Capitalism

Definition

Capitalism is an economic system where private individuals or businesses own and control the means of production and distribution of goods and services for profit. This system encourages competition, innovation, and investment, leading to economic growth and increased productivity. In the context of the Victorian era, capitalism significantly influenced social structures, political ideologies, and economic policies as industrialization transformed society and created new classes.

5 Must Know Facts For Your Next Test

1. During the Victorian era, capitalism led to rapid industrial growth, particularly in Britain, transforming it into one of the world's leading economies.
2. The rise of factories and mass production under capitalism created a distinct working class, which faced challenging conditions that sparked social reform movements.
3. Capitalism fostered urbanization as people moved to cities in search of work in industrial settings, dramatically changing demographics and lifestyles.
4. Economic theories by thinkers like Adam Smith promoted capitalism as a means to achieve greater prosperity through free markets and individual initiative.
5. The increasing wealth generated by capitalism also led to significant disparities in income and living conditions, fueling debates over social justice and labor rights.

Review Questions

• How did capitalism influence the social structure during the Victorian era?
  • Capitalism played a crucial role in reshaping the social structure of the Victorian era by creating distinct classes: the wealthy bourgeoisie who owned businesses and capital, and the working-class proletariat who labored in factories. This class divide led to social tensions as workers fought for better wages and conditions while the wealthy sought to maintain their economic advantages. The emergence of a middle class also brought new values and lifestyles that challenged traditional social hierarchies.
• Analyze how the principles of laissez-faire economics were applied during the rise of capitalism in the Victorian era.
  • Laissez-faire economics emphasized minimal government intervention in business affairs, allowing market forces to dictate production and pricing. During the Victorian era, this principle was widely adopted, enabling rapid industrial growth as entrepreneurs capitalized on new technologies without heavy regulation. However, this also led to exploitation of workers and environmental degradation, raising questions about the long-term sustainability of such an approach.
• Evaluate the impact of capitalism on labor movements during the Victorian period and their implications for modern economic practices.
  • Capitalism's impact on labor movements during the Victorian period was profound, as workers began organizing to demand better wages, working conditions, and rights. The harsh realities faced by the proletariat spurred significant social reform efforts, leading to important labor laws that laid the groundwork for modern labor rights. The ongoing dialogue about economic practices today continues to reflect those historical struggles between capitalists' interests and workers' rights, illustrating how capitalism shapes societal structures and norms.

Related terms

Industrial Revolution:

A period of major industrialization from the late 18th century to the early 19th century, marked by the transition to powered machinery, factories, and mass production.

Laissez-faire: An economic philosophy advocating minimal government intervention in the economy, promoting free markets and competition.

Proletariat: The working class in a capitalist society who sell their labor for wages, often contrasted with the bourgeoisie or capitalist class.