Question

What are pros and cons of a Capitalistic economic system such as the U. S. (Explain in your own words, based on your research with cited material).

Answer 1

The Pros

In a capitalist system, the theory is that everyone has the ability to build a successful business if they work hard enough. Additionally, consumers are free to purchase whatever goods they want, limited only by their economic means. The competition will drive businesses to produce only the goods that are in demand, reducing waste and keeping prices low. This drive toward making the most of what they have will also drive consumers to spend their money on the items they most need and want.

The drive to achieve “the American dream” encourages innovation. Steve Jobs was driven by a passion to start Macintosh, but like most entrepreneurs, he wanted to oversee a successful business. Once he had a certain measure of success, his ambition to be the best drove him to up his game, inventing products like the iPhone. Overall, this economic setup means that America remains competitive with other countries in creating new products.

The Cons

Unfortunately, capitalism doesn’t work quite the way idealists think it should. Often the income someone earns is based more on the ability to negotiate during a job interview than some “work hard, earn more” formula. Businesses also have realized the benefits of importing products from socialist countries, where cheap labor costs drive manufacturing prices down, which means American manufacturers are being bypassed due, in part, to capitalism.

Another issue with the U.S. economic system is the corporate practice of making money off financial activity rather than product sales themselves. Profits go to shareholders rather than being put back into the business and offering raises or bonuses to workers. This harms the overall economy rather than helping it, making it a definite item for the “con” column.

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