“Capitalism is a free-market form or capitalistic economy may be characterised as an automatic self-regulating system motivated by self-interest of individuals and regulated by competitions.” –Ferguson.
Meaning:
It is one of the oldest economic systems and its origin is at the time of mid-eighteenth century in England in the wake of Industrial Revolution. It is that system, where means of production are owned by private individuals, profit is the main motive and there is no interference by the government in the economic activities of the economy. Hence, it is known as free market economy.
According to Karl Marx, in his ‘Das Kapital’, the capitalist on an average takes twelve hours work from the worker and pays him wages equal to six hours work. According to Ferguson, “Capitalism is a free-market form or capitalistic economy may be characterised as an automatic self-regulating system motivated by self-interest of individuals and regulated by competitions.”
Main Features of Capitalist Economy:
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Capitalist economy has following main features:
(i) Private Property:
In this economy private property is allowed. All means of production like machines, implements, mines and factories etc. come under private property.
(ii) Price Mechanism:
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Capitalist economy is gained by price mechanism. Here prices are determined by the interaction of demand and supply without the interference of any kind by the government or any other external forces.
(iii) Freedom of Enterprise:
In this system every individual is independent to his means of production in any occupation that one likes.
(iv) Sovereignty of that consumer:
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Under this system, consumer plays the most vital role. The entire production pattern is based on the desires, wishes and the demand of the consumer.
(v) Profit Motive:
The maximisation of profit is the main motive of the producer. Profit guides the production in this type of economy.
(vi) No Government Interference:
Under capitalistic system, government does not interfere in day-to-day economic activities. This means producers and consumers are free to take decisions.
(vii) Democratic:
The capitalistic system is more democratic in comparison to other economic systems as there are more changes to chancel according to new environments of the economy.
(viii) Self-Interest:
The inspiring force in this system is self-interest. It leads to hard work and to earn maximum income by satisfying their consumers.