Capitalism

Capitalism is an economic system in which trade, industry, and the means of production
are largely or entirely privately owned and operated for profit.[1][2] Central characteristics
of capitalism include capital accumulation, competitive markets and wage labour.[3] In a
capitalist economy, the parties to a transaction typically determine the prices at which
assets, goods, and services are exchanged.[4]
The degree of competition, role of intervention and regulation, and scope of public
ownership varies across different models of capitalism.[5] Economists, political
economists, and historians have taken different perspectives in their analysis of
capitalism and recognized various forms of it in practice. These include laissez-faire
capitalism, welfare capitalism, crony capitalism and state capitalism; each highlighting
varying degrees of dependency on markets, public ownership, and inclusion of social
policies. The extent to which different markets are free, as well as the rules defining
private property, is a matter of politics and policy. Many states have what are termed
capitalist mixed economies, referring to a mix between planned and market-driven
elements.[6] Capitalism has existed under many forms of government, in many different
times, places, and cultures.[7] Following the demise of feudalism, capitalism became the
dominant economic system in the Western world.
Capitalism was carried across the world by broader processes of globalization such as
imperialism and, by the end of the nineteenth century, became the dominant global
economic system, in turn intensifying processes of economic and other globalization.[8]
Later, in the 20th century, capitalism overcame a challenge by centrally-planned
economies and is now the encompassing system worldwide,[9][10] with the mixed economy
being its dominant form in the industrialized Western world. Barry Gills and Paul James
write:

The process remains uneven, but notwithstanding the continuing importance of

national and regional economies today, global capitalism is undoubtedly the
dominant framework of economics in the world. There are many debates about
what this means, but across the political spectrum capitalism has become the
taken-for-granted way of naming the economic pattern that weaves together the
current dominant modes of production and exchange.[11]

Different economic perspectives emphasize specific elements of capitalism in their

preferred definition. Laissez-faire and liberal economists emphasize the degree to which
government does not have control over markets and the importance of property rights.[12]
[13]
Neoclassical and Keynesian macro-economists emphasize the need for government
regulation to prevent monopolies and to soften the effects of the boom and bust cycle.[14]
Marxian economists emphasize the role of capital accumulation, exploitation and wage
labor. Most political economists emphasize private property as well, in addition to power
relations, wage labor, class, and the uniqueness of capitalism as a historical formation.[6]

Proponents of capitalism argue that it creates more prosperity than any other economic
system, and that its benefits are mainly to the ordinary person.[15] Critics of capitalism
variously associate it with economic instability,[16] an inability to provide for the wellbeing of all people,[17] and an unsustainable danger to the natural environment.[18]
Socialists maintain that, although capitalism is superior to all previously existing
economic systems (such as feudalism or slavery), the contradiction between class
interests will only be resolved by advancing into a completely social system of
production and distribution in which all persons have an equal relationship to the means
of production.[19]
The term capitalism, in its modern sense, is often attributed to Karl Marx.[7][20] In his
magnum opus Capital, Marx analysed the "capitalist mode of production" using a method
of understanding today known as Marxism. However, Marx himself rarely used the term
capitalism, while it was used twice in the more political interpretations of his work,
primarily authored by his collaborator Friedrich Engels. In the 20th century defenders of
the capitalist system often replaced the term capitalism with phrases such as free
enterprise and private enterprise and replaced capitalist with rentier and investor in
reaction to the negative connotations associated with capitalism.[21]

History
Main article: History of capitalism
Economic trade for profit has existed since at least the second millennium BC.[22] Early
Islam promulgated capitalist economic policies, which migrated to Europe through trade
partners from cities such as Venice.[23][page needed] However, capitalism in its modern form is
usually traced to the emergence of agrarian capitalism and mercantilism of the Early
Modern era.

Agrarian capitalism
The economic foundations of the feudal agricultural system began to shift substantially in
16th century England; the manorial system had broken down by this time, and land began
to be concentrated in the hands of fewer landlords with increasingly large estates. Instead
of a serf-based system of labor, workers were increasingly being employed as part of a
broader and expanding money economy. The system put pressure on both the landlords
and the tenants to increase the productivity of the agriculture to make profit; the
weakened coercive power of the aristocracy to extract peasant surpluses encouraged them
to try out better methods, and the tenants also had incentive to improve their methods, in
order to flourish in an increasingly competitive labor market. Terms of rent for the land
were becoming subject to economic market forces rather than the previous stagnant
system of custom and feudal obligation. [24]
By the early 17th-century, England was a centralized state, in which much of the feudal
order of Medieval Europe had been swept away. This centralization was strengthened by
a good system of roads and a disproportionately large capital city, London. The capital

acted as a central market hub for the entire country, creating a very large internal market
for goods, instead of the fragmented feudal holdings that prevailed in most parts of the
Continent.

Mercantilism
Main article: Mercantilism
The economic doctrine that held sway between the sixteenth and eighteenth centuries is
commonly described as mercantilism.[25] This period, the Age of Discovery, was
associated with the geographic exploration of foreign lands by merchant traders,
especially from England and the Low Countries. Mercantilism was a system of trade for
profit, although commodities were still largely produced by non-capitalist production
methods.[7] Most scholars consider the era of merchant capitalism and mercantilism as the
origin of modern capitalism,[26][27] although Karl Polanyi argued that the hallmark of
capitalism is the establishment of generalized markets for what he referred to as the
"fictitious commodities": land, labor, and money. Accordingly, he argued that "not until
1834 was a competitive labor market established in England, hence industrial capitalism
as a social system cannot be said to have existed before that date."[28]
England began a large-scale and integrative approach to mercantilism during the
Elizabethan Era (15581603). A systematic and coherent explanation of balance of trade
was made public through Thomas Mun's argument England's Treasure by Forraign
Trade, or the Balance of our Forraign Trade is The Rule of Our Treasure. It was written
in the 1620s and published in 1664.[29]
Among the major tenets of mercantilist theory was bullionism, a doctrine stressing the
importance of accumulating precious metals. Mercantilists argued that a state should
export more goods than it imported so that foreigners would have to pay the difference in
precious metals. Mercantilists argued that only raw materials that could not be extracted
at home should be imported; and promoted government subsidies, such as the granting of
monopolies and protective tariffs, which mercantilists thought were necessary to
encourage home production of manufactured goods.
European merchants, backed by state controls, subsidies, and monopolies, made most of
their profits from the buying and selling of goods. In the words of Francis Bacon, the
purpose of mercantilism was "the opening and well-balancing of trade; the cherishing of
manufacturers; the banishing of idleness; the repressing of waste and excess by
sumptuary laws; the improvement and husbanding of the soil; the regulation of
prices ..."[30]
The British East India Company and the Dutch East India Company inaugurated an
expansive era of commerce and trade.[31][32] These companies were characterized by their
colonial and expansionary powers given to them by nation-states.[31] During this era,
merchants, who had traded under the previous stage of mercantilism, invested capital in
the East India Companies and other colonies, seeking a return on investment.

