Meaning and Definition of Capitalism
According to Karl Marx___” Capitalism is a particular mode of organisation of production which is characterized by wage slavery, production of profit, and creation of surplus value”.
According to Louks and Hoots___” Capitalism is a system of economic organization featured by the private ownership and the use for profit of man-made and nature made capital”.
Characteristics /Features of Capitalism
- Private Property: People are free to own and dispose of in any manner they like mean of production. They own property,bequeth property and use it is any manner they like. Land,factories and mines are owned by capitalist class. The institution of inheritance,passing or property to legal heirs,is preserved.
- Freedom of Enterprise: People are free to start any type of productive enterprise. There will be minimum state restrictions. Every one is free to take up the occupation which he likes.
- Profit Motive: The capitalist class runs and operates productions enterprises with profit motive.
- Labour power as a commodity: Under capitalism labour becomes a commodity that can be bought and sold like any other commodity. Labour power like any other commodity commands a price. The price covers subsistence of worker.
- Exploitation of Labour: Labour is mercilessly exploited by capitalists. They are made to work for long hours for low wages. ‘Surplus labour’ is created which is appropriate by the capitalist. Suppose a worker for 12 hours in a day. The first four hours of work assumed to be sufficient to maintain him. Marx called this necessary labour time. During this period the worker works to maintain himself. The extra 8 hours he works for the capitalist. This period is called surplus labour time.
- Market Economy: The production, distribution and exchange process under capitalism is regulated by the market forces. There is government interference over these activities. The market economy largely depends on the law of demand and supply.
Merits of capitalism
- Economic development.
- High Level of Production.
- Automatic working.
- High rate of capital formation.
- Optimum Utilization of resource.
- Incentive to hard work.
- Democratic system.
- Maximum Welfare.
Demerits of capitalism
- Economic instability and unemployment.
- Exploitation of labour.
- Wasteful competation.
- Monopolies arise.