Relation between capitalism and inequality

Relation between capitalism
and inequality

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY ..................................................................................................................................3
Relation between capitalism and inequality................................................................................3
CONCLUSION ...............................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Capitalism refers to an economic system which is based on private ownership, controls
nation's trade and industry for profit. Inequality is defined as the disparities in the dispersion of a
definite metric, that can be health, income or any other material asset (Botwinick, 2018). This
report is based on the topic “relation between capitalism and inequality” in which the causes of
inequality in society due to capitalism are defined. This project covers concept of capitalism and
inequality along with their relationship and influence on society. Apart from this, political
economy perspective and interactions between state activity and underlying economy are
discussed in the report.
MAIN BODY
Relation between capitalism and inequality
Inequality is referred as the unequal distribution of material goods, income and wealth. It
is the availability of unequal rewards and opportunities for distinct social statuses or positions
within a society or group. This results in deviations in individual endowments. Capitalism is
defined as the economic and political system in which the investment, industry, trade and
production of a country are controlled by for profit corporations and private individuals, instead
of a state. In 19th and 20th centuries, the growth and emergence of capitalism has led it to be the
dominant economic system globally. In all the competing systems like communism and
socialism, capitalism has outperformed (Braithwaite, 2013).
The shift towards capitalism at global level because of its economic freedom, potential
for high profits, reduced role of state and equality of opportunity has led to big problem of
increasing economic inequality because of ability of some groups and individuals to exploit and
get advantage or benefit of what capitalism enables them to. When most of the product
distribution occurs by markets in which for-profit companies and people trade goods, services
and contracts in order to generate profit, makes the society capitalist. Capital circulation into
new investments is allowed by markets, as invested capital is combined with power of labour to
develop products and services which are sold to earn profits that administers much capital for
further business enterprise. A cycle of increasing profit amounts is created through investors by
constantly doing this (Carvalho and Rezai, 2015). This depicts the way capital ownership in
capitalist society creates inequality to the degree as it develops further accretion by investment.