Merits of Capitalist economy:
1. Capitalism is self regulating and works automatically through price mechanism. There is no need of incurring costs for collecting and processing of information and for formulating, implementing and monitoring policies.
2. The existence of private property and the driving force of profit motive result in greater eflciency and incentive to work.
3. The process of economic growth is likely to be faster under capitalism. This is because the investors try to invest in only those projects which are economically feasible.
4. Resources are used in activities in which they are most productive. This results in optimum allocation of the available productive resources of the economy.
5. There is usually high degree of operative eflciency under the capitalist system.
6. Cost of production is minimized as every producer tries to maximize his profit by employing methods of production which are cost-euective.
7. Capitalist system ouer incentives for eflcient economic decisions and their implementation.
8. Consumers are benefitted as competition forces producers to bring in a large variety of good quality products at reasonable prices. This, along with freedom of choice, ensures maximum satisfaction to consumers. This also results in higher standard of living.
9. Capitalism ouers incentives for innovation and technological progress. The country as a whole benefits through growth of business talents, development of research, etc.
10. Capitalism preserves fundamental rights such as right to freedom and right to private property. Therefore, the participants enjoy maximum amount of autonomy and freedom.
11. Capitalism rewards men of initiative and enterprise and punishes the imprudent and ineflcient.1. Capitalism usually functions in a democratic framework.
12.The capitalist set up encourages enterprise and risk taking and emergence of an entrepreneurial class willing to take risks.
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