Why does the USA prefer capitalism?


Photo by Raúl Nájera on Unsplash

The USA strongly supports capitalism. The country uses capitalism as an economic system and supports it as a political ideology as well.

Why does the USA believe that capitalism is the way to go? How did capitalism help the USA towards development? Let's find out.

The word capitalism is derived from the word "capital". In economics, capital refers to the total value of the assets invested by an entity for starting a business.

A capitalistic society is a type of society where every person will work according to their abilities but the returns they will get will be according to their capital.

Any person who has more capital will receive more returns in this society. This is one of the reasons why the rich keep getting richer and the poor keep getting poorer in the USA.

Capitalism is a broad ideology. Even though there are several aspects to this ideology, there are 3 key features of capitalism that are crucial to be mentioned while defining the concept:

  1. The encouragement of privatization: In a capitalistic society, the owning of businesses by private individuals is highly encouraged.
  2. Low or minimal government interference: Many capitalists believe that a government has "no business to be in business".
  3. Free market and free competition: All the markets and competition regarding the trading of goods should depend only on market forces and not on external forces.

Due to less government interference, companies inside the USA got more liberty to carry out business operations without external restrictions. This led to more productivity inside the US territory and this led to a boost in economic growth.

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