Industrial capitalism
A Watt steam engine. The steam engine fuelled primarily by coal propelled the Industrial
Revolution in Great Britain.[33]
A new group of economic theorists, led by David Hume[34] and Adam Smith, in the mid18th century, challenged fundamental mercantilist doctrines such as the belief that the
amount of the world's wealth remained constant and that a state could only increase its
wealth at the expense of another state.
During the Industrial Revolution, the industrialist replaced the merchant as a dominant
factor in the capitalist system and affected the decline of the traditional handicraft skills
of artisans, guilds, and journeymen. Also during this period, the surplus generated by the
rise of commercial agriculture encouraged increased mechanization of agriculture.
Industrial capitalism marked the development of the factory system of manufacturing,
characterized by a complex division of labor between and within work process and the
routine of work tasks; and finally established the global domination of the capitalist mode
of production.[25]
Britain also abandoned its protectionist policy, as embraced by mercantilism. In the 19th
century, Richard Cobden and John Bright, who based their beliefs on the Manchester
School, initiated a movement to lower tariffs.[35] In the 1840s, Britain adopted a less
protectionist policy, with the repeal of the Corn Laws and the Navigation Acts.[25] Britain
reduced tariffs and quotas, in line with David Ricardo's advocacy for free trade.

Globalization
The gold standard formed the financial basis of the international economy from 1870
1914.
Industrialization allowed cheap production of household items using economies of scale,
while rapid population growth created sustained demand for commodities. Globalization
in this period was decisively shaped by nineteenth-century imperialism.[36]
After the First and Second Opium Wars and the completion of British conquest of India,
vast populations of these regions became ready consumers of European exports. It was in
this period that areas of sub-Saharan Africa and the Pacific islands were incorporated into
the world system. Meanwhile, the conquest of new parts of the globe, notably subSaharan Africa, by Europeans yielded valuable natural resources such as rubber,
diamonds and coal and helped fuel trade and investment between the European imperial
powers, their colonies, and the United States.

The inhabitant of London could order by telephone, sipping his morning tea,
the various products of the whole earth, and reasonably expect their early
delivery upon his doorstep. Militarism and imperialism of racial and cultural

rivalries were little more than the amusements of his daily newspaper. What an
extraordinary episode in the economic progress of man was that age which
came to an end in August 1914.[37]
The global financial system was mainly tied to the gold standard in this period. The
United Kingdom first formally adopted this standard in 1821. Soon to follow was Canada
in 1853, Newfoundland in 1865, and the United States and Germany (de jure) in 1873.
New technologies, such as the telegraph, the transatlantic cable, the Radiotelephone, the
steamship and railway allowed goods and information to move around the world at an
unprecedented degree.[38]

Keynesianism and Monetarism

Main articles: Keynesianism and Monetarism
In the period following the global depression of the 1930s, the state played an
increasingly prominent role in the capitalistic system throughout much of the world. The
post war era was greatly influenced by Keynesian economic stabilization policies. The
postwar boom ended in the late 1960s and early 1970s, and the situation was worsened by
the rise of stagflation.[39]
Monetarism, a theoretical alternative to Keynesianism that is more compatible with
laissez-faire, gained increasing prominence in the capitalist world, especially under the
leadership of Ronald Reagan in the US and Margaret Thatcher in the UK in the 1980s.
Public and political interest began shifting away from the so-called collectivist concerns
of Keynes's managed capitalism to a focus on individual choice, called "remarketized
capitalism." [40]

Economic elements
The essential feature of capitalism is the investment of money in order to make a profit.
[41]

In a capitalist economic system capital assets can be owned and controlled by private
persons, labor is purchased for money wages, capital gains accrue to private owners, and
the price mechanism is utilized to allocate capital goods between competing uses. The
extent to which the price mechanism is used, the degree of competitiveness, the balance
between the public sector and the private sector, and the extent of government
intervention in markets are the factors which distinguish several forms of capitalism in
the modern world.[5]
In free-market and laissez-faire forms of capitalism, markets are utilized most extensively
with minimal or no regulation over the pricing mechanism. In mixed economies, which
are almost universal today,[42] markets continue to play a dominant role but are regulated
to some extent by government in order to correct market failures, promote social welfare,

conserve natural resources, fund defense and public safety or for other reasons. In state
capitalist systems, markets are relied upon the least, with the state relying heavily on
state-owned enterprises or indirect economic planning to accumulate capital.
Capitalism and capitalist economics is often contrasted with socialism, though the
meaning of the word socialism has changed over time. The original meaning of socialism
was state ownership of the means of production. Today, the word is often used to mean
any state control of economic decision-making.

Money, capital, and accumulation

Money is primarily a standardized medium of exchange, and final means of payment, that
serves to measure the value of all goods and commodities in a standard of value. It is an
abstraction of economic value and medium of exchange that eliminates the cumbersome
system of barter by separating the transactions involved in the exchange of products, thus
greatly facilitating specialization and trade through encouraging the exchange of
commodities. Capitalism involves the further abstraction of money into other
exchangeable assets and the accumulation of money through ownership, exchange,
interest and various other financial instruments.
The accumulation of capital refers to the process of "making money", or growing an
initial sum of money through investment in production. Capitalism is based around the
accumulation of capital, whereby financial capital is invested in order to realize a profit
and then reinvested into further production in a continuous process of accumulation. In
Marxian economic theory, this dynamic is called the law of value.

Capital and financial markets

The defining feature of capitalist markets, in contrast to markets and exchange in precapitalist societies like feudalism, is the existence of a market for capital goods (the
means of production), meaning exchange-relations (business relationships) exist within
the production process. Additionally, capitalism features a market for labor. This
distinguishes the capitalist market from pre-capitalist societies which generally only
contained market exchange for final goods and secondary goods. The "market" in
capitalism refers to capital markets and financial markets. Thus, there are three main
markets in a typical capitalistic economy: labor, goods and services, and financial.

Wage labor and class structure

Wage labor refers to the class-structure of capitalism, whereby workers receive either a
wage or a salary, and owners receive the profits generated by the factors of production
employed in the production of economic value. Individuals who possess and supply
financial capital to productive ventures become owners, either jointly (as shareholders) or
individually. In Marxian economics these owners of the means of production and
suppliers of capital are generally called capitalists. The description of the role of the
capitalist has shifted, first referring to a useless intermediary between producers to an

employer of producers, and eventually came to refer to owners of the means of

production.[21] The term capitalist is not generally used by supporters of mainstream
economics.
"Workers" includes those who expend both manual and mental (or creative) labor in
production, where production does not simply mean physical production but refers to the
production of both tangible and intangible economic value. "Capitalists" are individuals
who derive income from investments.
Labor includes all physical and mental human resources, including entrepreneurial
capacity and management skills, which are needed to produce products and services.
Production is the act of making goods or services by applying labor power.[43][44]

Macroeconomics
Macroeconomics keeps its eyes on things such as inflation: a general increase in prices
and fall in the purchasing value of money; growth: how much money a government has
and how quickly it accrues money; unemployment, and rates of trade between other
countries. Whereas microeconomics deals with individual firms, people, and other
institutions that work within a set frame work of rules to balance prices and the workings
of a singular government.
Both micro and macroeconomics work together to form a single set of evolving rules and
regulations. Governments (the macroeconomic side) set both national and international
regulations that keep track of prices and corporations' (microeconomics) growth rates, set
prices, and trade, while the corporations influence what federal laws are set.[45][46][47]

Types of capitalism
There are many variants of capitalism in existence that differ according to country and
region. They vary in their institutional makeup and by their economic policies. The
common features among all the different forms of capitalism is that they are based on the
production of goods and services for profit, predominately market-based allocation of
resources, and they are structured upon the accumulation of capital. The major forms of
capitalism are listed below:

Mercantilism
Main articles: Mercantilism and Protectionism
Mercantilism is a nationalist form of early capitalism that came into existence
approximately in the late 16th century. It is characterized by the intertwining of national
business interests to state-interest and imperialism, and consequently, the state apparatus
is utilized to advance national business interests abroad. An example of this is colonists
living in America who were only allowed to trade with and purchase goods from their
respective mother countries (Britain, France, etc.). Mercantilism holds that the wealth of

a nation is increased through a positive balance of trade with other nations, and
corresponds to the phase of capitalist development called the Primitive accumulation of
capital.

