.” A simple definition I made to describe capitalism is “A political and economic system where a countries assets are independent of the state, allowing their citizens to prosper rather than to be forced to obey the government.”
Capitalism is used only during modern times, as monarchies used to be more popular. The scientific revolution led way to the enlightenment, which lasted until the end of the eighteenth century. The enlightenment is also called the age of reason since it changed the general political mindset, as well as other things like literature and art. John Locke’s book “Two Treatises of Government” (1690) outlines his opinions that;(1) the people should hold power instead of the king;(2) the government should protect the rights of the people;(3) the people have the right to overthrow an unfair government;(4) and people are entitled to life, liberty, and property.
This led the way to Jean-Jacques Rousseau, who stated that the government is simply a social contract where if everyone can agree that a government is what’s best for their welfare, no one is allowed to change that without a majority. Adam Smith, a Scottish philosopher agreed, and proposed a Laissez-Faire government, in his work “An inquiry into the nature and causes of the wealth of nations”, often abbreviated as the wealth of nations. A Laissez-Faire government protects citizens from war, injustice, and takes care of public works. Most importantly, they do not interrupt the flow and development of the economy, and they let individuals pursue their own self-interests. Other people built on his work, turning Laissez-Faire governments into capitalists, and Smith is now considered the father of capitalism.
We now know what is capitalism works, how it was originated, and therefore how it works using Laissez-Faire governments. Now let’s get into the pros and cons of capitalism. There are many things great about capitalism compared to other governments, but it’s not perfect. Because of the way it works, market failures, low wages, boom and bust market cycles, and corruption and environmental degradation are all devastating to a capitalist government. But, since capitalist governments don’t interfere, they prevent huge monopolies from taking over, consumers are free to choose and do whatever they desire, and everyone is equal.
In the end, capitalism is considered one of the best governmental systems, at least in my opinion. Hopefully, you enjoyed reading!
Sources:
- https://www.economicshelp.org/blog/5002/economics/pros-and-cons-of-capitalism/#:~:text=Pros%20of%20capitalism&text=A%20society%20that%20puts%20freedom,a%20high%20degree%20of%20both.%E2%80%9D&text=Economic%20freedom%20helps%20political%20freedom.&text=Firms%20in%20a%20capitalist%20based,cut%20costs%20and%20avoid%20waste.
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