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Capitalism quickly became the adopted ideology of many societies as this idea enabled free trade and exchange commodity between nations. There are many features of the capitalist ideology which drives the economy and has given opportunity of equality in rights (to those with all class backgrounds not just the bourgeoisie) to obtain success from capitalizing off of a product or service. Some of which are: co-ordination, motivation and property rights.
Firstly, co-ordination under capitalist economies has a market mechanism which determine prices in accordance to supply and demand. The forces of supply and demand increase or decrease prices in response to the decisions of individual buyers and sellers. This mechanism is commonly referred to as Adam Smith’s ‘Invisible Hand’. Within this capitalist system there is no state intervention to ensure that economic activities are carried out properly. Today, the state does not interfere with an individual or a business trading but must abide to tariffs and laws input by the government. Free trading still exists but with a saturated market these laws enable movement between legitimate traders and any fraudsters can be caught. The idea zero government intervention would not work due to criminal offenders levitating in the market system therefore the government work with larger private businesses to ensure people are exchanging commodities fairly. For example, banks will observe individual’s bank accounts and if they suspect money laundering fraud from visible multiple accounts and invoices then the situation would be handed over to the government to be dealt with. Integrating some laws allows safer trading within the capitalist economy.
Secondly, capitalism is a motivational structure. This is because as a result of the self-interest of many economic agents, within this system, the market is pushed by material motivations. Suppliers have an incentive to offer only those goods on which they expect to make a profit, on their own terms. For example, given the recent phenomena of social media surfacing and new jobs never thought of before, many working-class people are able to build up wealth and status more easily, because it is accessible to many which come from lower class backgrounds. For example, youtubers, Michelle Phan and Jeffree Star have become multi-millionaires through providing service on a media platform then invest money into a business where products are sold.
Finally, capitalism is portrayed by private responsibility for non-work variables of creation. The proprietors of these private properties have the ability to control these components of creation just as the merchandise and enterprises delivered from such information sources. The proprietors have the opportunity to choose what to create, how to deliver and for whom to create. The advantages proprietors are compensated with from responsibility for assets are lease from the utilization of their territory, compensation for the utilization of their work, enthusiasm as an arrival on their capital and benefits from their innovative aptitudes. Real estate allows any man to have assets or liability on their own accord and further experience wealth growth from such. Mobility in class structure was taking place in postmodern capitalism, never seen before, this is deemed functional for the society because it creates an equal opportunity for people to attain wealth. Though, the gap between the upper class and working class may not close, the living standard of the working class could potentially improve and this achievable realistic goal drives the labor and in return performance of the economy.
As indicated by Adam Smith, a capitalist economy works by methods for the ‘Invisible Hand’. The hypothesis of the ‘Invisible Hand’ expresses that inside a free market, items are traded at a cost exclusively controlled by the shared assent of buyers and sellers. demand by consumers for items direct the distribution of assets to accomplish customers’ utility amplification. Benefit is money related (material) motivating force to create merchandise. This monetary framework guarantees that deficiencies and surpluses do not keep going for long. When there is an abundance request (lack) costs in the market are probably going to ascend, as every buyer would now outbid the other for the scarce good demanded by many. At higher costs, suppliers are likely to increase their offer, and thus market harmony will be achieved. Circumstances may exist in the market where there is overabundance of supply (overflow). The inclination here is as costs begin to fall, every provider will attempt to attract and takeaway customers from their competing firms. At these lower costs, buyers are probably going to demand more. In this way, harmony in the market is reestablished.
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