PHIL_captilalism.docx - Capitalism Theory of Capitalism Free Market Ideal ● Private ownership Productive assets(capital land machinery are privately

PHIL_captilalism.docx - Capitalism Theory of Capitalism...

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Capitalism Theory of Capitalism, Free Market Ideal Private ownership. Productive assets (capital, land, machinery) are privately owned, Profit motive. Owners are motivated out of self-interest to increase their wealth: to produce the products and services that people want and need and to sell those products and services profitably. Demand-driven supply. The supply of products and services are driven by consumer preferences and willingness to pay (consumer demand). Robust competition. Competition of producers with other producers creates greater consumer choice and imposes market discipline, requiring suppliers to focus on cost control, product quality, and consumer willingness to pay. Market freedom. Supplier market entry is not limited by monopolization and market transactions (buy/sell transactions) are free of force and fraud. Minimal government regulation. Regulation is limited to what is necessary to prevent force, fraud, and monopolization and to keep dangerous products off the market. Rational decision-making. Both consumers and producers make fully informed (vs. emotion-based) buy/sell decisions Adam Smiths “Invisible Hand” to the extent that the capitalist ideal prevails in society, to that extent the greatest good for the greatest number will be promoted; needs will be met, jobs created, and societal wealth maximized; it would be as if an invisible hand were at work to promote overall societal well-being. (Smith’s “invisible hand of the market” is essentially a utilitarian argument in support of free market capitalism.) People are motivated not only by self-interest (a positive driving force in a market economy) but by feelings of benevolence and sympathy (a positive driving force in social life). While wealth tends to concentrate in a competitive free market economy, the most successful and wealthiest will, in their public lives, share their fortunes with the less fortunate in the form of charitable and philanthropic contributions. Such public benevolence is no less a part of the workings of the “invisible hand” than the motivating force of self-interest in business.
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  • Winter '18
  • AlbertB.Crawford

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