Capitalism is an economic and political system whereby the country’s economy is controlled by the private owners and not the state. The workings of the systems are determined by individual policies, market restrictions, capital movement and labor force within the country. The system was created for synthetic, dynamic and integrated approaches for organizational analysis cross-nationally.
Critically capitalism as argued by Smith (2005) did not give the state national ownership of companies’ matters. Firms activities cannot be monitored and controlled by the state and therefore, the economy left on the private hands. Businesses run through this system can ruin the country’s economic activities as the interests of individuals cannot serve the long term goals of the state. The state should control the political and economical activities for its stability but the capitalist cannot since they are only interested to maximize the profits.
The capitalist ignore the cross-national learning which promotes national cohesion and unity for the state. It does not take into consideration of the national interest and may spark in ethnical struggles which may generate tension if the government does not get in and control the system. Several national cakes with several intentions are produced which does not bring several ethnical groups together. There is great imbalance on the nature and quality of the labor force produced to serve these capitalist firms. They cannot have uniform standard quality to measure the production or output that may determine the rate of economical growth of the country.
The private owners do not consider the national interest. They do not allow societies to display similar institutional configurations which can be identified and spread uniformity across the nation. This increases international mobility and deterioration of the state economy. It does not promote national stability, universal capital movement and market forces. The state may lead to have inappropriate work form or hence have a lot of its population unemployed as the private firm may opt to import the labor force from other countries.
Societal effects may be affected by globalization forces, reinforce the existing forms, instead of changing them. Innovation practices may be concentrated in certain towns, places, zones, or regions instead of spreading across the state. Since it allows individual firms to select their own policies and options to shape up their environment. Environmental management may not be possible and this may lead to adverse environmental degradation. Private firms may not take into consideration to the conservation of the environment by controlling or regulating their activities by generating means to become friendly to environment.
The system employs diversity in the work force which improves the business system in the state. The private companies are able to improve the quality and quantity of the products in the market fairly well than when the system is controlled by the state. This is very much possible due to the competition created by the private companies where every business owner wants to be seen the best in the market. The system will improve the innovation and invention processes because the market is free from government intervention.
Capitalism increases the rate of globalization and between organizational policies and forms that support business expansion very fast. International trade becomes more homogenized by facilitating removal of trade differences between the countries involved in the business.
Economy run by small number of pattern can be easily distinguished and distinctive varieties of capitalism are simple to analyze and determine the trend of the economical growth in the state. This system, society and dominance provide the state with an alternative to complexities in the economies.
As a political business system, capitalism is based on the distinctive rights to property which increase due to competition, innovation and invention in the production forces. Through these characteristics the economy possesses a generic system in the firms, labour force and the state in general. The private firms takes advantage to formulate their own policies that enable it grow and expand its activities across the border.
On the other hand, capitalism it is very difficult for the state to standardize the forces to enable it control the exploitation of its resources across the country. Without regulations the economy cannot have a regular trend and future dependency on the available resources as the private firms do not mind about the future generation.
Products produced by capitalists may be sub-standard. This may leave the consumer with no choice but to accept the product available in the market. To control the quality may also be a problem as the private owners in capitalism are only interested to maximize their profits and not to benefit the common man.
Capitalism dominance may result to condensation of some business systems as the capitalist focuses more in the stock markets and less interest on industrial banks for the benefit of the country. The trend may result in inflation rate going very high as the economy is on the hands of the private people.
Capitalist development does not express uniform fashion across the society. Societal effects tend to create unstable internal relationships in various sectors in the government or state. The coordination between various government departments for economic development gets a great challenge as the system patterns are very much dispersed.
The system absorbs the national practices, ideas, norms and cultural beliefs from institutions from the state and national level for instance education, training, resource distribution, employer’s association and firm interrelationships. This brings up uniformity and standard level of evaluating the outputs in the system.
This system encourages the employment of managers from other countries with different educational background, training and beliefs which may not suit the interests of the state. This system may enable the managerial actors to gain bargaining business power in the states the favor their interests on the expense of the original state. For managers who come from other territories may be influenced by his country of origin. The dominance will follow the policies from country the manager originates.
The system creates an uneven nature of economic power and takes lead on the society’s organization or business practices that are considered to efficient. This makes other states to be dominant in a particular line of production than others.
In conclusion, Smith (2005) focused on the capitalism strengths but assumed the long-term effects of the system to the society and its dominance. It’s a good system but its effects causes more harm than benefits to the state.
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