Free-market economy
See also: Free market and Laissez-faire
Free-market economy refers to 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 intervention by government policy. It typically entails
support for highly competitive markets, private ownership of productive enterprises.
Laissez-faire is a more extensive form of free-market economy where the role of the state
is limited to protecting property rights.

Social-market economy
Main articles: Social market and Nordic model
A social-market economy is a nominally free-market system where government
intervention in price formation is kept to a minimum but the state provides significant
services in the area of social security, unemployment benefits and recognition of labor
rights through national collective bargaining arrangements. This model is prominent in
Western and Northern European countries, and Japan, albeit in slightly different
configurations. The vast majority of enterprises are privately owned in this economic
model.
Rhine capitalism refers to the contemporary model of capitalism and adaptation of the
social market model that exists in continental Western Europe today.

State capitalism
Main article: State capitalism
State capitalism consists of state ownership of the means of production within a state, and
the organization of state enterprises as commercial, profit-seeking businesses. The debate
between proponents of private versus state capitalism is centered around questions of
managerial efficacy, productive efficiency, and fair distribution of wealth.
According to Aldo Musacchio, a professor at Harvard Business School, it is a system in
which governments, whether democratic or autocratic, exercise a widespread influence
on the economy, through either direct ownership or various subsidies. Musacchio also
emphasizes the difference between today's state capitalism and its predecessors. Gone are
the days when governments appointed bureaucrats to run companies. The world's largest
state-owned enterprises are traded on the public markets and kept in good health by large
institutional investors.[48]

Corporate capitalism
Main article: Corporate capitalism
See also: State monopoly capitalism and Crony capitalism
Corporate capitalism is a free or mixed-market economy characterized by the dominance
of hierarchical, bureaucratic corporations.

Mixed economy
Main article: Mixed economy
See also: Economic interventionism
A mixed economy is a largely 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. The degree of intervention in markets varies among different
countries. Some mixed economies, such as France under dirigisme, also featured a degree
of indirect economic planning over a largely capitalist-based economy.
Most capitalist economies are defined as "mixed economies" to some degree.

Other
Other variants of capitalism include:

Anarcho-capitalism
Community
capitalism
Crony capitalism

Finance capitalism

Financial capitalism
Late capitalism
Neo-capitalism

Supercapitalism
Technocapitalism

Welfare capitalism

Post-capitalism

Etymology and early usage

The term capitalist as referring to an owner of capital (rather than its meaning of
someone adherent to the economic system) shows earlier recorded use than the term
capitalism, dating back to the mid-17th century. Capitalist is derived from capital, which
evolved from capitale, a late Latin word based on caput, meaning "head" also the
origin of chattel and cattle in the sense of movable property (only much later to refer only
to livestock). Capitale emerged in the 12th to 13th centuries in the sense of referring to
funds, stock of merchandise, sum of money, or money carrying interest.[57][58][59] By 1283
it was used in the sense of the capital assets of a trading firm. It was frequently
interchanged with a number of other words wealth, money, funds, goods, assets,
property, and so on.[57]

The Hollandische Mercurius uses capitalists in 1633 and 1654 to refer to owners of
capital.[57] In French, tienne Clavier referred to capitalistes in 1788,[60] six years before
its first recorded English usage by Arthur Young in his work Travels in France (1792).[59]
[61]
David Ricardo, in his Principles of Political Economy and Taxation (1817), referred to
"the capitalist" many times.[62] Samuel Taylor Coleridge, an English poet, used capitalist
in his work Table Talk (1823).[63] Pierre-Joseph Proudhon used the term capitalist in his
first work, What is Property? (1840) to refer to the owners of capital. Benjamin Disraeli
used the term capitalist in his 1845 work Sybil.[59] Karl Marx and Friedrich Engels used
the term capitalist (Kapitalist) in The Communist Manifesto (1848) to refer to a private
owner of capital.
According to the Oxford English Dictionary (OED), the term capitalism was first used by
novelist William Makepeace Thackeray in 1854 in The Newcomes, where he meant
"having ownership of capital".[59] Also according to the OED, Carl Adolph Douai, a
German-American socialist and abolitionist, used the term private capitalism in 1863.
The initial usage of the term capitalism in its modern sense has been attributed to Louis
Blanc in 1850 and Pierre-Joseph Proudhon in 1861.[64] Karl Marx and Friedrich Engels
referred to the capitalistic system (kapitalistisches System)[65][66] and to the capitalist mode
of production (kapitalistische Produktionsform) in Das Kapital (1867).[67] The use of the
word "capitalism" in reference to an economic system appears twice in Volume I of Das
Kapital, p. 124 (German edition), and in Theories of Surplus Value, tome II, p. 493
(German edition). Marx did not extensively use the form capitalism, but instead those of
capitalist and capitalist mode of production, which appear more than 2600 times in the
trilogy Das Kapital.
Marx's notion of the capitalist mode of production is characterised as a system of
primarily private ownership of the means of production in a mainly market economy,
with a legal framework on commerce and a physical infrastructure provided by the state.
He believed that no legal framework was available to protect the laborers, and so
exploitation by the companies was rife.[68][page needed] Engels made more frequent use of the
term capitalism; volumes II and III of Das Kapital, both edited by Engels after Marx's
death, contain the word "capitalism" four and three times, respectively. The three
combined volumes of Das Kapital (1867, 1885, 1894) contain the word capitalist more
than 2,600 times.
An 1877 work entitled Better Times by Hugh Gabutt and an 1884 article in the Pall Mall
Gazette also used the term capitalism.[59] A later use of the term capitalism to describe the
production system was by the German economist Werner Sombart, in his 1902 book
Modern Capitalism (Der moderne Kapitalismus).[69] Sombart's close friend and colleague,
Max Weber, also used capitalism in his 1904 book The Protestant Ethic and the Spirit of
Capitalism (Die protestantische Ethik und der Geist des Kapitalismus).

