Market capitalism is an economy where forces of demand and supply determine prices. People also own the means of production, and those with no access to means of production have to offer labor as employees. Markets are also free where owners of production set prices of their goods and services. This essay will focus on factors that are essential to understanding market capitalism. The essay poses three different statements that will help in understanding the issue of market capitalism. I will first discuss statement A, followed by statement B then lastly statement C.
The key to understanding market capitalism is to study who has the imagination to be creative. In addition, why and how they take profit opportunities that others do not.
In this question, it is necessary to understand the aspect of creativity and the role it plays in market capitalism. This will focus on how a creative organization can emerge above other businesses in market capitalism. It will also focus on how companies in a capitalist market strive to emerge differently and unique so as to gain a market advantage over the other companies in the market. This will in turn demonstrate the characteristics of a capitalist market clearly.
A capitalist market provides an arena for creations. This is because in capitalism every business wants to make innovations that will bring in more money and enrich these companies. This is in contrary to other economic systems like socialism. It is because of a capitalist market that we now have more and advanced medical inventions. The computers and the internet creations have also been driven by capitalism. Capitalism pushes organizations to invest in ideas that will enable them acquire more profits than their competitors do.
Creativity has become to post modern capitalism what efficiency was in the earlier capitalism (Boltanski & Chiapello, 2007, p 45). Creativity has also become an interest of knowledge economies. Creativity in today's capitalism distinguishes the successful from the unsuccessful. The market causes and brings innovations in the world (Smith, 1999, p 370). This is because of the competition that the market presents to those present in the market.
Creativity and innovation in capitalism has even led companies to provide for social services unwillingly and even voluntary. The provision of these services are non-commercial, and their giving is for other reasons like political ones (leys, 2003, p 23). This shows the level of creativity and imagination organizations are willing to reach so as to succeed in a capitalist market. Creativity has best thrived in the entertainment industry, especially in music.
The second aspect that needs to be discussed under this question is that of taking opportunities and turning them into profits. An organization that wants to thrive in a capitalist market must be opportunistic and invest in viable upcoming opportunities. They should grab an opportunity that will put them forward above other organization in the market. This is so especially because of the competitive market present in capitalism.
In capitalism, profit comes first before anything else, such as people. Capitalism promotes entrepreneurship, especially because of the gains that accumulate for the entrepreneur. An entrepreneur is one who sees an opportunity and takes it; he also sees opportunities before all others and takes the necessary risks so as to accumulate profits. Entrepreneurs even exploit workers and consumers so as to attain profit in the risks they have taken.
Capitalism provides an environment for entrepreneurs to succeed. It also pushes them to step into areas that have not been explored. Economists William Baumol and Peter Boettke have argued that capitalism provides for an entrepreneur to thrive. This is as compared to other modes of economies. Capitalism promotes the creation of wealth and profit (Boettke and Christopher, 2003, p 69). This then attracts entrepreneurs to venture into opportunity areas that have not been explored before.
The key to understanding market capitalism is to study how business organizations, like organisms in the natural world, adapt better than others to their ever-changing market environment
In this statement, the main focus will be on how businesses are able to adapt well to the changing market situation in a capitalist market. To argue this statement, I will focus on competition in capitalism that enables the businesses that are able to adapt and emerge strong amid competition. The other aspect will be to look at the ever-changing capitalist market environment, and how organizations are able to survive this change.
The aspect about capitalism being a free market creates and paves a way for competition to thrive. This renders organizations to come up with inventions, innovations, and all materials that they can help them survive in the capitalist markets. Competition in capitalism causes the rise of monopolies (Amable, 2003, p 56). This happens when organizations acquire more and more power in the market and end up controlling the market.
