AdamSmith perception of capitalism was that, with a complete presence ofbuyers and sellers in markets, wasteful resources are eliminated byan invisible hand meaning one’s riches increases from anotherones’s riches. He claimed that wealth is created by private andcommercial entrepreneurs acting with little interference fromgovernments (Daniel, 1994). This ideal might no longer work in moderndays.
Itmay no longer because currently, government intervention is widelycommon, since the capitalistic system no longer caters for the needsof the citizens. It is like living for the fittest, where the richand powerful individuals survive while the poor die. Althoughcapitalistic market still exists in the economy, government is notsupposed to interfere but the citizens insist otherwise. They demandlivelihood and social programs, but the economy must not behindered. This is tricky since for the government to provide suchsocial programs it must interfere with the businesses in order togenerate money in through tax or tariffs. Its only the governmentswho can work with capitalism, but no other institution since nobusiness would like to lose money (Buccholz, 1999).
Currently,wealth inequality is on the rise and it will still grow furtherleading to scrutiny of capitalism in the future. has beenruined as a result of wealth inequality, government interferencethrough taxation, capital inheritance and risk taking and effort(Buccholz, 1999).
Capitalhas downed capitalism in that when a businessman borrows capital andinvest, its returns will exceed the wages and output leading toincrease in wealth inequality. This situation is again worsened bywealth inheritance where wealth is inherited showing a greed ofkeeping up with the rich. The community can however change thistransition by having start up entrepreneurs to challenge theconcentrations of existing wealth (Samuelson, 1967).
has been undermined, but in return there are forces trying to wreckthe system. The rich are able to protect their wealth from taxationleading to increased tax burden on those unable to protect theirwealth. It is true that the public sectors such as health, housingand education is maintained by average taxpayers who lacks the meansto protect their wealth.
Incapitalism, there are two important parts. These are production andconsumption. In capitalism, its only the rich who benefits while thepoor lose. It`s only the poor who are the laborers are exploited anddehumanized. According to Marx, the laborer becomes alienated fromthe object he produces, human race and the society (Buccholz, 1999).
Marxdid not support capitalism and his reasons are great benefits inexplaining why capitalism no longer works in the business world. Incapitalism, wages of laborers are always minimal since a capitalistpays a little amount for the service to retain much profit. Thuscapitalism was a better bargaining position and for a laborer to stopstarvation, he must accept any wage offered to keep his family alive.But this is not the case currently, workers have formed trade unionsand may hold demonstrations if they feel they are exploited as pertheir work. In addition, capitalism worked well with bad workingconditions and overwork (Samuleson, 1967).
Accordingto Marx, lack of planning, private ownership and profit maximizationare the faults of capitalism. If these indictments are addressedamicably, capitalism would be eliminated further. Karl Marx, who is acommunist advocated for the removal of rich class through therevolution of proletariat to come up with own ideologies to countercapitalist forces. This revolution is termed communism where there isno state, or class where the means of production are common, andcompetition is eliminated and everyone has equal access to wealth(Buccholz, 1999).
Buccholz,Todd G. (1999). NewIdeas from Dead Economists: An Introduction to Modern EconomicThought,Revised edition. New York: Plume (Penguin Putnam).
DanielM. Hausman (New York: Cambridge UP, 1994), 119-142. 3 ….. 22 RobertHeilbroner. “Adam Smith and the Origin of ,” TheWorldly Philosophers, 7th ed. ….. Lives,Times, and Ideas of the Great Economic Thinkers,7th ed.
Samuelson,Paul A. (1967). “Marxian Economics as Economics.” TheAmerican Economic Review57, no. 2, 616-623.