Capitalism is a Force of Progress for Business and Society - Essay Example

? Business and society' BUS107 Capitalism is a force of progress for business and society' Discuss Capitalism is asystem that has gained so many plaudits over the year for the effects that it inflicts into a business or a society. A number of business organizations have succeeded for their adoption to the capitalism system. The same has accrued to a number of nations as well as societies that have embraced capitalism. However, critics have continuously associated capitalism with inequalities in the society as well as unequal distribution of wealth (Dicken, 2010). They claim that under this system, the societies are made up of a few filthy rich people and a majority poor. In relation to business organizations, critics of capitalism associate it with the establishment of powerful and monopolistic organizations which are said to oppress the majority less powerful organizations. Other vices that have been associated to capitalism include imperialism, materialism, unemployment as well as exploitation. This essay provides a discussion on the influence or other force that capitalism inflicts to business organizations and to societies. It advocates for capitalism as an appropriate method of invigorating economic growth and development in a society and country. It proposes that capitalism can be highly effective in ensuring the growth of a business organization. The discussing starts with the broad definition of the term capitalism. What is capitalism? Capitalism is defined as a system of economics whereby industries, corporations and means of production are owned and controlled by private entrepreneurs (Fulcher, 2004). The main objective of these owners is to make as much profits as they can. Therefore, they invest any available capital and re-invest profits. Goods and services are produced with the major objective of selling them for profits. In addition, the production is based on market economy whereby the forces of demand and supply are the once that dictate the prices of goods and services. Under capitalism, the economy is made up of competitive markets. Capital accumulation is a common feature as well as wage labour. A capitalist society is founded on the principle of individual rights. The economic freedom leads to what is referred to as the free market. No regulation or barriers to activities in the market. Capitalism allows for a competitive market. Industries can freely compete for each other. In a political system, capitalism is a system whereby the laissez- faire kind of leadership is exercised. Everyone is at liberty to make their own decision and achieve their own goals in their own way. In a legal system, capitalism refers to a system that is guided by objective laws. It advocates for rule of law rather than the rule of man. Capitalism as a force of progress for business and society At the end of feudal economies, capitalism found its way up the ranks and has since become a dominant phrase in the developed countries as well as some of the developing countries. Though it is may not be easily justifiable whether capitalism has been the force that single handed contributed to the success of the developed countries and business organization, it can be reliably proved that capitalism has had a significant influence to their development. For instance, capitalism allows for free markets where competition is a common feature. Competition gives a motivation for managers of business organizations to work hard in order to win the battle over their rivals (Fulcher, 2004). The organizations will therefore strive to improve their goods and services so as to satisfy their customers and gain the competitive edge. In the process the business improvement as well as the society development will be realised. Further the free market facilitates economic growth. The prices for good and services are not controlled by any organization or any individual. The forces of demand and supply are responsible for the changes that occur in the products in the market. Suppliers and producers therefore will only produce goods they can sell in the market (i.e.) they will avoid as much as possible to produce excess since this might lead to wastage as some good goes un-bought. In other words, market conditions create a state of equilibrium whereby the suppliers are able to maximize their income and profits and at the same time minimize losses. Business entities are able to grow through maximization of profits. In a market where there is competition, innovation is usually high. Innovation increases as every organization tries to better its goods and services in order to gain a competitive edge. Innovation refers to better modes of production as well as high quality products and services. Capitalist theory is said to facilitate innovation as well as more affordable goods and services (Ritzer, 2010). When customers are able to afford goods and services, their quality of life improves since they can buy whatever they need to make their lives better. In this case, capitalism acts as a force for business and society development. Capitalism emphasizes on capital accumulation and money investment. Accumulation of capital is concerned with “making money.” It is the process through which one puts a certain amount of money into some use so that the initial amount will increase in quantity. Financial capital is usually invested so that it can generate profits. The