According to Karl Marx,the chief critic of capitalism,the sale and purchase of labour power in the market just like any other commodity is the most distinctive feature of capitalism. this phenomenon arises due to the fact that the means of production become private property of a small section of the society and as a result a large section of population sell their labour power to the capitalist class to make a living.
Loucks define thus ” Capitalism is a system of organization featured by the private ownership and the use for profit of man-made and nature made capital.
Characteristics /Features of Capitalism
1. 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.
2. 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.
3. Profit Motive: The capitalist class runs and operates productions enterprises with profit motive.
4. 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.
5. 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.
Merits of capitalism
- Economic development
- Automatic working
- High rate of capital formation
- Optimum Utilization of resource
- Incentive to hard work
- Democratic system
Demerits of capitalism
- Economic instability and unemployment.
- Exploitation of labour.
- Wasteful competation.
- Monopolies arise.