Social capitalism is a new market-based economic system. It addresses the problems inherent in both capitalism and socialism. Traditional capitalism often overlooks human and environmental interests and the central planning of traditional socialism impedes a rational allocation of resources.
In social capitalism, governments create greater profit opportunities for entrepreneurs by investing in desirable future industry and technologies (like rewable energy).
The essence of social capitalism is that markets work best and output is maximized through sound social management of the macroeconomy. Social capitalism posits that government regulation, and sponsorship of markets, can lead to superior economic outcomes.
Government investment in the green economy or securities regulation are examples of social capitalism. Regulation should be as limited as possible, however, regulation is needed to ensure that individuals and corporations do not exploit markets for personal gain at the expense of market growth, economic stability and environmental sustainability.
For business, social capitalism is the ability to create positive, healthy development. Businesses practicing social capitalism give back to society while creating an environment that is conducive to profit maximization.
Social capitalism is not hostile to free markets or the private ownership of property. Instead, social capitalism recognizes the unique success of capitalism, particularly under appropriate social supervision. Social capitalism thus seeks to create a balanced approach to business and the role of the state, with a view to optimizing the business environment for maximum sustainable economic growth.
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