In today's economy, competition has increased due to four factors; first is the economic stagnation. This is leading some companies to a downfall while those who are able to withstand are excelling (Elser, 1988, p 58). The second factor is the growth of multinationals, which are becoming intensely competitive and creating room for the rise of monopoly power. The third factor is finacialization, where some companies that are not competitive are going bankrupt. The last factor is new technological developments, which leave out businesses not able to keep up with technology (Brenner, 2006, p 67).
The changing of markets environment is becoming more predominant in today's economy especially with fluctuations in economic growth of economies and with economies performing poorly. Businesses are now finding themselves faced with change and lack an option for an action. These businesses face problems of rising costs and decreasing sales. The only companies that are able to survive are those able to adapt. Adaptation may mean to change product or even prices and companies that are not able to survive this change end up falling (Bowles, Edwards & Roosevelt, 2005, P 92).
The forces in the market of a capitalist economy are responsible for the changes that keep occurring in the market. These changes in the market may often lead to an increase in prices. This then necessitates the intervention of the government. The government can play a vital role in preventing the exploitation of consumers by organizations that are flourishing during change. Capitalism promotes this behavior by businesses, which leads them not care for the public anymore. These businesses are oligopolies, as they exert influence in the market and forcing other players to operate on the periphery.
The key to understanding market capitalism is to study which business organizations have the most control over resources and what they do with this control
The main key area to focus under this statement is the distribution and control of resources in a capitalist market. In capitalism, resources have always been a key factor that enabled capitalism to flourish. This was so especially if the resources got controlled by a few who were willing to use the resources for their own gain.
In capitalism, businesses get the freedom to own resources and decide where these resources should be directed. The way in which this economic system works, the owners of resources depend on market forces such as demand and supply to determine prices of commodities or services. This system is the laissez-faire system (Bowles, 2007, p 34). The way this system works is that the organization will only invest their resources if they are to achieve profitable returns. On the contrary to this, they are most likely to withdraw their resources.
The study of successful organizations and businessmen shows how capitalism works. It is by looking at how such organizations have been able to create wealth by having private property. This control in resources results into the creation of monopoly and oligopoly market structures. The development of these markets then denies consumers the presence of perfect competition where prices are fair.
The development of monopolistic and oligopolistic competitive markets can be attributed to the distribution in resources and capital. Monopolies thrive in markets where they are able to control substantial resources (Barbalet, 2008, p 88). This way they are able to set prices and collect as many profits by exploiting both their labor resource and consumers of their products and services. These mainly occur in the industry sector of the economy.
It is in pure capitalism that businesses have their own resources and even add to their private property. In owning these resources, freedom on the control of resources and their use is widely available. According to Smith, private allocation and control of the resources results into economic efficiency and an economy thriving which are beneficial to a country (Smith, 1999, p 256). The problem though with ownership and control of resources results into the owners doing what interest and benefits them.
Critics of capitalism like Karl Marx are predominant against this notion of privately owning and controlling resources (Mcquarie, 1978, p 46). Marxist scholars argue that only a few in the society end up benefiting from the economy. Marxist also argues that capitalism could lead to society destruction. In the postmodern capitalism, the government has to play the crucial role to decide how they conduct the sharing of resources and who controls some resources.
In my opinion, the statement that I most agree with is statement A. This is mainly because it covers a modern approach and aspect of capitalism. It shows the reality of the world economies of the world today. Market capitalism is about making the best out of a situation and being able to sustain. The argument of the statement presents the creativity that organizations have to adapt so as to thrive in a competitive market. It also presents the aspect of opportunities and how entrepreneurs take up such opportunities for profit purposes rather than to benefit the society. Although the other statements also present a considerable argument, they do not meet the factors of postmodern market capitalism.
The above statements are all arguing about the best way and key aspects that help in understanding market capitalism. They all help to uncover the different characteristics of capitalism and the free market. They also show an insight on the damage that capitalism can cause. In the first statements, the drivers of capitalism such as creativity and opportunities are the principal proponents of capitalism, while the second statement, focuses on competition and change. On the third statement, resources and their control of the main focus to show how capitalism may work.