Characteristics of Capitalism

Characteristics of Capitalism

There must be continual production and purchase for a capitalistic economy to be sustained. The purchase rate of a product must be consistent for it to remain profitable. When fewer people buy a commodity, it will eventually lose its market leading to the collapse of the company that makes it. Capitalism insists that you should continuously produce your goods only when there is a surplus demand for them. If your commodity is no longer needed, you are required to accommodate new changes and either improve your production or try something else. You are supposed to devise ways in which you will keep your customers yearning for your item.

Capitalism makes customers great influencers such that they can control sellers and producers to do what they want. When consumers decide that they want products that meet certain standards, producers are supposed to obey without any hesitation. Producers do not dictate the prices and quality of products that they will sell but rather ask consumers before deciding on the prices. When consumers feel that certain products are of low standards or their prices are not as expected, they can choose to abandon them and use the affordable alternatives.

This economy has a freely working

It proves that the government does not utilize resources better than private enterprises. Companies can only amass wealth when owned by private entrepreneurs therefore, capitalism greatly supports private companies to acquire wealth which will give them more funds. The government is not authorized to nationalize assets or businesses that are available. You are given the power to utilize all the assets around you for your benefit. All that entrepreneurs earn by accumulating assets belong to them and their family. Another thing is that your entire generation will enjoy the fruits of your labor as your property will be granted to them. You will work hard so that your children can have a better life in that after you die, they will enjoy all the wealth that you accumulated.

This economy has a freely working price mechanism to guide consumers and producers. The free working of supply and demand forces without anyone affecting it is what controls the amount of money that is paid for an item. The price mechanism is important for producers to decide on the best field of production they will specialize in. The demand of a commodity is what will influence the level of production.

Competition is viewed as a mechanism

In capitalism, it does not matter what you are doing as long as it brings you profits, it is worth putting in all your efforts. There might be an activity that a person enjoys doing but since the consumers do not need it you will have to change and prioritize the customers’ needs. This is because it is only by fulfilling the customers’ needs that you will more money from your investment. A capitalist society only favors those who make profits making every entrepreneur strive to achieving the highest profits possible. Entrepreneurs work hard only because there is a reward of huge profits. Profit is such an inducement that an entrepreneur is prepared to undertake a high risk to maximize earning it, so capitalism points at profit making as its major incentive.

Competition is viewed as a mechanism to improve the standards of production and reduce prices in a capitalist economy. Businesses compete to win more buyers for them to be consistent in making profits. Capitalism encourages competition for customers as a means of controlling the prices of commodities and their quality. Only the best in the market can survive price fluctuations as the customers will always need it.

Characteristics of Capitalism

For the sale of a commodity to remain consistent, the price has to be fair for the customers with the item being of the best quality. Quality and price of an item is what the buyers look for before purchasing a product. Companies have to maintain the good quality of their product even though it is sold cheaply. With availability of many skilled people, employers also look for workers who can cheaply increase the productivity of their products.

Capitalists support entrepreneurship as the best way of succeeding in life. People are encouraged to become entrepreneurs by creating a product that is unique but still needed by buyers. You can pursue anything you like but it must have a significant impact to the people. The particular product or service you offer should be one that will give people what they lack and eradicate problems from the community.

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