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Understanding Economics: Definition of the Capitalism

Wealth creation in a capitalist system relies on private ownership of property. Individuals are given the freedom to own and control the property. In addition, the economy operates as a free market. This means that there is minimal government intervention increasing the efficiency of market forces in determining the price of goods and services. The freedom to own privately own property and determination of prices by market forces increase the degree of responsibility amongst individuals in their quest to accumulate wealth. The resultant effect is the increased creation of wealth.

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The effectiveness with which individuals create wealth in a capitalist economy is dependent on the amount of capital accumulated. This is due to the fact that capital accumulation enhances the production process thus enhancing the health of the economic system (Heilbroner, p. 33).

Under capitalism, the state has the role of ensuring that there are well-implemented structures to enhance the health of capitalism. Some of these include implementation of managerial structures, enhancing skills. As a result, individuals would be able to conduct their economic activities with regard to the creation of wealth more effectively. In addition, the state should ensure that technical equipment necessary for the execution of various tasks is present within the economy. The state should also ensure that capitalism thrives well. One of the ways through which this can be attained is regulation of the economic environment. This is attained through the protection of individual rights. However, it should not interfere with the operations of individuals. This will increase the probability with wealth is accumulated within the economy (Heilbroner, p. 78).

Ideology refers to a general view regarding a particular issue. This is similar to Heilbroner’s perspective who asserts that ideology entails an unselfconsciously held view regarding a dominant issue within the society. He further links ideologies to a system of thoughts that are used to explain how a particular social system works. This means that ideologies are not fiction but they are evident and moral (Heilbroner, p. 107). Freedom in a capitalist system is connected to the reproduction of capital in that individuals can be able to make economic decisions such as those related to investment without being influenced by the government. In addition, an individual’s freedom is enhanced by the rights associated with the system.

In a capitalist economy, a small proportion of individuals control the economy in terms of resources. As a result, they are able to accumulate wealth. They attain this by keeping the wages low and profits high. In such an economy, profit is of great concern compared to the environment and people. In order for there to be effective production, competition amongst each other is incorporated. Individuals are forced to compete against each other in order to make enough money to meet their daily needs. This means that competition and needs to satisfy individuals’ needs are some of the forces which propel capitalism. On the other hand, it is the owners of the firms who benefit.

Works Cited

Heilbroner, Robert. The Nature and Logic of Capitalism. New York: W. W. Norton, 1985. Print.

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StudyCorgi. (2021, December 16). Understanding Economics: Definition of the Capitalism. Retrieved from https://studycorgi.com/understanding-economics-definition-of-the-capitalism/

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StudyCorgi. (2021, December 16). Understanding Economics: Definition of the Capitalism. https://studycorgi.com/understanding-economics-definition-of-the-capitalism/

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StudyCorgi. (2021) 'Understanding Economics: Definition of the Capitalism'. 16 December.

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