1. CAPITALISM
RECREATING ECONOMY

2. GROUP MEMEBERS
FAROOQ SAEED
HAIDER ALI
ALI RIZWAN
HAFIZ FAZAL MOIN

3. AGENDA
 INTRODUCTION
 HISTORY OF CAPITALISM
 TYPES OF CAPITALISM
 PERSPECTIVES OF CAPITALISM
 ADVOCACY
 CRITICISM

4. INTRODUCTION
 Philosophy of economic systems that favors
private ownership of the means of production,
creation of goods or services for profit or income
by individuals or corporations, competitive
markets, voluntary exchange, wage labor, capital
accumulation, and personal finance.

6. CAPITALISM: A HISTORICAL
PERSPECTIVE
o PRE HISTORY
o MERCENTALISM
o INDUSTRIALIZATION
o KEYNESIANISM AND
NEOLIBERALISM
o GLOBALIZATION

7. PRE HISTORY
 Modern capitalist system has its origin in the
“Crisis Of The Fourteenth Century“
 Marx labeled this period the
Pre-History of

8. MERCANTILISM
 A System of Trade for Profit
 Under mercantilism, European merchants,
backed by state controls, subsidies, and
monopolies, made most of their profits from
the buying and selling of goods.

9. INDUSTRIALIZATION
 During the Industrial Revolution,
the industrialist replaced the
merchant as a dominant actor in the
capitalist system and affected the
decline of the traditional handicraft
skills of artisans, guilds, and
journeymen.

10. GLOBALIZATION
 Capitalism should now be viewed as a
truly world system.
 Number of trends associated with
globalization have acted to increase the
mobility of people and capital since the
last quarter of the 20th century (the start
of globalization)

11. MERCANTILISM
 An economic system to increase a nation's wealth
by government regulation of all of the nation's
commercial interests
 It demands a positive balance of trade
 Dominated Western European economic policy
from 16th to late-18th centuries
 Mercantilist policies have included
 Building a network of overseas colonies
 Forbidding colonies to trade with other nations
 Promote accumulation of gold and silver
 Maximizing the use of domestic resources
 Forbidding trade to be carried in foreign ships

12. FREE MARKET CAPITALISM
 A free-price system where prices are determined
by supply and demand
 Laissez-faire (let them do)
 No government/state intervention
 Productive enterprises are privately owned
 Role of government is limited to protecting the
rights of life, liberty and property
 A laissez-fair state and free market has never
existed

13. SOCIAL MARKET ECONOMY
 Economic system implemented by most of the
German political parties since World War II
 Seeks a middle path between capitalism and
laissez-fair economic liberalism and state
intervention provides
 Fair competition
 Balance between a high rate of economic growth
 Low inflation
 Low levels of unemployment
 Social welfare
 Public services

14. STATE CAPITALISM
 State ownership of the means of production
within a state
 State has considerable control over the allocation
of credit and investment
 Examples of state capitalism include
 Corporatized government agencies
 States that own controlling shares of publicly-listed
corporations

15. CORPORATE CAPITALISM
 Characterized by the dominance of hierarchical,
bureaucratic corporations
 Legally required to pursue the profit
 State monopoly capitalism
 Corporate capitalism has been criticized for the
amount of power and influence, corporations
have over government policy

16. MIXED ECONOMY
 Both state and private sector direct economy
 Means of production are mainly under private
ownership
 Indirect influence of government
 Governments in mixed economies provide
 Environmental protection
 Maintenance of employment standards
 Standardized welfare system
 Maintenance of competition

17. PERSPECTIVES ON CAPITALISM
 Classical political economy
 Marxist political economy
 Weberian political sociology
 Institutional economics
 Keynesian economics
 Neoclassical economics

18. CLASSICAL POLITICAL ECONOMY
 Emerged in Britain in the late 18th century
 Adam Smith, David Ricardo, Jean-Baptiste Say,
and John Stuart Mill
 Criticized monopolies, tariffs, duties, and other
state enforced restrictions
 Developed the law of comparative advantage
 It is profitable for two parties to trade, even if
one of the trading partners is more efficient

19. MARXIST POLITICAL ECONOMY
 Developed by Karl Marx
 Believed that the working classes would come to
power in a communist transformation of human
society
 Labor is the source of all value, and thus of profit
 Criticized capitalism that exploited labor would
result in a revolution to a socialist-style economy

20. WEBERIAN POLITICAL SOCIOLOGY
 Developed by 19th century German social
theorist Max Weber
 Considered market exchange as the defining
feature of capitalism
 Laborer was both free to own property, and free
of the ability to reproduce his labor power

21. INSTITUTIONAL ECONOMICS
 Pioneered by John Dewey, Thorstein Veblen, and
Daniel Bromley
 Was once the main school of economic thought In
the United States
 Holds that capitalism cannot be separated from
the political and social system
 Businesses protect their existing capital
investments leading to depressions
 Increasing military expenditure and war through
business control of political power

22. KEYNESIAN ECONOMICS
 Developed by the British economist John
Maynard Keynes
 Capitalism suffered a basic problem in its ability
to recover from periods of slowdowns in
investment
 Capitalist economy could remain in an indefinite
equilibrium despite high unemployment
 Showed that regulation can be effectives

23. NEOCLASSICAL ECONOMICS
 Majority of the world draws on neoclassical
economic thought
 Favors extensive market coordination and
neutral patterns of governmental market
regulation
 Market economies are inherently stable if left to
themselves and depressions result only from
government intervention
 Value is subjective, varying from person to
person, and thus reject the labor theory of value

24. ADVOCACY FOR CAPITALISM
 Increased Economic Growth
Capitalist nations have emphasized
capitalism's ability to promote economic growth, as
measured by Gross Domestic Product (GDP).
 In years 1000–1820 world economy grew six fold,
50 % per person. After capitalism had started to
spread more widely, in years 1820–1998 world
economy grew 50-fold, i.e., 9-fold per person.

25. ADVOCACY FOR CAPITALISM
 Increasing GDP (per capita) is empirically shown
to bring about improved standards of living, such
as better availability of food, housing, clothing,
and health care.
 Proponents also believe that a capitalist economy
offers far more opportunities for individuals to
raise their income through new professions or
businesses.

26. SELF-ORGANIZATION
 Capitalism can organize itself into a complex
system without an external guidance or central
planning mechanism.
 Prices serve as a signal as to the urgent and
unfilled wants of people
 The promise of profits gives entrepreneurs
incentive to use their knowledge and resources to
satisfy those wants

27. CRITICISMS ON CAPITALISM
 Critics of capitalism associate it with:
 social inequality
 unfair distribution of wealth and power
 Notable critics of capitalism have included:
 socialists, communists, national socialists, social
democrats, technocrats, some types of conservatives,
Shakers and some types of nationalists.

28. CRITICISMS ON CAPITALISM
 Requires huge investments in capital. This has
resulted in a very small number of people to have
over control over the productive resources of the
entire society.
 The employees have limited motivation to put in
their best to the work they do. In this way their
capabilities are used much below their potential.

29. CONCLUSION
 Advantages
 As a consumer, you can get the best quality goods and
services at the best prices
 As a consumer or a producer, you have the greatest
possible freedom to do what you want
 Rewards hard work, ingenuity and talent
 Disadvantages
 Inequality and injustice
 Rewards corruption and influence peddling
 Wealthy can dictate policy with donations

30. THANK YOU