Government 2, May/June 2014  
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General Comments

question 2

(a)        Define capitalism.

(b)        State two advantages and two disadvantages of capitalism.


This was another popular question and was attempted by almost all the candidates.   The performance of the candidates who answered it was good as they really understood its demands. However, some candidates did not do well in the (b) part and they scored low marks by listing the points without further explanations. The candidates were expected to provide the following answers to the question:

(a)        Capitalism can be defined as an economic system in which the means of production, distribution and exchange of goods and services are in the hands of individuals.

  1. Capitalism guarantees maximum freedom of enterprise;
  2. It brings about increase in the quality of goods and services produced;
  3. It creates room for effective use of talent;
  4. It encourages numerous inventions and innovations;
  5. It encourages diverse economic development;
  6. It leads to specialization;
  7. It promotes hard work;
  8. It encourages healthy competition;
  9. It encourages private ownership of property.
  10. It encourages consumer sovereignty.



(i)         It encourages the exploitation of the poor by the rich;
(ii)        It leads to inequitable distribution of income and wealth;
(iii)       It may lead to unhealthy rivalry;
(iv)       It may threaten the sovereignty of a state;
(v)        It may lead to conflict between employers and employees;
(vi)       It may lead to job insecurity;
(vii)      It does not consider public interest because of profit motive.


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