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What are the pros and cons of capitalism?

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Quick Answer

Some of the pros of capitalism include increased market efficiency and increased economic growth, while some of the cons include wealth inequality and lack of public services. Capitalism is an economic system in which the government exerts little influence, and private companies control the production of goods and services.

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Full Answer

Proponents of capitalism argue that it promotes economic efficiency because companies are inclined to change in order to meet market demands. Private companies strive to cut costs and deliver products to consumers as efficiently as possible in order to maximize profits. In government-controlled economies, producers are not motivated by profits and may be less inclined to try new, more efficient practices. Capitalism's increased efficiency equates to an increase in economic growth. Economic growth from capitalism can increase a country's GDP and its overall standard of living.

Critics of capitalism argue that it creates dramatic income inequality. Wealth can be gained in a capitalist economy, but it can also be inherited, meaning that people often stay rich simply because they were born rich. Those born into wealthier economic classes have more opportunities to gain wealth than those born into poorer classes. Capitalist economies are less inclined to produce services that have little potential for profit, such as education or public transportation. Even in capitalist economies, many public services are controlled by the government.

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