Criticisms of Capitalism

Introduction

Capitalism refers to a system of the economy where a small percentage of the elite population holds control over the economy of the country. It only focuses on earning profits and mistreats the labour involved. It is a highly criticized economic system but dominates the economy of some economically leading countries.

Concept of Capitalism and its Criticism

A cash outlay can be recognised as an asset on the balance sheet rather than a cost on the income statement according to the capitalization accounting principle.

Both proponents and opponents of capitalism agree that capitalism's singular contribution to history has been its advocacy of economic expansion. However, economic development is not regarded by critics of capitalism as an unequivocal positive. Its bad side is brought on by three dysfunctions that are a result of its market origins. These dysfunctions are discussed below.

Unreliability of Growth

Since capitalism is driven by profit expectations, its expansion varies with shifts in social or technological opportunities for capital accumulation.

• As opportunities present themselves, money flows in to take advantage of them, producing the well-known effects of an economic boom. When the market for new products or services is established, the initial rush eventually slows down, which limits investment, creates a shakeout in the key industries impacted by the previous boom, and ushers in a period of recession.

• The first volume of Marx's Das Kapital was not published until 1867, at which point this criticism had evolved entirely. Marx thought that in addition to being unpredictable for the reasons above—he referred to such erratic swings as the "anarchy" of the market—the growth path was also steadily becoming more unstable.

• Marx thought that the cause of this is a byproduct of industrialisation, which encourages large-scale businesses. The process of winnowing occurs as each saturation stops expansion, allowing the more successful businesses to buy the assets of the less successful ones.

• Due to this, capital tends to be concentrated in ever-larger enterprises by the very mechanics of growth. This results in even bigger disruptions after the next boom finishes and only comes to an end when the working class loses its cool and capitalism is replaced with socialism.

Quality of Growth

The manufacturing of numerous commodities produces "bads" as well as "goods," such as poisonous waste or unhygienic working conditions as well as beneficial items. This is inherent to a complex industrial civilization.

By routinizing employment, Smith warned that the division of labour would reduce workers to "as ignorant and uneducated as a human creature can become," while Marx emphasised the social cost of prioritising the interests of the community over corporate profits. Other economists voiced concern that long-term unemployment would arise from the deployment of technologies meant to lower labour costs.

The capacity of physical and chemical processes to exceed the carrying capacity of the environment has received a lot of attention in recent times, which is concerning given the numerous sorts of environmental harm caused by excessive discharges of industrial effluents and pollutants.

Equity

A criticism of capitalism's expansion focuses on how fairly it shares its recurring hardships or distributes its growing wealth.

The particular version focuses on income differences between social classes. A supporter of market-determined distribution will contend that, with a few notable exceptions, people typically receive compensation commensurate with the value of their contribution to production in a society based on the free market. Therefore, market-based incentives raise the productive system's productivity and the overall quantity of money that is available for distribution.

According to Marxist opponents, workers in a capitalist economy routinely get lower wages than the worth of their labour due to employers' stronger negotiating position. As a result, the argument that capitalists are more equal than, efficiency covers up an underlying exploitation situation.

Other critics dispute the efficiency standard itself, which does not take into account the moral, social, or aesthetic merits of either input or output and forbids employees from expressing their own opinions regarding the choices that would be best for their companies.

Conclusion

Critics of capitalism may disagree with any aspect of the system, from the overall guiding principles to particular outcomes. Many political and intellectual currents, including those that are socialist, Marxist, religious, and nationalist, criticise capitalism. Some people think the only way to eliminate capitalism is through a revolution, while others think gradual structural change could come about as a result of political changes. Some anti-capitalists desire societal control, usually in the form of legislation, to counteract the benefits of the system (e.g. the social market movement).

The claims that capitalism is inherently exploitative, alienating, unstable, and unsustainable, that it creates enormous economic inequality, treat people like commodities, is anti-democratic, undercut human rights and national sovereignty, and promotes imperialist expansion and war are some of the most popular criticisms of capitalism.

FAQs

Q1. What is the criticism of Marx's capitalism?

Ans. Marx bemoaned how capitalism alienates the mass populace. Although workers create goods for the market, market forces govern the world rather than labour. Workers are required to perform labour for capitalists who have complete control over the means of production.

Q2. What do you call the people who criticise capitalism?

Ans. Numerous ideas and points of view that are opposed to capitalism are included in the political movement and philosophy known as "anti-capitalism." People who favour an alternative economic system to capitalism, such as socialism or communism, are said to be anti-capitalists.

Q3. What are the 3 disadvantages of capitalism?

Ans. Environmental damage could result from unequal wealth distribution and a propensity towards the industrial disturbance. Labour might be exploited and undervalued. A few people might live in the capital.