A Reflection on Capitalism Model of Economics:

  • 2017

A Reflection on Capitalism Model of Economics:

The Economic Dilemma of Global Financial Crisis
Author:
Henry Fallah
Abstract:

The global financial crisis of 2008 erupted as the result of a sharp decline in real estate investment. The fall in price levels is due to the combination of a fall in demand and a decline in consumer’s confident. As more financial resources were channeled to real estate investment, it affected many different aspects of investments. The cost of real estate fell deeply below the expectation of mortgage lenders, banking institutions, corporations, as well as financial firms who borrowed more financial resources with the expectation that investors would maximize financial output. Moreover, given that the 2008 financial crisis began in the United States, the research examines the role of capitalism in both domestic and global economy. Can economic bubbles be attributed to the principles of capitalism? This is exactly one of the main objectives of this research. To accurately determine the causes of market bubbles, the research examines the economic nature of private enterprise. Does investment give rise to market bubble? Or are bubbles more likely to occur due to the self-interest principles of Bourgeois capitalist and private financial firms that simply concentrate on maximizing financial assets rather than achieving aggregate economic output? Considering the interplay of private firms in a free market system, with limited government interference, capitalism is characterized as a system in which crisis are inevitable.