Capitalism is often pictured as an impersonal force that wreaks havoc on the lives of ordinary people and their communities. But is that the actual picture? Since its inception in the early nineteenth century, capitalism has been the driving force behind the technological and industrial revolutions and has reshaped the whole world.

Even in plain sight, capitalism is good for the global economy. That’s because it delivers one thing that other systems fail to do: incentive. Capitalism promotes competition and capital accumulation, which, in turn, encourages businesses to achieve maximum efficiency. This allows the investors to offer the consumers a lower price range by capitalizing on the growth.

Critics of sales coaching argue that the ethos of deregulation of businesses and lower taxes hasn’t played a significant role in supporting political investment in public services. But we can’t deny that it’s due to capitalism that we can enjoy global economic growth!

 

Capitalism And Trade

Capitalism ensures the privatization of factors of production. Since private enterprises control these factors, the producer can use the factors to gain additional profits. 

The capitalist system drives its participants to make a profit by accumulating capital. This ability to amass profits is a powerful incentive to innovate. Unlike the communist system, which takes away the general populace’s motivation to work harder, the capitalist system incentivizes growth by creating the possibility of success and failure.

Since participation in the capitalist business system is voluntary, businesses can operate efficiently and provide competitive prices. Otherwise, unlike their communist counterparts, the buyers in the capitalist system have the option to look elsewhere. This makes both the buyers and sellers better off, inciting growth.

 

Capitalism And The Family

Over time as work has moved from the home to the marketplace, the dynamic of families has also changed. This movement can be summarized as the result of the liberation of human beings from unnecessary labor. 

Before the inception of capitalism, the family served as the central unit of economic production. In an agriculture-based economy, production was done with limited capital for the family’s survival.

In such circumstances, both male and female members had to contribute to the family’s livelihood. All the physically capable household members had to work in the fields and look after the younger members. 

And due to the limited financial resources, the family was incapable of storing material wealth for an extended period of time. Back then, a large family served as a form of old-age insurance.

The capitalist system introduced wage labor into the equation. The introduction of this factor gave birth to entrepreneurship. As some households began to accumulate sufficient wealth to fund early factories, they began to hire outside workers to work in their place. 

Wage labor sets the difference between household production and market production. We can even say that wage labor is what separates work from home.

 

Capitalism And Religion

Capitalism largely rests on one’s belief in a supreme being. Some postulate this all-powerful being as money, while others lean towards Adam Smith’s ‘Invisible hand’ as this omnipotent being. 

Regardless of its form, this supreme power decides what’s best without interference. In a way, capitalism can be described as a system of beliefs that rests on a supreme being in which economics’ role is a theological one.  

 

Capitalism And Democracy

Capitalism and democracy are different concepts. While capitalism thrives on unequally distributed property rights and centers around profit-oriented trade, democracy offers equal political and civil rights and the common good. 

In the first postwar years, there remained tension between the two systems. However, that tension was mitigated through the socio-political embedding of capitalism by the welfare state and an interventionist tax. However, the financialization of capitalism since the early 80s has wrecked the balance of the systems and has given rise to socioeconomic inequality.

Socioeconomic inequality has translated into political inequality, which has left the lower-third of society unheard. Deregulated markets have significantly inhibited governments’ power to govern. 

As such, if these challenges aren’t dealt with through economic and democratic reforms, the democracy we know may no longer exist. However, it’s not the crisis of capitalism that defies democracy, but its neoliberal triumph. 

 

Keynesian Viewpoint

The central feature of capitalism is making a profit. As Adam Smith said: “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” 

Both parties will only voluntarily participate in the transaction when they have something to gain. While we may credit capitalism largely for the growth we’ve achieved in this era, the Keynesian viewpoint hasn’t always been so kind to it.

According to the British economist John Maynard Keynes, capitalism has a fatal flaw. It struggles to recover from any stagnation in investment. It’s not that the capitalist system can’t recover from the slowdown; it’s just that it doesn’t need to.

With zero growth and high unemployment, the capitalist economy can retain its equilibrium position indefinitely. And even the pillars that lead to the system’s success can also bring about its own failure

For example, the concept of the free market. The free market can flourish only when the government sets the rules that govern them, such as property laws. 

Without the government strictly enforcing distinct property rights, the capitalist system can’t guarantee proper property rights. Moreover, it’s society that has to protect the capitalist system from the capitalists. 

As more powerful private interests emerge, the rise of nepotism may occur despite the loss in efficiency. Thus, society must ensure a limited concentration of property rights ownership to maintain a competitive market. 

 

Way To A Better Economy

The recent pandemic has turned the world upside down. Whenever we look at the news, the headlines are all about layoffs, bankruptcies, and many other mistakes. Obviously, there’s no easy way out of this mess. But the means to do so lie right at our fingertips.

In theory, free markets, competition, and trade can create so much wealth that can make everyone better off just by being willing to do so. However, that’s all in theory.

While a multitude of technological advancements are made, they’re primarily used to prioritize one company’s profits. Unfortunately, the same economic system that created prosperity in the 60s is now giving rise to inequality. 

But not all hope is lost. We can achieve a better economic system, and believe it or not, it’s right around the corner!

We’ve already seen collaboration between the public and private sectors to work on the SARS-CoV-2 vaccine. We’ve also witnessed the marvelous cooperation between the government and business to secure the funds for said project.

We can hope this will be a feature of our economic system rather than an anomaly. Instead of running after short-term profits, if only companies pursued the overall well-being of their employees, that could sever the gap between the inequality between classes. 

That doesn’t mean that companies have to stop chasing profits. Instead, they just need to look into a long-term plan instead of making it to the next fiscal year. And we can say with glee that some are already doing so!

 

Conclusion

The basic concept of capitalism is profit. This works as a driving force behind wealth, innovation, and prosperity. Capitalism introduces competition to the system. By ensuring healthy competition, everyone is better off. When faced with competition, companies are forced to be their best versions and provide their best services.

And through the system of a free market, capitalism has incited the world’s most remarkable economic growth. But we can reach even greater heights with sales coaching. That can be achieved by broadening our scope and planning for the long term. Capitalism is not a perfect system. But I dare you to show me a better one! For more content on achieving entrepreneurial success, stay updated with Campfire Capitalism Podcast.