Capitalism

Definition

Capitalism is an economic system based on the private ownership of the means of production and their operation for profit. It is characterized by the accumulation of capital, competitive markets, and wage labor.

5 Must Know Facts For Your Next Test

1. Capitalism emerged in Europe during the 16th-18th centuries, replacing feudalism and the manor system.
2. The driving force of capitalism is the pursuit of profit, which incentivizes innovation, investment, and the efficient allocation of resources.
3. Capitalism relies on the concept of private property, where individuals and businesses can own and control the means of production.
4. The growth of capitalism is often associated with industrialization, urbanization, and the rise of a middle class.
5. Critiques of capitalism include its tendency towards wealth inequality, exploitation of labor, and environmental degradation.

Review Questions

• Explain how the rise of capitalism is connected to the process of industrialization and postmodernity.
  • The emergence of capitalism is closely tied to the Industrial Revolution, which began in the 18th century. Industrialization enabled mass production, the use of machinery, and the development of new technologies, all of which fueled the growth of capitalism. As capitalism matured, it led to the rise of large corporations, the spread of consumerism, and the shift towards a service-based economy, which are all hallmarks of postmodernity. The profit-driven nature of capitalism also contributed to the rapid technological advancements and cultural changes associated with the postmodern era.
• Analyze how the capitalist system perpetuates various systems of inequality, such as class, gender, and racial inequalities.
  • Capitalism, with its emphasis on private ownership and the pursuit of profit, has been criticized for exacerbating social inequalities. The capitalist class, or bourgeoisie, often wields significant economic and political power, which can be used to maintain their privileged status at the expense of the working class or proletariat. Additionally, the capitalist system has been linked to the exploitation of marginalized groups, such as women and racial minorities, who may face barriers to accessing economic opportunities and resources. The concentration of wealth and power in the hands of a few can lead to the perpetuation of class, gender, and racial hierarchies, as the capitalist class uses its influence to preserve its dominance.
• Evaluate the role of the state in regulating and shaping the capitalist system, and how this has evolved over time.
  • The relationship between the state and the capitalist system is complex and has evolved over time. In the early stages of capitalism, the state often played a minimal role, allowing the free market to operate with minimal intervention. However, as the negative consequences of unregulated capitalism became more apparent, such as economic crises, labor exploitation, and environmental degradation, the state has taken on a more active role in regulating the capitalist system. This has included the implementation of social welfare policies, labor laws, antitrust regulations, and environmental protections. The extent and nature of state intervention in the capitalist system has been a subject of ongoing debate, with some arguing for a more hands-off approach and others advocating for greater state involvement to address the systemic inequities inherent in capitalism.

Related terms

Free Market: An economic system with minimal government intervention, where prices, production, and the distribution of goods and services are determined mainly by competition in the market.

Privatization: The transfer of ownership or control of property or businesses from the public sector (the state) to the private sector.

Bourgeoisie: The social class that owns the means of production and whose economic and political interests shape society, in contrast to the working class or proletariat.