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Profit Promotes Competition To be successful, companies must provide a product or service that is a better value than their rival’s. The result is a greater selection of products, prices, and services for the consumer. Looking for a new refrigerator? Walk into any appliance store and you’ll have your choice of dozens. How about a new TV? It’s hard to decide which to buy, given so many excellent choices. Competition inspires better medical services and products, and more responsive customer services. When companies compete to produce the best product or provide the best service, the consumer and the economy win. Profit Promotes a Qualified Workforce Capitalism inspires competition in the workplace too. For example, people have to compete for jobs . That improves the quality of the workforce since to get or remain qualified and competitive for a job, workers to must constantly improve their knowledge, skills, and qualifications. Likewise, employers must compete for the best employees . To attract qualified employees they must offer competitive salaries, benefits, and work environments, which improve the quality of employees’ lives. Profit Promotes Efficiency Profits are boosted not just by sales, but by cost savings . That means capitalists constantly refine and streamline their means of production and operation to ensure efficiency, and lower production and distribution costs . The less spent on developing a product or service and getting it into the hands of the consumer, the better the profit. Capitalism’s Critics Under communism and socialism, economies and governments are intertwined. Under communism in particular, the state (government) can pretty much tell people what their job will be and how to do it. That hardly inspires competition, efficiency, innovation, or the desire to improve one’s skills and education. Moreover, it’s ripe for corruption and bribery because key and well-paying positions are often rewarded based on cronyism , which is the appointment of family members, a friend, or associate to a position without consideration of their qualifications. There are plenty of poopers at the capitalism party too. Critics of capitalism find fault in its persistent focus on profit and consumption and its link to social and economic inequality . After all, the success of capitalism depends on consumers’ constant purchase of goods and services. Capitalism loves a crowded mall on a Saturday afternoon, adores crass and meaningless consumption, and inspires the accumulation of debt. Capitalism also has a long history of exploiting workers and polluting the environment for profit. As you learned in the last lesson, capitalism has produced a great deal of inequality in wealth . Moreover, as with any other system, capitalism has its share of fraud, corruption, and abuse . In fact, in the Great Recession of 2007-2009, the world narrowly averted a total global economic meltdown brought on by the greed and stupidity of some powerful capitalists. The details are beyond the scope of this course, but this event highlighted the importance of balancing capitalism with some measure of government oversight and regulation . The debate over appropriate levels of government regulation in a free market economy is frequently PRODUCT PREVIEW
Lesson 7 | Commerce Capitalism 116
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