Capitalist Market

Examples of Capitalist Market in the following topics:

• State-Centered Theories

  • The laissez-faire era of United States economic history, which occurred around the turn of the 20th century—when the government generally left the economy unregulated—reflects a belief in market-driven theories of inequality.
  • Laissez-faire policy led to corporate monopolies and a vast gap between the wealth of capitalist business owners and wage laborers.
  • In contrast to market-oriented theories of inequality, state-centered theories do not assert that the capitalist free-market will naturally regulate prices and wages.
  • State-centered theories of inequality critique market-driven ones on the basis that capitalists embroiled in the free-market will act to increase their own wealth, exploiting the lower classes.

• Capitalism in the U.S.

  • Democratic capitalism is a political, economic, and social system with a market-based economy that is largely based on a democratic political system.
  • The United States is often seen as having a democratic capitalist political-economic system.
  • Democratic capitalism, also known as capitalist democracy, is a political, economic, and social system and ideology based on a tripartite arrangement of a market-based economy that is based predominantly on a democratic polity.
  • The three pillars include economic incentives through free markets, fiscal responsibility, and a liberal moral-cultural system, which encourages pluralism.
  • This economic system supports a capitalist, free-market economy subject to control by a democratic political system that is supported by the majority.

• The Disadvantages of Mixed Economies

  • They argue that this has made social democrats similar to center-left, but pro-capitalist groups, such as the U.S.
  • Social democratic programs intended to ameliorate capitalism, such as unemployment benefits or taxation on profits and the wealthy, create contradictions of their own through limiting the efficiency of the capitalist system by reducing incentives for capitalists to invest in production.
  • In contrast to social democracy, democratic socialists advocate a post-capitalist economic system based either on market socialism combined with workers self-management, or on some form of participatory-economic planning.
  • Social democracy can also be contrasted with market socialism.
  • Market socialists criticize social democracy for maintaining a property-owning capitalist class, which has an active interest in reversing social democratic policies and a disproportionate amount of power over society to influence governmental policy as a class.

• Differences Between Centrally Planned and Market Economies

  • The key difference between centrally planned and market economies is the degree of individual autonomy.
  • A pure market economy, or capitalist system, is one perfectly free from external control.
  • Although they avoid many of the inadequacies of planned economies, market economies are not free of their own problems and downfalls.
  • Despite these and other problems, market economies come with many advantages, chief among which is speed.
  • Because they do not need to wait for word from the government before changing their output, companies under market economies can quickly keep up with fluctuations in the economy, tending to be more efficient than regulated markets.

• The Function and Nature of Markets

  • A free market is a market structure that is not controlled by a designated authority.
  • Free markets may have different structures: perfect competition, oligopolies, monopolistic competition, and monopolies are all types of markets that may exist in a capitalist economy.
  • Consider the market for computers.
  • When markets are perfectly competitive, the equilibrium outcome of trade in the market is economically efficient.
  • The market equilibrium exists where the market demand curve and the market supply curve intersect.

• Capitalism

  • Capitalism is a system that includes private ownership of the means of production, creation of goods for profit, competitive markets, etc.
  • An example of the state's involvement in capitalist economies is the development of minimum wage laws.
  • Economists usually focus on the degree that government does not have control over markets (laissez-faire economics), and on property rights.
  • The differing extents to which different markets are free, as well as the rules defining private property, are a matter of politics and policy, and many states have what are termed mixed economies.
  • The relationship between the state, its formal mechanisms, and capitalist societies has been debated in many fields of social and political theory, with active discussion since the 19th century.

• IPOs

  • Initial public offerings are a primary and potentially lucrative means of exit from investment for venture capitalists.
  • For a recent example of a weak IPO market, we can look to online companies like Facebook and Zynga.
  • An initial public offering (IPO), also known as a stock market launch, is the first time a private company's shares are sold to the general public on a securities exchange.
  • Prior to agreeing to provide capital, venture capitalists contract for privileges including "registration rights", which ensure their ability to sell shares into the public capital markets, thereby safeguarding their future returns.
  • The registration rights agreement between the company and the venture capitalists requires the company to register the offering of shares by venture capitalists under certain conditions.

• Capitalism

  • The origins of modern markets can be traced back to the Roman Empire and the Islamic Golden Age and Muslim Agricultural Revolution where the first market economy and earliest forms of merchant capitalism took root between the 8th–12th centuries.
  • As labourers, individuals may decide which jobs to prepare for and in which markets to look for work.
  • Competition is important in capitalist economies because it leads to innovation and more reasonable prices as firms that charge lower prices or improve the quality of their product can take buyers away from competitors (i.e., increase market share.
  • A monopoly occurs when a firm supplies the total output in the market.
  • This results in a market equilibrium, with a given quantity (Q) sold of the product.

• Work and Alienation

  • Alienation in capitalist societies occurs because the worker can only express this fundamentally social aspect of individuality through a production system that is not collectively owned, but privately owned.
  • The product's design and the manner in which it is produced are determined not by its actual producers, nor even by those who consume products, but rather by the capitalist class.
  • This capitalist class appropriates labor, including that of designers and engineers, and seeks to shape the tastes of consumers in order to maximize profit.
  • The fourth is the alienation of the worker from other workers, in which the capitalist system reduces the act of work to a simple economic practice, rather than recognizing the social elements of the act of production.
  • A capitalist system sees the labor of the worker to a commercial commodity that can be traded in the competitive labor-market.

• Venture Capital

  • Return is earned when the venture capitalist sells its shareholdings.
  • It is also in the venture capitalist's interest to nurture the companies in which they invest.
  • Most venture capitalists will also require significant detail about a company's business plan.
  • Start-up: VC firms provide capital to early stage firms that need funding for marketing and product development.
  • Market research for the idea is conducted, and the VC firm also monitors product feasibility and capability of the management.