Please explain capitalism to a layman ?

18 Answers

  • A.J.
    Lv 7
    1 month ago
    Favourite answer

    I will teach, and you try to learn what you can understand of this. Economic systems on a large scale are not a simple concept. This is why people get cheated in life, because they are not willing to understand things. 

    Capitalism is a system of economics where individuals or a group of individuals have a goal of wealth and the power it holds. It is a system of competing for money and almost everything can be related to it. It is on the opposite end of the spectrum to socialism, where goals are society growth and individuals contribute to the whole so that all may rise together. In the current real world, no society is one or the other, and instead has elements of both. 

    In the capitalist world, people own businesses and may also create a company or corporate entity. In a socialist world, that business is owned by the government or employees. It can be understood better on smaller scales. To understand capitalism, you need to understand its opposite. 

    A cooperative, Israeli Kibbutz, or in the USA for example Publix Supermarkets, are owned by the people working there. The managing people are selected by the general workers. The people can choose different managers because managers don't own the business. This is socialism on a small scale. Workers seek to grow the business as a whole such that everyone gets the rewards.

    In banking it is a credit union, owned by the depositor members.


    Capitalism is a person renting a retail space investing their money and time to sell goods and/or services to customers. The owner can run it himself(or herself) and choose to hire people and fire them as they wish. That person is doing it to make a monetary profit. They could have a goal to own several of these stores and hire managers and collect profits.

    In socialism, people contribute to their capability and get taken care of to their needs. In capitalism, each individual trades their time to earn money or profit.

    In capitalism, you go to a doctor and pay for all services and materials and overhead and profits. In socialism, you go to a doctor and get medical care to your needs. The entire environment is owned by a government of the people. 

    Each system fails in its pure state for different reasons.

    Socialism fails because people are greedy and lazy more than altruistic. They want monetary rewards for being innovative and for working harder. There are problems that develop in quality, matching supplies and demands, inventiveness, risk-taking, coordinating schedules between different groups, corruption at the top because somebody still has to run things. 

    In capitalism it is about supply and demand and value of things based on that. It is a need to contribute or die. Rewards to the best performers. The failure is that the system becomes owned by a wealthy elite. Skew of wealth making masses unhappy. The owner may be absent completely sitting on a beach drinking Pina Coladas collecting the work of people struggling. Even if managing direction, why should they earn 300 or 400 times more than a person working the same number of hours putting in equal labor? The wealthy get more and more power and corrupt all systems. Mergers and acquisitions reduce competition and create barriers to entry. Bigger and bigger corporations and businesses result which can crush anyone trying to compete. 

    Instead, every society is a mix until getting too far to one end or the other. The core root problem above all else in the USA now is the runaway capitalism and skew of wealth. Only some people see it. 40% are struggling to survive, 20% are doing OK, 30% are improving slowly. 10% are in charge and doing fabulously. The very top of that 10% is the Forbes 400 with $3 trillion dollars in net worth ownership. Even if talking married couples or families, even if 1200 people in the 400 listed, that is 0.00036% of the USA with more wealth than the entire goods and services of India for a year of the 1.4 billion people.   (P.S. Add, if India does not relate, they own more than the UK GDP also. That is all people working in the UK for total of goods and services for a year, these 400 can pay it all)


  • arther
    Lv 5
    4 weeks ago

    exploit lie if your rich enough you can do as you please our system is corrupt as

    Joe Biden is a classic example of a filthy old sell out. Think 60 years of compound interest is how deep the corruption goes.

  • James
    Lv 5
    1 month ago

    Marxists believe people can be organized to work together like parts of an engine . The problem is people like to make engines , not be parts in them . Man loves and deserves the unalienable right of freedom . Capitalism takes into consideration man's human nature and natural desire to be free . Civilization enjoys the productivity from the freedom of those who have dreams and ideas and bring them into reality . Someone in an open field will always outrun someone in a cage . That's why the Communists have to steal our technology because they cannot keep up with the productivity of men and woman in a free country

  • garry
    Lv 5
    1 month ago

    its easy you need capitalism to pay you bills , and also to hate communism ..

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  • Anonymous
    1 month ago

    A "good" capitalist will push their product to what the market will bear instead of charging a fair price relative to cost. After all, the customer is just a nameless number to capitalize on. A good capitalist company considers wages an obstructive hurdle that tries to interfere w/ maximizing profit. Capitalism is among the leading sources of corruption. It needs limitations. 

  • Anonymous
    1 month ago

    You choose what to do with your money (capital) instead of the government

  • Anonymous
    1 month ago

    It’s a system which allows people who do very little work to become much wealthier than those who kill themselves working

  • F
    Lv 6
    1 month ago

    People make things or perform services  and sell them at a profit. Some people get extremely rich and some are extremely poor, but the vast majority make a reasonable living.

    Contrast that with communism or socialism. , where everything is done for the common good, in theory a much better system. 

    In practice a few still get extremely rich and some are  still extremely poor but the vast majority’s are also poor.

    In summary, contrary to theory , most people are far better off in a capitalist society.

  • 1 month ago

    It is the acknowledgment of the role that savings and wealth play in generating more savings and wealth.

    We have corporations now, joint ventures of risk for invested funds. That was not always the case. 

    If you wanted to do something you had to totally fund it and totallly take the loss if that happened.

  • 1 month ago

    A simple definition of capitalism is an economic system in which all or most of the means of production are privately owned and operated, and the investment of capital and the production, distribution and prices of commodities (goods and services) are determined mainly in a free market, rather than by the state.  The means of production are generally operated for profit.

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