1. 

On the first level, the markets, firms compete to secure their labour and capital as well as to serve their customers.

2. 

In the second level, there are basic institutional foundations, including physical and social infrastructure; physical infrastructure includes, among other things, transportation and communications, and social infrastructure includes the educational, public health, and legal systems.

3. 

The third level comprises a political authority typically one with specialized functions such as executive, legislative, and judicial branches. In turn, a set of political institutions connect the political authority to the political markets and ultimately to civil society, to which such authority is finally responsible.

Related topics 

Details

Types of capitalism

1. Mercantilism is a nationalist system that was practised in the later phase of the 16th century.

• It is characterized by the mixing of national business interests with state interest and imperialism, and eventually, the state is utilized to improve national business interests abroad.
• Mercantilism was determined by the belief that the prosperity of a nation is increased through a positive balance of trade with other nations.
• It relates to the phase of capitalist development and is sometimes called the Primitive accumulation of capital.

1. A free-market economy is described as a capitalist economic system where prices for goods and services are set freely by the forces of supply and demand and are allowed to reach their point of equilibrium without interference by government plans.
2. A social market economy is a free-market system where government involvement in price formation is kept to a minimum but the state provides substantial services in the area of social security, unemployment benefits, and recognition of labour rights through national collective bargaining arrangements.
3. Rhine capitalism is described as the modern model of capitalism and adaptation of the social market model that exists in continental Western Europe today.
4. State capitalism includes state ownership of the means of production within a state, and the organization of state enterprises as commercial, profit-seeking businesses.
5. Corporate capitalism refers to a free or mixed-market economy categorized by the supremacy of hierarchical, bureaucratic corporations.
6. A mixed economy is a mainly market-based economy consisting of both private and public ownership of the means of production and economic interventionism through macroeconomic policies intended to correct market failures, reduce unemployment and keep inflation low.

Effect of capitalism on society

• Capitalism ensures economic growth as it empowers both manufacturers and consumers and keeps money in rotation.
• It ensures the accessibility of goods and services at a competitive price and helps to improve the standard of living in the country.
• Capitalism paved the wave for LPG reforms in the world and provided opportunities for the labor force to opt for global employment opportunities, which have further shrunk the global boundaries.
• But capitalism leads to unequal distribution of wealth- rich get richer and poor get poorer.