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Capitalism

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AP US History

Definition

Capitalism is an economic system characterized by private ownership of the means of production, where individuals or businesses operate for profit in a competitive market. This system encourages innovation and efficiency, as well as the pursuit of wealth, which connects to various historical contexts such as international relations, exploration, and economic transformations.

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5 Must Know Facts For Your Next Test

  1. Capitalism emerged in Europe during the late Middle Ages and became more defined during the Renaissance, evolving through key historical moments such as the Age of Exploration.
  2. The rise of capitalism was fueled by increased trade networks established during European exploration, which expanded markets and increased wealth accumulation.
  3. The Market Revolution in the 19th century significantly transformed the American economy, promoting capitalist principles such as factory production and consumer culture.
  4. Capitalism influenced postwar diplomacy by shaping economic relationships between nations, where trade agreements and capitalist development played crucial roles in global politics.
  5. The pursuit of profit in capitalist systems has often led to innovation but has also resulted in economic disparities and social tensions throughout history.

Review Questions

  • How did capitalism influence the Age of Exploration and the establishment of trade networks?
    • Capitalism played a significant role during the Age of Exploration as European nations sought new trade routes to increase their wealth and access valuable resources. The promise of profit motivated explorers and investors to support voyages that expanded trade networks across the globe. This desire for economic gain not only facilitated the discovery of new lands but also led to the establishment of colonies that operated under capitalist principles, driving competition among European powers.
  • In what ways did the Market Revolution reflect changes in capitalism within American society?
    • The Market Revolution marked a significant shift towards a capitalist economy in America, characterized by advancements in transportation, communication, and manufacturing. It led to the rise of factories that centralized production and encouraged urbanization, as people moved to cities for work. Additionally, this period fostered a consumer culture where goods were mass-produced for sale rather than for personal use, changing social dynamics and reinforcing capitalist values like competition and innovation.
  • Evaluate the impact of capitalism on postwar diplomacy, particularly concerning international trade relations.
    • Capitalism fundamentally shaped postwar diplomacy as countries engaged in rebuilding economies through trade agreements rooted in capitalist principles. Nations recognized that fostering strong economic ties could promote stability and peace. Economic strategies focused on mutual benefits through trade were pivotal in organizations like NATO and GATT, leading to greater interdependence among countries. This capitalist framework encouraged not only growth but also negotiations that aimed to balance power and address tensions arising from economic disparities.

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