1. Characteristic of Capitalism
a. Individual Freedom Pursuit of Self Interest
Capitalism is a social system that promotes a principal of individual freedoms that acknowledge and protect about the individual importance and individual reason. The
first role of capitalism is that everyone has the right to live and right to have something based on his judgement.
Moreover the pursuit of self-interest is also commonly regarded as an essential role in capitalism. Adam Smith point to what he believes to be the benefit of
individuals trading for their self-interest rather than altruistically attempting to serve the “common good”. Smith, widely considered to be the intellectual father of
capitalism, says in Wealth of Nations By pursuing his own interest [an individual] frequently promotes that of the society more effectually than when he really intends
to promote it. I have never known much good done by those who affected to trade for the [common] good.
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So individual freedom becomes the essential part in capitalism, as Ayn Rand, the most outspoken advocate of the role of self-interest in capitalism, says in
Capitalism: The Unknown Ideal Americas abundance was created not by public sacrifices to the common good, but by the productive genius of free men who pursued
21
Edwin R.A Seligman, “introduction” in Adam Smith, The wealth of nation, vol.III London: JM Dent and Sons Ltd, 1960 p.98
their own personal interests and the making of their own private fortunes.
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In other word, the capitalist system considers that by letting the individual to pursuit their self-
interest is a good way to achieve the economic mobility in society the economic growth
According to Adam Smith, the individual freedom consists of four freedoms such as: freedom of trade and occupation, freedom of contract, freedom of property
and freedom making-profit.
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The freedom of trade and occupation means that all can make a business based on their interest and government will not restrain them by condition they need
to obey the role of a certain business. Afterwards, freedom of contract, it means that individual is free to have a
contract in his business to avoid him from a financial loss. An agreement of working to someone or to purchase or selling goods is an example of contract. A contract is a
binding agreement between two or more parties that usually results in some types of performance. In capitalism, a function of the state is operating mainly through the
court system to enforce performance by requiring the promise to fulfill his bargain on penalty of fine or imprisonment or by awarding judgment against him for money
damages when he fails to perform without legal reason. The next freedom is freedom of property which means each individual able to
possess, to purchase, and to trade off his certain property without any obstacle. The
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Ayn Rand, Capitalism, The Unknown Ideal, New York: A Signet book, 1970
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William Ebenstain, Today’s ISMS : Communism, Fascism, Capitalism, Socialism, new jersey : prentice hall, inc, 1967 fifith.ed. p.181
last is freedom of making profit means an individual can derived profit by selling a product for more than the cost required to produce or acquire it.
b. Free Market
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