Pros & Cons of Capitalism

Written by richard ristow
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Pros & Cons of Capitalism
Profit. (Creatas Images/Creatas/Getty Images)

Capitalism is an economic system that favours markets, wage labour and private ownership. It is a system motivated by maximising profit over investment, resulting into a class system of workers, owners and a middle class between the two. Owners possess and profit from what economist Karl Marx calls "the means of production," which could be factories, companies and entities that collectively produce something. Workers "own" their labour and contract it and their time for wages or salaries.


A capitalist economy is said to encourage innovation in technology and industry. Making money is an enticement for an individual or a company to offer a better product than a competitor. This is what some economic and political commentators call "the genius of the marketplace." Also, there is a belief that a pursuit of profit can lead to social mobility; people who were once poor can create a product, make money, and climb out of one class and into another.

Pros & Cons of Capitalism
Pros (Jupiterimages/Comstock/Getty Images)


Capitalist societies have issues with social inequalities and social justice. There is always an impoverished class, and as a result, some sort of suffering taking place. Without any sort of regulation on private business, power also tends to concentrate into the hands of a powerful few. A company can grow so large, it can become a monopoly and stifle meaningful economic competition.

Pros & Cons of Capitalism
Inequality (Hemera Technologies/ Images)


Democracy and capitalism are not the same thing. As stated earlier, capitalism is an economic system motivated by making money. Democracy is a political system motivated by providing equality in government.

Pros & Cons of Capitalism
Misnomers (Comstock Images/Comstock/Getty Images)

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