Capitalism is in most aspects a refined form of all economic systems in history. While, many socialists see it as barbaric and competitive, capitalism represents the basic system nearly all countries practice on a national level. The difference between capitalism and socialism is the level on which they choose to practice capitalism. The United States practices capitalism on an individual level more so than say Great Britain and much more so than a true socialist republic.What do I mean by different levels? Well, it is important to understand the basic concepts of capitalism. First an entity produces a product. Next, it puts that product on the market for sale. Finally, a buyer purchases ...view middle of the document...
The system in the United Kingdom as well as the rest of Europe is a mixed economy - a form of moderate socialism. Even in the United States evidence of such a state is easily found, although, the United States is becoming less socialist instead it is becoming more totalitarian.Modern capitalism was first created in the Industrial Revolution. During this time period, wealthy men began purchasing farms, factories, and service industries in order to create more money. It also was a hot bed of entrepreneurship. Capitalism is essentially based on two things. Risk and hard work. The risk comes at the uncertainty in an endeavor or investment. The hard work is how much effort you want to put into a job to make it succeed. An example of risk is the stock market. You invest in a company taking a gamble on whether it will succeed or not. An example of hard work can also be found in the stock market. If you work hard and do proper research in a company you can reduce the risk you take when you invest. If you are lucky and choose your stock right, you can make a profit. Capital which can be in turn used to produce more wealth.Other factors govern capitalism as well. First it recognizes selfish self - interest as a natural feeling and works to reward those who work hard to better themselves. The majority of people work to pay for food, water, and shelter in addition to extra comforts. It is a fact sadly illustrated by the attempted socialist governments that people do not work for the state, they work for themselves. In socialism, your motivation is to work for the state, whereas in capitalism, the motivation is to work for yourself. I want a Ferrari. So, in order to get enough money to purchase that car, I work extra shifts at my job. Capitalism rewards you with extra money for your labor.The second factor that governs capitalism is competition. After I have my money accumulated to purchase that Ferrari, I go shopping. At dealership A, the price for the car is let's say $1000. At dealership B, however, the price for the car is $800. The consumer, if given a choice, will choose the cheaper price. This forces dealership A to lower its prices or lose business to dealership B. This is competition.Another factor, according to Adam Smith, is supply and demand. If a product is in high demand, its price goes up. If there is a surplus of a good, the price goes down to encourage the consumer to purchase the item. For example, there are 10 Ferraris. However, 15 people wish to buy them. The cost goes up because the dealer wishes to increase his profit. In normal economic conditions he may charge the highest his buyers will pay. However, if there are 10 Ferraris and 2 people want to buy them; the dealer will lower the price to encourage more people to buy them.These are the basic factors behind capitalism that govern its economic system. There are however, more factors that govern the philosophical side of capitalism. These moral guidelines work within the econo...
