The pursuit of a free market economy

Topics: Capitalism, Communism, Economic system Pages: 6 (1950 words) Published: August 18, 2014
Economic trade for profit has existed since at least the second millennium BC. However, capitalism in its modern form is usually traced to the emergence of agrarian capitalism and mercantilism of the Early Modern era. Throughout history, different governments and nations have tried to choose weather is it better to be capitalist or communist societies, and analyzing the results both economic systems; one related to a political perspective and the other one entirely relationated to an economical one; have given to the ones that have used them since they were created until nowadays, we can realize that it is better to keep the resources or the means of production with a private owner other than society taking the means of production and resources of a country.

One of the most important disadvantages communism has is that it makes the society to be lazy as a communist country pays all of its workers each month with a limited payment, and this makes people just wait for their money and the end of the month and does not encourage them to inprove themselves and just be okay with what the government gives them. Communism stands for equal sharing of work, according to the benefits and ability. But in capitalism, an individual is responsible for his works and if he wants to raise the ladder, he has to work hard. Moreover, communism stands for a class less society, which doesn’t see any difference between the rich and the poor. On the other hand, capitalism divides the society into rich and poor. Capitalism can be said to be the exploitation of the individual. While every one is equal in communism, there is a great divide of the class in capitalism.

For Communists, the society is above individuals. But for capitalists, individual freedom is above the state or society. While capitalism is a self regulated economic system, communism is a government run economy. In capitalism, the individual has full control over production and decides on the price structure. Contrary to this, it is the society or the government that determines the price structure in communism. Capitalism can organize itself into a complex system without an external guidance or central planning mechanism. Friedrich Hayek considered the phenomenon of self-organization as underpinning capitalism. Prices serve as a signal as to the urgent and unfilled wants of people, and the opportunity to earn profits if successful, or absorb losses if resources are used poorly or left idle, gives entrepreneurs incentive to use their knowledge and resources to satisfy those wants. Thus the activities of millions of people, each seeking his own interest, are coordinated.

Many theorists and policymakers in predominantly capitalist nations have emphasized capitalism's ability to promote economic growth, as measured by Gross Domestic Product (GDP), capacity utilization or standard of living. This argument was central, for example, to Adam Smith's advocacy of letting a free market control production and price, and allocate resources. Many theorists have noted that this increase in global GDP over time coincides with the emergence of the modern world capitalist system. Proponents also believe that a capitalist economy offers far more opportunities for individuals to raise their income through new professions or business ventures than do other economic forms. To their thinking, this potential is much greater than in either traditional feudal or tribal societies or in socialist societies. Proponents argue that increasing GDP is shown to bring about improved standards of living, such as better availability of food, housing, clothing, and health care.

After exposing all these factors stating that capitalism is better that communism because of the effect and advantages it have brought to societis that have used it, we can say that having a free market economy is a way more fair economic system and that should be pursuit by every country in the world so we will be available to develop...
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