Perspectives
Classical political economy

Main articles: Classical economics and Classical liberalism

The classical school of economic thought emerged in Britain in the late 18th century. The
classical political economists Adam Smith, David Ricardo, Jean-Baptiste Say, and John
Stuart Mill published analyses of the production, distribution and exchange of goods in a
market that have since formed the basis of study for most contemporary economists.
In France, 'Physiocrats' like Franois Quesnay promoted free trade based on a conception
that wealth originated from land. Quesnay's Tableau conomique (1759), described the
economy analytically and laid the foundation of the Physiocrats' economic theory,
followed by Anne Robert Jacques Turgot who opposed tariffs and customs duties and
advocated free trade. Richard Cantillon defined long-run equilibrium as the balance of
flows of income, and argued that the supply and demand mechanism around land
influenced short-term prices.
Smith's attack on mercantilism and his reasoning for "the system of natural liberty" in
The Wealth of Nations (1776) are usually taken as the beginning of classical political
economy. Smith devised a set of concepts that remain strongly associated with capitalism
today. His theories regarding the "invisible hand" are commonly interpreted to mean
individual pursuit of self-interest unintentionally producing collective good for society. It
was necessary for Smith to be so forceful in his argument in favor of free markets
because he had to overcome the popular mercantilist sentiment of the time period.[70]
He criticized monopolies, tariffs, duties, and other state enforced restrictions of his time
and believed that the market is the most fair and efficient arbitrator of resources. This
view was shared by David Ricardo, second most important of the classical political
economists and one of the most influential economists of modern times.[71]
In On the Principles of Political Economy and Taxation (1817), he developed the law of
comparative advantage, which explains why it is profitable for two parties to trade, even
if one of the trading partners is more efficient in every type of economic production. This
principle supports the economic case for free trade. Ricardo was a supporter of Say's Law
and held the view that full employment is the normal equilibrium for a competitive
economy.[72] He also argued that inflation is closely related to changes in quantity of
money and credit and was a proponent of the law of diminishing returns, which states that
each additional unit of input yields less and less additional output.[73]
The values of classical political economy are strongly associated with the classical liberal
doctrine of minimal government intervention in the economy, though it does not
necessarily oppose the state's provision of a few basic public goods.[74] Classical liberal
thought has generally assumed a clear division between the economy and other realms of
social activity, such as the state.[75]
While economic liberalism favors markets unfettered by the government, it maintains that
the state has a legitimate role in providing public goods.[76] For instance, Adam Smith
argued that the state has a role in providing roads, canals, schools and bridges that cannot

be efficiently implemented by private entities. However, he preferred that these goods

should be paid proportionally to their consumption (e.g. putting a toll). In addition, he
advocated retaliatory tariffs to bring about free trade, and copyrights and patents to
encourage innovation.[76]

Marxist political economy

Main article: Marxian economics
Karl Marx considered capitalism to be a historically specific mode of production (the
way in which the productive property is owned and controlled, combined with the
corresponding social relations between individuals based on their connection with the
process of production) in which capitalism has become the dominant mode of production.
[25]

The capitalist stage of development or "bourgeois society," for Marx, represented the
most advanced form of social organization to date, but he also thought that the working
classes would come to power in a worldwide socialist or communist transformation of
human society as the end of the series of first aristocratic, then capitalist, and finally
working class rule was reached.[77][78]
Following Adam Smith, Marx distinguished the use value of commodities from their
exchange value in the market. Capital, according to Marx, is created with the purchase of
commodities for the purpose of creating new commodities with an exchange value higher
than the sum of the original purchases. For Marx, the use of labor power had itself
become a commodity under capitalism; the exchange value of labor power, as reflected in
the wage, is less than the value it produces for the capitalist.
This difference in values, he argues, constitutes surplus value, which the capitalists
extract and accumulate. In his book Capital, Marx argues that the capitalist mode of
production is distinguished by how the owners of capital extract this surplus from
workersall prior class societies had extracted surplus labor, but capitalism was new in
doing so via the sale-value of produced commodities.[79] He argues that a core
requirement of a capitalist society is that a large portion of the population must not
possess sources of self-sustenance that would allow them to be independent, and must
instead be compelled, to survive, to sell their labor for a living wage.[80][81][82]
In conjunction with his criticism of capitalism was Marx's belief that the working class,
due to its relationship to the means of production and numerical superiority under
capitalism, would be the driving force behind the socialist revolution.[83] This argument is
intertwined with Marx's version of the labor theory of value arguing that labor is the
source of all value, and thus of profit.
Vladimir Lenin, in Imperialism, the Highest Stage of Capitalism (1916), further
developed Marxist theory and argued that capitalism necessarily led to monopoly
capitalism and the export of capitalwhich he also called "imperialism"to find new

markets and resources, representing the last and highest stage of capitalism.[84] Some
20th-century Marxian economists consider capitalism to be a social formation where
capitalist class processes dominate, but are not exclusive.[85]
Capitalist class processes, to these thinkers, are simply those in which surplus labor takes
the form of surplus value, usable as capital; other tendencies for utilization of labor
nonetheless exist simultaneously in existing societies where capitalist processes are
predominant. However, other late Marxian thinkers argue that a social formation as a
whole may be classed as capitalist if capitalism is the mode by which a surplus is
extracted, even if this surplus is not produced by capitalist activity, as when an absolute
majority of the population is engaged in non-capitalist economic activity.[86]
In Limits to Capital (1982), David Harvey outlines an overdetermined, "spatially restless"
capitalism coupled with the spatiality of crisis formation and resolution.[87] Harvey used
Marx's theory of crisis to aid his argument that capitalism must have its "fixes" but that
we cannot predetermine what fixes will be implemented, nor in what form they will be.
His work on contractions of capital accumulation and international movements of
capitalist modes of production and money flows has been influential.[88] According to
Harvey, capitalism creates the conditions for volatile and geographically uneven
development [89]

Weberian political sociology

In social science, the understanding of the defining characteristics of capitalism has been
strongly influenced by the German sociologist, Max Weber. Weber considered market
exchange, a voluntary supply of labor and a planned division of labor within the
enterprises as defining features of capitalism. Capitalist enterprises, in contrast to their
counterparts in prior modes of economic activity, were directed toward the rationalization
of production, maximizing efficiency and productivity a tendency embedded in a
sociological process of enveloping rationalization that formed modern legal
bureaucracies in both public and private spheres.[90] According to Weber, workers in precapitalist economies understood work in terms of a personal relationship between master
and journeyman in a guild, or between lord and peasant in a manor.[91]
For these developments of capitalism to emerge, Weber argued, it was necessary the
development of a "capitalist spirit"; that is, ideas and habits that favor a rational pursuit of
economic gain. These ideas, in order to propagate a certain manner of life and come to
dominate others, "had to originate somewhere ... as a way of life common to whole
groups of men".[90] In his book The Protestant Ethic and the Spirit of Capitalism (1904
1905), Weber sought to trace how a particular form of religious spirit, infused into
traditional modes of economic activity, was a condition of possibility of modern western
capitalism. For Weber, the 'spirit of capitalism' was, in general, that of ascetic
Protestantism; this ideology was able to motivate extreme rationalization of daily life, a
propensity to accumulate capital by a religious ethic to advance economically through
hard and diligent work, and thus also the propensity to reinvest capital. This was
sufficient, then, to create "self-mediating capital" as conceived by Marx.

This is pictured in the Protestant understanding of beruf [92] whose meaning encompass
at the same time profession, vocation, and calling as exemplified in Proverbs 22:29,
"Seest thou a man diligent in his calling? He shall stand before kings". In the Protestant
Ethic, Weber describes the developments of this idea of calling from its religious roots,
through the understanding of someone's economic success as a sign of his salvation, until
the conception that moneymaking is, within the modern economic order, the result and
the expression of diligence in one's calling.
Finally, as the social mores critical for its development became no longer necessary for
its maintenance, modern western capitalism came to represent the order "now bound to
the technical and economic conditions of machine production which today determine the
lives of all the individuals who are born into this mechanism, not only those directly
concerned with economic acquisition, with irresistible force. Perhaps it will so determine
them until the last ton of fossilized coal is burnt" (p. 123).[93] This is further seen in his
criticism of "specialists without spirit, hedonists without a heart" that were developing, in
his opinion, with the fading of the original Puritan "spirit" associated with capitalism.

