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1. Principles of Economics

What are the supportive arguments you will raise favouring capitalist economy?

Society would only benefit, , if there were no monopolies so that competition could operate unrestricted. So, for instance, if one baker in your neighborhood decided to charge ten dollars for a loaf of bread, he would not get away with it as long as there were another baker willing to sell his bread for a more reasonable price. You, acting in your own self interest would go to the cheaper baker (competition). If however, one person owned all of the bakeries in your neighborhood (monopoly) and he raised the price, you would have no choice and would have to pay or go without bread.

-This tendency for competition to keep the prices of products in line with the needs of consumers Adam Smith called the "invisible hand." The invisible hand of the market, said Adam Smith, will allow the self interest, of each individual to provide for the overall interest of society.

-Adam Smith also described the idea of division of labor. Efficiency is important in a capitalist economy and Adam Smith observed one day in a pin factory that pins could be produced more efficiently if "one man draws out the wire, another straights it, a third cuts it, a fourth points it . . ." and so on. More pins could be produced this way than if one person made the whole pin each time. This was the birth of the modern day industry

-Many theorists and policymakers in predominantly capitalist nations have emphasized capitalism's ability to promote economic growth, as measured by Gross Domestic Product (GDP), capacity utilization or standard of living.

-This argument was central, for example, to Adam Smith's advocacy of letting a free market control production and price, and allocate resources.

- Many theorists have noted that this increase in global GDP over time coincides with the emergence of the modern world capitalist system.[ While the measurements are not identical,...