Merits and Demerits of Capitalism

Merits of Capitalism:

(i) There is an improvement in the quality of goods and services produced.

(ii) It promotes fast diverse economic development.

(iii) It leads to specialization which enhances efficiency.

(iv) It encourages private ownership of property.

(v) It encourages consumer sovereigntyConsumer sovereignty is an economic concept where consumers decide what goods and services they want to buy, and businesses must produce those goods and services in order to make a profit. More.

(vi) It encourages inventions, innovations, the use of talents, and hard work.

(vii) It encourages healthy rivalry which helps to bring out the best among producers.

(viii) There is more than one political party so the electorateall the people in a country or area who are entitled to vote in an election. More has alternatives.

Demerits of Capitalism:

(i) It may lead to unequal distribution of wealth and income which leads to a classed societyThe term society is derived from the Latin word 'socius' meaning friendship or companionship. Society is a community, nation or group of people who share the same traditions, institutions, rules and... More.

(ii) It encourages the exploitationTo use someone or something unfairly for your own advantage. More of the poor by the rich.

(iii) It may lead to conflict between the workers and employers.

(iv) It may also lead to unhealthy rivalry.

(v) It may threaten the sovereigntySovereignty is a political concept that refers to dominant power or supreme authority. In a monarchy, supreme power resides in the "sovereign", or king. In modern democracies, sovereign power rests with... More of the state.

(vi) It may not consider the public interest because of a profit motive. It is too individualistic.

(vii) It can also lead to job insecurity.