Institutional economics
Main article: Institutional economics
Institutional economics, once the main school of economic thought in the United States,
holds that capitalism cannot be separated from the political and social system within
which it is embedded. It emphasizes the legal foundations of capitalism (see John R.
Commons) and the evolutionary, habituated, and volitional processes by which
institutions are erected and then changed.
One key figure in institutional economics was Thorstein Veblen who in his book, The
Theory of the Leisure Class (1899), analyzed the motivations of wealthy people in
capitalism who conspicuously consumed their riches as a way of demonstrating success.
The concept of conspicuous consumption was in direct contradiction to the neoclassical
view that capitalism was efficient.
In The Theory of Business Enterprise (1904) Veblen distinguished the motivations of
industrial production for people to use things from business motivations that used, or
misused, industrial infrastructure for profit, arguing that the former often is hindered
because businesses pursue the latter. Output and technological advance are restricted by
business practices and the creation of monopolies. Businesses protect their existing
capital investments and employ excessive credit, leading to depressions and increasing
military expenditure and war through business control of political power.

German Historical School and Austrian School

Main articles: Historical school of economics and Austrian School

From the perspective of the German Historical School, capitalism is primarily identified
in terms of the organization of production for markets. Although this perspective shares
similar theoretical roots with that of Weber, its emphasis on markets and money lends it
different focus.[25] For followers of the German Historical School, the key shift from
traditional modes of economic activity to capitalism involved the shift from medieval
restrictions on credit and money to the modern monetary economy combined with an
emphasis on the profit motive.
In the late 19th century, the German Historical School of economics diverged, with the
emerging Austrian School of economics, led at the time by Carl Menger. Later
generations of followers of the Austrian School continued to be influential in Western
economic thought in the early part of the 20th century.
Austrian-born economist Joseph Schumpeter, sometimes associated with the School,[94]
emphasized the "creative destruction" of capitalismthe fact that market economies
undergo constant change. Schumpeter argued that at any moment in time there are rising
industries and declining industries. Schumpeter, and many contemporary economists
influenced by his work, argue that resources should flow from the declining to the
expanding industries for an economy to grow, but they recognized that sometimes
resources are slow to withdraw from the declining industries because of various forms of
institutional resistance to change.
The Austrian economists Ludwig von Mises and Friedrich Hayek were among the leading
defenders of market economy against 20th century proponents of socialist planned
economies. Mises and Hayek argued that only market capitalism could manage a
complex, modern economy.
Since a modern economy produces such a large array of distinct goods and services, and
consists of such a large array of consumers and enterprises, argued Mises and Hayek, the
information problems facing any other form of economic organization other than market
capitalism would exceed its capacity to handle information. Thinkers within Supply-side
economics built on the work of the Austrian School, and particularly emphasize Say's
Law: "supply creates its own demand." Capitalism, to this school, is defined by lack of
state restraint on the decisions of producers.

Keynesian economics
Main article: Keynesian economics
In his 1937 The General Theory of Employment, Interest and Money, the British
economist John Maynard Keynes argued that capitalism suffered a basic problem in its
ability to recover from periods of slowdowns in investment. Keynes argued that a
capitalist economy could remain in an indefinite equilibrium despite high unemployment.
Essentially rejecting Say's law, he argued that some people may have a liquidity
preference that would see them rather hold money than buy new goods or services, which

therefore raised the prospect that the Great Depression would not end without what he
termed in the General Theory "a somewhat comprehensive socialization of investment."
Keynesian economics challenged the notion that laissez-faire capitalist economics could
operate well on their own, without state intervention used to promote aggregate demand,
fighting high unemployment and deflation of the sort seen during the 1930s. He and his
followers recommended "pump-priming" the economy to avoid recession: cutting taxes,
increasing government borrowing, and spending during an economic down-turn. This
was to be accompanied by trying to control wages nationally partly through the use of
inflation to cut real wages and to deter people from holding money.[95]
John Maynard Keynes tried to provide solutions to many of Marx's problems without
completely abandoning the classical understanding of capitalism. His work attempted to
show that regulation can be effective, and that economic stabilizers can rein in the
aggressive expansions and recessions that Marx disliked. These changes sought to create
more stability in the business cycle, and reduce the abuses of laborers. Keynesian
economists argue that Keynesian policies were one of the primary reasons capitalism was
able to recover following the Great Depression.[96] The premises of Keynes's work have,
however, since been challenged by neoclassical and supply-side economics and the
Austrian School.
Another challenge to Keynesian thinking came from his colleague Piero Sraffa, and
subsequently from the Neo-Ricardian school that followed Sraffa. In Sraffa's highly
technical analysis, capitalism is defined by an entire system of social relations among
both producers and consumers, but with a primary emphasis on the demands of
production. According to Sraffa, the tendency of capital to seek its highest rate of profit
causes a dynamic instability in social and economic relations.

Neoclassical economics and the Chicago School

Main article: Neoclassical economics
Today, the majority of academic research on capitalism in the English-speaking world
draws on neoclassical economic thought. It favors extensive market coordination and
relatively neutral patterns of governmental market regulation aimed at maintaining
property rights; deregulated labor markets; corporate governance dominated by financial
owners of firms; and financial systems depending chiefly on capital market-based
financing rather than state financing.
Milton Friedman took many of the basic principles set forth by Adam Smith and the
classical economists and gave them a new twist. One example of this is his article in the
September 1970 issue of The New York Times Magazine, where he argues that the social
responsibility of business is "to use its resources and engage in activities designed to
increase its profits ... (through) open and free competition without deception or fraud."
This is similar to Smith's argument that self-interest in turn benefits the whole of society.
[97]
Work like this helped lay the foundations for the coming marketization (or

privatization) of state enterprises and the supply-side economics of Ronald Reagan and
Margaret Thatcher.
The Chicago School of economics is best known for its free market advocacy and
monetarist ideas. According to Friedman and other monetarists, market economies are
inherently stable if left to themselves and depressions result only from government
intervention.[98]
Friedman, for example, argued that the Great Depression was result of a contraction of
the money supply, controlled by the Federal Reserve, and not by the lack of investment as
John Maynard Keynes had argued. Ben Bernanke, former Chairman of the Federal
Reserve, is among the economists today generally accepting Friedman's analysis of the
causes of the Great Depression.[99]
Neoclassical economists, who by 1998 constituted a majority of academic economists,[100]
subscribe to a subjective theory of value, according to which the value derived from
consumption of a good, rather than being objective and static, varies widely from person
to person and for the same person at different times. Adherence to a subjective theory of
value compels Neoclassical thinkers to reject the labor theory of value upheld by Adam
Smith and other classical liberal thinkers, which was grounded upon a conception of
objective value.
Neoclassical models typically adopt the assumptions of Marginalism, according to which
economic value results from marginal utility and marginal cost (the marginal concepts).
Marginalist theory implies that capitalists earn profits not by exploiting workers, but by
forgoing current consumption, taking risks, and organizing production.

