Understanding of Capitalism
How it works
Capitalism has been defined in different ways, but the main point is that it involves several organizations holding factors of production and a large number of potential investors unable to get into the market. This essay will mostly address the issue of capitalism as it is in American continent the first part looks into the authors who have supported the ideas that capitalism is driven by the greed of investors and has related costs for its success. The second portion will address the anti-capitalism proposers who believe that greed is not the main factor for capitalism and we have market properties related to it.
It explains how they are less connection between selfishness and need for materialistic gain. The last section offers criticism to the sides and analysis them into two aspects the views of different authors and media bloggers. Finally, the paper ends with a conclusion of the three sections. In this paper, the question the essay is answering is “Does greed drive economic success in capitalism and how or what are the consequence if it plays a role?”
Capitalism is all about having some few number of individuals or organization owning the factors of production. It has some benefits and disadvantages as it a common practice in the 21st century (Kasser, & Ryan, 2007). For any economy to survive with capitalism it has to be supported by the certain set of institutions, like the law has to be able to protect the private property. The aspect of greedy within the whole aspect is seen through inner ideologies it holds, for instance, natural resources are treated as private assets, primary aim to achieve self-interest through benefiting from competition which is relevant for economic growth. Due to this self-interest then people start to enhance to individuals in carrying out their daily survival activities. People start to work for good wages as their main goal and the capitalism businesses start to consider how they can maximize their profits by lowering cost of production (Kasser & Ryan, 2007). Capitalism follows different ideologies and looks forward to own various institutions to help in protecting them from exploitation.
In order to attain capitalism, individuals have been the high extent of selling some of their personal properties like lands, technology or any other special skill which they have with the aim of coming up with the unique product in the market for the benefit of making higher profits and this is totally greediness. According to Adam Smith, the tendency of self-interest bends the private sector from attaining the goal of serving the society. Capitalist consider maximizing profits as they keep wages very low and creating a difficult environment for the households who work for them to buy the products they produce. One feature of the American capitalist is the provision of limited liability to shareholders in their corporations and making the conditions conducive for potential shareholders. According to Galbraith 1993, the formation of government bureaucracies paradoxically for only supporting corporations to make huge profits is greed to attain huge earning as other citizens suffer (Kasser, & Ryan, 2007). The desires of the capitalist who need to have wide access to cheap resources and new markets have encouraged corporations to form country worldwide integration with other countries. We can up the essay by saying that the goals and self-interest of the capitalist as they run organizations is what depicts greediness in the whole system.
Nearly all the costs of ACC are psychological. The interests and goals of capitalism are contrary to the desires of the society as the result of inequality of wealth and resources. People who embrace the characteristics of capitalism will keep treating other people in more competitive and in the less cooperative way. Due to high cases of the industries and organizations manufacturing products scientist have associated capitalism to cause disturbances of weather in coming decades and thus negatively affecting our health and survival in terms of agricultural products produced (Kasser, & Ryan, 2007). When you think about higher gains through capitalism then you no longer rationalize the effects which your actions can cause to other people.
The quality of interpersonal relationships will get affected due to following ACC values and people get too careless of their close friends. Both cultural and empirical evidence have poor relationships are created through ACC. The success of ACC will mean that individuals working within it need to comply with ideologies of the organization in accumulating wealth for the company (Kasser, & Ryan, 2007). Finally, through the conducted advertisements are costly are geared towards ensuring that relevant competition is there. Each and every capitalist aim at being the best and getting high profits in the market and the only way is to have launched of products and other carrying out the strong competition.
According to Milton Friedman 1962, he addressed the concept of capitalism through the pursuit of self-interest in the free economy as the tendency to take responsibility of all resources and use them to engage in activities of increasing profit when it is within the guidelines (Wang, & Murnighan, 2009). The guidelines for running the private business in controlling certain sectors of the economy is based on greed to have much than what the people who are helping are gaining. The goal of maximizing self-interest makes an individual start engaging in activities like to lie, misleading information, feign and confusion of other parties involved in business transactions. When cognitive ability and self-interest are combined, they can lead to cheating, fraud, and deception. there is a very strong relationship between greed and economics, for instance, according to game theory students who are less honest and are pursuing economics course are likely to have self-interest and thus turn to be capitalist in coming decades when they get out in the market (Wang, & Murnighan, 2009).
