Monday, October 27, 2008

how capitalism work and the good of capitalism

Capitalism is an economic system that consists of private ownership of wealth, profit motive (making money), and producing products/goods and sell those goods in the free market. The "invisible hand" (the way in which how market competitions and self-interests would create situation that organizes and benefit society) sort of helps controls the market so that it somehow works in a way that everything would flow. Free market is where people go get profit and putting investments and having their own companies with selling, buying, and trading (Globalization). Using Land (raw materials we use to make the products), Labor (all the work necessarily to sell, distribute and produce) and Capital (the factory, machinery, companies who get the profit) we can see how capitalism work in a way that makes everything united in a way. We are all in the same boat, but working in different levels but in the end everybody's knowledge of "things" (even though it is their own interests) would benefit everybody to make the whole boat working. The people also get a chance or chances to go from "rags to riches" or upward mobility, making them able to become monopolies, natural monopolies, monopsonies or getting a company of their own and getting profit for themselves.
In capitalism, there is also economics involve in the free markets = lots of commodities (something that can be bought and sold in the market place or perfectly substituable) and competition. The good thing about the competition is that if a lot of people are competing in one thing then prices would go down which means people can afford it better than before. There is not much government interferences in capitalism which makes it a good thing since people don't like the government interfering the market or surpluses and low shortages can happened. One of the important things about the economics in capitalism is the Supply (the availability for sale of a commodity of all prices) and Demand (the amount purchase of a commodity at all price) because its good for the sellers or just the market to know the right prices to sell at and get profit from it.

Everybody work hard to get to where they want and capitalism is one of those ways they can do that because they are free if they are in capitalism to decide what to do. They get their own wealth and there are no limited.

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