Nobody downloaded yet

Capitalism: Market Failure - Essay Example

Comments (0) Cite this document
Summary
Capitalism: Market Failure Customer Inserts His/Her Name Customer Inserts Grade Course Customer Inserts (31, August, 2011) Introduction In 20th century, broadly speaking, two major economic systems were in place throughout the world, capitalism and communism…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER91.6% of users find it useful
Capitalism: Market Failure
Read TextPreview

Extract of sample
"Capitalism: Market Failure"

Download file to see previous pages In communism people do not have a right to private property and state intervenes in the economy regularly. There are many subsets of both capitalism and communism but mainly these two economic systems exist. The economic crises of the 20th century have caused many people to think differently about capitalism and many reservations are raised. In this paper we will critically evaluate whether market failure is the inevitable consequence of capitalism. We will discuss both pro capitalist and anti capitalist arguments in order to critically evaluate the above statement. Capitalism: An Overview The roots of capitalism lie in mercantilism which was prevalent between the 16th and 18th century (Burnham, 2003). Mercantilism was basically a system that was based on profit seeking trades. Adman Smith in the 18th century gave the basic tenants of capitalism and his ‘invisible hand’ theory became popular (Buchan, 2006). Adam Smith argued that markets can balance themselves and there is no need for government intervention. Capitalism became widely accepted in the 20th century and many countries had capitalist economies. Now we will discuss the arguments in favour of capitalism. Pro-Capitalist Views Economists who argue in favour of capitalism generally base their argument in freewill. ...
This is only possible if people reap the fruits of their hard work. Innovation, according to this view will only prosper if people are encouraged with reward (Cantwell & Santangelo, 2000). Capitalism offers encouragement and monetary incentives and this in turn motivates people to innovate. The argument that capitalism encourages innovation is quite ponderous because people do get motivated by incentives. It is human nature to work for profits and capitalist economies allow profit seeking behaviour. Opportunity for Social Mobility People also get an opportunity in capitalistic society to move forward and attain a higher social position. Free market mechanism allows anyone, who is willing to work hard enough, to grow socially and financially. There is room for a person to improve his or her life style and living standards under capitalist economies. This argument explains the importance of freedom in human life. Human beings need freedom to live a healthy and satisfactory life therefore they should have freedom in their economic life as well. Government therefore should not intervene in matters of economy. Other economic systems do not allow social mobility (Fitzpatrick, 2002) therefore capitalism is to be preferred. Consistent with Human Behaviour It is argued that capitalism is consistent with human behaviour therefore it cannot lead to market failure. Markets are made by people and if a system is in placed that are consistent with human behaviour and nature then it cannot fail. Fighting and surviving is the way through which human beings have survived since their ancient times so this makes it clear that it is human behaviour to fight in order to survive. The same principle if applied to the economic ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Capitalism: Market Failure Essay Example | Topics and Well Written Essays - 2000 words”, n.d.)
Retrieved from https://studentshare.org/business/1431065-business-environment
(Capitalism: Market Failure Essay Example | Topics and Well Written Essays - 2000 Words)
https://studentshare.org/business/1431065-business-environment.
“Capitalism: Market Failure Essay Example | Topics and Well Written Essays - 2000 Words”, n.d. https://studentshare.org/business/1431065-business-environment.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document
CHECK THESE SAMPLES - THEY ALSO FIT YOUR TOPIC
Capitalism
...Capitalism The United s plunged into an economic crisis in 2008 and 2009. This situation escalated, and it became an irresistible opportunity for the United States to pronounce the failure of the type of capitalism that had emerged towards the end of the twentieth century. The French President, Nicolas Sarkozy once said, “One had expected competition and abundance for everyone, but instead one got scarcity, the triumph of profit-oriented thinking, speculation and dumping." According to Sarkozy, the then economic crisis had signaled the return of the state and brought an end to public impotence illusions. Notably, economists regard the state of capitalism as one in which...
3 Pages(750 words)Essay
Economic Externalities And Market Failure
...Economic Externalities And Market Failure Externalities are defined as a result of an action on a third party or the environment. This result of an action can be both positive and negative. Externalities can be created both out of production and consumption (Boyes 2008, 30). If an externality is being created out of production, then also it can be positive or negative. If we assume, that all goods consumed or produced are private in nature, that is to say that one particular individuals consumption or production of a good does not have an impact on the other, the question of third parties does not exist. However, if and when our actions do have an impact on those individuals who are not directly involved...
7 Pages(1500 words)Essay
Market failure
