Capitalism. The following paper presents an analysis of capitalism a system frequently regarded as the sole viable economical and political ideology (Heywood, 2003, p20). Discussions of the concepts and developments of the capitalistic system will be

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Introduction

The following paper presents an analysis of capitalism – a system frequently regarded as the sole viable economical and political ideology (Heywood, 2003, p20). Discussions of the concepts and developments of the capitalistic system will be aimed to answer the question whether capitalism will prove itself to be a sustainable solution in the long-term.

Conceptual background

Capitalism has been defined as an economic system in which wealth and the means of production is owned by private individuals and businesses and goods are produced according to the market rules of supply and demand (Han et al., 2008, p128). Hence, the very essence of capitalism is a profit-driven competition. An essential strength of capitalism has been regarded the ability of the free market to coordinate itself as if led by an “invisible hand”, as expounded by Adam Smith (Hague and Harrop, 2007, p146). The underlying assumption hereby is that through the pursuit of individual’s self-interested activities, society as whole benefits.  

While adoption of capitalistic system has experienced fairly enthusiastic increase, capitalism has evolved as a model and changed in a variety of ways to accommodate the needs of different times and regions. In its purest form – laissez-faire (“let them do”) capitalist system was advocated by Adam Smith and later Milton Friedman and his Chicago School calling for free-market and reduced state intervention (Klein, 2007, pp49-53). However, in the aftermath of the Great Depression, a concept, suggested by John Maynard Keynes, was introduced which claimed that government intervention was essential in order to provide social security (Hague and Harrop, 2007, p145).

The modern capitalistic systems are mostly regarded as a mixed economies lying somewhere between these two models. While most Anglo-American countries, particularly the US, have adopted a more liberal, shareholder orientated market economy, continental European countries have developed a coordinated market economy with focus on many stakeholder groups (Morrison, 2002, pp109-112). In addition, the distinctive Asian capitalism, based on Confucian ethics, can be distinguished. It is typically embedded in social and cultural experiences which emphasize collectivist rather than the individualist attitudes (Heywood, 2003, p109).

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Analysis and discussion

While capitalistic systems have seemingly provided means of immense growth in the past, it has endured plenty of criticism. With a number of accounts, Whyte reveals the criminogenic character of capitalism deeming it a fundamentally inhumane system (2009, pp61-68).

Numerous problems arise from the prevalent industrial consolidation as well as the increased

influence of the multi-national enterprises (MNEs). As Heath and Potter point out some MNEs exert far more power than governments (2004, p329). This economic concentration, however, leads to a contradiction within the capitalism itself by destroying the incentives to encourage individual enterprise ...

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