what are the demerits of a capitalistic economy??
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Demerits of Capitalistic System:
According to Karl Marx, “Capitalism contains the seeds of its own destruction.”
The main demerits of this system are given below:
(i) Labour Exploitation:
The main defect of capitalism is the exploitation of labour. Labourers get less wages in comparison to their working hours. The wages less than their marginal productivity are not sufficient for their livelihood.
(ii) Class Struggle:
A lion’s share of income and resources is controlled by the upper sections of the society, while others remain deprived of the basic amenities of life. Thus, the entire society is divided between ‘haves and ‘have not’s. Hence, the continuous class struggle spoils the health environment of the economy.
(iii) Wasteful Competition:
Capitalism is a wasteful competition. A lot of money is spent on advertisement and publicity for pushing the sale of the commodity. Its burden ultimately is borne by the poor consumers in the form of increased price.
(iv) Threat of Over-Production:
The production is made on a large scale which cannot be changed in a short period. Therefore, under capitalism, fear of over-production always exists. The Great Depression of 1930s in USA is an example of it.
(v) Economic Fluctuations:
Being automatic in nature, capitalist economy always faces the problem of economic fluctuations and unemployment. This means the state of instability and uncertainty,
According to Karl Marx, “Capitalism contains the seeds of its own destruction.”
The main demerits of this system are given below:
(i) Labour Exploitation:
The main defect of capitalism is the exploitation of labour. Labourers get less wages in comparison to their working hours. The wages less than their marginal productivity are not sufficient for their livelihood.
(ii) Class Struggle:
A lion’s share of income and resources is controlled by the upper sections of the society, while others remain deprived of the basic amenities of life. Thus, the entire society is divided between ‘haves and ‘have not’s. Hence, the continuous class struggle spoils the health environment of the economy.
(iii) Wasteful Competition:
Capitalism is a wasteful competition. A lot of money is spent on advertisement and publicity for pushing the sale of the commodity. Its burden ultimately is borne by the poor consumers in the form of increased price.
(iv) Threat of Over-Production:
The production is made on a large scale which cannot be changed in a short period. Therefore, under capitalism, fear of over-production always exists. The Great Depression of 1930s in USA is an example of it.
(v) Economic Fluctuations:
Being automatic in nature, capitalist economy always faces the problem of economic fluctuations and unemployment. This means the state of instability and uncertainty,
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