Neoclassical economic theory

Neoclassical economics explain capitalism as made up of individuals, enterprises,
markets and government. According to their theories, individuals engage in a capitalist
economy as consumers, laborers, and investors. As laborers, individuals may decide
which jobs to prepare for, and in which markets to look for work. As investors they
decide how much of their income to save and how to invest their savings. These savings,
which become investments, provide much of the money that businesses need to grow.
Business firms decide what to produce and where this production should occur. They also
purchase inputs (materials, labor, and capital). Businesses try to influence consumer
purchase decisions through marketing and advertisement, as well as the creation of new
and improved products. Driving the capitalist economy is the search for profits (revenues
minus expenses). This is known as the profit motive, and it helps ensure that companies
produce the goods and services that consumers desire and are able to buy. To be
profitable, firms must sell a quantity of their product at a certain price to yield a profit. A
business may lose money if sales fall too low or if its costs become too high. The profit
motive encourages firms to operate more efficiently. By using less materials, labor or
capital, a firm can cut its production costs, which can lead to increased profits.

An economy grows when the total value of goods and services produced rises. This
growth requires investment in infrastructure, capital and other resources necessary in
production. In a capitalist system, businesses decide when and how much they want to
invest.
Income in a capitalist economy depends primarily on what skills are in demand and what
skills are being supplied. Skills that are in scarce supply are worth more in the market and
can attract higher incomes. Competition among workers for jobs and among
employers for skilled workers help determine wage rates. Firms need to pay high
enough wages to attract the appropriate workers; when jobs are scarce, workers may
accept lower wages than they would when jobs are plentiful. Trade union and
governments influence wages in capitalist systems. Unions act to represent their members
in negotiations with employers over such things as wage rates and acceptable working
conditions.

The market

The price (P) of a product is determined by a balance between production at each price
(supply, S) and the desires of those with purchasing power at each price (demand, D).
This results in a market equilibrium, with a given quantity (Q) sold of the product. A rise
in demand would result in an increase in price and an increase in output.
Supply is the amount of a good or service produced by a firm and which is available for
sale. Demand is the amount that people are willing to buy at a specific price. Prices tend
to rise when demand exceeds supply, and fall when supply exceeds demand. In theory,
the market is able to coordinate itself when a new equilibrium price and quantity is
reached.
Competition arises when more than one producer is trying to sell the same or similar
products to the same buyers. In capitalist theory, competition leads to innovation and
more affordable prices. Without competition, a monopoly or cartel may develop. A
monopoly occurs when a firm supplies the total output in the market; the firm can
therefore limit output and raise prices because it has no fear of competition. A cartel is a

group of firms that act together in a monopolistic manner to control output and raise
prices.

Role of government
Further information: Competition regulator, Consumer protection and Competition law
In a capitalist system, the government does not prohibit private property or prevent
individuals from working where they please. The government does not prevent firms
from determining what wages they will pay and what prices they will charge for their
products. Many countries, however, have minimum wage laws and minimum safety
standards.
Under some versions of capitalism, the government carries out a number of economic
functions, such as issuing money, supervising public utilities and enforcing private
contracts. Many countries have competition laws that prohibit monopolies and cartels
from forming. Despite anti-monopoly laws, large corporations can form near-monopolies
in some industries. Such firms can temporarily drop prices and accept losses to prevent
competition from entering the market, and then raise them again once the threat of entry
is reduced. In many countries, public utilities (e.g. electricity, heating fuel,
communications) are able to operate as a monopoly under government regulation, due to
high economies of scale.
Government agencies regulate the standards of service in many industries, such as
airlines and broadcasting, as well as financing a wide range of programs. In addition, the
government regulates the flow of capital and uses financial tools such as the interest rate
to control factors such as inflation and unemployment.[101]

Democracy, the state, and legal frameworks

Main article: History of capitalist theory

Private property
The relationship between the state, its formal mechanisms, and capitalist societies has
been debated in many fields of social and political theory, with active discussion since the
19th century. Hernando de Soto is a contemporary economist who has argued that an
important characteristic of capitalism is the functioning state protection of property rights
in a formal property system where ownership and transactions are clearly recorded.[102]
According to de Soto, this is the process by which physical assets are transformed into
capital, which in turn may be used in many more ways and much more efficiently in the
market economy. A number of Marxian economists have argued that the Enclosure Acts
in England, and similar legislation elsewhere, were an integral part of capitalist primitive
accumulation and that specific legal frameworks of private land ownership have been
integral to the development of capitalism.[103][104]

Institutions
New institutional economics, a field pioneered by Douglass North, stresses the need of a
legal framework in order for capitalism to function optimally, and focuses on the
relationship between the historical development of capitalism and the creation and
maintenance of political and economic institutions.[105] In new institutional economics and
other fields focusing on public policy, economists seek to judge when and whether
governmental intervention (such as taxes, welfare, and government regulation) can result
in potential gains in efficiency. According to Gregory Mankiw, a New Keynesian
economist, governmental intervention can improve on market outcomes under conditions
of "market failure", or situations in which the market on its own does not allocate
resources efficiently.[106]
Market failure occurs when an externality is present and a market will either underproduce a product with a positive externalization or overproduce a product that generates
a negative externalization. Air pollution, for instance, is a negative externalization that
cannot be incorporated into markets as the world's air is not owned and then sold for use
to polluters. So, too much pollution could be emitted and people not involved in the
production pay the cost of the pollution instead of the firm that initially emitted the air
pollution. Critics of market failure theory, like Ronald Coase, Harold Demsetz, and James
M. Buchanan argue that government programs and policies also fall short of absolute
perfection. Market failures are often small, and government failures are sometimes large.
It is therefore the case that imperfect markets are often better than imperfect
governmental alternatives. While all nations currently have some kind of market
regulations, the desirable degree of regulation is disputed.

Democracy
The relationship between democracy and capitalism is a contentious area in theory and
popular political movements. The extension of universal adult male suffrage in 19th
century Britain occurred along with the development of industrial capitalism, and
democracy became widespread at the same time as capitalism, leading many theorists to
posit a causal relationship between them, or that each affects the other. However, in the
20th century, according to some authors, capitalism also accompanied a variety of
political formations quite distinct from liberal democracies, including fascist regimes,
absolute monarchies, and single-party states.[25]
While some thinkers argue that capitalist development more-or-less inevitably eventually
leads to the emergence of democracy, others dispute this claim. Research on the
democratic peace theory indicates that capitalist democracies rarely make war with one
another[107] and have little internal violence. However, critics of the democratic peace
theory note that democratic capitalist states may fight infrequently and or never with
other democratic capitalist states because of political similarity or stability rather than
because they are democratic or capitalist.

Some commentators argue that though economic growth under capitalism has led to
democratization in the past, it may not do so in the future, as authoritarian regimes have
been able to manage economic growth without making concessions to greater political
freedom.[108][109] States that have highly capitalistic economic systems have thrived under
authoritarian or oppressive political systems. Singapore, which maintains a highly open
market economy and attracts lots of foreign investment, does not protect civil liberties
such as freedom of speech and expression. The private (capitalist) sector in the People's
Republic of China has grown exponentially and thrived since its inception, despite having
an authoritarian government. Augusto Pinochet's rule in Chile led to economic growth
and high levels of inequality[110] by using authoritarian means to create a safe environment
for investment and capitalism. Thomas Piketty of the Paris School of Economics asserts
that rising economic inequality is a natural consequence of capitalist activity, and is
destabilizing to democratic societies and undermines the ideals of social justice upon
which they are built.[111]
In response to criticism of the system, some proponents of capitalism have argued that its
advantages are supported by empirical research. Indices of Economic Freedom show a
correlation between nations with more economic freedom (as defined by the indices) and
higher scores on variables such as income and life expectancy, including the poor, in
these nations.

