Hi friends, through this article I would like share with you about CAPITALISM or CAPITALISTIC ECONOMY.

       The term Capitalism was introduced by Karl Marx. Capitalism is the system in which Price mechanism is used to determine how resources are allocated. Land and Capital are owned by individuals, who will decide how they are used on the basis of profit that can be obtained. Capitalist economy is also called as Market economy.
An economy where individuals are free to earn, own and control their economic resources without the government interferences is called Capitalist economy.

Features of Capitalist Economy:
• Existence of private property
• Operation of invisible hand i.e., price mechanism
• Consumer is the king or sovereign and
• Freedom of enterprise.

      Under Capitalism factors of production are owned by firms and industries. They have profit motive which acts as a guiding force.
 Basic economic functions like production, distribution and exchange are in the hands of private individuals or private sector. Governments do not interfere in the economic activity of the private sector. Hence the government’s role is very minimum in Capitalist economies.
      In capitalism, the consumer is the sovereign or the king. Market is controlled by tastes, preferences and decisions of the consumer.
The basic problems facing the economy like:
• What to produce
• How to produce and
• For whom to produce are talked by market forces only.
      Producers produce those goods which are demanded by consumers. Since goods available in the market are many, consumers make the ultimate choice as what to purchase? Thus the consumer is like a ‘king’.
      Every firm in an industry under capitalist economy has freedom to enter the industry or quit. There is no restriction on the private initiative of a person to start a new firm or enterprise.
 Capitalistic economy has the following advantages:
• Economic freedom
• Maximum utilization of resources
• Higher standard of living
• Growth in Research& Development (R&D)
• Rewards according to ability.

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