Has capitalism brought about global improvement, or has it been a destructive force? This intricate question warrants an exploration of capitalism’s triumphs and failures. On the upside, capitalism promotes decentralization, empowering individuals to start businesses and drive innovation, resulting in significant technological progress and a notable decline in global poverty. It provides avenues for economic growth and diversifies consumer choices. However, capitalism’s darker aspects include the rise of monopolies, increasing income inequality, environmental harm, and the risk of corporate dominance over democratic institutions. To fully grasp capitalism’s impact, it is essential to consider both its impressive successes and its profound challenges.
Has Capitalism improved the world? Or is Capitalism an ideology that has destroyed the world? Come let’s understand the successful ideas of Capitalism and its failures.
Positive Impact of Capitalism:
Decentralization:
The largest successful idea of Capitalism might be Decentralization. In capitalist countries, everyone has the freedom to start their own business. Even you can start a business. and every year there are lots of new businesses starting up.
These businesses work independently from each other. It means that they are Decentralized. They compete with each other which leads to innovation. on the other hand, in communist-socialist countries like the Soviet Union, everything is controlled by the government.
All major production areas and industries are controlled by the government. There is only one point of control. Centralization. For the top few people to control all the production means of the country and to balance the economy is very difficult.
This is believed to be one of the major reasons for America’s win against the Soviet Union during the Cold War because of the central planning of the Soviet Union, their growth was far less when compared to America’s. when these numerous decentralized businesses in capitalism work independently.
INNOVATION OF TECHNOLOGY:
They will also compete with each other to better themselves. they get a financial incentive here: the Profit to earn this profit, the businesses would want to work better. better than their competitors, which will lead to innovation.
So Capitalism provides a financial incentive that triggers Innovation because of this innovation, in the last 100-200 years, Capitalism has seen a level of technological development that we had not seen in the two thousand years of human history.
Think about it. Cars, Airplanes, the Internet, Computers, and Cameras, all were invented in the last 100-200 years.
Fallen a Poverty Level:
People favoring Capitalism also argue that because of it, in the last 50 years, poverty has fallen globally. The education level of people have risen and the overall living standard of people has improved a lot. another positive point of capitalism is that it lets everyone dream.
That you too can reach the top if you want. Everyone has a chance to reach the top. If you work hard, you too can become like Bill Gates or Elon Musk.
Opportunity for Growth of Economy:
Whereas, in a Socialist and Communist system, you can’t become that rich. additionally, a consumer, in a capitalist system has more options in every aspect of life.
Take India’s example.
There was a time when there was only one channel on television: Doordarshan. which was run by the government. but when the television sector was opened up for privatization and there was a free market, you have numerous options today.
There are so many channels on TV. your choices have increased manifold. Your entertainment value has increased. It has similarly affected several other sectors. many people will list out these benefits of Capitalism that I told you and will promote this ideology without a second thought.
They’ll promote privatization. However, it is important to understand that there are several adverse effects as well. Some of them are so harmful that they may destroy the world.
FAILURE OF CAPITALISM:
Monopolies:
Capitalization indeed has Decentralization, that you have the freedom to start your business, but realistically, what happens is that businesses merge among themselves. Large businesses often take over smaller businesses.
It is possible here that one business may buy out all its competition and become only one company. If there is no more competition and one company rules the entire sector, it is termed a Monopoly.
This is often seen in Capitalism. Once a company establishes a monopoly, it is terrible for the consumers because the company may increase the prices, and it may even exploit the consumers.
Another phrase used in Capitalism is ‘Acquire or Get Acquired.’ suppose you’re a fish in a lake. either you grow by eating other fish, or a bigger fish will eat you.
Capitalism works similarly. either you start acquiring other companies to grow yours or some bigger company would absorb you.
Do you remember there used to be a company Jabong? Myntra acquired that and Myntra was later acquired by Flipkart and then came the international giant, Amazon. Flipkart had two options. either Amazon acquired it or Wal-Mart. today, the companies termed monopolies have become so by acquiring other companies.
Rising Inequality:
Where the rich people and the rich companies have all the wealth, and the small businesses cannot compete with them in reality.
In theory, there is competition in Capitalism but in reality, how can small businesses compete with these monopolistic giant companies? In the last 30-40 years.
Since the neoliberalism ideology staged a comeback globally, income inequality has risen rapidly across the world. It was reported in 2017 that the top 1% of people have control over 82% of the new world generated in the world now.
The richest 42 people in the world, hold as much wealth as half the population of the world. that 3.5 billion people collectively own It is not possible that these 3.5 billion people are extremely lazy and only these 42 people have worked hard to get this rich.
There is no direct correlation with hard work the capitalist system works like this. those who have wealth can create more very easily.
The “Money Begets Money” concept. and the other thing that I told you now, ‘Acquire or Get Acquired.’ either eat small fish and grow, or some bigger fish will gobble you up. Thirdly, another is saying similar to “Money Begets Money”.
Poverty Begets Poverty:
The poor people do not have the capital to invest. the Poverty Circle If they don’t have the money to start with, it will be extremely difficult for them to rise. They would not be able to spend on their education or health. and eventually, they won’t be able to generate wealth to counter this, the governments of many countries provide free education.
Impact on Environment:
The next failure and probably the greatest failure of Capitalism has been the Impact on the Environment. Environmental destruction and Societal destruction. on one hand, I said that the poverty rates have drastically fallen in the last 100 years literacy and education rates have risen rapidly, In the same 100 years, the environmental destruction that we’ve seen hasn’t been seen in 2000 years, or even the entire human history.
The speed of deforestation, extinction of biodiversity, and increasing climate change, are unprecedented. and this happened because, in Capitalism, companies focus only and only on their profits.
They are not concerned about the global effects of deforestation. as long as they keep getting their profits and keep getting richer this craving for profit is not only destroying our planet,
The negative impact on society:
But it also negatively affects our society tremendously consumers indeed have choices. They’re free to choose what they want to buy from which company but in reality, companies bombard us with ads.
These changes the mindset of the entire society. In the ads, it’s shown that the chemically altered, processed, fatty burger is very good for you. You’ll be happier when you eat it. Brainwashing Ads.
And when you see numerous burger stores around you selling these burgers when your friends and family members would want to eat here, you too would want to eat there. You’ll want to eat this burger, which will eventually lead to obesity. In America, 34% of adults suffer from obesity.
Capitalism and Democracy:
When compared with communism, capitalism has historically been better suited for a democratic structure. There have been frequent dictatorships in communist countries frequently. but capitalism worked well with democracy and thrived.
I am not saying that there weren’t dictators in capitalism. But in general, capitalism has a better record. but the failure of this system, this ideology is seen when companies get so huge and have so much wealth that they become more powerful than the government.
In such cases, the companies can easily bribe the governments, buy out the governments, and even help in manipulating the elections. companies are concerned with their profits only. If they feel that they’ll get better benefits if a particular politician wins.
They’ll fund that politician and support their election campaign. this might happen publicly like in America, known as Lobbying. this is legal in America. which I believe to be extremely wrong. In countries like India, it isn’t very apparent.
Especially since the passing of the electoral bonds. which company is funding which political party? we have no idea. but overall, all the companies will help that political party to win and will give them the most benefits.
This corruption can work in all aspects and is very harmful to every country. The company might pay money to the government to convince them to sell forest land to them. to put the forest on sale. and the government would comply.
Companies: may ask for the rules to be changed in such a way that though the citizens may suffer, the companies benefit. The government would comply. The government would become puppets in the hands of the companies. this is often an accusation against countries like America. to deal with these failures of Capitalism, countries around the world have come up with different strategies.
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