What Are the Weaknesses of Capitalism?

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Some weaknesses of capitalism include the potential for monopoly power, a lack of focus on negative externalities and the creation of social division and wealth inequality. Capitalism is an economic system characterized by a lack of government intervention and private ownership of the means of production.

Government regulation is limited in a capitalist system, which can lead to the potential of monopoly power. A monopoly occurs when an organization is the only supplier of a good or service, which allows it to exploit its position and overcharge consumers.

Capitalism typically leads businesses to focus on maximizing profits, often at the expense of other aspects of production. Many corporations, for example, have historically been unconcerned with the negative effects their production exerts on the environment. Similarly, major companies such as Nike and Apple are well known for exporting their labor to foreign countries, where factory workers face deplorable conditions defined as human rights abuses by many organizations. Capitalism also leads to under-provided social services, such as public health care, education and transportation, because these services do not create profits.

Capitalism also perpetuates extreme class division and the inheritance of wealth. Most wealthy people are born wealthy, which bestows far greater opportunities to create wealth and further perpetuate the cycle. Inequality of opportunity creates and maintains income inequality, which has grown exponentially larger in the United States since the 1970s.