• aakshitabhardwaj02

Capitalism: A Brief Introduction

Updated: Apr 17, 2020




Distilled down to its fundamentals capitalism is simply a process/a system whereby all property is privately owned, individual & property rights are protected, and government does not interfere in businesses unless there is some interruption in the level playing field that prevents the economy from truly functioning freely. The only function of the government, in such a society, is the task of protecting a person's rights, i.e., the task of protecting one from physical force.

In capitalism, the motive for producing goods and services is to sell them for profit, not to satisfy people’s needs. But in today’s era, as the consumer has extremely large number of options to choose from, capitalists develops products according to the consumer but when the main aim of making profits kicks in, the quality of physical products in many cases degrades.


How did it emerge?

Capitalism emerged during the 17th century. Breakdown of serfdom and feudal systems in England led to development of free markets and emergence of capitalism. Now labour was paid wages, the surplus produce from farms was used for trade, better product would bring in more money therefore everyone wanted theirs to be the best which led to innovation. Since the labour was now paid wages, they could use to buy other products. This is known as Agrarian capitalism - a transitional form between feudalism and capitalism.

Why it works?

More freedom to businesses brings more innovation and limitless opportunities for individuals. Capitalism assures that; you work hard, you get money. You make money and invest, make more money and invest and it continues. It results in increased innovation and economic growth.

More freedom to capitalist--> More innovative products --> Greater range to choose from --> More competition among capitalists --> Low priced products for consumers ; but, only to a fixed point, therefore, people who are in need of a product but don’t have enough money cannot buy that product which brings us to;

Why it doesn’t work?

Capitalism is not obliged to look after the societal issues, it’s a choice whether you want to pay heed to the natural environment you live in or not, therefore, most prioritizes profit over social good. When due to competition capitalists cut down the costs of their products, the environment has to pay the cost in the form of low quality products, pollution of all kinds, climate change in long run and what not. Differently-abled people, senior citizens, children suffer in such an arrangement due to their lack of competitive skills and therefore financial dependency. Those who are not privileged enough like who lack good education or nutrition do not get equality of opportunity.

Capitalism would normally work on demand and supply pattern until it’s crony capitalism.

Crony capitalism

An economic model where the big businesses have close relations with the state. Favouritism in this case is what decides which business will flourish and which not. Businesses gets benefits in the form of subsidies, permission to function at the cost of environment etc. And government is able to extract more tax and funds from big businesses.

This is what is being functional in most of the economies all over the world.



Countries all over the world have started shifting towards capitalism due to the bright economic perks it offer. The drive to earn more and create exponential growth always push the economy forward until the ethics and social responsibility are still in place.


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