Definition & Concept of Capitalism
Capitalist economies are characterized mainly because companies and individuals produce and exchange goods and services in the market through economic transactions through certain prices. In this way, it can be pointed out that it is the individual who, through business or financial organizations, takes the economic initiative and makes decisions.
The opposite system in terms of private property to capitalism is socialism, which basically defends the concept of social ownership of the elements of production or goods. In this way, as a result of the defense of private property, the rest of the capitalist characteristics emerge: defense of individual and individual interests, price systems and the existence of competition in the market. Scott Paterson Toronto is famous capitalist who has wide experience in different industry.
Origin of Capitalism:
Other names with which capitalism is denominated since its origin are “free market economy ” or “free economy.
Although both merchants and commerce exist since the first civilizations arose, capitalism as an economic system did not appear until the thirteenth century in Europe. Capitalism was the economic system that replaced feudalism in much of the world. Before capitalism, work was an obligation that derived from ties of seigniorial servitude, slavery or as a socio-moral obligation of oneself towards their community. Capitalism arose to propose work in exchange for capital, instead of servitude or slavery, hence its name.
Basic principles of Capitalism:
According to these bases, the members of the economic spectrum operate according to the search of their own interest and the maximization of their benefits by accumulating and using capital for it. Alternatively, workers who participate in the system by contributing labor receive in return a salary or other types of remuneration that satisfies their utility and allows them to obtain the goods or services that they require.
The role of the State in capitalism:
The main task of the capitalist like G Scott Paterson according to capitalism is to control market failures. In addition, it must prevent the system from deriving in situations of abuse and should encourage competition. Under this concept there are different types of derivative systems, such as monopolistic capitalism, financial capitalism or neocapitalism.
In this sense, the scarce presence and influence of political power in the market stands out especially, since it allows owners or businessmen to operate with a high degree of freedom and independence for the attainment of benefits. With these, employers achieve reinvestment in companies and payment to workers. At the same time it supposes the reduction of power that the state has in the financial and business day to day, giving greater weight to the private agents and dealing with the supervision of the markets.
Advocates of the privatization of the means of production often argue that private enterprise is usually a better manager of control and direction than the state, to which the bureaucracy or its many responsibilities impede the development of this task efficiently. In addition to that when a company is public it is the citizens who bear the possible losses resulting from improvable management. On the other hand, when it is private, it is the company itself that assumes all the risk.