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

DYFUNCTIONS OF CAPITALISM

DYFUNCTIONS OF CAPITALISM

Sovereignty Capitalistic economy’s sovereign clement is capital. Although modern of Capital management has manifested the utmost importance of the human resources, supports professionalism, makes Rensis Likert advocate for human balance sheet, the capital is always preferred to all human aspects. Owners expect too much of their managers to bring more and more profit putting them under undue stress. In other words, capital is of primary importance and the humans find a secondary place. Capital is the nucleus of the business around which all other factors including humans revolve. In the way past capital was the slave of the human, now the position is reverse.

 

Class Struggle

The poor get poorer and the rich get richer, the fact which enhances class conflict. The whole society is divided into two, the fact the poor and the rich classes. However, this phenomenon can be checked by the government by enforcing necessary laws and suitable salary structure.

 

Rampant Corruption

Capitalism gives rise to rampant and uncontrolled corruption which arises from minimum government control over the business and excessive freedom of economy Limited companies tend to manipulate accounts to harm the government and shareholders by paying less taxes and dividends.

 

Interest

Interest is the base of capitalism. According to Islam, interest is haram and carries many inherent evils which are disastrous for the society.

 

Possibility of Cartels

Industrialists tend to form cartels for avoiding competition. In addition to Etc. it, other combinations include trusts, mergers, holding companies, and pools. Under such arrangements they try to keep low quality, high prices, low production and limited distribution. In the U.S.A such combinations are completely banned because they harm consumers and the economy of the country.

The combinations may take the following forms.

a. Cartels

b. Trust

c. Pool

d. Merger

e. Amalgamation

f. Holding companies

g. Subsidiary companies

 

Risks

Risk is very much part of capitalistic economy and stems out of competition, poor management policies, unfavorable rise or fall in prices, new inventions, government policies, and political conditions.

Risks elements also include fire, cyclone, theft, earthquake, and other natural calamities. Some risks are insurable while others not.

The risk factor is more prevalent in capitalism than in socialism because governments are far stronger than individuals in managing and controlling the risks.

Risks arise even from favorable and plus factors. Introduction of new inventions breaking monopolies, creation of competition are the cases in point.

 

Business Cycle

By development and prosperity countries around the world fall under four categories:

1. Fully developed countries: asUSA,Japan,UK, andGermany.

2. Less developed countries:China,Korea, andSingapore.

3. Developing countries:India,Indonesia,Thailand,Brazil.

4. Underdeveloped countries:Pakistan, Nigerian,Nepal,Somalia,Bangladesh,Bhutan.

 

Business cycle works only in developed capitalistic countries. It is nonexistent in poor and socialistic countries. It refers to the conditions of business activity that fluctuate regularly between prosperity and depression over a period of around ten years. This regular downward fluctuation in the economic activity rage havoc and creates uncertainties in the developed societies. Business cycle affects employment, production, spending, balance of trade, foreign exchange reserves.

 

Other Evils Capitalism has other inherent ills as under:

1. Extravagance, worldly vanity, and pomp are common.

2. Satta, lottery, gambling are all allowed.

3. Nudity, sensuality, and lasciviousness are free and unchecked.

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