Question

Capitalism is a mode of production that generates its own crises. Using the redefinition of the ECONOMY as we redefined it (i.e. the birthday cake), explain which types of crises are endemic to capitalism. How do we prevent/overcome these crises? Is it possible to prevent them without transforming the system/ without reducing or eliminating growth ?

Answer 1

Some of the crisis endemic to capitalism are inequality, pollution, excessive use or waste of resources, lack of social welfare etc. Capitalism creates hugh inequalities in terms of wealth distribution. The rich get richer and the poor gets poorer. Since there are no rules and regulations implementation, the capitalists use the resources as they desire and they may not always be used efficiently. There are no rules against firms causing pollution.

These crisis can be overcome by government intervention. The government should make policies in favour of social welfare.

However, it is not possible to prevent them without reducing economic growth. The economic growth is rapid without government intervention. When government starts implementing policies in favour of social welfare, firms make less profit.