Market Economy and its social consequences
In primitive societies the usual system of exchanging goods vas barter system. At that time the idea of profit did not exist, ‘people accumulated goods not for making profit during the days of scarcity but to gain prestige. The system of trading often consisted if giving and mutual rendering of services. Economic factors such s wages, investment; interest and profit were practically unknown n preliterate societies.
In the early part of the modern period, the economic activities were generally regulated by the governing powers. It was an economic reflection of the growing unification of European peoples under strong monarchical Governments. The interest of the secular rulers lay in internal unification and this necessarily meant economic as well as political integration.
The mercantilist ideology dominated the period. The economic activities of the people were politically regulated to increase the profits of the king and to fill his treasury with wealth. The nation was looked upon by the mercantilist as an economic organisation engaged in the making of profit. The ownership and use of productive properties were minutely regulated by mercantilist’s law.
Then came the Industrial Revolution which changed the techniques of production. The policy of mercantilism also had failed to bring about the welfare of the people. To secure maximum production of usual goods the new do “trine of ‘Laissez- faire’ was propounded. The doctrine preached non- interference in economic matters.
Under capitalism, there is no governmental control over the forces of production, distribution and exchange. It is controlled by the forces operating in the market. There is no price control or regulated distribution by the government. The economy operates freely under the law of demand and supply. The capitalist economy is a liberalized or market economy.
Features of market system
In the broadest sense, capitalism may be defined as the economic system making the widest use of capital in the process of production. In the technical sense, capitalism may be defined as the economic system of production in which capital goods are owned privately by individuals or corporations.
Private Property
The institution of private property lies at the basis of modern economic life. It is the terra ferma of capitalism. In capitalism every person has the right to earn and maintain property. The right to property is considered an inviolable right.
Large Scale Production
It is another important feature of capitalism. Capitalism arose as a result of industrial revolution which made large scale production possible. The installation of gigantic plants and division of labour increased production. More production means wider use of capital and led to more profits.
Profit Institution
capitalism cannot exist in the absence of institution of profit. The capitalists invest money and out of investments earn profit. Production under capitalism is profit-oriented.
Competition
Competition is the inevitable result of a capitalist economy. In capitalism there is extreme competition between capitalists. Demand is artificially increased and supply is decreased. There is cut-throat competition under capitalism.
Social Consequences of Capitalism
High Standard of Living
Capitalism is the product of industrialisation. Industrialisation has increased production. Now men do not have to toil for bread as they used to do in the primitive days. The necessities of life are easily available.
Economic Progress
Capitalism has led men to exploit the natural resources more and more. The people exert themselves utmost for earning money. This had led to many inventions in the field of industry, agriculture and business which have contributed to economic progress.
Exchange of Culture
Capitalism has led to international trade and exchange of know-how. People in different countries have come nearer to each other. The development of the means of transport and communication has facilitated contacts among the peoples of the world thereby leading to exchange of ideas and culture.
Lessening of Racial Differences:
Capitalism has also led to the lessening of differences based on race, creed, caste and nationality. In the factory the workers and officials belonging to different castes co-operate with one another and work shoulder to shoulder. Inter-mixing of castes is the off-shoot of capitalism.
Greed for Wealth
Capitalism is based on greed for wealth It has raised wealth to the pedestal of deity. Wealth has become the be-all and end-all of human life. The modern man is mad after wealth. He wants to earn more and more wealth by any means. The idea for morality does not enter into the means of earning. It has thus led to moral degeneration.
Destruction of Human Values
In a capitalist order, everything has come to be measured in terms of wealth. All values of human life such as love, sympathy, benevolence, love and affection are evaluated in terms of silver coins. Every person wants to get the maximum. The sole criterion is wealth, not value.
Materialism
Capitalism manifests materialism in its extreme form. Religion and spirituality lose their force. Religion becomes the opium of people. Religion becomes hypocrisy. The big capitalists save lacs of rupees by way of tax through contribution to fictitious charitable institutions. While people are short of goods, the capitalists hoard them to soar the prices.
Artificiality
Capitalism has transformed modern culture into mere artificiality. Today there is false courtesy. One does not find gentility and human touch. One can see false prestige, mere artificiality, and sheer advertisement even in art and literature, nothing to speak of diet, dress and speech etc. Life today has become artificial.
Imbalance in Social System
Capitalism has led to an imbalance in the social system. It has failed to adjust itself to the welfare of society. It has widened the gap between the haves and have-not’s and created insatiable greed for wealth among the people. It has changed the very outlook of human beings. Wealth has become an important criterion of status.
It has led to the moral degeneration of man. Obviously, capitalism has failed to bring about the moral development of man. It is injurious both to society and the individual. In short, it has proved a curse to humanity instead of a blessing. Karl Marx was its bitter critic.