Advantages Of Capitalism

Capitalism is defined not just as an economic system described by private ownership of capital goods but also by being a system of prosperity formation, modernization, and social modification that has brought to billions of people wealth that was inconceivable to former generations. Capitalism sets human originality to the provision of humankind by regarding and inspiring entrepreneurial innovation, that indefinable feature that clarifies the alteration between the lives of the people today, and the people back then. Capitalism promotes political freedom, alleviation of poverty and leads to economic growth.

To begin, the first advantage that exists in capitalism is the development of political freedom. There exists an adjacent relationship

The astonishing economic growth experienced by Capitalist countries and the extensive allocation of free enterprise benefits has immensely abridged the degree of poverty. As said by Terry Miller in Why Economic Freedom Matters, multiple countries have “participated in an era of globalization and economic integration in which solutions to many of the worlds development problems have taken told and generated real improvements in living standards.” This is important because it clearly favors the notion that all the qualities of a free economy, eventually improve the living standard of all individuals. Economic freedom fuels unprecedented economic growth. Therefore, as the global economy expands, more opportunities are born for a wider range of individuals. Thus, the key to poverty reduction is dynamic economic growth. Also as stated by Terry Miller in Why Economic Freedom Mater, “Countries moving towards greater economic freedom tend to achieve higher rates of per capita GDP growth over time”. The higher the per capita GDP, the more a nation is able to provide income for the people in its country. Hence, as long as economic freedom is preserved, it will essentially prevent the advantaged from becoming established. Freedom causes diversity and mobility. As said by Milton and Rode Friedman “It preserves the opportunity for today’s disadvantaged to become tomorrow’s privileged and, in the process

Free markets, the protection of private property, and a government presence in the economy lead to prosperity. In fact, as said in Foundation for Economic Education, “Adam Smith made the case that prosperity is produced through a competitive market economy”. This validates the point that if a free market environment was formed and sustained, the overall economy would grow and flourish. Adam Smith had acknowledged that the invisible hand in a market, if placed in an atmosphere of economic freedom, would successfully allocate resources. This type of economy will appeal all types of investments. It also gives incentives for the development of more innovative technology and for workers to acquire marketable talents. Therefore, this allows the economy to exponentially grow. The protection of private property rights and the little government intervention in economic affairs gives workers the incentive to grow their businesses. As believed in the invisible hand theory, when an individual grows their business, they unknowingly benefit everyone else around them, thus increasing the overall economic growth in a nation. Likewise, as shown in the graph on the left, the more economic freedom in a country, the higher the GDP per Capita. Meaning that the economy of the country would keep flourishing and