Aaron Ramirez 

Eng Comp 10100 

Prof. Shearer 

Due Nov 11, 2022 

Cover Letter 

Capitalism is a very seemingly easy concept to grasp, but it is incredibly complicated. In drafting this research paper, I realized that capitalism could take on many forms, has had some transformations over the years, and can be perceived differently depending on who you ask. Due to its almost overwhelming complexity, I refrain from going that deep into what capitalism is, but knowing it exists made me realize something. Researching this topic made me realize that this may be the case for all umbrella topics. It makes me glad to know I do not have to draft a research essay for an academic audience. If I did, I would have to do more research than writing and educate myself to the point of being able to put together a nuanced argument. I will draft my essay as if my audience were someone who knew almost nothing about the economy and more specifically capitalism. This luxury made it so that the research required to finish is much less intense. Overall, this was the most difficult phase to write because it was the most tedious and required the most attention. Especially since it must be organized consistently from the bibliography.  

The REAL winners behind capitalism 

Americans today are beneficiaries and or victims of capitalism, but they may not even realize where they stand. Unfortunately, most people are on the losing end of our capitalist-based economy. This economic system was the driving force behind many wealthy individuals today, Elon Musk is a good example of an extremely rich minority, but there are reasons why people like Musk are exceedingly rare. The reality is that not everyone can be a winner in a capitalist-based economy, not even half of us to the extent of minorities like Musk. This capitalist-based economy is designed to keep the winners on top and the losers sub servant to the winners (winners being the extremely rich minority). 

To begin with, capitalism is an economic system based on private ownership of businesses and products they may sell. In a capitalist-run economy, “capital assets—such as factories, mines, and railroads—can be privately owned and controlled” (Jahan, Mahmud). Labor is purchased by said business owners and prices are fixed by supply and demand. Capitalism is an economy that runs itself. Suppose you want to buy potatoes, there will be numerous brands for you to choose from. Because capitalism means anyone can own their own private businesses, anyone can, and many will own their own business to rival bigger businesses. Competition means options for the consumer and consumer choice ensures that the quality of the potato in this scenario is at least of a high enough quality to stay competitive. If the people working under that potato business are underpaid or mistreated, they can always simply leave for another potato business or boycott the potato business. In some cases, government intervention can ensure that workers are treated fairly. So, in this way competition amongst companies also protects workers. Of course, if the business is doing well then so is the business owner financially, so the owner will try his best to satisfy the former to be successful. Capital-based economies are fueled by these interactions daily and require little to no regulation to be sustainable.  

Though the market tends to change in terms of regulation periodically. Markets function with little to no regulation in free markets, commonly referred to as laissez-faire economies. Little to no regulation in free markets means more productivity and wealth for business owners. In mixed economies—so named for the combination of markets and government—markets play a dominant role, but government regulates them more heavily to address market failures like pollution and traffic congestion, advance social welfare, and serve other purposes like national security and public safety. 

So how does capitalism affect the wealthy? To utilize Musk as an example again, capitalism is the reason they were able to amass the wealth that they did. Earlier I spoke on how competition in the market keeps things fair and running smoothly, however it does not always apply. For example, there is not any real competition for Telsa in terms of electric cars or cars safer for the environment in general. Since there is not any competition, Musk simply gets exponentially richer as he has a monopoly on electric cars. Business monopolies are not as rare as you would first imagine either. Think of your favorite shoe or clothing brands for example. For most people, only a few come to mind, in other words a few people own the production of most of the shoes and clothes Americans wear every day. According to the Open market institute organization, “Walmart, controls 72 percent of warehouse clubs and super centers in the entire United States.” For a business-like Walmart, there is not really a chance for opposition, not even for future generations. Walmart and Musk’s business will likely remain the winner amongst its competitors allowing for generational wealth to be distributed for centuries.  

