ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -In any capitalist society (in which most businesses are owned by individuals, not the government), the rich tend to get a disproportionately large piece of the economic pie; this is called income inequality.

Detailed explanation-2: -Another aspect of capitalism is that private property can be passed on from one generation to another. Therefore those who inherit capital can enjoy high income even without any effort. They have access to the best private education and jobs. This creates inequality of opportunity as well as inequality of outcome.

Detailed explanation-3: -Capitalism may be seen to range between Classical Capitalism, where the rich have only capital income, and the rest have only labor income, and Liberal Capitalism, where many people receive both capital and labor incomes.

Detailed explanation-4: -The uneven distribution of wealth in the 1920’s existed on many levels. Money was distributed disparately between the rich and the middle-class, between industry and agriculture within the United States, and between the U.S. and Europe. This imbalance of wealth created an unstable economy.

Detailed explanation-5: -Capitalism, as Thomas Piketty’s “Capital in the Twenty-First Century” shows, relentlessly worsens wealth and income inequalities. That inherent tendency is only occasionally stopped or reversed when masses of people rise up against it.