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GROUP MEMEBERSFAROOQ SAEEDHAIDER ALIALI RIZWANHAFIZ FAZAL MOIN
AGENDA INTRODUCTION HISTORY OF CAPITALISM TYPES OF CAPITALISM PERSPECTIVES OF CAPITALISM ADVOCACY CRITICISM
INTRODUCTION Philosophy of economic systems that favors private ownership of the means of production, creation of goods or services for profit or income by individuals or corporations, competitive markets, voluntary exchange, wage labor, capital accumulation, and personal finance.
CAPITALISM: A HISTORICALPERSPECTIVE o PRE HISTORY o MERCENTALISM o INDUSTRIALIZATION o KEYNESIANISM AND NEOLIBERALISM o GLOBALIZATION
PRE HISTORY Modern capitalist system has its origin in the “Crisis Of The Fourteenth Century“ Marx labeled this period the Pre-History of
MERCANTILISM A System of Trade for Profit Under mercantilism, European merchants, backed by state controls, subsidies, and monopolies, made most of their profits from the buying and selling of goods.
INDUSTRIALIZATION During the Industrial Revolution, the industrialist replaced the merchant as a dominant actor in the capitalist system and affected the decline of the traditional handicraft skills of artisans, guilds, and journeymen.
GLOBALIZATION Capitalism should now be viewed as a truly world system. Number of trends associated with globalization have acted to increase the mobility of people and capital since the last quarter of the 20th century (the start of globalization)
MERCANTILISM An economic system to increase a nations wealth by government regulation of all of the nations commercial interests It demands a positive balance of trade Dominated Western European economic policy from 16th to late-18th centuries Mercantilist policies have included Building a network of overseas colonies Forbidding colonies to trade with other nations Promote accumulation of gold and silver Maximizing the use of domestic resources Forbidding trade to be carried in foreign ships
FREE MARKET CAPITALISM A free-price system where prices are determined by supply and demand Laissez-faire (let them do) No government/state intervention Productive enterprises are privately owned Role of government is limited to protecting the rights of life, liberty and property A laissez-fair state and free market has never existed
SOCIAL MARKET ECONOMY Economic system implemented by most of the German political parties since World War II Seeks a middle path between capitalism and laissez-fair economic liberalism and state intervention provides Fair competition Balance between a high rate of economic growth Low inflation Low levels of unemployment Social welfare Public services
STATE CAPITALISM State ownership of the means of production within a state State has considerable control over the allocation of credit and investment Examples of state capitalism include Corporatized government agencies States that own controlling shares of publicly-listed corporations
CORPORATE CAPITALISM Characterized by the dominance of hierarchical, bureaucratic corporations Legally required to pursue the profit State monopoly capitalism Corporate capitalism has been criticized for the amount of power and influence, corporations have over government policy
MIXED ECONOMY Both state and private sector direct economy Means of production are mainly under private ownership Indirect influence of government Governments in mixed economies provide Environmental protection Maintenance of employment standards Standardized welfare system Maintenance of competition
PERSPECTIVES ON CAPITALISM Classical political economy Marxist political economy Weberian political sociology Institutional economics Keynesian economics Neoclassical economics
CLASSICAL POLITICAL ECONOMY Emerged in Britain in the late 18th century Adam Smith, David Ricardo, Jean-Baptiste Say, and John Stuart Mill Criticized monopolies, tariffs, duties, and other state enforced restrictions Developed the law of comparative advantage It is profitable for two parties to trade, even if one of the trading partners is more efficient
MARXIST POLITICAL ECONOMY Developed by Karl Marx Believed that the working classes would come to power in a communist transformation of human society Labor is the source of all value, and thus of profit Criticized capitalism that exploited labor would result in a revolution to a socialist-style economy
WEBERIAN POLITICAL SOCIOLOGY Developed by 19th century German social theorist Max Weber Considered market exchange as the defining feature of capitalism Laborer was both free to own property, and free of the ability to reproduce his labor power
INSTITUTIONAL ECONOMICS Pioneered by John Dewey, Thorstein Veblen, and Daniel Bromley Was once the main school of economic thought In the United States Holds that capitalism cannot be separated from the political and social system Businesses protect their existing capital investments leading to depressions Increasing military expenditure and war through business control of political power
KEYNESIAN ECONOMICS Developed by the British economist John Maynard Keynes Capitalism suffered a basic problem in its ability to recover from periods of slowdowns in investment Capitalist economy could remain in an indefinite equilibrium despite high unemployment Showed that regulation can be effectives
NEOCLASSICAL ECONOMICS Majority of the world draws on neoclassical economic thought Favors extensive market coordination and neutral patterns of governmental market regulation Market economies are inherently stable if left to themselves and depressions result only from government intervention Value is subjective, varying from person to person, and thus reject the labor theory of value
ADVOCACY FOR CAPITALISM Increased Economic Growth Capitalist nations have emphasizedcapitalisms ability to promote economic growth, asmeasured by Gross Domestic Product (GDP). In years 1000–1820 world economy grew six fold, 50 % per person. After capitalism had started to spread more widely, in years 1820–1998 world economy grew 50-fold, i.e., 9-fold per person.
ADVOCACY FOR CAPITALISM Increasing GDP (per capita) is empirically shown to bring about improved standards of living, such as better availability of food, housing, clothing, and health care. Proponents also believe that a capitalist economy offers far more opportunities for individuals to raise their income through new professions or businesses.
SELF-ORGANIZATION Capitalism can organize itself into a complex system without an external guidance or central planning mechanism. Prices serve as a signal as to the urgent and unfilled wants of people The promise of profits gives entrepreneurs incentive to use their knowledge and resources to satisfy those wants
CRITICISMS ON CAPITALISM Critics of capitalism associate it with: social inequality unfair distribution of wealth and power Notable critics of capitalism have included: socialists, communists, national socialists, social democrats, technocrats, some types of conservatives, Shakers and some types of nationalists.
CRITICISMS ON CAPITALISM Requires huge investments in capital. This has resulted in a very small number of people to have over control over the productive resources of the entire society. The employees have limited motivation to put in their best to the work they do. In this way their capabilities are used much below their potential.
CONCLUSION Advantages As a consumer, you can get the best quality goods and services at the best prices As a consumer or a producer, you have the greatest possible freedom to do what you want Rewards hard work, ingenuity and talent Disadvantages Inequality and injustice Rewards corruption and influence peddling Wealthy can dictate policy with donations