Abstract
Capitalism is said to be an economic system that is based upon the profit maximization goal. It is both an economic and social system in which individuals can maximize profits because they own the means of production. In the Marxist analysis, profits are tenable by the exploitation of the workers who offer labor (Esping-Andersen 1990). Thus capitalism exists all over the world where the factors of production and distribution of goods and services such as technology, land, capital, factories, and transport are owned by a few people, that is, the capitalist class while the working class is paid to produce goods and services which are later sold at a profit. This profit is the difference between what is produced and the cost of labor, that is, the working class is exploited by the capitalist class.
Individualism
In individualism, an individual is a primary unit of reality and the ultimate standard of value, which does not object that the society co-exists and that people benefit in the co-existence, but projects the idea that society is a collection of individuals, not something over and above them. (Robinson). The relationship between capitalism, freedom, and individualism of the 17th century was contingent.The emergence of the corporate structures in late capitalism declined the earlier dominance of possessive individualism. This has largely been attributed to the regulation of modern societies by the state (individuation), the localization of the life-worlds, and the crisis of the subject in the post–modernist culture of intellectuals. The emergence of new capitalist centers like Japan which appear to be developing without individualistic values and institutions depending on the collectivist norms and authoritarian forms of management and organization means that the relationship between capitalism and individualism is contingent and variable.
Freedom and liberty can only exist in the capitalist system. This is because any person is free to choose when force is not being directed against him. Any person’s freedom can only be infringed when another person uses physical force against him. If an individual cannot start his own company is a violation of his freedom. Freedom is said to be one whole and anything that reduces the freedom of an individual affects the freedom of the rest.
Economic freedom is one of the ways of attaining political freedom. This arises because the kind of competitive capitalism which provides economic freedom directly also promotes political freedom because it differentiates between political power and economic power (Turner 1988). Thus it can be concluded that no true freedom and liberties can be achieved without the rewards from a capitalist socio-economic structure. And again capitalists cannot survive in a society where personal freedom and liberties are oppressed, thus if capitalist practices are against freedom eventually the socioeconomic system will give way to communist tendencies. Capitalism cannot survive without freedom! (Turner 1988).
Competitive markets
The competitive markets without stable and credible property rights are ineffective and the stable and credible property rights presuppose the rule of law. They eliminate the differences between private and social costs of using privately owned goods and protect individuals against redistributive policies. The government interference creates a gap between private and social costs of using privately owned goods and reduces incentives to accumulate wealth. The European Union is accelerating the erosion of private property rights, slowly turning member states into provinces, consolidating more and more power in Brussels, and bribing low tax states in central and Eastern Europe to raise taxes in exchange for subsidies. While Anglo-American capitalism might be moving in the direction of continental capitalism and social-democracy, the EU is taking continental capitalism in the direction of unadulterated socialism (.The roots of capitalism-private property, a pre-requisite for classical capitalism, Vienna, 16th to 18th October 2005). The means of production and the private property and economic system that allows for the management of wealth for organizations and individuals constitute capitalism. The means of production and distribution of wealth are in individual hands just like in Stone Age. The same system has evolved over a number of thousand years due to population changes, technology, trade, and communication. The ancient Americans rejected the British mercantilism which was the use of unjust powers to favor some members of the society and thus results in the monopolies protected by the state which eventually limits innovation and progress of the lower classes, that is, there exists class stratification. They rejected mercantilism by publishing the declaration of independence and Adams smith’s “the wealth of nations” which became a source of reference for the new economic model. Thus the foundation of capitalism is private property rights without security in property rights, the economy, and liberty are not feasible (Missouri Essay-private property, the core issue-online). The government should be instituted to protect the property of every sort as well as that which lies in the various rights of individuals. Thus they instituted a government that secured their properties and personal liberty.
Social responsibility
Social responsibility refers to a theory that an entity, that is, corporation, individual, government, or any organization has a social obligation (responsibility) to the society which can be positive (proactive stance), that is, the responsibility to act or negative (resistance stance), that is, responsibility to refrain from acting.
Adam Smith in his theory of invisible hand criticized monopolies, tariffs, and other state-enforced restrictions and believed that the market is the fairest distributor of resources. Classical liberal doctrine of minimum government intervention does not oppose government provision of public goods while economic liberalism favors markets unfettered by the government. Adam Smith said that the state has a role in the provision of public utilities such as schools, hospitals, roads, and canals that the private sector is unable to provide but proposed that such goods should be paid for in proportion to their consumption, for example, fines, taxes on pollution and environmental degradation and fees, and tolls hence the essence of social responsibility. Adam Smith also proposed for retaliatory tariffs to encourage free trade and patents and trademarks to encourage innovation.
I will defend the statement. This is because the capitalist is based on the premise of maximization of their profits. This is their ultimate goal. In pursuit of profit maximization goal, the entity is likely to engage in activities that are socially desirable such as the emission of industrial effluents, disregard to safety precautions of its employees and the society, environmental degradation through dumping of wastes, and so on. Without government interference, such activities would never cease. Thus there is a need for government to intervene and make the entities to be socially responsible through its fiscal policies such as taxation, fees, and fines, tariffs, and penalties. Thus capitalist has a duty to himself and the society to be socially responsible.
References
Bryan S. Turner (1988): Faculty of Social Science the State University of Utrecht: Individualism, Capitalism and the Dominant Culture: A Note on the Debate Journal of sociology, vol.24, no.1, 47-64.
Esping-Andersen, Gosta (1990): “The Three Worlds of Welfare Capitalism”, Cambridge Press.
Lane, J.E.; Ersson, S.O. (2002). Government and the Economy: A Global Perspective. Continuum International Publishing Group, 7–16.
Porritt, Jonathon (2005) “Capitalism; as if the world matters” Earth scans Publications Ltd.
William I. Robinson “A theory of global capitalism: production, class, and state in a t transnational world” (themes in Global Social Change).