Capitalism

1
Capitalism
2
Elements of Capitalism

• Private property rights
• Private ownership of the factors of production
• Market system
• Price mechanism
• Freedom of enterprise
• Incentives profit motives
• Competition
• Limited government (laissez-faire policy)

3
Strength and Weakness of Capitalism

• Strength
• Incentives ?Efficiency
• Innovations
• Weakness
• Income inequality
• poverty

4
Income Inequality

• How to measure
• Lorenz curve
• Gini coefficient
• Quintile income share
• Quintile ratio
• International comparison
• Global income data
• Global income distribution

5
Modifications of Pure Capitalism

• Decline of laissez-faire and increasing
  government involvement
• New deal policy during the Great Depression of
  the 30s
• Monopoly and regulation
• Antitrust laws (preventive measures)
• Social regulation(pollution, sin taxes)
• Social safety net (social security and welfare)

6
Capitalist Systems

• Individualistic capitalism (U.S.)
• Social market capitalism (western Europe)
• State-directed capitalism (Japan and East Asian
  countries)