What are the main features of a Capitalist Economy ?


Features of Capitalist Economy

Main features of a capitalist economy are as follows:

(i) It is an economic system in which each individual in his capacity as a consumer, producer and resource owner is engaged in economic activity with a great degree of economic freedom.

(ii) The factors of production are privately owned and managed by individuals.


(iii) The main motive behind the working of the capitalist system is the profit motive. The entrepreneurs initiate production with a view to maximize profits.

(iv) Income is received in monetary form through the sale of services of the factors of production and fro: profits of private enterprise.

(v) Capitalist economy is not planned, controlled or regulated by the government. In this system, economic decisions and activities are guided by price mechanism which operates automatically without any direction and control by the central authorities.

(vi) Competition is the most important feature of the capitalist economy. It means the existence of large number of buyers and sellers in the market who are motivated by their self-interest but cannot influence market decisions by their individual actions.

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