(a) What Is Capitalism? (b) Outline any five features of capitalism. ?

Answer Details

(a) What is Capitalism?

Capitalism is an economic and political system in which the means of production, distribution and exchange (such as land, factories, capital and industries) are owned and controlled by private individuals or corporations for the purpose of making profit, with minimal interference from the state and prices determined by the forces of demand and supply.

(b) Features of Capitalism

1. Private ownership of the means of production: Individuals and firms own and control land, capital and industries.
2. Profit motive: Economic activities are driven by the desire to make profit.
3. Free market and price mechanism: Prices of goods and services are fixed by the forces of demand and supply.
4. Freedom of enterprise and choice: People are free to invest, produce, consume and choose their occupations.
5. Competition: Producers compete freely for markets, which promotes efficiency and quality.
6. Minimal government interference: The state plays a limited (laissez-faire) role in economic affairs.
7. Existence of social classes: Society is divided broadly into the owners of capital (bourgeoisie) and the working class.