Capitalism: Examining Features and Effects of Laissez-Faire

This essay provides an overview of capitalism, with a particular focus on Manchester capitalism, also known as laissez-faire capitalism. It defines capitalism as an economic and social system based on private ownership of the means of production and operation for business profit. The essay highlights key features such as competition, free markets, and self-reliance, which are underpinned by private property, wage labor, accumulation, price systems, and competitive international markets. It explores how decision-making and investment are determined by wealth owners and property, with the distribution of goods and processes controlled by market competition. The analysis extends to the varying degrees of free markets and public ownership in different types of capitalism, including free market capitalism, state capitalism, and welfare capitalism, and concludes by emphasizing the role of competition, self-reliance, and free trade in fostering high-quality products and market profitability within the laissez-faire framework.

Running head: CAPITALISM
CAPITALISM
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The aim of this paper is to discuss capitalism to be the economic and social system. It
is based on the private ownership in the means of production and the operations for the
business profit. Some of the main features of capitalism include, competition, free market and
self-reliance which are marked by private property, wage labor, accumulation, price system
and the competitive international markets. In the capitalist market economy, the decision
making process and investment have been determined by the owners of wealth and property
along with production abilities in the capital and financial markers although the distribution
of goods and process are controlled by the competition in the goods and services markets.
This paper will be discussing different features of capitalism especially focusing on the
Manchester capitalism or laissez-faire capitalism and its effect on the economy.
In order to understand the actual features of the capitalistic markets, the economists,
sociologists, historians and political economists have adopted various perspectives. In their
analysis of capitalism have predictable of different forms of the practice of capitalism. These
theories and perceptions include free market capitalism, state capitalism and welfare
capitalism (Berend, 2016). There different types of capitalism features in different degrees of
free markets and the public ownerships, difficulties to the free competition among the
business organization and the state sanctioned social policies. These different models of
capitalism has marked different types of intervention, regulation, scopes of the state
ownerships and most importantly, the degree of competition in the market (Krieger &
Meierrieks, 2016). To the extents of the markets being free and the rules properly defining
the private properties are the matters of the policies and politics. Most of the existing
capitalist countries have mixed economies that combine the elements of the free markets with
the state interventions as well as to some cases the economic planning.
Among all the types of capitalism present in the world, the Manchester capitalism or
laissez-faire capitalism has gained more popularity in the world. This particular theory

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directly creates restriction in the government intervention in the economy of the country
(Hicks, 2018). This type of economy is the strongest of all because the government protects
the rights of the individuals (Berend, 2016). Laissez-faire capitalism is the economic system
where the private entities own the factors of production. In this type of capitalism, the market
economy is required to be set in the prices as well as distribute the goods as well as services
(Krieger & Meierrieks, 2016). The businesses sell their production in a highest price to the
consumers. At the same time the sellers will be working for the lowest price for the goods
and services which will be reflective of their market value.
This provides an accurate image of the supply and demand at any given moment. The
market economy in laissez-faire capitalism framework requires private ownership of the
goods and services (Streeck, 2015). The owners are quite free to produce, sell and buy in the
competitive market. The force of the competition keeps the prices of the products and
services low. Along with this, the theory ensures that his society provides goods and services
effectively. As sooner the demand of the market increases, for that particular product, the
prices rise (Hicks, 2018). Competitors in the market thus see that they also can increase their
profit producing the product by adding to supply. This actually lowers the prices to such a
level where only the best competitors remain.
The features of laissez-faire capitalism is marked by competition present in the
market. Initially it was thought that the market where the government actually control the
means of production which is another example of mercantilism, there is no need for
competition but in the case of laissez-faire capitalism the scope for competition increases
(Berend, 2016). This type of capitalism has introduced the concept that the individuals or
business must compete against one another and their success must be determined by the
forces of demand and supply. Therefore, the consumers have the capability for deciding the
success of the business, based on if they buy the goods or service (Krieger & Meierrieks,

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2016). The theorists supporting the laissez-faire capitalism argue that the competition gives
benefit to the society in various ways. This in one hand mandates the companies to produce
high quality products or services in a lowered price (Schumpeter, 2017). Similarly, capitalism
is also supported in most of the developed countries as this mandates the competitors to focus
on the innovation process for outdoing one another (Streeck, 2015).
In this type of capitalism, the free trade is another feature in which the companies as
well as individuals must be allowed to carry out their business without the government
interference. In this type of capitalism, the government only controls the business through
taxation which is collected from the individuals as well as the companies (Commons, 2017).
This provides an accurate image of the supply and demand at any given moment. The
government collect different forms of taxation which include income tax, sales tax and
corporate taxes.
Another feature of capitalism is the self-reliance which is the concept related to the
individuals who must be responsible for their wellbeing and not on the governmental funds
and support (Streeck, 2015). In the modern welfare capitalist states the governments provide
different social programs to support the citizen proving that the government intervention in
the economy cannot always help in the growth of the countries. This pushed the citizens to
work hard and benefits the society as a whole (Hicks, 2018).
Therefore, it can be concluded that the features of laissez-faire capitalism completely
nullify the market economy is required to be set in the prices as well as distribute the goods
as well as services. The businesses sell their production in a highest price to the consumers
but this is supported by the competition, self-reliance and free trade process. The Manchester
capitalism or laissez-faire capitalism provides scope for offering high quality products and
services which increases market profitability and social support.

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References:
Abercrombie, N. Hill, S., & Turner, B.S. (2015). Sovereign individuals of capitalism.
Schumpeter, J.A. (2017). Essays: on entrepreneurs, innovations, business cycles and the
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Commons, J.R. (2017). Legal foundations of capitalism. Routledge.
Iversen, T., 2005. Capitalism, democracy, and welfare. Cambridge University Press.
Hicks, A. (2018). Social democracy and welfare capitalism: A century of income security
politics. Cornell University Press.
Krieger, T., & Meierrieks, D. (2016). Political capitalism: The interaction between income
inequality, economic freedom and democracy. European Journal of Political
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Streeck, W. (2015). Comment on Wolfgang Merkel,“Is capitalism compatible with
democracy?”. Zeitschrift für vergleichende Politikwissenschaft, 9(1-2), pp.49-60.
Berend, I.T. (2016). An economic history of twentieth-century Europe: economic regimes
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