Capitalism

Definition

Capitalism is an economic system where private individuals or businesses own and control the means of production and trade, aiming to generate profit. This system emphasizes free markets, competition, and minimal government intervention, allowing supply and demand to dictate prices and production levels. Capitalism has shaped various aspects of society, influencing economic policies, social structures, and labor relations throughout history.

5 Must Know Facts For Your Next Test

1. Capitalism gained prominence in the United States after the Civil War, leading to rapid industrialization and economic growth.
2. The rise of big business during the late 19th century was facilitated by capitalist principles, allowing companies to expand operations and dominate markets.
3. Technological innovations played a crucial role in enhancing productivity within a capitalist framework, leading to increased profits for businesses.
4. Labor movements emerged as workers sought better conditions and wages within the capitalist system, challenging the power dynamics between employers and employees.
5. During the Cold War, capitalism was positioned in contrast to communism, with the U.S. promoting its economic model as a means to foster democracy and individual freedom.

Review Questions

• How did capitalism influence economic and social changes in the New South following the Civil War?
  • Capitalism significantly impacted the New South's economy by shifting from an agrarian-based economy to one that embraced industrialization. This transition encouraged investments in railroads and manufacturing, leading to job creation and urban growth. However, this rapid change also resulted in social stratification as wealth concentrated among industrialists while many workers faced low wages and poor conditions, highlighting both the opportunities and challenges posed by capitalism.
• Evaluate the role of technological innovations in shaping capitalist growth during the late 19th century.
  • Technological innovations were pivotal in accelerating capitalist growth during this era by enhancing productivity and efficiency across industries. Inventions like the telegraph, railroads, and machinery revolutionized communication, transportation, and manufacturing processes. These advancements allowed businesses to scale operations rapidly, increase profit margins, and gain competitive advantages in the market. Consequently, they laid the groundwork for a booming capitalist economy characterized by mass production and consumption.
• Analyze how labor movements challenged capitalism in the early 20th century and what implications this had for workers' rights.
  • Labor movements emerged as a direct response to the exploitative practices prevalent within capitalism, as workers organized to demand fair wages, better working conditions, and reasonable hours. This push for rights highlighted systemic inequalities within the capitalist framework and prompted significant reforms in labor laws. As unions gained strength, they influenced policies that improved workers' rights while also provoking debates about capitalism's sustainability and ethical implications in a rapidly changing society.

Related terms

Free Market: An economic system where prices for goods and services are determined by open competition among businesses, with minimal government interference.

Entrepreneurship: The process of starting and managing a new business venture, often involving innovation and risk-taking to develop new products or services.

Socialism: An economic system where the means of production are owned and regulated by the community or the state, aiming for equal distribution of wealth and resources.