Question

write demerits of a capitalistic economy​

Answer 1

Answer:

• ᴄʟᴀss sᴛʀᴜɢʟᴇs
• ᴇᴄᴏɴᴏᴍɪᴄ ɪɴsᴛᴀʙɪʟɪᴛʏ
• ᴍɪsᴀʟʟᴏᴄᴀᴛɪᴏɴ ᴏғ ʀᴇsᴏᴜᴄᴇs
• ᴡᴀsᴛᴇ ᴏғ ᴄᴀᴘɪᴛᴀʟɪsᴛ ᴘʀᴏᴅᴜᴄᴛɪᴏɴ
• ᴇᴍᴇʀɢᴇɴᴄᴇ ᴏғ ᴍᴏɴᴏᴘᴏʟʏ ᴘᴏᴡᴇʀ
• ɴᴇɢʟᴇᴄᴛ ᴏғ sᴏᴄᴀɪʟ ᴡᴇʟғᴀʀᴇ

Answer 2

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Increase Inequalities:

It increases inequalities in wealth, income and opportunities. Increase in economic inequalities creates economic and social problems.

Economic Instability:

It is difficult to establish a balance between the demand and supply. There will be a trade boom or recession or the frequent fluctuations in prices. All the decisions relating to production are taken by the capitalist and due to wrong estimates of future requirements; imbalance in production is generally found. Due to fluctuations in prices industrial and other economic activities become unstable and this will have an adverse impact on economic development and expansion.

Inefficient Production:

The capitalist always produces with the motive of profit only. He always produces goods for use by the higher income class of the community so that maximum profits can be obtained. There is no place in the mind of the capitalist to produce for consumption by common people. Goods and service are not produced by keeping in view the interest and wants of the common man, but with the motive of capitalist’s profits.

Class Conflicts:

The capitalist economy divides the community into two parts; on the first side the top capitalists and on the other side labor class which depends on the capitalists to fill their stomach. Since the production resources are controlled by the capitalists they exploit the labor from their reasonable reward.

Unemployment:

In a capitalist economy, full employment situation cannot be brought due to lack of central economic planning. With the result, optimum use of resources cannot be possible. This brings the situation of unemployment.

Monopoly and Exploitation:

The establishment of large-scale business, improvement in technology, the motive of maximization of profits, formation of combinations and acute competition are the reasons for the creation of monopoly and exploitation of customers.

Neglect of National Interest:

They are mainly oriented towards self-interest of maximization of profits for which they compete with each other. They neglect the social interests. They do not undertake their activities keeping in view the national interest.