Difference Between Capitalism and Free market | Difference Between | Capitalism vs Free market
Capitalism and Free market economy are somewhat entwined as one is an integral part of the other. However, in their true definitions they differ. Peo Screen Shot at AM ple often ask me: “You are known as a marketing guru. Yet you just published a book called. The purest form of capitalism is free market or laissez-faire .. refers to capitalist society that's based on the close relationships between.
Big-firm capitalism takes advantage of economies of scale. This type is important for mass production of products.
Entrepreneurial capitalism produces breakthroughs like the automobile, telephone, and computer. These innovations are usually the product of individuals and new firms. However, it takes big firms to mass-produce and market new products, so a mix of big-firm and entrepreneurial capitalism seems best. This is the kind that characterizes the United States more than any other country.
The Keynesian critique During the Great Depression of the s, the advanced capitalist economies suffered widespread unemployment. In his General Theory of Employment, Interest, and Money, British economist John Maynard Keynes argued that capitalism struggles to recover from slowdowns in investment because a capitalist economy can remain indefinitely in equilibrium with high unemployment and no growth.
Keynesian economics challenged the notion that laissez-faire capitalist economies could operate well on their own without state intervention to promote aggregate demand and fight high unemployment and deflation of the sort seen during the s. These actions sought to temper the boom and bust of the business cycle and to help capitalism recover following the Great Depression.
Keynes never intended to replace the market-based economy with a different one; he asserted only that periodic government intervention was necessary. The forces that generally lead to the success of capitalism can also usher in its failure.
Free markets can flourish only when governments set the rules that govern them—such as laws that ensure property rights—and support markets with proper infrastructure, such as roads and highways to move goods and people.
Governments, however, may be influenced by organized private interests that try to leverage the power of regulations to protect their economic position at the expense of the public interest—for example, by repressing the same free market that bred their success. The concentration of ownership of productive assets must be limited to ensure competition. Enlightened companies will also want to contribute to environmental wellness, social well-being, and human wisdom the 4Ws.
The company can focus on either itself, or its stakeholders, or the global world as a whole. The company can be judged by the public on whether it developed a better product, more satisfied customers, and created a better world.
Capitalism is the best economic system for producing the greatest volume and diversity of goods and services.
For it to succeed, however, there must be enough buyers for all the goods and services that Capitalism is capable of producing. The Sears catalogs introduced millions of Americans to millions of products and services.
- Phil Kotler on the Relationship between Marketing and Capitalism
- Can Marketing Improve Capitalism?
- Page Not Found
Consumers saw goods that they never imagined. The growing number of Sears and other department stores and boutique stores made many goods tangible and accessible and desirable.
Difference Between Capitalism and Free market
Newspapers, magazine articles, and the growth of the movie industry featured the life styles of the rich and famous and created an aspirational and accumulative American mindset. Buying was stimulated by the use of various tools such as.
Marketing then faced a second task, namely, to convince consumers to borrow the money needed to buy the product. The marketing of credit cards, mortgages and other credit devices made Capitalism possible.
So what role does marketing play in a Capitalist economy? It gets people to want and buy all the things that are made and it gets them to accept debt to obtain these goods.
Marketers are also quite good at developing interest in a product or brand by creating strong images that trigger pleasure, hope, or fear. Marketers will stimulate desire by showing how the product will make the consumer's life better, simpler, safer, richer.
The Relationship between Marketing and Capitalism – Philip Kotler
Marketers real challenge is to turn desire into action. Here marketers employ a number of tools such as sales days, discounts, coupons, rebates, guarantees or warranties. Marketing's task does not end with producing a purchase event. Marketers have a more sophisticated and comprehensive aim: Marketers use AIDA to help produce the first purchase. If the first-time buyer is satisfied, he or she may buy again. If the purchase delights the buyer, he or she will buy it again and again and even tell friends.
Growing a customer requires further work. What else can you sell to the same customer? McDonald's can't base its future just on fast and tasty hamburgers. Customers want new things, such as a tasty salad or chicken or fish. Growing the customer's purchases calls for continually monitoring the target customers changing needs, wants, and lifestyles.
A smart company will go further. It will not only add more existing products to its offering. It will even try to imagine new products that don't exist but that could satisfy the same customer. Apple didn't rest on its just selling computers and making them better each year.