Thursday, January 13, 2011

What is capitalism?

Before starting to use the word capitalism I will try to define it first. According to Merriam-Webster's dictionary, capitalism is defined as:  "An economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market
Now let's slice this definition into pieces and elaborate its fundamentel elements. It is an economic system by private or corporate ownership of capital goods meaning that possession of said goods play a key role in capitalism which reminds me of a quote of John Locke on the role of a government which will be important later on when I discuss the role of the government in capitalism. He said the following : "Government has no other end than the preservation of property."This property includes but is not limited to capital goods. Capitalism is also characterized by investments that are determined by private decision and by prices, production and the distribution of goods. Again, it is relevant to note the importance of the role of the government because this leads to the several questions e.g. which economical policy is more fruitful, the regulated market or the deregulated market and what are the social and global consequences that companies have in the distribution of they products and/or services. The last part of the definition speaks of the role of the free market in capitalism and its potential to provide economic growth and profits and its potential to enlarge poverty. 

I hope the first part of my blog was clear and gave a sketch of the general rationale of my blog 'Capitalism and democracy'.