Capitalism and Bangladesh

Capitalism
Capitalism is an economic system where the means of production are owned by private
individuals. "Means of production" refers to resources including money and other forms of
capital. Under a capitalist economy, the economy runs through individuals who own and operate
private companies. Decisions over the use of resources are made by the individual or individuals
who own the company.
Under capitalism, companies live by the motivation for profit. They exist to make money. All
companies have owners and managers. In small businesses, the owners and managers are
generally the same people, but as the business gets larger, the owners may hire managers who
may or may not have any ownership stake in the firm. In this case, the managers are called the
owner's agents.
The job of the management is more complex than just making a profit. In a capitalist society, the
goal of the corporation is maximizing shareholder wealth.
Capitalism is an economic and political system in which a country's trade and industry are
controlled by private owners for profit, rather than by the state. In a capitalist market economy,
decision-making and investment is determined by the owners of the factors of production in
financial and capital markets, and prices and the distribution of goods are mainly determined by
competition in the market.
Under this system, the government does not intervene in the management of economic affairs.
The capitalist enterprises carry out production activities, wherein the private owners freely
operate their business, as per their will, such as:
▪ Where and how much to invest

▪ What, how and how much to produce
▪ At what prices, goods and services are offered for sale.
Capitalism is the oldest social system, which is still prevalent in many countries of the world like
United States, Australia, Canada, Mexico, Italy, France and many more. It is also known as
a free-market economy or laissez-faire economy.
According to G.D.H. Cole “Capitalism is a system of production for profit under which
Instruments and materials of production are privately owned, the work is done mainly by hired
labor, the product belonging to the capitalist owner or owners”.
Characteristics of Capitalism
1. Profit Motive: In capitalism, profit motive induces individual owners to work and produce.
2. Private property right: The capital goods like land, factories, machinery, etc. are under private
ownership, and the owners have the right to employ them, in the manner they like. However, for
the mutual benefit of the society government, can put some restrictions.
3. Consumer sovereignty: In this system, consumers are free to make a choice as to how they want
to spend their income. Only those goods are produced by the producers, which are demanded by
the consumers.
4. Freedom of enterprise: Every individual is free to choose and involved in the economic activity
he/she thinks fit.
5. Competition: Competition exists among various sellers to sell products and services to
customers and among buyers to get the goods, so as to satisfy their want.
6. Income inequality: In capitalism, a wide disparity of income between haves and have-nots is
observed, which is caused by the unequal property distribution.
In capitalism, no central planning authority exists to solve the central economic problems, i.e.
what, how, when and for whom to produce. In such a situation, it is quite difficult to identify, as
to what are the forces that cause the economy to function smoothly.
Suppose, if consumers demand washing machines and producers want to produce computers, and
workers choose to make cars, then a situation of disorder and disorientation may occur.
But to overcome such a problem, a capitalist economy resorts to market demand and supply
forces and price mechanism (also known as a market mechanism) to solve the central economic
problems.
1. Profit Motive: The motive for all companies is to make and sell goods and services only
for profits. Companies do not exist solely to satisfy people's needs. Even though some
goods or services may satisfy needs, they will only be available if people have the
resources to pay for them.
2. Market competition: True capitalism needs a competitive market. Without competition,
monopolies exist, and instead of the market setting the prices, the seller is the price setter,
which is against the conditions of capitalism. So, in capitalist economy market
competition always exists.
3. Freedom of Occupation: In a capitalist economy, a person is free to select any
occupation. This freedom of choice enables the individuals to enter the field in which
they have knowledge and purchase the property, which yields maximum profit. This type
of freedom enables the businessmen to earn profit from their business. More resources
flow into those areas where yield is more.
4. Willingness to change: The capitalism is the ability to adapt and change. Technology
has been a game changer in every society and the willingness to allow change and
adaptability of societies to improve inefficiencies within economic structures is a true
characteristic
5. Free Enterprise Economy: Capitalism is also called as free enterprise economy. This is
because under capitalist system, individuals and private firms have the right to own and use
property. They have the right to earn, save and spend incomes also. They are allowed to obtain
resources, to organize production and to sell the products in any manner they like and to anyone.
6. Private Ownership: Under capitalist economy, the factors of production like labor, land,
capital and organization are privately owned. Private property is protected, controlled and
enforced by law. Individuals have the right to own property and also free to use it as they like.
7. Market Mechanism: The market mechanism is the most important characteristic feature of
capitalist economy. It is also called as price mechanism. Under capitalist economy, profit, which
is related with market mechanism, guides the allocation of resources. Under this system the
whole economic system moves in and around the market mechanism.
8. Consumers’ Freedom of Choice: Under capitalist economy consumers have complete

freedom to choose what to purchase. Consumer is the king of the market under capitalism.
Manufacturers consider consumers’ demand, taste, preference etc. while producing goods.
Is Bangladesh a Capitalistic or a Socialistic economy?

Bangladesh follows a mixed economic system like most other countries. It practices elements of
both capitalistic market economy and centrally planned economy. Having a mix of private and
public enterprise allows the economy to grow by encouraging individual Businesses and
multinational companies also make sure the underprivileged class gets access to basic amenities
like education, healthcare. Production of Merit goods and goods used for collective consumption
of general public are better handled when under public sector.
The economic system of Bangladesh is a mixed economy. A mixed economy is a combination

of market and command economy. Some advantages of a mixed economy are that it promotes a
quick economic development, another advantage is that it provides the freedom to own a private
property.

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Capitalism

▪ Where and how much to invest

8. Consumers’ Freedom of Choice: Under capitalist economy consumers have complete

Is Bangladesh a Capitalistic or a Socialistic economy?

The economic system of Bangladesh is a mixed economy. A mixed economy is a combination

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