The three key concepts of capitalism

byMunyaradzi Mafaro published on

Hey, y’all! You’ve probably heard that capitalism is all about making money, but what in the world does it mean? Well, there are three key concepts when it comes to capitalism: private property, profit motive, and market competition.

Private property

The first key concept of capitalism is private property. This means that individuals have the ability to own different types of assets like land, money, stocks, and businesses. With private property ownership comes certain legal rights, including the ability to buy or sell these assets.

Profit Motive

The second concept of capitalism is the profit motive. This is a concept that encourages you to act in your own self-interest, and to strive for financial gain, and it is the foundation of a market economy.

It drives businesses to produce more, invest their funds wisely, and create new products. With each decision you make—whether it’s deciding which supplier to use or how to price your products—you are essentially looking out for ways to maximize profits.

Therefore, when there are plenty of opportunities out there for making money, companies have the incentive to come up with innovative ideas and become more efficient so they can maximize their profits and stay ahead of the competition.

Market competition

The third and final concept of capitalism is market competition. Competition happens when there are multiple companies vying for customers’ business based on product quality and/or price point. The good thing about it are, it drives firms to create better products at the most reasonable prices while also providing consumers with more options and opportunities.

Wrap-up

So there you have it, these three concepts come together to form our modern-day definition of capitalism! With private property ownership, allowing individuals to buy or sell assets combined with a functioning free-market system offering innovative solutions plus increased competition resulting in more options for consumers. Capitalism has thus become an intrinsic part of our society today.