The Ideal System of Capitalism

The ideal system of capitalism answers all questions pertaining to the economy and politics. Factors of production are fundamental supplies that are utilized to create goods and services. Land, labor, and capital are factors of production. An entrepreneur gathers all these factors and combines them to create goods and/or services. A free enterprise system, which could also be referred to as capitalism, is an economic structure that pertains to private or corporate ownership of capital goods and investments that are set by private choice rather than the government. In order for a free enterprise system to take place, four factors are included: private ownership, individual initiative, profit, and competition.

Individuals and privately owned companies possess the majority of the means of manufacture. The resources used to produce goods and services are privately owned. The resources that are produced are also privately owned by the individual or company. In this type of system, workers have choice about what sorts of work they will do and the opportunity to change jobs. Individual initiative allows individuals have the liberty to start and operate their own businesses. In a free enterprise system, citizens control the production and distribution of goods and service. Citizens are also allowed to gain from their own investments or undertaking. Since individuals control the production of goods and services, multiple individuals and companies will offer the same goods and services. In order to receive more profit and to blow the competition out of the water, companies need to maintain higher quality at a lower price.

Adam Smith believed in the laissez-faire theory. The laissez-faire theory states that the government should have a ...

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...ow to use their money, where capitalism, that is the whole point. Under capitalism wealth and power exists, where socialism every person is equal. A faultless mix between the two would be ideal.

In the United States, we focus more on the capitalism fence, but there may be times where the government intervenes. The government might intervene for a number of reasons: to amend market failure, to attain a more equitable division of income and wealth, and to reform the efficiency of the economy. In 2009, President Obama intervened. General Motors and Chrysler were two major carmakers that were deteriorating. Obama intervened in these privately owned companies to correct failure. The government granted the two carmakers emergency loans so their businesses could remain operating. We are considered a capitalistic society, but in some cases our socialism is demonstrated.