The flip side of Capitalism

Capitalism rules most of the world. It is the most dominant method of economic operation in all continents. There are several advantages of Capitalism. However, there are several disadvantages or what we can call as the flip side. These are sought to be discussed in detail in this article.


There are several advantages of what we call as Capitalism. For example, it promotes the quality of goods and services. It promotes competition and keeps people on their toes. It also promotes entrepreneurship of the tallest order. It also promotes democracy and freedom of speech and expression.

However, Capitalism also has certain disadvantages. Specifically, it does a) Promote monopoly in several areas b) Leads to huge inequalities in economic status c) Breeds violence of a tall order d) Global Reach Disadvantages and e) Promotes greed that has no limits.

Promote monopoly in several areas

Capitalism does promote monopolies of several economic levers pertaining to a particular country. For example, the reach of the multinationals in the cell phone industry is so huge. Local players like Vivo are successful only to some extent. However, Nokia and Samsung are two big giants who can afford to bring in models with the most advanced features. In an industry where the utility value is given more importance, the customers flock to models that have superb features, giving them more value for money. The EMI schemes facilitate the purchase of such models and the low-cost warriors cannot make a huge difference.

Such a fast situation is fast emerging in Organized retail. The Indian monopoly giant called Big Bazaar is already eating into the sales of hundreds of thousands of small shops. It is a virtual monopoly in many cities. A similar experience can be seen in so many areas and this will also make the position very complicated when we have situations where the access to advanced technology is not available to a larger number of players in the market. The most educated and trained people often join and get to work in the best of companies. This also promotes what can be called intellectual capitalism. This, in turn, leads to an intellectual monopoly as well. This is more true of drugs and pharmaceutical companies worldwide.

Leads to huge inequalities in economic status

With every single rupee increase in salary of some person, some other person will be very happy. The multinationals always target the middle class and the upper middle class for their baby products as they can only afford them. Another set of capitalists selling cars, for example, will be very happy about the increase in income of the managerial class. This is the class that will tend to buy cars with bank loans. The story gets repeated on and on. However, this same story also bleeds inequalities as the poor cannot afford to buy the costly goods. Not only this. The poor cannot buy the very same provisions that are sold in the market. For instance, in the case of branded products like soaps and detergents the poor always buy the cheapest goods that are absolutely no good.

They get to eat in rich restaurants. They always eat from roadside shops and are always under the risk of catching some infection of the other. It is estimated that over 50% of the people of Mumbai live in the miserable slums and the asbestos shelters, most of which are unauthorized by the Government. These areas are monopolized by the politicians who encourage the migrants to live on for their vote banks. Still, life is very miserable.

Inequalities abound everywhere. The fancy malls cater to the upper middle classes and the rich. The poor are always very poor. Capitalism results in a situation where some jobs are created, but those jobs are those where the persons are perpetually under-employed. For example, those employed through Swiggy, a major player in the food market are underpaid so badly. Two delivery guys were recently caught on video, stealing and eating food that should have been delivered to some customers. Though the act deserved disciplinary action, the fact was that the hunger pangs just took over.

Breeds violence of a tall order

Violence of a tall order has been reported all over the world, whenever and wherever there have been strikes by industrial workers. Farmers who always fight for their rights have also resorted to violence. Capitalism takes many forms. For instance, Union Ministers from different States fly down to their hometowns on some pretext or the other. They are often provided security by the State and Central Government police as well. Such avoidable expenses run into crores of rupees that could have or should have been only spent on welfare schemes.

All these breeds heartburn and people do become violent when they see no action taking place at all. The violence never stops, anywhere in the world.

Global reach disadvantages

The multinationals do bring the most advanced technology. But they also enter into consumer goods and services, particularly of the FMCG kind. Right from potato chips to cool drinks, they are present everywhere. They buy up huge tracks of land, where other crops can be productively cultivated. But the likes of Pepsico and Coca Cola use up all the water resources and this leads to situations where the poor do not have the water at all for their use. The MNCs of this kind are never welcome anywhere, as they produce only harmful cool drinks and things like potato chips that are consumed only the upper middle class and the rich. The poor always remain very poor as the multinationals always view India as a big market. Their social concern is never really good.

The multinationals also eat up all the local companies with their technological edge or deep pockets. Even Flipkart, a rather successful Indian giant in online retail marketing, could not withstand the onslaught of and merely sold out to Walmart.

Promotes greed that has no limits

This is another big minus. Greed has no limits in any given situation. Greed is fine as long as it is within limits. But Capitalism of a very tall order breeds very bad thoughts in the minds of even normal people. The "better, bigger and much bigger" craze leads to corruption of a very tall order. There are thousands of Government servants and politicians who are actually victims of this greed. The circle becomes complete when the greed even bleeds violence and the poor are even forced to sell their lands at prices that are far below the market prices.


