How does capitalism drive innovation and economic growth, and what are some potential drawbacks of this economic system?
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The competition and profit-making motives bequeath innovation and economic growth through capitalism which should greedily grasp more customers hence increasing its market size. Of different benefits that come with competition, creating new products, services, and technologies alongside making efficiency and cost-cutting would lead to increased productivity; thus economic growth.
Inequalities; it gives rise in wealth inequality bringing about a very insignificant section of people absorbing most wealth.
-Market failures: at times, it also fails to allocate resources efficiently; markets fail as it is in the cases of monopolies, externalities, and the likes where it is about informational asymmetries.
-Interest in the near future: capitalism is often accused of taking a very short-term stance than others about achieving profits over investing in sustainable development possibilities for the future.
-Environmental and social costs: Profit making sometimes may turn into assets of negative social and environmental costs like worker exploitation and pollution.