Capitalism: Features, Benefits, and the U.S. Economy

The Capitalist System

Capitalism, also known as a free market economic system, is dominant in today's world. This system has four main features:

• Private Ownership: The private ownership of the means of production, including land, machinery, technology, and businesses.
• Profit Motive: The pursuit of profit as the primary engine of economic activity.
• Supply and Demand: The regulation of the quantity of products made by companies and their price is determined by the law of supply and demand. Under this law, the production and the price of an item increase when the product supply is low, and decrease when there are plenty of products to meet consumer demand.
• Free Competition: The existence of free competition means that any individual or company can perform the activity they want, provided it complies with the current law.

In the past, in capitalist countries, the state intervened little in the economy and was limited to ensuring respect for private property and compliance with the law. However, at present, states participate to address some important problems that occur if left entirely free to the companies, such as trying to prevent the formation of monopolies, protect the rights of workers and consumers, and seek a harmonious economic development without major imbalances.

The United States Economy

The value of U.S. production far exceeds that of any other country; its production is just over 20% of the world's total. Several factors contribute to this:

• Many large firms are world leaders.
• Entrepreneurship is positively valued.
• High investments in research put the U.S. at the forefront of scientific and technological progress, which results positively on productivity and competitiveness of enterprises.
• A quality university education enables the U.S. to have a highly qualified workforce.
• The U.S. has a wealth of natural resources and energy.
• Its economy is very flexible and capable of adapting to changes.
• The U.S. captures significant foreign investments.

As a result of their economic power, the dollar is the most important currency in the world. The population enjoys one of the highest per capita incomes, so consumption is very high. This high consumption drives growth in domestic production and also in the countries from which most of the products they consume originate. So, what happens in the U.S. economy is important for the entire world.