That’s greed. The incentive to do these things is to be as successful as possible. That is the “American Dream.” That is why the US is the way it is today. Capitalism does have its strengths and weaknesses but the strengths outweigh the weaknesses. For example, greed causes businessmen to compete with other businessmen, thus, keeping prices reasonable and forces them to keep up with consumer demands.
As mentioned previously, Adam Smith, a highly regarded economist, demanded that in order for economic success, the”invisible hand of the market” must be in control, rather than the government. This notion involves the establishment of free enterprise and greater openness to international trade and investment (e.g the abolition of tariffs). Free enterprise results in the value of various goods and services being determined by supply and demand meaning that suppliers are unable to manipulate prices. It also encourages investment as people can see the potential to make a return – without the government capping prices. On the other hand, this idea of free trade is highly disadvantageous, and even harmful, to the Global South with the Global North dictating prices.
Marx agreed with the liberal economic viewpoint that a free-market is “good” with benefits gained from competition. The distinction is in a liberal capitalistic system without government intervention there is an inevitable abuse of the lower class by the capitalists. On the other hand, the lack of an invisible hand in a socialist economy can lead to things like lower quality of goods produced, scarcity etc. This grey area is what often divides liberals from Marxists. Does one value equality between his peers at the cost of certain freedoms?
Monopoly is the sole producer in the market; its demand curve is the market demand. If a monopoly raises the price of its good, consumers buy less of it. Monopoly can alter the price of its good by adjusting the quantity it supplies to the market. In monopolized markets, price exceeds marginal cost; for a monopoly firm, P>MR=MC A monopoly firm charges a price above marginal cost compare to competitive firm. Policymakers in the government can respond to the monopoly problem by trying to make industries more competitive, regulating the behavior of monopolies, turning some private monopolies into public enterprises, or do nothing.
Note that the emphasis is on the individual, because free-markets enable the individual to prosper, and in turn, society improves for the greater good. Locke sees capitalism as the highest form of economic evolution, but Marx believes it is just a step toward his better, collective system. Marxism emphasizes the collective group and, in my view, deemphasizes the individual to the detriment of the whole, which is why true Marxism has never worked and never will (but will live forever in fantasy worlds dreamt up by unemployed liberal arts majors). Private property is the motivating factor that keeps society functioning. Without it, we would simply waste away.
Exponents of the capitalism are of the opinion that the government interference will lead to inefficiencies in the utilization of economic resources. They strongly advocate that private enterprises motivated by maximization of profits will lead to advancements in society, which will ultimately benefit everyone. Proponents of Socialism are of the contrary opinion. They believe economic inequality will not achieve the overarching goals of the wider society, and the government is ultimately responsible for reducing any perceived inequalities through programs that benefit the less able members of society. Capitalism is an economic system characterized by private or corporate ownership of capital goods.
Marxists especially claim that liberal democratic governments favour disproportionately the interests of well funded, well organised pro-capitalist pressure groups because governments depend for their very survival on the profitability and efficiency of private capitalism on which in turn levels of employment, living standards and economic growth depend. Governments are therefore unlikely to introduce policies which are not supported by private enterprise. Furthermore pro-capitalist pressure groups are likely to be granted insider status which means that their negotiations with government are often secret which undermines both their own and the government’s accountability to the general public. Furthermore most pressure groups, apart from trade unions, are joined mainly by relatively affluent middle class people and most pressure group leaders [who may not be chosen by especially democratic methods] are even more likely to be middle class although we cannot automatically assume that pressure groups’ middle class members and leaders will not attempt to represent the interests of other social groups. However these points taken together do suggest that the poor and otherwise disadvantaged groups such as many disabled people and members of some ethnic minority groups are themselves relatively unlikely to be involved directly in pressure group activity and relatively more likely to be represented by under-funded outsider pressure groups which despite their best efforts may be unable to greatly influence government.
Bismarck himself was supportive of the view that he was a master manipulator of the political system, as he writes ‘everything depends on chance and conjecture. One has to reckon with a series of probabilities and improbabilities and base one’s plans upon this reckoning’. The economic depression that followed the Liberal Years resulted in a call for economic protectionism as opposed to free trade, which resulted in the National
(Daft & Lane, 2011,2008) This did not stop companies from being selfish. When businessmen donated money, it was done as private philanthropists, not representative of their companies. In turn, their companies were guilty of exploiting workers. In attempt to fix this problem, government passed laws and regulations such as the Sherman Antitrust Act, to rein in the large corporations and to protect employees, consumers, and society at large. During the mid-20th Century, things were better, but there were events that caused problems for the working class.
In our current economic climate, the Keynesian model of economics is more accurate. Business owners operate their business outside of government control and without much thought to the economic situation. Their goal is to build revenue and raise net worth of their company. With this being said, prices are in fact “sticky”. Even though the prices will lower of time, companies will take advantage of the recession, knowing that consumers still require their goods, no matter if it falls outside their budget or not.