Advocacy for capitalism

Economic growth

World's GDP per capita shows exponential growth since the beginning of the Industrial
Revolution.[112]

Capitalism and the economy of the People's Republic of China

Many theorists and policymakers in predominantly capitalist nations have emphasized
capitalism's ability to promote economic growth, as measured by Gross Domestic
Product (GDP), capacity utilization or standard of living. This argument was central, for

example, to Adam Smith's advocacy of letting a free market control production and price,
and allocate resources. Many theorists have noted that this increase in global GDP over
time coincides with the emergence of the modern world capitalist system.[113][114]
Between 1000 and 1820, the world economy grew sixfold, a faster rate than the
population growth, so each individual enjoyed, on the average, a 50% increase in wealth.
Between 1820 and 1998, world economy grew 50-fold, a much faster rate than the
population growth, so each individual enjoyed, on the average, a 9-fold increase in
wealth.[115] In most capitalist economic regions such as Europe, the United States, Canada,
Australia and New Zealand, the economy grew 19-fold per person, even though these
countries already had a higher starting level, and in Japan, which was poor in 1820, the
increase per person was 31-fold. In the third world there was an increase, but only 5-fold
per person.[115]
Proponents argue that increasing GDP (per capita) is empirically shown to bring about
improved standards of living, such as better availability of food, housing, clothing, and
health care.[116] The decrease in the number of hours worked per week and the decreased
participation of children and the elderly in the workforce have been attributed to
capitalism.[117][118]
Proponents also believe that a capitalist economy offers far more opportunities for
individuals to raise their income through new professions or business ventures than do
other economic forms. To their thinking, this potential is much greater than in either
traditional feudal or tribal societies or in socialist societies.

Political freedom
In his book The Road to Serfdom, Freidrich Hayek asserts that the economic freedom of
capitalism is a requisite of political freedom. He argues that the market mechanism is the
only way of deciding what to produce and how to distribute the items without using
coercion. Milton Friedman, Andrew Brennan and Ronald Reagan also promoted this
view. Friedman claimed that centralized economic operations are always accompanied by
political repression. In his view, transactions in a market economy are voluntary, and that
the wide diversity that voluntary activity permits is a fundamental threat to repressive
political leaders and greatly diminish their power to coerce. Some of Friedman's views
were shared by John Maynard Keynes, who believed that capitalism is vital for freedom
to survive and thrive.[119][120]
The novelist and philosopher Ayn Rand made positive moral defences of laissez-faire
capitalism, most notably in her 1957 novel Atlas Shrugged, and in her 1966 collection of
essays Capitalism: The Unknown Ideal. She argued that capitalism should be supported
on moral grounds, not just on the basis of practical benefits.[121][122] She has significantly
influenced conservative and libertarian supporters of capitalism, especially in the
American Tea Party movement.[123]

Self-organization

Austrian School economists have argued that capitalism can organize itself into a
complex system without an external guidance or central planning mechanism. Friedrich
Hayek considered the phenomenon of self-organization as underpinning capitalism.
Prices serve as a signal as to the urgent and unfilled wants of people, and the opportunity
to earn profits if successful, or absorb losses if resources are used poorly or left idle,
gives entrepreneurs incentive to use their knowledge and resources to satisfy those wants.
Thus the activities of millions of people, each seeking his own interest, are coordinated.
[124]

Criticism
Main article: Criticism of capitalism
Critics of capitalism associate the economic system with social inequality; unfair
distribution of wealth and power; a tendency toward market monopoly or oligopoly (and
government by oligarchy); imperialism; counter-revolutionary wars; various forms of
economic and cultural exploitation; materialism; repression of workers and trade
unionists; social alienation; economic inequality; unemployment; and economic
instability. Notable critics of capitalism have included: socialists, anarchists, communists,
national socialists, social democrats, environmentalists, technocrats, some types of
conservatives, Luddites, Narodniks, Shakers, and some types of nationalists.
Many socialists consider capitalism to be irrational, in that production and the direction
of the economy are unplanned, creating many inconsistencies and internal contradictions.
[125]
Capitalism and individual property rights have been associated with the tragedy of the
anticommons. Marxian economist Richard D. Wolff postulates that capitalist economies
prioritize profits and capital accumulation over the social needs of communities, and
capitalist enterprises rarely include the workers in the basic decisions of the enterprise.[126]
Following the banking crisis of 2007, Alan Greenspan told the United States Congress on
October 23, 2008, "The whole intellectual edifice collapsed. I made a mistake in
presuming that the self-interests of organizations, specifically banks and others, were
such that they were best capable of protecting their own shareholders. ... I was
shocked."[127]
Some labor historians and scholars have argued that unfree labor by slaves, indentured
servants, prisoners or other coerced persons is compatible with capitalist relations.
Tom Brass argued that unfree labor is acceptable to capital.[128][129] Historian Greg Grandin
argues that capitalism has its origins in slavery: "when historians talk about the Atlantic
market revolution, they are talking about capitalism. And when they are talking about
capitalism, they are talking about slavery."[130]
According to Immanuel Wallerstein, institutional racism has been "one of the most
significant pillars" of the capitalist system and serves as "the ideological justification for
the hierarchization of the work-force and its highly unequal distributions of reward."[131]

Many aspects of capitalism have come under attack from the anti-globalization
movement, which is primarily opposed to corporate capitalism. Environmentalists have
argued that capitalism requires continual economic growth, and that it will inevitably
deplete the finite natural resources of the Earth.[18] Such critics argue that while this
neoliberalism or contemporary capitalism has indeed increased global trade, it has also
destroyed traditional ways of life, exacerbated inequality and increased global poverty with more living today in abject poverty than before neoliberalism, and that
environmental indicators indicate massive environmental degradation since the late
1970s.[132][133]
Many religions have criticized or opposed specific elements of capitalism. Traditional
Judaism, Christianity, and Islam forbid lending money at interest,[134][135] although
alternative methods of banking have been developed. Some Christians have criticized
capitalism for its materialist aspects and its inability to account for the wellbeing of all
people.[136] Many of Jesus' parables deal with economic concerns: farming, shepherding,
being in debt, doing hard labor, being excluded from banquets and the houses of the rich,
and have implications for wealth and power distribution.[137][138] In his 84-page apostolic
exhortation Evangelii Gaudium, Pope Francis described unfettered capitalism as "a new
tyranny" and called upon world leaders to fight rising poverty and inequality: [139]
Some people continue to defend trickle-down theories which assume that
economic growth, encouraged by a free market, will inevitably succeed in
bringing about greater justice and inclusiveness in the world. This opinion,
which has never been confirmed by the facts, expresses a crude and naive trust
in the goodness of those wielding economic power and in the sacralized
workings of the prevailing economic system. Meanwhile, the excluded are still
waiting.[140]

See also

Anti-capitalism
Le Livre noir du capitalisme 1998 French book (The Black Book of Capitalism)
Corporatocracy
Criticism of capitalism
Distributism
Economic democracy
Economics
Market socialism
Perspectives on capitalism
Varieties of Capitalism 2001 book

