When Capitalism is a failure( Article)
When Capitalism is a failure
Dr.S.Padmapriya
There are two market systems with which we are all familiar. The first is capitalism and the second is communism.
Under capitalism, wherein the means of production, which include buildings, materials and machines are in the hands of private people, the forces of demand and supply determine price. Price fluctuates as per the market forces, which appear to be self- correcting. A higher quantity demanded forces the price to rise. A lower quantity demanded forces the price to fall. Demand appears to be reflective of the spirit of the market and the buying power of the customers. Under communism, wherein the means of production are in the hands of the government, prices and wages are regulated by the government. Minimum and maximum wages are often fixed.
Capitalism is a success in those countries, where wage and price disparities are at minimum levels. In such countries, all sections of the people contribute to the determination of demand. Therefore, in such countries where incomes are more equitable, demand is just and the price which is determined, as a result is just. Even the supply gets automatically corrected and becomes just. On the contrary, in the under-developed and developed countries where there are certain sections of people, who are rich and most sections are poor, demand is unjust because it is generally the rich, who determine the demand more and are instrumental in raising the prices. These high prices of commodities cause more hunger, more poverty and more unemployment. The high prices brought about by the rich plays havoc on the poor. Therefore, it can be placed in the right perspective that capitalism is a success where wages or incomes are more uniform and is a failure where wages are not uniform. Although the argument can be raised that the marginal propensity to consume is higher for the poor, the total income of the rich is more. Their proportion of the quantity demanded will be more. Therefore, the excess riches of the rich lead to the further pauperisation of the poor in countries where wages are very inequitable. In such economies, capitalism is a failure.
Dr.S.Padmapriya
There are two market systems with which we are all familiar. The first is capitalism and the second is communism.
Under capitalism, wherein the means of production, which include buildings, materials and machines are in the hands of private people, the forces of demand and supply determine price. Price fluctuates as per the market forces, which appear to be self- correcting. A higher quantity demanded forces the price to rise. A lower quantity demanded forces the price to fall. Demand appears to be reflective of the spirit of the market and the buying power of the customers. Under communism, wherein the means of production are in the hands of the government, prices and wages are regulated by the government. Minimum and maximum wages are often fixed.
Capitalism is a success in those countries, where wage and price disparities are at minimum levels. In such countries, all sections of the people contribute to the determination of demand. Therefore, in such countries where incomes are more equitable, demand is just and the price which is determined, as a result is just. Even the supply gets automatically corrected and becomes just. On the contrary, in the under-developed and developed countries where there are certain sections of people, who are rich and most sections are poor, demand is unjust because it is generally the rich, who determine the demand more and are instrumental in raising the prices. These high prices of commodities cause more hunger, more poverty and more unemployment. The high prices brought about by the rich plays havoc on the poor. Therefore, it can be placed in the right perspective that capitalism is a success where wages or incomes are more uniform and is a failure where wages are not uniform. Although the argument can be raised that the marginal propensity to consume is higher for the poor, the total income of the rich is more. Their proportion of the quantity demanded will be more. Therefore, the excess riches of the rich lead to the further pauperisation of the poor in countries where wages are very inequitable. In such economies, capitalism is a failure.
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