Pakistan study notes for Matric, Intermediate, B.A, B.COM BSC, M.A, BCS. Free Pakistani Urdu educational school, colleges and University notes.

ADVANTAGES OF CAPITALISM

ADVANTAGES OF CAPITALISM

Minimum In capitalism government’s interference is minimum. Businessmen have Government latitude to devising their own business policies, determining sources of Restrictions ‘capital and other funds, deciding on the type of business organization, choosing goods and services to he dealt in, working out number of employees to be hired, and fixing pay scales. However their freedom is restricted by various laws enacted-from time to time by the government.

 

Competition

It is the result of abundant supply which is advantageous to both the country and the people. It results in better quality, natural price level and optimum service to consumers. Surprisingly, competition expands producers’ market.

 

Investment Climate/ Capital Mobilization Profit

Under capitalism investment climate is created. People are free to do their business or invest their money in profitable projects.  Capitalism affords maximum flow and opportunities for investment. This system allows the organizer to own all profit after paying necessary taxes. Profit opportunities attract more manufacturers, and consequently, industrial growth takes place by leaps and bounds.

 

Free Economy

Economy is free in that individuals can start their own business without government interference. Capital flows freely. Government restrictions on business are minimum. Entrepreneurs can start their business as a sole proprietorship, a partnership, or a company. There is no contra) over price, salary, cost of production, or distribution channels.

 

Consumer Status

Consumer is the king under this system. He will buy at his price, time, and choice. He dictates the market.

 

Survival of the Fittest

The system naturally encourages merit. Only those businessmen survive who can compete well with others. According to the Darwin Theory, it is the world where only the fittest and strongest will survive. If this principle is applied in business only that product will survive which is acceptable to the consumer. It gives rise to a philosophy that only the right product at the right price, at the right time, at the tight place offered to the right customer will survive. Lesser good products will have lesser demand. The same theory applies to manpower. In the open market the best person will be selected for the job. Those having graduation degree without required knowledge (passing examination by copying) will find no place on the job market. Capitalism rejects unqualified and incompetent personnel. Their haven is only the government jobs based on quota system, jobbery, and nepotism. Free market economy welcomes competent personnel with initiative, dynamism, force of drive, and resourcefulness. These are the personnel who lead the company to the yellow brick road. Those who do not accept this part ofDarwin’s Theory are definitely against merit.

 

Professional Management

Up until the middle of the 20h century companies and businesses were run by family member mostly of them being unprofessional in countries having capitalistic and mixed economic systems. Socialistic countries ran their companies by bureaucrat’s majority of whom too were unprofessional. Since the spread of business administration education developed countries realized the need for professionals to run business corporations increasing their efficiency to incredible levels Companies in the private sector now prefer hiring MBAs having specialized in marketing, finance, management, and advertising. MBAs and CA’s are considered as professionals as doctors, and engineers who are also going in for MBA education to find a better job in companies. Professionalism is always based on merit. Nepotism and jobbery are minimized.

 

Natural Price Mechanism

In capitalistic economy price mechanism is based on demand and supply. Prices are naturally fixed at a point where demand and supply lines intersect each other. When demand increases prices go high and the seller’s profit grows. The growth in profits attracts more producers and sellers increasing the supply. The increase in supply releases the pressure on price and it comes down again. Hence the price makes its own natural way of movement and settles at the right place.s

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