Capitalism | Merits | Demerits | World History

Capitalism | Merits | Demerits | World History


So, we read about the industrial revolution. Now, tell me, What do you mean by Capitalism. What are its essential features? What was the main motto of the capitalist
mode of production? What does it mean by the division of labour? What are the classes in a capitalist society? What are the merits and demerits of capitalism
and how it triggered the rise of socialism? Let us try to find the answers in this video. Look, the industrial revolution in Europe
resulted in a paradigm shift in the means of production. One of the prominent results of the industrial
revolution was a socio-economic division of European society based on private property. Based on ownership rights over private property. The European society got stratified into capitalist
class and working class and the revolution gave birth to an economic system called capitalism. Capitalism is an economic system where private
entities own the factors of production. What are the factors of production? The four factors are entrepreneurship, capital
goods, natural resources, and labour. Central elements of capitalism include capital
accumulation, competitive markets and a price system. Further, we can point out the following features
of capitalism. First. Private property. In capitalism, every individual has the right
to earn and maintain private property. The right to property is considered as a sacrosanct
right in capitalism. In capitalism, individuals are the owners
of the property which is utilized for their benefits. Second.Profit institution. The primary motto of any action or process
in capitalism is to get maximum profit out of the investments. The production under capitalism is profit-oriented. Third. Competition. Capitalism is marred by the cut-throat competition. Generally, many firms produce similar kind
of goods and services, as a result, they compete with each other to capture market share. This competition helps consumers to a great
extent. Fourth. Price mechanism. In capitalism, the price of goods and services
are fixed as per the law of demand and supply. Ironically, the cost of production plays a
significant role in terms of price determination. Fifth. Wage institution. In capitalism, the workers sell his labour
in the factories. As we know the primary goal of capitals system
is the maximisation of profits consequently there is a tendency to pay less to the workers
so that profit could be increased. Cost-cutting you know. This often leads to exploitation of the labour
class. Sixth. money and credit. the capital system involves huge investments,
in such scenario credit, plays a big role. Thus a robust financial system forms the backbone
of the capital’s economy. Banks fail. Economy fails. Seventh. Market Economy, under the capitalist system
there is no governmental control over the forces of production, distribution and exchange. There is no price control or regulated distribution
by the government, the economy operates freely under the law of demand and supply. The capitalist economy is a liberalized or
market form of economy. So what is the Flipside of Capitalism first, in the capitalist system, the basis
of production is not on the needs of the majority of people. The basis of production is making profits. Profit and only profits and this Profit belong
not to the majority but to a handful of people, the capitalists. Do you know that the Gini Coefficient, read
the worlds banks report on income inequality index? Oxfam reports says, here in India, top 1%
people bag 73% of total wealth. Rich getting richer, poor getting poorer. Alright, second, on the basis of ownership
over means of production, the capitalist system creates sharp cleavage in the society. On the basis of class, the capitalist system
makes for a disunited community where one class that works and the other that owns. It creates a servant and master relationship. third, though the production was possible
only when the machine and the labour worked together, maximum attention was paid towards
money and a machine rather than the labour. The labourers were living in shanties, outside
the factories under subhuman conditions. Whereas the factory owners resided in beautiful
places with all the joys and comforts of life. Thus, capitalism perpetuated inequality. Fourth the biggest drawback of capitalism
was the fact that the bulk of the population was reduced to penury and destitution. Ironically, the champions of capitalism and
early thinkers found nothing wrong in such a system and paid no attention to the sad
and bad plight of the factory workers. Fifth, Capitalism ignores external costs,
such as pollution and climate change. This makes goods cheaper and more accessible
in the short run. But over time, it depletes natural resources,
lowers the quality of life in the affected areas, and increases costs for everyone. In the early 19th century, in both England
and France, evils of capitalism were brought before the public through Pamphlets, books,
and speeches. The thinkers like Robert oven and Charles
Fourier focused their attention on the sad plight of the factory workers. their books were widely read, their speeches
drew large audiences which criticized capitalism. This gave birth to the rise of socialism. We will see that in the next video. Alright, let’s have a quick recap. Main Characteristics of Capitalism, Right
to own property, Profit motive, Private ownership of means of production, Consumer’s sovereignty,
Economic freedom, Social division of people, Price mechanism, disregard to the environment. Advantages of Capitalism, Reduction in cost
of production due to efficient control, competition brings innovation, Improved quality of goods,
Consumer is the king, Varieties of products. Disadvantages of Capitalism, Inequality in
the distribution of national wealth, Fluctuations in the level of employment, Class conflicts,
neglect of basic human rights. Thank you so much for watching this video,
take care.

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