...? A case of Market Failure: The Northern Cod Executive Summary The cod fisheries in Labrador and Newfoundland attracted local fishermen as well as international fishing fleets for more than four centuries (“Cod Moratorium”). Fishermen have voraciously fished for various marine species, like, seals, salmon, herring, and whales, in this zone besides the northern cod. Unregulated open fisheries in the Pacific Ocean created a common resource for the fishermen. Both local fishermen and foreign fishermen exploited these resources with the aim of maximizing private profits. This decreased the total reserve of fish in these areas and at one point of time the cod population became extinct (“Fish Stock Depletion”). Experts opine... Moratorium”)....
5 Pages(1250 words)Research Paper
Market failure: A case study
...Market failure: A case study Introduction to market failure Market failure refers to the situation where the forces of the free market are incapableof making efficient allocation of resources. This efficiency refers to productive efficiency as well as allocative efficiency (Wilkinson, 2005). This leads to the situation of inefficient market condition. According to the classical school of thoughts, efficient outcome in the market might be achieved at some given conditions of price, cost of production, availability of products and entry barriers. The condition of efficiency is violated if...
6 Pages(1500 words)Essay
Market Failure Resarch Paper
... Market Failure Scarce resources in a free a market are allocated via the price mechanism where the needs or preferences and spending decisions of customers and supply decisions of producers come together to determine acceptable prices. High demand of goods or services leads to increase supply of the products to meet rising demands. High prices motivate producers to produce more while it kills the morale of consumers from purchasing the products. Pricing system sometimes does not consider income inequality in that price of certain goods and services are always high making it hard for low-income earners to access them. It is the duty of the government to intervene and make sure that prices set are not discriminative. Government... ...
1 Pages(250 words)Research Paper
Market Failure
...Market Failure Contents Market Failure 3 Reasons of market failure 3 Consequences 4 Remedies 4 Reference 5 Market Failure The notion of market failure is incorporated in the economic theory. In the notion the inefficient distribution of services as well as goods by the system of free market are described. In the notion it is implied that one of the participant of the market can end up in better off position without making any other participant worse off. The idea of market failure comes into the picture...
2 Pages(500 words)Essay
IB PAPER 1 MARKET FAILURE
...Market failure al Affiliation Introduction Market failure is an economic concept where the allocation of goods and services is not sufficient to serve a free market. Market failure is normally a societal perspective of what should or can be done to better the situation. Market failure always prompts for immediate government intervention in a particular market. The interventions comes in terms of taxes, subsidies, bailouts, wage and price controls and regulation in an attempt to correct the failure which at times further aggravates the situation hence...
2 Pages(500 words)Essay
Market Failure and Government Failure in Europe
... Market Failure and Government Failure in Europe Introduction For several decades, a debate has been raging in development economics on the relative virtues of the free market as opposed to state intervention. With the help of analytical models of a market economy, the interventionists have demonstrated what they have considered as serious instances of market failures. That is to mean, the inability of a market economy to reach certain desirable outcomes in resource use. The protagonists of the free market on the other hand, compile impressive lists of ill-covered and counterproductive policy measures implemented by the governments of different nations at different times. As a result, there has been serious wastage of resources... in the...
7 Pages(1750 words)Essay
Starbucks Failure in International Market
...STARBUCKS FAILURE IN INTERNATIONAL MARKET Executive Summary Starbucks, a reputable international investor has faced a wide range of challenges while venturing in its global expansion. It investment in Japan is one of the greatest failures that resulted from underestimating competition rivalry and inability to adjust to market characteristics. The complexity of market characteristics such as culture, competition and customer behaviour patterns resulted to the highest financial losses. The purpose of this report is to outline the various reasons that underpins Stanbucks failure in the international market, and to provide...
12 Pages(3000 words)Essay
Market Failure and Government Intervention
...Market failure and Government intervention Introduction A market is a place that facilitates exchange and transaction of goods produced and services provided. It always seeks efficient resource allocation across alternative or various users. In a market Adam Smith’s ‘Invisible hand’ rationalize individuals or entrepreneurs acting to maximize self-interest. The main role of a market is efficiency that is appropriately defined in terms of Pareto Efficiency (Aldridge, 2005). Efficiency in a market is where all agents maximize their personal interests. Market failureMarket failure is a situation that describes a situation where the effects of demand and supply do not allocate their resources appropriately. This will therefore lead... to a...
5 Pages(1250 words)Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Let us find you another Essay on topic Capitalism: Market Failure for FREE!
Contact Us