The Economic Success of Capitalism

Subject: Economics
Pages: 2
Words: 306
Reading time:
< 1 min

It is true that economic success is brought about by capitalism. Schumpeter explains that capitalism is not in motion rather it is fixed. This theory does not have the accumulation of capital rather the money is in a continuous circular flow. Capitalists have the least profit and they normally receive constant wages.

The employees may get an increase in their remuneration according to the success of the economy. He argues that business people are risk-takers. This is what qualifies them to be entrepreneurs. These are the people who do not work for either richness or titles but for dynasty. They have a passion for business and they are willing to sacrifice everything for the prosperity of their business. These people are normally talented and they have leadership skills.

Capitalism instills this spirit of entrepreneurship in the population of a nation and therefore the economic status will rise. This is almost every individual will be earning an income which will collectively lead to a high national income. The theory of economic development explains the business cycle. It argues that the investments of a certain nation will shorten the period of the economic boom of a country. When there is high competition in the markets the prices seem to be lowered.

Prices go down because there are many substitutes of the products which could be offered at a lower price. This will then lead to a reduction in the profits earned. The entrepreneur does not enjoy the profits but the owner of the business. This theory is contradicting the Keynesian theory, in that it lacks the sense of accumulating savings. This, therefore, brings economic success to the country and not a sociological success since the profits are not directly enjoyed by the entrepreneurs.