Question

The Failure of Capitalism: What is the issue dan problem

Answer 1

Capitalism is a free-market economic system and limited intervention by the government. Proponents argue that capitalism is the most efficient economic system to enable a better standard of living. Capitalist proponents like Milton Friedman argue that capitalism and the economic freedoms it represents are also important for fostering political freedoms. Despite its ubiquity, however, many economists criticize aspects of capitalism, pointing out that there are many flaws and problems. In short, capitalism can lead to inequality, market failure, and economic cycles of boom and bust.

Capitalism's profits are seldom distributed fairly. Wealth tends to grow to a small percentage of the population. This means that a small percentage of the population is often limited by demand for luxury goods. Capitalism's existence will cause this disparity to continue to grow. It happens inherited wealth for a few reasons. Capitalists are able to transfer their assets to their children. Capitalism therefore does not create equal opportunities, but those born in privilege are much more likely to do well due to better health, education, and inherited wealth. Value in capital. When capitalists can purchase property–bonds, house prices, stocks, they can earn interest, rent, and dividends. You can use these earnings to buy more property and resources, generating a multiplier effect on income. Those without assets are left behind and are likely to see house prices rising faster than inflation.

Capitalism depends on financial markets–shares, bonds, and money markets, but financial markets tend to cause booms and bust. Lending and trust increase in a boom period, but markets are frequently carried away by' irrational exuberance' that causes assets to spike in value. Yet, as market sentiment shifts, this boom can quickly turn into a crash. These crashes on the market can lead to economic downturn, recession, and unemployment. Capitalism has undergone severe recessions (the 1930s) at various times, waves of mass unemployment, and declining living standards.

Successful companies can achieve monopoly power in a free market. This helps customers to charge higher prices. Capitalism's supporters argue that only capitalism provides economic freedom. But a monopoly's autonomy can be exploited, and customers lose because they have no alternative. For example, in industries such as tap water or electricity supply, which are a natural monopoly, customers have no choice but to pay consumer-charged rates. Monopolies like Standard Oil purchased our rivals in the nineteenth century (often with unfair competitive practices) and then became very profitable.