Capitalist Economy

In any event, a capitalist economy is distinguished by the existence of free markets and the absence of government interference in the economy. Realistically, there has to be some form of government involvement in order to protect private property, otherwise there could be potential anarchy. Globally, many economies seen to have a capitalist economic system that has government spending take up over a third of GDP. For this reason, the government pays for health, education, national defence and welfare. Despite this, the economy is still viewed as capitalist, as a result of private firms being able to decide what to produce and who to supply to.

In relation to the politics of a country, freedom in a capitalist economy directly supports political

For example, pollution from production can lower living standards. There is also less spent on health, education and transport, which is an inefficient allocation of resources in the long run. Most capitalists acknowledge the necessity of funding for these sectors of society.

Finally, there are occurrences of boom and bust, where a period of economic prosperity and growth is suddenly followed by economic decline. Evident from the Wall Street Crash of 1929, recessions and stagflations have been of varying severity.

Today, we are all closer in many aspects of life, through the phenomenon of globalisation. Economically, this means businesses and organisations develop on an international level and trade and exchange with each other in different countries, involving communications, travel, culture, knowledge, art, entertainment and sports. Our global economy can have repercussions if something happens in one

This also supported improving communications globally. Internet and mobile technology have become available in most countries today.

The availability of international labour is also a component of globalisation. India has a third of the UK's labour costs, but high skill levels. This allows cheaper goods production through laborious industries such as textiles, and this allows multinational companies to take advantage of the lack of legislation that doesn't cover workers in India but is imposed in the UK.

Gradually, transnational corporations form connections with other countries as they invest in them. The UK, for example, has set up stores in China with the DIY chain B&Q. This could be to take advantage of cheap materials and workers, accessibility to markets and easier geographical transport, more convenient legislation, or to establish themselves as a new market leader (2).

The UK traditionally has petroleum, under BP, as one of the highest globalised parts of the economy, along with the aerospace industry who's companies include BAE Systems and Rolls-Royce