Capitalism has its own advantages and disadvantages. Most of the reforms have effectively created a huge Capitalistic society. It is true that people have found jobs. But such jobs are those that have resulted in massive under-employment and situations where employers are able to take good advantage of changed labor conditions.

These trends will continue for another two decades. Or even more.

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Author: Reena Upadhya05 Feb 2019 Member Level: Diamond   Points : 7

Capitalism causes wastage. Resources do not get distributed fairly. Some people in society end up living a wealthy life. They have enough resources. Others end up in poverty with fewer resources. Thus, lots of resources get wasted. Wastage is because of one section of people in the society who are blessed with more than they require. On the other hand, those who actually need it end up sleeping on an empty stomach.

Even if an individual wants to escape capitalism, it is not possible. It seems like a dream. Every other second an individual is asked to buy something. It can be on T.V., on a billboard or in some other way. When a company is trying to make a sale we call it an advertisement. When the governments do it, we call it propaganda. Call it whatever you want but it is nothing less than a way to brainwash a layman.

Capitalism brings pollution. It shouldn't be difficult to believe the statement. A major part of the pollution is caused by large scale companies who are unwilling to adopt environment-related measures while producing their goods. The reason is simple and that is they do not want to lose their profits. All they care for is to gain huge profits. Thus, they create an imbalance in nature. In a capitalist system, people rarely care about others as the concentration is directed towards self. Thus, anti-social thinking is another disadvantage of capitalism.

Author: Sheo Shankar Jha06 Feb 2019 Member Level: Diamond   Points : 4

Capitalism, if not handled properly, would eat up other industries producing the products on a minor scale. But at the same time, there are some industries promoting the standard of their employees by providing basic facilities such as schools, hospitals, scholarship for the meritorious students etc. However, there are some giant industries that ignore the proper growth of the area and their entry into a particular area would spoil the land with corrosive chemicals etc. Their sole aim is to make huge amount of profit ruining the economy of the region. Capitalism never encourages a healthy trend of employment and they believe in the exploitative method to achieve success in promoting their end products.
The author has dealt with the relevant details highlighting the drawback of the darker side of capitalism.

Author: Umesh07 Feb 2019 Member Level: Platinum   Points : 5

Every system has its pros and cons. Capitalism is also one of them.

Capitalism provides the necessary motivation for the entrepreneurs and hard working people to establish their business empire not only in their country but they can expand it to the whole world with franchise branches. It gives the conducive environment to those few who are having business acumen and willingness to work hard in the cutthroat business environment.

The common man working in such situations have to deliver the goods failing which the owner will remove them from the job and they will not be able to stand against it as is prevalent in democratic or other Govt systems. So in capitalism, the workforce delivers the desired results and an efficient workforce is created.

The great Pyramids in the deserts, Taj Mahal and other such monuments were erected by the workforce totally under the ruling kings which were more and less like a capitalist system only where the powers were in the hands of the king and his allies.

Author: ABSivakumar07 Feb 2019 Member Level: Diamond   Points : 4

Umesh sir, you are very much correct. However, we do see excesses and, of late, the NEEM scheme where people are exploited for 3 years and then thrown out without any security or even ESI or PF benefit is a classic example of the atrocious form of State Capitalism. Obviously, the employers are very happy. However, the larger issue of social security is not addressed at all.

Please tell me which employer is so poor that he can't even pay for the PF? Is this not atrocious? The Central Government has formulated this absolutely irrational scheme. What is the so-called training going to achieve? At the end of 3 years, the poor guy will only fit into another contract job.

So, we do have many problems. The seeds of industrial and social conflict are sown only through these kinds of irrational and stupid policies. Let us remember that there are highly ethical companies where a contract does not exist for any type of labor. So, whosoever is exploiting such schemes are the worst ambassadors of Capitalism.

Author: Umesh11 Feb 2019 Member Level: Platinum   Points : 3

Mr Sivkumar, here is a background to the present status of throwing people out in 3 years or like that. If you remember, earlier Govt was hiring people for a long time till they superannuate at the age of 58 or 60. But the trade unions and other associations worsened the situation and Govt started to hire on a contractual basis rather than regular.

So these atrocities are only an outcome of the lack of working and indifference in the Govt sector.

Today Reliance Jio is one example of business success by lowering down the tariffs drastically and other telcos are either closing down or matching their rates with Jio. So, progress can be achieved in free capitalism or a strict communist regime. In a democratic setup, there are so many ambiguities and development suffers.

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