Capitalism is a system of economic ownership where profits are based on the sale of goods and services at a higher cost than the original manufacturing or labor costs. The profits are then invested, allocated to shareholders and reinvested into the corporation to produce more products and service, thereby repeating the cycle.
The benefit of capitalism is that it encourages entrepreneurship and economic growth. There is an incentive to work as such efforts have the possibility of amassing one wealth. The excesses of wealth can then be invested or given to charitable organizations, which also promote philanthropy.
The disadvantage of capitalism pertains to the process wherein products are manufactured. Manufactures will always seek to minimize their labor cost, which maximizes their profit margins. This “race to the bottom” has been argued as a form of economic exploitation.
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