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In Defense of Capitalism

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In Defense of Capitalism

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I. Introduction

A market system under a capitalist political economy has continuously proven itself successful and resilient in many countries around the world today. This type of economy allocates its potential output efficiently, uses the country’s productive resources effectively, addresses fundamental economic decisions, and has a positive impact on it's citizen's liberty. The continuous cycle of supply and demand ensures efficient allocation of an economy's GDP and other potential resources. Productive resources are used to their greatest potential by citizens who are allowed to pursue their interests, and new technological advancements are made by a population who are encouraged to choose their own career. Economic decisions of what, how and for whom to produce are determined by what will bring a profit, produced by using the lowest cost option and sold to those who are willing and able to pay a favorable price. Because citizens of a free market economy have the maximum freedom of individual choice, and consumers will find the widest variety of goods and services available to them, the overall liberty of the citizens is affected positively. Renowned economic theorist Adam Smith agrees with the ideas behind the market/capitalist system, and will appear in court to testify.

II. Allocation of Potential Output

The free market economic system has a continuous cycle of supply and demand between it's buyers and sellers. When the price becomes lower on a particular product, the demand for that product rises, and greater quantities of that product are sold (Bolotta, Hawkes, Mahoney, Piper, 2002) . Because a capitalist government does not regulate this cycle of supply and demand in a free market system, there is nothing restricting the growth of the economy's GDP per year. For example, all 5 countries with the highest GDP per capita are capitalist countries with some form of a market system (CIA World Fact Book, 2007). Clearly, the potential output...

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