Capitalism : A Economic And Political System Of Production And Trade Based On Property And Wealth

1791 Words Dec 18th, 2015 8 Pages
Capitalism is an economic and political system of production and trade based on property and wealth being owned by private business and ordinary people, rather than the state (The Financial Times 2012). Modern capitalism can be referred as post-war capitalism (Amable 2003). The study of the operations of capitalism is crucial because everyone is involve in it whether one is a capitalist, targeted customer or both. This essay will explain why the PESTLE framework (Politics Economics Society Technology Law Environment) is such a useful tool and also why sometimes it is not.

In order the understand modern capitalist, history must be revised so that lessons can be learnt. The world has witnessed the economic boom after the World War II. From that time period until now, everything constantly changes. In other words, PESTLE constantly changes. For a capitalist to gain profit, to get more exposure or to keep up with consumer taste, he must have strong grasp of current affairs.

According to Ha-Joon Chang, economics is “(almost) bout Life, the Universe and Everything”. Almost everyone is affected by interest rate. It will have effect on the cost of borrowing and the reward of saving. Increase in interest rate is bad for the economy because people will tend to save more and spend less as loans get expensive. Higher interest rate also discourage investment. Overall, it will lead to a fall in Aggregate Demand (AD) which mean economic growth will be lower and unemployment will be…

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