profits are then reinvested to produce more profits and the process continues. This process is referred to as the continuous process of accumulation. If a business entity or a society is not in a position to increase its initial sum of money, then it will be difficult for it to realise any growth (Dicken, 2010). It will not have money to fund any development projects or to make better the lives of individuals. The fact that capital accumulation is concerned with increasing the amount of money held initially means that through capitalism, businesses and societies are able to fund their development proposals. The nature of capital is said to be changing. It is changing in the essence that traditionally, capitalism only used to exclusively refer to financial capital. However, today the aspect of capitalism has gone on to include human capital as well as intellectual capital. These two are increasingly being recognized as real sources of wealth. Factors of production such as land capital and machinery maybe scare at times. However, it is during this time that the ideas have a chance to increase. People are able to think of ways in which they can utilize the little they have in order to increase revenue and generate wealth. Therefore, under capitalism, the economy can be developed through investment in knowledge. Knowledge will create opportunities for the future. In fact, some countries such as China have invested in knowledge and this has been effective for them (Coe et al, 2007). China is a capitalistic nation. Since it adopted capitalism, it has now developed to become the second largest in the world in terms of economy. China has a highly skilled human resource. The country has really invested in creating knowledge and this has ended up being a key factor to its success. On top of knowledge creation, most organizations and companies in China are privately owned. Since the year 1978 when reforms were implemented, China became a capitalistic nation and has since experience the fastest economic growth in the world. This is a good case experience of the fact that capitalism is a force for progress for both business and society. International trade has developed so rapidly over the last couple of years. It has been associated with the development of capitalism. Actually, globalization facilitates the mobility of people around the globe as well as mobility of financial capital. It should be noted that human are considered as capital to an organization. In fact, human is the most valuable capital (Brown & Lauder, 2001). Globalization has facilitated investment in the international level. Most business organizations have developed as a result of globalization. In addition, societies and nations have also developed. This is because at the international level, it is easy to find more customers for finished goods and services. The increased mobilization of capital facilitates increased production whereby nations and businesses can produce more goods and services (Gamble, 2009). As it has been mentioned earlier, suppliers are always willing to produce what can be bought. In addition, the markets under capitalism are free and hence anyone, any country or any business can join at will. The fact that there are more customers at the international level means that investors will invest more so that they can make more profits. This in turn facilitates the development of businesses and societies. Under a capitalistic system, the government does not interfere with the private ownership of properties. In addition, it does not interfere with the wages that firms pay their employees. The firms are at liberty they should pay their employees depending on factors such as the level of production by employees, the size of the firm as well as the economic situation among other factors. This enables firms to develop policies that are inline with their profit maximization objectives. However, the government carries a number of economic functions such as the issuance of money, enforcement of private contacts as well as supervision of public utilities (Cammack, 1998). It also prohibits organizations which may be wishing to form monopolistic cartels. This enforces the development of businesses and societies. Conclusion Capitalism has been the force behind the development of countries such as America and China among others. These two happen to be the best economies in the world. Businesses which embrace capitalism also record good performances and a positive development. From the above discussion, it can duly be deduced that capitalism is the force for businesses and society development. Therefore, societies and businesses should embrace capitalism since it will fuel their development. Reference List Brown, P., & Lauder, H. (2001). Capitalism and social progress: The future of society in a global economy. Basingstoke [u.a.: Palgrave. Cammack, P. (1998) 'Globalization and the death of liberal democracy', European Review Coe, N. M., Kelly, P. F., & Yeung, H. W.-C. (2013). Economic geography: A contemporary introduction. Hoboken, N.J: Wiley-Blackwell. Dicken, P. 2010, Global Shift: Mapping the Changing Contours of the World Economy, Sage; London Fulcher, J., 2004, Capitalism: A Very Short Introduction, Oxford University Press, UK. Gamble, A. (2009). The spectre at the feast: Capitalist crisis and the politics of recession. Basingstoke: Palgrave Macmillan. Ritzer, G. (2010). Globalization: A basic text. Malden, MA: Wiley-Blackwell. Read More