Ethics Finder

Capitalism / Markets

Any community of any size and complexity will develop a system of exchange of goods and services. A basic form of this is barter – direct exchange – but in a complex community with a broad range of skills and products, and increasingly as it trades with other communities, there will develop a medium of exchange that is not itself a good or a service but a token redeemable in the purchase of these. The most familiar and widespread form of this is money. The value of this is its purchasing power which provides motivation for its acquisition for investment in resources and for the acquisition of these. Additionally, there developed the practices of buying and selling money (currency exchange) and hiring it at interest (lending and borrowing). While money is the primary form of capital, other capital assets include various material and tradeable resources such as land, investments, manpower and skills. Business and the modern system of economics derives from these basic facts. The terms ‘Capitalism’ and ‘Free Market Capitalism’ are generally used to refer to an economic system in which assets, manufacturing, services, and trade are owned and controlled privately and utilised for profit. This is in contrast to a system in which economic resources are privately held but in which their use is controlled by the state as part of a planned economy, also using credit and fiscal measures as part of a planned economy. Critics of capitalism and free markets argue that they exploit the disadvantaged, create and intensify inequalities, are indifferent to moral and social considerations, encourage greed, etc. Defenders argue that property is important for the development of responsibility, that markets efficiently distribute resources according to demand, and that private ownership and free markets are important bulwarks of liberty.

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