Economics System

Modern Capitalism

Group 2 :

Aditya Oriza Febryan 105020101121001

Nanang Bagus S 115020107121007

Indira Cynthia SP 115020107121008

Lathiefa Rusli 115020107121025

Deby Reynanita R 115020108121001

University of Brawijaya

Economic and Business Development Department

 Chapter I
Preface

Capitalism is an economic system which is based on the private owner. It

focuses on the private necessary than public necessary. Capitalism directs
ability and potency in order to increase the profit. Otherwise, this economic
system makes every individual work hard to win the competition with others.
Because this system is used individually, government cannot enter to this
system easily. That is why we concerns on the modern capitalism in which
government can also influence the system.

Chapter II
Discussion

2.1 Basic Capitalism

Capitalism is an economic system which is based on the private
owner. Private owner is people who has the capital and decides
whether the goods and services are profitable. Profit is found by self-
interest seeking individually. This way makes the private owner make a
competition each others use law controller. The law states “the
competitive market system compels
producers to increase more efficient, and
to respond the desire of consumers”.

The picture shows that individuals who are

free to pursue their self-interest will
produce goods and services that others
want, at prices others will be willing to pay.
 Basically in capitalism, government should interfere minimally and
market influences maximally, because the price is depended on the
invisible hand which is only happen in the market.

2.2 Capitalism According to Adam Smith

 Confession of private owner is no limitation
 Confession of private owner to do economic activity in order to
increase the social economic status
 Confession of economic motivation in order to get a lot of profit
 Do competing freely
 Confession of the free market system

The most important thing of Adam Smith is the dependent of economic

increasing, development, and also welfare which reflect the state.

2.3 Phase of Capitalism

1. First capitalism (1500 – 1750)

In the middle of 16-18 century, industrial revolution in Europe. This
industrial develops Europe in making the social and economic
system.
2. Classical capitalism
Phase of industrial revolution in England starts make big machine
which are useful in supporting the industry. We can call this
revolution as the movement trade.
3. Modern capitalism
This is happen after the world war. It is signed as:
 Dominating movement in Europe to American
 Realizing the state in Asia and Africa as access in classical
capitalism which manifest as fight.
  Bolshevik revolution broke the capitalism which own as
individual as the production.

2.4 Principal of Capitalism

1. Find the profit
Gain the profit as much as the private owner can except when they
gain dishonestly.
2. Make the private owner
Make the government interfere minimally in order to open the wider
private owner.
3. Perfect competition
4. Price system
It is used as suitable demand and necessary as the price system
which is decreasing in controlling the commodity.

2.5 Modern Capitalism

Modern capitalism is an economic system which is based on the
private owner. In this system, the government interfere the business in
order to solve the market failure.

Chapter III
Conclusion

Capitalism is a system which private owner take a decision in order to

gain a lot of profit or something which can be changed as capital. The
different between classical capitalism and modern capitalism is in the system.
In classical capitalism, government interferes minimally and market system
maximally. If in modern capitalism, government interferes maximally and
market system minimally.