Criticism of Capitalism
Criticism of capitalism
But capitalism is now being assailed from all directions:
1. Wastes of Competition. Competition, which is the cardinal feature of a capitalist economy, is a sheer waste. Massive expenses are sustained on commercial ads and salesmanship merely to crush a opponent. Capital in use by those who are overpowered in the competition go to waste. Cut-throat competition does not confer any corresponding social benefit.
Another way in which capitalism leads to stresses on property waste is the production of excessive varieties of goods and excessive number of producers. While a reasonable number of varieties are no doubt desirable since it provides choice to the consumers, yet too many varieties are wasteful.
2. Misallocation of Resources. Since profit motive is the main-spring of all economic activity, those goods are produced in a capitalist economy which fetches larger profit to the entrepreneur. Obviously, it is the rich, who can afford luxuries, while the poor may not even be able to pay for necessaries and comforts. Thus, the result is that the resources of the community are used to produce goods which are profitable rather than desirable. In this way, productive resources are not allocated in keeping with the real needs of the society.
3. Inefficiency in Working. The efficiency of the capitalistic system depends on the existence of free competition and the mobility of the factors of production. But the existence of friction, legal, social and economic, hampers free competition with the result that the factors of production often lie idle.
4. Lack of Harmony between Consumers and Producers. The supposed harmony between the interests of the consumers, i.e., the society, and those of the producers, does not actually exist. Lack of free competition, deliberate deceit practiced by unscrupulous producers and the ignorance and the importance of the individual consumer turn the consumer-king into an abject slave, a victim of exploitation.
5. Economic Instability. Capitalistic societies are subject to cyclical fluctuations depressions alternating with booms. During depression, large-scale involuntary unemployment takes place resulting in great human suffering and misery and loss of production to the society. Booms are characterized by inflation, which too has many undesirable consequences, particularly for the fixed-income groups in the society. These cyclical fluctuations are the result of the uncoordinated nature of the economic system under capitalism so that effective demand keeps on changing and may not be at a level which may consistently ensure full employment of the community's resources.
6. Human Welfare Neglected. Capitalism lays undue stresses on property right as against human rights. Man, the first of god's creation, is treated like an ordinary chattel.
7. Social Unrest. Capitalism has sown the seeds of eternal social unrest by dividing the society into two unfriendly campsites of labor and capital. They look sullenly at each other, and are ever on the lookout for an opportunity to fight.
8. The extreme inequality of wealth distribution, which is being accentuated as time goes on, is the most galling outcome of capitalism. As G.D.H. Cole remarks, "There is a world of difference in terms of happiness between the high priest and the slaves in the temple of industry."
9. Capitalism is full of frustrating anomalies, the few indulging in all conceivable luxuries and the majority living under semi-starvation conditions. The crops are rotting while human beings are starving, and machines are lying idle inside the factories, while unemployment is raging in all its fury outside.