If there is no capitalism, there is no private investment hence no entrepreneurship.
Think of a world entirely controlled by the State. Everybody is a worker, investment is made by Government and not by private individuals. Entrepreneurship requires private investment and risk taking. Entrepreneurship is essential to innovation, growth, and efficiency. There is incentive to respond to market forces as survival of businesses rely on that. Absence of capitalism means everything falls on the State. There is no incentive to improve, hence you are likely to see stagnation and little to no growth.
Many problems blamed on capitalism is actually caused by State intervention. Capitalism ,unfortunately, is not particularly good at solving problems caused by the State. Then again it was not designed to solve them. Income and wealth inequality is a problem consistently blamed on capitalism. Inequality should, if capitalism is allowed to function, be a short-term problem. Creativity, innovation and cooperation among those more agile to adjust to market changes (smaller firms, new entrepreneurs) can close the gap and even overtake the existing leaders. State intervention leads to barriers to entry and inefficient Government monopolies. Government expenditure also creates a crowding out effect that hinders entrepreneurs and natural responses to market forces.
Just to add a final twist. I am not saying that capitalism is perfect or even ideal. Capitalism often leads to wastage and unnecessary competition. Competition certainly has its place but cooperation is generally far more efficient in the long-run. I see this more of a problem of the myopic nature of society. State intervention does not offer a solution to this problem. Control does not equal cooperation.
If there is no capitalism, there is no private investment hence no entrepreneurship.
Think of a world entirely controlled by the State. Everybody is a worker, investment is made by Government and not by private individuals. Entrepreneurship requires private investment and risk taking. Entrepreneurship is essential to innovation, growth, and efficiency. There is incentive to respond to market forces as survival of businesses rely on that. Absence of capitalism means everything falls on the State. There is no incentive to improve, hence you are likely to see stagnation and little to no growth.
Many problems blamed on capitalism is actually caused by State intervention. Capitalism ,unfortunately, is not particularly good at solving problems caused by the State. Then again it was not designed to solve them. Income and wealth inequality is a problem consistently blamed on capitalism. Inequality should, if capitalism is allowed to function, be a short-term problem. Creativity, innovation and cooperation among those more agile to adjust to market changes (smaller firms, new entrepreneurs) can close the gap and even overtake the existing leaders. State intervention leads to barriers to entry and inefficient Government monopolies. Government expenditure also creates a crowding out effect that hinders entrepreneurs and natural responses to market forces.
Just to add a final twist. I am not saying that capitalism is perfect or even ideal. Capitalism often leads to wastage and unnecessary competition. Competition certainly has its place but cooperation is generally far more efficient in the long-run. I see this more of a problem of the myopic nature of society. State intervention does not offer a solution to this problem. Control does not equal cooperation.
Thanks for the reply. I have been here over a month and nobody takes me seriously.