References

Bacher, Christian (2007). Capitalism, Ethics and the Paradoxon of SelfExploitation. Munich: GRIN Verlag. p. 2. ISBN 978-3-638-63658-2.
De George, Richard T. (1986). Business Ethics. New York: Macmillan. p. 104.
ISBN 978-0-02-328010-8.
Fulcher, James (2004). Capitalism A Very Short Introduction. Oxford: Oxford
University Press. ISBN 978-0-19-280218-7.
James, Paul; Gills, Barry (2007). Globalization and Economy, Vol. 1: Global
Markets and Capitalism. London: Sage Publications.
Lash, Scott; Urry, John (2000). "Capitalism". In Abercrombie, Nicholas; Hill,
Stephen; Turner, Bryan S. The Penguin Dictionary of Sociology (4th ed.).
London: Penguin Books. pp. 3640. ISBN 978-0-14-051380-6.
McCraw, Thomas K. (August 2011). "The Current Crisis and the Essence of
Capitalism". The Montreal Review. ISSN 0707-9656.
Obrinsky, Mark (1983). Profit Theory and Capitalism. Philadelphia: University of
Pennsylvania Press via Questia (subscription required). p. 1. ISBN 978-0-81227863-7.
Wolf, Eric R. (1982). Europe and the People Without History. Berkeley:
University of California Press. ISBN 978-0-520-04459-3.
Wood, Ellen Meiksins (2002). The Origin of Capitalism: A Longer View. London:
Verso. ISBN 978-1-85984-392-5.

Further reading

Alperovitz, Gar (2011). America Beyond Capitalism: Reclaiming Our Wealth,

Our Liberty, and Our Democracy, 2nd Edition. Democracy Collaborative Press.
ISBN 0984785701
Block, Fred; Somers, Margaret R. (2014). The Power of Market Fundamentalism:
Karl Polyani's Critique. Cambridge, MA: Harvard University Press. ISBN 978-0674-05071-6.
Harvey, David (2014). Seventeen Contradictions and the End of Capitalism.
Oxford University Press. ISBN 019936026X.
James, Paul; Patomki, Heikki (2007). Globalization and Economy, Vol. 2:
Global Finance and the New Global Economy. London: Sage Publications.
James, Paul; Palen, Ronen (2007). Globalization and Economy, Vol. 3: Global
Economic Regimes and Institutions. London: Sage Publications.
James, Paul; OBrien, Robert (2007). Globalization and Economy, Vol. 4:
Globalizing Labour. London: Sage Publications.
Mander, Jerry (2012). The Capitalism Papers: Fatal Flaws of an Obsolete
System. Counterpoint. ISBN 1619021587.
Mayfield, Anthony. "Economics", in his On the Brink: Resource Depletion, Debt
Collapse, and Super-technology ([Vancouver, B.C.]: On the Brink Publishing,
2013), pp. 50104. N.B.: The author, as well, frequently discusses aspects of
economics and capitalism elsewhere (passim.) in the book.
Musacchio, Aldo; Lazzarini, Sergio G. (2014). Reinventing State Capitalism:
Leviathan in Business, Brazil and Beyond. Cambridge, MA: Harvard University
Press. ISBN 978-0-674-72968-1.

Panitch, Leo, and Sam Gindin (2012). The Making of Global Capitalism: the
Political Economy of American Empire. London: Verso. ISBN 978-1-84467-742-9
Piketty, Thomas (2014). Capital in the Twenty-First Century. Cambridge, MA:
Belknap Press. ISBN 067443000X.
Polanyi, Karl (2001). The Great Transformation: The Political and Economic
Origins of Our Time. Beacon Press; 2 edition. ISBN 080705643X
Roberts, Paul Craig (2013). The Failure of Laissez-faire Capitalism: towards a
New Economics for a Full World. Atlanta, Ga.: Clarity Press. ISBN 978-09860362-5-5
Wallerstein, Immanuel (1983). Historical Capitalism. Verso Books.
ISBN 0860917614.
Wolff, Richard D. (2012). Democracy at Work: A Cure for Capitalism. Haymarket
Books. ISBN 1608462471.

Notes
1.

^ Capitalism Oxford Dictionaries. capitalism. an economic and

political system in which a countrys trade and industry are controlled by private
owners for profit, rather than by the state. Retrieved 4 January 2013.
2.
^ Chris Jenks. Core Sociological Dichotomies. Capitalism, as a mode of
production, is an economic system of manufacture and exchange which is geared
toward the production and sale of commodities within a market for profit, where
the manufacture of commodities consists of the use of the formally free labor of
workers in exchange for a wage to create commodities in which the manufacturer
extracts surplus value from the labor of the workers in terms of the difference
between the wages paid to the worker and the value of the commodity produced
by him/her to generate that profit. London, England, UK; Thousand Oaks,
California, USA; New Delhi, India: SAGE. p. 383.
3.
^ Heilbroner, Robert L. "capitalism." Durlauf, Steven N.and Lawrence E.
Blume, eds., The New Palgrave Dictionary of Economics. 2nd ed. (Palgrave
Macmillan, 2008) doi:10.1057/9780230226203.0198
4.
^ http://www.merriam-webster.com/dictionary/capitalism "an economic
system characterized by private or corporate ownership of capital goods, by
investments that are determined by private decision, and by prices, production,
and the distribution of goods that are determined mainly by competition in a free
market"
5.
^ a b Macmillan Dictionary of Modern Economics, 3rd Ed., 1986, p. 54.
6.
^ a b Stilwell, Frank. Political Economy: the Contest of Economic Ideas.
First Edition. Oxford University Press. Melbourne, Australia. 2002.
7.
^ a b c Scott, John (2005). Industrialism: A Dictionary of Sociology. Oxford
University Press.
8.
^ James, Paul; Gills, Barry (2007). Globalization and Economy, Vol. 1:
Global Markets and Capitalism. London: Sage Publications.
9.
^ a b Capitalism. Encyclopdia Britannica. 2006.
10.
^ James Fulcher, Capitalism, A Very Short Introduction, In one respect
there can, however, be little doubt that capitalism has gone global and that is in

the elimination of alternative systems. p. 99, Oxford University Press, 2004,

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Die Erhhung des Arbeitspreises bleibt also eingebannt in

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Die allgemeinen Grundlagen des kapitalistischen Systems einmal

gegeben, tritt im Verlauf der Akkumulation jedesmal ein Punkt ein, wo die
Entwicklung der Produktivitt der gesellschaftlichen Arbeit der
mchtigste Hebel der Akkumulation wird.

Wir sahen im vierten Abschnitt bei Analyse der Produktion des

relativen Mehrwerts: innerhalb des kapitalistischen Systems vollziehn

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External links

Capitalism on In Our Time at the BBC. (listen now)

Hessen, Robert (2008). Capitalism. The Concise Encyclopedia of Economics (2nd
ed.). Library of Economics and Liberty. ISBN 978-0865976658.
OCLC 237794267.
Center on Capitalism and Society at Columbia University
Center for the Study of Capitalism at Wake Forest University
Commonwealth Club of California-Dr. Yaron Brook and Dr. David Callahan: Is
Capitalism Moral? A Debate October 22, 2012
Basic Characteristics of Capitalism from textbooksfree.org