Capitalism is a system that has defined the economy of many prosperous nations such as the United States. Despite its popularity, many economists and researchers feel that it comes with a certain degree of dangers that require strategies for mitigation in order for everyone to enjoy the economic benefits of the nation. In a capitalist system, private individuals and business own the capital goods. The production of goods and services in the general market hinges on the powers of supply and demand as opposed to central planning. The most discussed type of capitalism is known as the laissez-faire or free market where private individuals have the freedom to determine where to invest, what to sell, and the prices without any significant checks and controls. According to Amartya Sen, “capitalism benefits the selfish interests of a few, the privileged elites of the developed world, and damages the interests of everyone else” (Kurer, 2016).
The Greatest Dangers of Capitalism
Economists have agreed that the function of any government is to represent the interests of the working people and the middle-income individuals rather than just focusing on the wealthy. However, the capitalist system goes against this assertion because it promotes the corporate ownership of goods and investment is determined by private decision. Additionally, factors such as production, prices, and distribution are determined primarily by a competition that occurs in a free market. Adam Smith is widely regarded as the father of capitalism by painting the picture of an "invisible hand" that maintains the market without any necessary government intervention (Ciulla, Martin, & Solomon, 2018). The two central tenets of capitalism include the free enterprise and the rights of individuals. As such, this provides a misleading notion that capitalism is socially and economically progressive. The main danger that comes with capitalism is the fact that it only takes into consideration the interests of the privileged people in the society and disregards that of everyone else.
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Further understanding the dangers of capitalism requires the appreciation of Carl Marx's theory of surplus value which noted that when a capitalist makes a profit, they are essentially participating in the theft of a value produced by labor. Most significantly, the problems of capitalism reflect through its endeavors in discouraging the local production and instead promote the unregulated ballooning of large corporations that exploit labor found locally for profits that have benefits elsewhere. Daniel Bell, in his critique of capitalism known as "The Cultural Contradictions of Capitalism" noted that capitalism inhibits "the freedom to act as an absolute by right." Bell goes ahead to intimate that the system is a “credo of the rational egoist who recognizes no authority higher than his own judgment of the truth” (Ciulla, Martin & Solomon, 2018). Therefore, the capitalism argument acts as a scapegoat for individuals hell-bent to harm others as they pursue their self-interests. Bell continued to assert that capitalists have a free mentality that has vindicated themselves from the inequality or immorality. Gray, (2015) noted that it remains essential to appreciate that economies such as the US have a paltry 1% that controls up to 24% of the country's gross income.
John Mill, in his discussion on capitalism and Laissez-Faire, noted that this system promoted "free will" (Ciulla, Martin, & Solomon, 2018). However, in the real sense, capitalism causes an economic disparity that implicates the prospects of social mobility thereby constricting individuals into social classes, fixed environment, and opportunities. Many capitalists refuse the fact that the disadvantaged or poor are unable to gain any wealth because they have no opportunities. They further intimate that the poor are willingly so because the economic system has provided a free enterprise system where anybody who works hard has the chance to accumulate wealth. Researchers have also intimated that capitalism promotes economic disparity, corruption, individualism, and consumerism.
How to Improve Capitalism
Many countries today have managed to leverage capitalism as their economic system of choice. The system has two perspectives that include the social and economic angles. The social perspective asserts that capitalism is a model where the rights of people are recognized. One of the rights is that to own property. As a result, the right of private ownership is guaranteed, meaning that one cannot use their physical force to take it away from the bona fide owners (Gray, 2013). An economic perspective explains that production and allocation of goods are reserved to a minority with a majority of people having to sell their labor to make a living. Although it has been regarded as a stable system that promotes the overall well-being, certain improvements can make it better.
First, individuals should be encouraged to borrow responsibly taking into consideration their ability to pay back. Secondly, the taxing system should be improved in such a way that the low-income earners pay less, and the high-income earners pay more to ensure a just society where everybody has an equal opportunity to progress. Capitalists must also remain keen to improve the environment; it is important to note that many companies have a significant toll on the environment through their means of production. As such, this can have a counterproductive impact on production leading to poverty. Improving compensation a d reducing risks in a company is another crucial way of preventing the dangers of capitalism. Also, workers should be provided with the much-needed freedom to form trade unions that ensure that their rights as workers are taken into consideration.
In conclusion, capitalism is a system of production where a few wealthy and powerful individuals virtually control the economy. It promotes privatization of property and a free market system that has changing dynamics. As such, its dangers primarily emanate from the fact that it disregards the welfare of the low income earning majority and tends to focus on a few wealthy minorities. However, strategies such as improving the taxing system and the methods of production can make it a friendly system that leads a country to economic prosperity.
References
Ciulla, J. B., Martin, C. W., & Solomon, R. C. (2018). Honest work: A business ethics reader. Oxford University Press
Gray, J. (2013). Liberalisms (Routledge Revivals): Essays in Political Philosophy. Routledge.
Gray, J. (2015). False dawn: The delusions of global capitalism. Granta Books.
Kurer, O. (2016). John Stuart Mill (Routledge Revivals): The Politics of Progress. Routledge.
