So far we have heard a lot about economy, but in fact there are many more functions of a particular type of economy called capitalism. Capitalism and economy are not the same thing. Many economists view capitalism as a natural, permanent condition. That is why we feel that there is only economy. However, there were other economies that existed before capitalism, and more economies are expected to follow after capitalism.

Capitalism has certain characteristics and forces that need to be recognized in order to understand how it works. To understand what is going on in capitalism right now, we need to recognize and study its essential facts. Most people have to work for others in exchange for wages or salaries.

A society owns a large amount of wealth in a small area and uses that wealth in an effort to create more wealth.

Competition between companies, each trying to maximize their own profits, forces them to behave in particularly perverse ways at times.

It sounds strange but traditional economists mostly ignore these central facts. They don't even use the word capitalism, instead they call the system a market economy. A few people have vast wealth, while most people have almost nothing, a fact that is considered accidental or irrelevant. They claim that the economy will be the same whether capitalists employ workers or workers employ capitalists.

These central and unique features of capitalism provide the economy with a particular type of behavior and momentum. They explain why capitalism is dynamic, flexible, creative and ever-changing. They explain why capitalism is conflictual.

An economist who ignores the main features of capitalism will be less able to understand and explain how capitalism actually works. So it is important to be clear about what we are dealing with from a purely scientific perspective.

That is, economists of all political stripes carry political baggage. Capitalism is impossible to name and analyze without judging it. Traditional economists pretend that the positive science that describes the economy can be separated from the normal way of evaluating and trying to improve the economy, but this false distinction never succeeds.

By many criteria, capitalism has been tremendously successful. It ushered in the industrial age and with it came prosperity for some. It mercilessly undermines old-fashioned restrictive taboos and relentlessly investigates new avenues of private profit. It consumes enormous energy, creativity and discipline from its many participants.

Capitalism, on the other hand, has failed to deliver on many of its promises. Although mankind has abundant resources to eradicate these miseries, billions of people around the world suffer from misery, poverty and premature death. The immense resources like talent and energy of crores of unemployed, underemployed persons are being misused for a long time. The natural environment is rapidly deteriorating in the face of imperatives to shift at the expense of private profit maximization. Global climate change is the latest and most catastrophic symptom of this failure.

Regardless of the underlying rationale that fundamentally drives the entire system, there are many obvious changes that will help the economy meet human and environmental needs. And it is finally possible to create an alternative economic system motivated directly by our desire to improve the human condition without an appetite for private gain.