Wealthy people in a capitalistic country are also beneficiaries of private property. In capitalism, someone who owns the property is entitled to any value associated with the property. Real estate for example is a type of private property that many wealthy people in America invest in and or own. Real estate is something you own that is attached to the land it resides on. Real estate becomes a means of making money via the use of a “trust.” “Trusts” are agreements that allow a 3^rd party (the trustee) to hold assets for you and direct assets or property on behalf of you (the owner of the real estate or property), referred to as the beneficiary. The wealthy use trust to lower income taxes and shield assets from transfer and estate taxes. So, if you leave the real estate in the hands of a trust you could amass generational wealth at no cost. Real estate could be used for its resources, wealthy people can monopolize resources if they monopolize the source which builds into their monopoly on the business. Another use to owning real estate is rental income, you could simply sell the space to tenants for consistent income. Additionally, you could make money from the property via appreciation. Which is a property’s value increasing over time. Wealthy individuals who employ these tactics are set for hundreds of years to use a trust to cut taxes and avoid probate (the process in which where your assets go is decided after you die). All these economic loops and infinite wealth can be attributed to capitalism allowing for the value associated with a property to be in the hands of the owner.  

Overall, the well to do seem to benefit from capitalism, however where does that leave the working class? Capitalism benefits the working class in a variety of ways. For starters, capitalism allows people to start their own businesses and be their own bosses. This means that people can make a good living without having to rely on others. Whilst they cannot compete with big companies, small businesses still have their place in the market. Truthfully, a small business will not amass enough wealth to push you into the top 1%, you can still find a comfortable lifestyle as a small business owner.  

Capitalism also promotes competition, which lowers prices and benefits consumers. While the existence of competition is spotty in the market it still exists and thanks to that the quality of products is ensured at a fair price.  

Generally. Capitalism allows people to choose how they live and work, allowing them to pursue their own goals and dreams. However, that is about everything capitalism has to offer to the working class, fairness. 
The working class is affected by capitalism in several negative ways also. First, they are paid less than the wealthy and rich, which means they must work harder to make a living. The benefit of having assets left over in a capitalist-based economy is that you can use it to make more capital. Using trusts to handle assets or real estate is the same as telling your money to work for you. Not to mention that you can avoid taxation  

Secondly, the working class is more likely to be unemployed, as businesses can choose to cut jobs to save money. Finally, the working class is less likely to have access to healthcare and education, as these are often seen as luxuries that only the wealthy can afford. This means the working class is at a disadvantage compared to the wealthy and rich when achieving a good standard of living.  

While everybody benefits from capitalism to at least some extent, none more than the rich. They are not given the same opportunities as the rich to gain wealth or move up economically because there is no way to challenge the wealthy. Big businesses will have monopolized their sources, solidified their place as a consistent source of that product, and have the assets to produce higher quality products. Leaving small businesses unable to expand beyond their local town or city limits without ultimately failing. Rather than pursue the wealth that the top percent have, the working class is forced to feed into their wealth through societal cost and even their own rent.  

In a mixed economy, regulations will squander any chance small businesses get rich like their successful predecessors. Whilst in a free market, while it is more possible for the working class to find ways to be successful, there are just as many dirty ways to lose to bigger businesses that may see you as competition. In capitalism the working class are stuck as workers while the rich are stuck as the rich! Hence the argument to “modernize market frameworks” because only a transformative market can uphold the economic liberty that Americans feel entitled to (Scott,28).  

It is easy to say that the winners of capitalism are the rich. Not because their wealth was inherently a biproduct of capitalism, but because it keeps them rich. Should an economy promise economic freedom, there should be some way to halt some from using that liberty to become entitled to everything the working class uses. Otherwise, the reality remains that in a capitalistic country like the U.S, that freedom is a ticket reserved for the rich to hold indefinitely.  

Bibliography 

• Scott, Bruce. “The Political Economy of Capitalism – Harvard Business School.” Harvard Business School, Dec. 2006, https://www.hbs.edu/ris/Publication%20Files/07-037.pdf. 
• JAHAN, SARWAT, and AHMED SABER MAHMUD. “What Is Capitalism?” IMF, https://www.imf.org/en/Publications/fandd/issues/Series/Back-to-Basics/Capitalism. 
• “Why the Poor Getting Poorer, the Rich Getting Richer.” Network Marketing (MLM) and Facebook Marketing Tips for Filipino, USO99, http://aimglobalcalbayog.blogspot.com/2014/07/why-poor-getting-poorer-rich-getting-richer.html. 
• “Monopoly by the Numbers.” Open Markets Institute, 2017, https://www.openmarketsinstitute.org/learn/monopoly-by-the-numbers. 

• Collins, Mike. “The Winners and Losers of Free Market Capitalism.” Forbes, Forbes Magazine, 12 Oct. 2022, https://www.forbes.com/sites/mikecollins/2015/08/04/the-winners-and-losers-of-free-market-capitalism/?sh=28f5d4fa7f75.