Capitalism is a scheme in an economic system in which the means of production are privately owned and operated for profit. In the system, supply, demand, price, distribution, and investments are determined mainly by private decisions in the free market .Profit is distributed to owners who invest in businesses, and wages are paid to workers employed by businesses. Thus it entails the private ownership of capital goods by a class of capital owners, either individually, collectively or through a state apparatus that operates for a profit or serves the interests of capital owners. Capital goods are goods used to produce other goods or services. Capitalism also involves the further abstraction of money into other exchangeable assets and the accumulation of money through ownership, exchange, interest and various other financial instruments.
In China capitalism occurred through the following processes: First through mercantilism where merchants explored geographic locations and traded for profit using different commodities they found in different locations. Then through industrialism where the merchants believed that the state could only increase its wealth at the expense of another state. Thus they decreased the traditional handicraft skills and increased mechanization. This led to development of factories for manufacturing which increased output. This led to division of labor between and within work spaces leading to establishment of domination of capitalist mode of production. Later Keynesianism and neoliberation followed. This was disadvantaged by inflation which slowed the output production. Then the general public’s interest was shifted from the collectivist concerns of Keynes’s managed capitalism to a focus on individual freedom and choice, called “remarketized capitalism.” Lastly there was globalization where there is international trade of the goods produced. This increased the mobility of people and capital since the last quarter of the 20th century, combining to circumscribe the room to maneuver states in choosing non-capitalist models of development.
In China’s capitalism, the government does not prohibit private property or prevent individuals from working where they please. It does not prevent firms from determining what wages they will pay and what prices they will charge for their products. However, it has minimum wage laws and minimum safety standards. Also it has competition laws that prohibit monopolies and cartels from forming. Monopolies occurred due to different companies supplying the same commodity to the same buyers while cartels occur when different companies merge with only one interest of marking profit.
Authoritarian capitalism has led to many advantages in China leading to increased economic growth. It guarantees individual freedom and rights in running businesses. First, it involves extensive economic interventions. This is a foreign exchange policy that supports industrial policies as part of an export-led economic growth strategy. It directs bank loans and investment funds towards areas of economic growth. This has made China highly dependent upon foreign investment funds and technology for its growth. The dependence on outsiders is exacerbated by institutional arrangement that work against domestic entrepreneurs to provide an indigenous source of economic growth. Thus individuals have freedom to choose from other sources of money to expand there businesses. This gives individuals the freedom of looking for other means of finances and resources apart from their own country.