Greed helps in stimulating rather than sates and this creates a continuous cycle of extravagance and desire for more. This is basics of how capitalism came to be in the 21st century. The study of economics can inhibit cooperation and encourage self-interest. As many of the models which have been used in business models sensitize of on self-interest and greed, we can assume studies related economics will lead to positively appreciating greed and the results will those individuals engaging in greedy actions like starting of capitalist business as they view those activities to be good contrary to other people (Wang, & Murnighan, 2009). According to Smith people have to protect their businesses and thus attain their self-interest without external constraints intervening.
Not linking the blooming of the capitalist markets with the greed of the nationalists, theories of economics have explained other spontaneously properties which cause free markets within a nation. This is not concerned with economist’s self-interest, but earlier theories have tried to explain how to regulate free markets and planning for them. Over half-decade theorists have tried to argue capitalism has been due to other market demands and properties. Stigler as an economist being fixed into a corner on how he could explain the rise of many capitalists looked into it as the individual economizing decision in markets (Kirzner, 2010). He didn’t focus on greed and selfishness, but rather addressed the coldly calculating behavior attributed to business participants by the learning of microeconomics. Furthermore, many of the theories which have been used in analyzing the rise of capitalism in American continent don’t feature the reality of things as they are. In addition to this concerning theories, Lionel Robbins 1932 believes that invokes all assumptions of business emergence to be connected with greed and materialistic (Kirzner, 2010). In wiping out this idea totally, he claims that participants in the market are driven by their purposes and goals in which best way possible. The world will pose you into a given, limited and certain array of resources and as a potential investor then you think on how best to use them and maximize profits. Through the calculations of maximization as a theorist, you will have to initial situations to emerge best in the entire market.
For Mises, he believes like Robbins that economic reasoning doesn’t go beyond full reality and human action is based on human being have purposed to pursue and human thinking entails all types of qualities including selfishness and greedy and thus we cannot accord capitalism to greedy alone. We can conclude that Mises and Robbins share the point that economic theory doesn’t rest self and materialistic need for gain on the economy (Kirzner, 2010). All market demands are constructed through the concept of trial and error, when you land into a beneficial mode of getting a niche in the market then you have to keep it and abide by its constraints. This process of entrepreneurship trial is based on pure profit as the main goal and has nothing essential to do with greed.
It is paradoxical that many of the countries are burdened by the idea of social justice than capitalism and thus people who are less stable financially do suffer (Snow, 2002). For the western countries, the situation is worse and the ideology that determines policy renders impossible changes that would be able to improve the situation of working class. In developed countries the economy is advanced and it offers opportunities for entrepreneurs to enter into many choices of investing, and this makes the parts which are less developed to start coming up. As the government tries to look into ways of improving less developed areas then coming up private sectors and businesses remains to be the option. Competition is the key to the invention of these new opportunities as managers try to look for new ways of taking competitive advantage (Snow, 2002). We have the ability and power to control any society which fully developed in terms of business which is created. With an understanding of how competition and the level of economic development then, it is very hard to link capitalism with greed for materialistic gain. In a well-established economy, people are driven by self-interests in investing but by the general well-being of the country. Competition act as part of impersonal coercion that can make many individuals change their behavior in a way that can bring about by commands.
According to Ha-Joon Chang, free market ideology is built on the fact they don’t do something well unless they are paid for it. Richard Murphy as one of the UK economic blogger assumes that people in the market are entirely self-interested and the self-interest is seen through greater consumption of materials and goods (Snowdon, 2015). According to the way economics is taught in schools, it looks into how business maximizes profits through its activities and success in life entails consuming more. People are not the point of being driven by the interest of self-material as many people claim. If the world was to have the kind of people mentioned by various books as the scholar it would collapse due to the weight cheating and monitoring of people actions. Economists all people are greedy and selfish contrary to what many people associate greediness with only a few elements that steer capitalism. In business will have to look into getting maximum benefit, but this doesn’t mean that people are self-interested and greed in making economic transactions (Snowdon, 2015). Selfishness is all about indulging oneself at another expense, but free market transactions only take place when two self-interest parties get the benefit.
