Capitalism Vs Capitalism

WESTERN CAPITALISM VS. STATE CAPITALISM Capitalism is an economic system whereby means of production were owned and controlled by private actors in which they were allowed to own and control the use of property base on their own interests, and where the supply and demand in markets were coordinated by invisible hand of the pricing mechanism in a way that may suit the best interests of society (Scott 2006). Reisman (1998) describes Capitalism as “a social system based on private ownership of the means of production. It is characterized by the pursuit of material self-interest under freedom and it rests on a foundation of the cultural influence of reason. Based on its foundations and essential nature, capitalism is further characterized

As a natural corollary, we have this new face of imperialism-the continued exploitation of the developing countries, not by the flow of capital for the extraction of raw materials, but by direct intervention in the production patterns in the developing countries in order to ensure market access for the products and services of the developed countries. This can be achieved, and has so far been achieved, by the co-option of the elite in the developing countries by the forces of modern capitalism. Major weakness of this system according Parikh (2011) is that “private companies become so big that they become almost monopoly in their field which leads to exploitation by them in terms of charging the price for product or service which they produce. Also In this system poor people are hit the hardest because the gap between the rich and poor keep rising under this system as there is limited government control”. He further suggests that, due to these many countries adopt a mix of capitalist and socialist economic system where the important resources are controlled by government and rest are left to the

The concept was also used and analysed by third world, advanced capitalist and the socialist nations in the 1970s. In those days it was also designed to aid the development of a strong and sustainable industrial bourgeoisie, the rise of which was halted by the historical effect of the colonial and imperial domination of the Third World countries. Increase in state intervention in the economic activities of a country is what differentiates today’s state capitalism from the early one. The most important measure taken by some states in pursuing state capitalism was the nationalisation of foreign-owned industries mostly mining, steel production, oil, and petro-chemical industries (Ostrowski 2012). Also there are sovereign wealth funds (SWFs) whose goals are to preserve living standards of the population for future generations. Some are based on exploitable resource revenue (as in Norway) or revenues derived from state-led government corporations (as in Singapore, Russian Federation or China) that have strategic market objectives and are able to use the powers of the state to advance their commercial interests (Leipziger 2012). The financial crisis of 2008 also became the turning point in the rise of State Capitalism beyond its origination, as the market meltdown discredited free-market capitalism -which has