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9 Examples of Capitalism

Capitalism is an economic system based on private property rights, competitive markets and the profit motive. This an overwhelmingly common system whereby all nations are fundamentally capitalist with a handful of exceptions, such as North Korea, that represent a tiny fraction of global economic production. The following are examples of capitalism.

Overwhelming Dominance

Any nation that produces most of its GDP with the profit motive and competitive markets can be viewed as capitalist. In this context, most nations, including former communist and socialist states such as China and Vietnam, are capitalist. There are degrees of capitalism as some industries are still nationalized in some nations. However, capitalism produces most global GDP and is the defacto economic system of most nations.

Private Property

Capitalism is based on property rights whereby if you build something, you can own it, sell it, use it and so forth. Under capitalism, the government doesn't own and control industries but rather lets them emerge with the ambition and needs of the people.

Profit Motive

Capitalism produces significant productivity, growth and innovation as property rights allow people to profit from value creation. This is known as the profit motive and doesn't exist in a system of forced sameness whereby outcomes are guaranteed to be the same regardless of contribution or results.

Competitive Markets

A market is a system where agents freely compete to close translations. For example, a market for goods or a market for labor. These generate competition that improves things. For example, a competitive labor market rewards those who acquire the talents, knowledge and skills needed by businesses.

Anti-competitive Practices

Pure capitalism, known as laissez-faire capitalism, is a system where governments don't interfere in the economy in any way. This doesn't exist at any scale and probably can't exist at any scale because without government regulations and enforcement, a monopoly would quickly emerge that would resemble a communist government in that it would eventually control all capital. As such, capitalism can only exist where governments prevent anti-competitive practices that would eventually destroy competitive markets.

Economic Bads

Economic bads is the production of negative things such as pollution and oppression. In addition to regulating anti-competitive practices, governments play a role in preventing firms and individuals from hurting people and planet in pursuit of the profit motive. Where this is deficient, an economy can create negatives in an unconstrained fashion that would be likely to reduce quality of life and create very large risks.

Social Classes

Capitalism is based on keeping the value that you can capture or create. Without this, the profit motive doesn't exist and it's not capitalism. As such, capitalism inherently leads to social classes such as the upper class, middle class and working class. Governments in developed nations commonly use taxation and limited income redistribution to reduce or prevent poverty.

Social Market Economy

Currently, all developed nations are some variant of a social market economy whereby capitalism is the primary economic system that generates income and wealth but taxation is used to provide some level of redistribution of income, often in the form of free public services such as education. Social market economies should not be confused with socialism as they are capitalist systems that simply use taxation to provide government services and entitlements. Socialism on the other hand, implies that a nation attempts to own and control all or most industries.

Capitalist Realism

Capitalism has produced much progress and value. For example, global life expectancy at birth was around 31 years in 1900 and was 72.81 in 2021. Remarkably, the countries with the lowest life expectancy now are higher than the nations with the highest life expectancy in 1900. The progress produced by capitalism and near complete adoption of capitalism by nations has led to a smug overconfidence known as capitalist realism whereby people feel there is no alternative to capitalism. This creates complacency whereby incumbents do not fear alternative economic systems despite capitalist excesses such as pollution, upper class tax evasion, poor working conditions and environmental injustice.
Overview: Capitalism Examples
An economic system based on private property rights, competitive markets and the profit motive.
Common Variants
Related Concepts
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