DEMERITS OF CAPITALISM

 Demerits of Capitalism

1. There is vast economicinequalityandsocialinjustice undercapitalism. Inequalities reduce the aggregate economic welfare of the society as a whole and split the society into two classes namely the‘haves’ and the ‘have-nots’, sowing the seeds of social unrest and class conflict.

2. Under capitalism, there is precedence of property rights over human rights.

3. Economic inequalities lead to wide diuerences in economic opportunities and perpetuate unfairness in the society.

4. The capitalist system ignores human welfare because, under a capitalist set up, the aim is profit and not the welfare of the people.

5. Due to income inequality, the pattern of demand does not represent the real needs of the society.

6. Exploitation of labour is common under capitalism. Very often this leads to strikes and lock outs. Moreover, there is no security of employment. This makes workers more vulnerable.

7. Consumer sovereignty is a myth as consumers often become victims of exploitation. Excessive competition and profit motive work against consumer welfare.

8. There is misallocation of resources as resources will move into the production of luxury goods. Less wage goods will be produced on account of their lower profitability.

9. Less of merit goods like education and health care will be produced. On the other hand, a number of goods and services which are positively harmful to the society will be produced as they are more profitable.

10. Due to unplanned production, economic instability in terms of over production, economic depression, unemployment etc., is very common under capitalism. These result in a lot of human misery.

11. There is enormous waste of productive resources as firms spend huge amounts of money on advertisement and sales promotion activities.

12. Capitalism leads to the formation of monopolies as large firms may be able to drive out small ones by fair or foul means.

13. Excessive materialism as well as conspicuous and unethical consumption lead to environmental degradation.