Capitalism

Capitalism is an economic system in which businesses are owned and con trolled by private ind ividuals rather than by the government and are operated for profit.In Capitalism the price of goods and the amount produced is determined by the amount people are prepared to buy for a given price, and the quantity a business is prepared to supply for that price. Therefore the supply and demand of products in the market is determined by price and quantity.



Capitalism emphasizes creation of wealth by companies using resources as productively as possible. One way of improving productivity is through the division of labor. The production of a good is broken down into individual tasks and each worker specializes in one task. The worker becomes very skilled at what he is doing and can do the task more efficiently and to a hig

her quality.

Adam Smith also known as the father of modern economics was very influential in his book the Wealth of Nations in explaining how capitalism can increase a country’s standard of living. He regarded capitalism beneficial as long as the government did not allow large monopolies, which is where a single business dominates the market. Without monopolies capitalism creates competition in the market and gives consumers choice.



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The negative effects of capitalism is that it created a static cast system which is when a society is divided into two groups the incredibly poor and the incredibly rich and it is difficult to change your social standings. The second negative effect was that capitalism resulted in child labor because children were cheaper to employee and there hands could easily fit between the parts of the machines. The positive effects of capitalism were that it produced goods more efficently so they were able to be sold more cheaply. It also created jobs for people after the enclosure movement when thousands of peasants were left without jobs.



Capitalism was significant in the transformation of America from its largely agriculture and cottage industries to a major industrial economy with large manufacturing factories, heavy industries like iron and steel and extensive rail road network.



By Kaveen Singh and Jemima Holborow


Sources:

"Adam Smith - Wikipedia, the free encyclopedia." Wikipedia, the free encyclopedia. 20 Sep. 2008 <http://en.wikipedia.org/wiki/Adam_Smith>.

"Adam Smith's Laissez-Faire Policies." The Victorian Web: An Overview. 28 Sep. 2008 <http://www.victorianweb.org/economics/laissez.html>.

"April Brown's Articles." NWACC - Faculty Web Pages. 28 Sep. 2008 <http://faculty.nwacc.edu/abrown/WesternCiv/Articles.html>.

"BBC - History - John Maynard Keynes (1883 - 1946)." BBC - Homepage. 25 Sep. 2008 <http://www.bbc.co.uk/history/historic_figures/keynes_john_maynard.shtml>.