The concept of self-interest should not be centered on economic terms but should be seen in terms goals and aspirations. Self-interest is not myopic selfishness is the interest of participants and whatever they value and pursue and has to be the motivation in our life. According to Smith, the interest he had in work was not driven by financial aspect and he knew there was more life just having the greed for material possession (Snowdon, 2015). We can sum the paragraph by saying that free market makes no difference whether the entrepreneur is well-intentioned or self-serving.
Chang thinks that all economists who view decisions of finance are driven by self-interest are totally wrong (Snowdon, 2015). According to him prospers managers of big companies have not been basing their decisions on self-interest. Economists view business people to be rational and not guided by self-interest greed and thus the decisions they make are sound and not concerned with personal gain. According to Chang free market, free market economics starts due to the assumption that all free market economics starts from the assumption that all economic agents are selfish and this is seen through the concept of the butcher, brewer, and baker. It is questionable whether someone who wants to work for free is selfish as changes look into it. Capitalism doesn’t depend on selfish motives but can make good ends where such motives exist. According to Kaufman, it is ill-founded to say that capitalism relies on selfish motives and works on rewarding greedy. Greedy people don’t like free markets due to the existence of competition which prevents them from having high charges. Capitalism is robust on its own and doesn’t depend on it.
Behavioral economists have quite said that many of the decisions given out are affected by irrational biases and unconscious. This results in businessmen making their goals short and maximizing the utility to be obtained from the business and thus making it burden to other individuals involved in the production. People are frowning to irrational bias such as gamblers’ fallacy and other fallacies help explain these biases (Richards, 2009). This bias on whether capitalism is due to self-interest happens due to influence from our dear friends. Many of those who criticize capitalism concept fail to seize the characteristics attributed to economic man, in order to denounce the idea that he or she is not controlled by malice or greed.
Greed is good contrary to what many people map it when assessed by economists in terms benefit to other people. There have been old and strong myth that capitalism is based on greed hence mapping it to be bad. If capitalism is based on this evil desire then it is immoral and deserves to be rejected with the highest degree possible. In an evangelical world, this problem is still prevailing preacher like Tony Campolo once said that greed is the result of the modern capitalistic in united states (Neuhaus, 2012). In focusing to the anti-capitalistic supporters Richards on Money, Greed, and God, sets many myths about capitalism and shows that it is not contrary to the teachings of Jesus Christ as many people have been thinking (Richards, 2009).
Concerning those who support capitalism as due to greed Richard makes several concepts and clarification on chapter five of the book. First, self-interest and selfishness are different things and capitalism is based on people trying to have their way out in attaining self-interest and selfishness. Self-interest is not immoral and many activities of the day are based on it. Economic exchange in capitalism is supposed to be beneficial and that is why people engage in it (Richards, 2009). For example, when you go butchery you don’t beg to buy, meat but you buy it as it has benefit to you. Finally, capitalism is connected to generosity contrary to what many of the Americans have been saying. We can see this from the general point that America is most generous in helping other poor countries with subsidies. In summing up this paragraph we can say that Christianity is not opposed to capitalism as many people think.
The critics of how capitalism has triumphant claims that social justice is part of the menace and thus the corporate and capitalism should be buried. Failures which detected within the financial and credit institutions are main sources of free trade which result in the free market and hence capitalism (Neuhaus, 2012). According to scientist emotion can affect our thinking and thus emotions can undermine rational thinking based and in many cases people fail to know their ideas which compromise on the decisions made.
We have seen that various people and economists have thought capitalism in the United States to have been highly contributed by greed. Various authors do argue the need to have high profits and paying less to workers has contributed to poor living standards that are unable to purchase the items they produce. Those who have gone contrary to the link of greed and capitalism is that this is a general characteristic to the whole of human behavior and should focus on the whole aspect of participants to in starting any business. These two sides have been contrasting on which side is strong and from the perspective of education learned we have aspects self –interest created to the learner who can advance this being materialistic oriented. We can sum up the essay by saying both sides of capitalism do hold water and should be addressed together when looking into how capitalism does and doesn’t benefit the citizens of the country.