Capitalist Economic System: Definition, Characteristics, Strengths, Weaknesses and Countries Adhering to it
Capitalist Economic System: Definition, Characteristics, Strengths, Weaknesses and Countries Adhering to it – Is that what is meant by a capitalist economic system?, On this occasion About the knowledge.co.id will discuss it and of course about other things that also cover it. Let's look at the discussion together in the article below to better understand it.
Capitalist Economic System: Definition, Characteristics, Strengths, Weaknesses and Countries Adhering to it
The economic system according to Gregiry Grossman is a collection of economic institutions and units that are not only interact or relate to each other, but to a certain degree support each other and influence.
The capitalist economic system is a system with freedom to regulate and determine the economic activities that occur in society. The economic activity in question is the main economic activity which includes production, consumption and distribution.
Capitalist economic system, is a system that gives freedom to organize and determine economic activities for the community that they want to do according to their abilities each.
Understanding of the Capitalist Economic System According to Experts
The economic system is an important system in a country. Without this system, there are no rules that can regulate the country's economy. As a result, human resources and natural resources have been neglected. While the understanding of the capitalist economic system according to experts, namely:
Adam Smith
Adam Smith said that the capitalist economic system is a system that can create prosperity in society. Because the government does not intervene in market policies and mechanisms.
Max Weber
According to Max Weber, the capitalist economic system is an economic system aimed at something market and encouraged to be able to generate profits from exchange activities in the market the.
Tom G. Palmers
Tom G. Palmer expressed his opinion that capitalism is a legal, social, economic and cultural system that promotes equality rights, meritocracy, decentralization of innovation, and a learning process (trial and error) through a voluntary process on the mechanism market.
Sukarno
Meanwhile, according to Ir. Soekarno's capitalist economic system, namely the social system in society that emerged from the method of production and separated the workers from the existing means of production.
Ebenstein William
Ebenstein William stated that the capitalist system is a social system that is more comprehensive and even more than certain types of economy.
Characteristics of a Capitalist Economic System
There are several characteristics possessed by the capitalist economic system and you can use them to recognize this economic system more easily. The characteristics of the capitalist economic system, namely:
- Communities have full rights in their economic activities
- In a capitalist economic system, every community is given full rights to be able to manage its own economic system. So that every individual ability is highly valued by the government of that country.
- Individually owned means of economic production
- Of course, this is because everyone has to procure their own means of production, bearing in mind that they are the ones who manage their own economy.
- There is no interference from the government
- In a capitalist economic system, the government is not allowed to interfere in the people's economy. Because the government only serves as a supervisor of economic activity.
- Capital is a determinant in economic activity
- Capital is a determinant of whether the economy in society can progress or even go out of business.
- The goal of economics is profit
- All economic activities carried out by the community are primarily aimed at making a profit.
- Prices of goods/services according to the free market
- Prices of goods and services produced by society are determined by the free market, not the government.
- There is competition
- Because the community itself determines the type of business, there must be competition between communities.
Advantages of the Capitalist Economic System
Every economic system that is formed must have advantages or advantages of each. The advantages of the capitalist economic system are:
- Every individual (individual/company) has freedom and has the right to own wealth and production resources privately or not as limited as in the socialist economic system.
- Community initiative and creativity in economic activities can be developed.
- Its actions are always based on economic principles so that efficiency and effectiveness are high.
- Because each individual is free to carry out his activities, there will be competition between producers (companies) to produce quality goods.
Weaknesses of the Capitalism Economic System
Not only advantages, this capitalist or liberal economic system also has disadvantages or weaknesses including:
- This freedom in carrying out economic activities is often misused by those who are economically strong to extort the weaker ones.
- Market freedom causes competition to seize the market. This can lead to encouraging the formation of monopolies, business collusion and conglomerates so as to threaten weak entrepreneurs.
- Encouraging the increasingly visible gap between strong economic groups and weak economies is getting bigger.
- The economy is easily shaken by instability.
Capitalism Economic System Country
The capitalist economic system is also known as the liberal economic system. Along with the development of time, the capitalist economic system also developed. In fact, many countries are starting to look at this type of economic system. The countries that use the capitalist economic system are:
- Countries in the Americas
There are many countries in the Americas that use a capitalist economic system. Such as United States, Suriname, Puerto Rico, Peru, Paraguay, Panama, Dominican Republic, Bahamas, Aruba, Mexico, Canada, Honduras, Ecuador, Venezuela, Uruguay, Nicaragua, Colombia, Cuba, Chile, Grenada, Greenland, Bolivia, Brazil, Rica, Costa and Argentina.
- Countries on the European Continent
Meanwhile, countries on the European Continent that use an economic system are the United Kingdom, Serbia, Montenegro, Russia, Romania, Slovenia, Slovakia, Portugal, Poland, Norway, Lithuania, Latvia, Italy, Iceland, Hungary, Luxembourg, Greece, Germany, France, Finland, Estonia, Denmark, Netherlands, Moldova, Macedonia, Croatia, Ukraine, Switzerland, Sweden, Spain, Bulgaria, Czechoslovak Republic, Cyprus, Belgium, Austria, Armenia and Albania.
- Countries on the Continent of Asia
The Asian continent is also not inferior to other continents because on this continent there are countries that use a capitalist economic system. These countries are New Zealand, Australia, Singapore, Hong Kong, Cambodia, Myanmar, Malaysia, Turkey, Thailand, Japan, Israel, Iran, Taiwan, Philippines, South Korea and India.
- Countries on the African Continent
Then countries on the African Continent that use a capitalist economic system are Zimbabwe, Zambia, Tunisia, Tanzania, Seychelles, Mozambique, Morocco, Equatorial Guinea, Côte DIvoire, Mantol Verde, Burkina Faso, Malawi, Kenya, Ghana, Gambia, Benin, Angola, Algeria, South Africa, Senegal, as well as Egypt.
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