Capitalism
The word capitalist appeared in the Hollantse Mercurius newspaper during 1653 and 1654 to describe owners of capital. This Dutch publication used the term four years before Arthur Young recorded its first English usage in his 1792 work Travels in France. The root word capital evolved from a late Latin term meaning head, which also gave us words like chattel and cattle. By 1283, merchants used this concept to refer to the assets of trading firms alongside terms like wealth, money, funds, goods, and property. Louis Blanc coined the modern sense of capitalism in 1850 when he defined it as the appropriation of capital by some to the exclusion of others. Pierre-Joseph Proudhon followed with his own definition in 1861 describing an economic regime where capital does not generally belong to those who make it work through labor. Karl Marx frequently discussed the capitalist mode of production in Das Kapital published in 1867 but rarely used the specific word capitalism itself. The Oxford English Dictionary records the first appearance of the full term in William Makepeace Thackeray's novel The Newcomes during 1854. Carl Adolph Douai, a German American socialist and abolitionist, introduced private capitalism in 1863. Robert Hessen argued that the term itself is a misnomer for economic individualism because it was coined by critics of the system.
Cosimo de Medici built an international financial empire in Florence during the early Renaissance era. This city-state became one of the first centers of agrarian capitalism before the Industrial Revolution took hold. England began shifting its feudal agricultural system substantially during the 16th century as manorial systems broke down. Land concentrated into fewer hands while workers transitioned from serfdom to money-based employment. Thomas Mun wrote England's Treasure by Forraign Trade in the 1620s and published it in 1664 to explain balance of trade. The British East India Company and Dutch East India Company inaugurated expansive commerce after massive contributions from Mughal Bengal. David Hume and Adam Smith challenged fundamental mercantilist doctrines during the mid-18th century. Richard Cobden and John Bright initiated movements to lower tariffs based on Manchester School beliefs during the 19th century. Britain adopted less protectionist policies with the 1846 repeal of the Corn Laws and the 1849 repeal of the Navigation Acts. The gold standard formed the financial basis of the global economy from 1870 until 1914. The United Kingdom formally adopted this standard in 1821 followed by Canada in 1853 and Newfoundland in 1865. New technologies like telegraphs, transatlantic cables, steamships, and railways allowed goods to move worldwide unprecedentedly. Contemporary capitalist societies developed in the West from 1950 to present with relevant examples starting in the United States after the 1950s. France began its development after the 1960s while Spain started after the 1970s. Poland joined the system after 2015. The postwar boom ended in the late 1960s and early 1970s when stagflation rose. Ronald Reagan served as US president from 1981 to 1989 while Margaret Thatcher led the UK from 1979 to 1990. The end of the Cold War and dissolution of the Soviet Union allowed capitalism to become truly global again.
Private ownership of means of production defines capitalism alongside profit motive and capital accumulation. Hernando de Soto argued that functioning state protection of property rights creates formal systems where transactions are clearly recorded. These legal frameworks transform physical assets into capital usable efficiently within market economies. Wage labor refers to selling labor power under formal or informal employment contracts to employers. All labor contracts bind workers legally to fulfill obligations undertaken during their tenure. Transactions occur in labor markets where wages remain market-determined rather than fixed by custom. Adam Smith described competition in The Wealth of Nations published in 1776 as allocating productive resources to most highly valued uses. He believed a prosperous society required everyone free to enter and leave markets changing trades as often as they pleased. Supply and demand models determine prices until quantity demanded equals quantity supplied resulting in economic equilibrium. David Besanko and Ronald Braeutigam outlined four basic laws governing these interactions between buyers and sellers. If demand increases while supply remains unchanged, shortages emerge leading to higher equilibrium prices. Decreased demand with constant supply creates surpluses driving lower equilibrium prices. Fleeming Jenkin published the first graphical representation of supply and demand curves in his 1870 essay On the Graphical Representation of Supply and Demand. Alfred Marshall popularized this model further through his 1890 textbook Principles of Economics. Henry Hazlitt explained profit functions according to rational choice theory stating businesses seek benefits for themselves or shareholders. Socialist theorists note capitalists accumulate profits expecting rates to stay constant causing problems when earnings elsewhere do not increase proportionally.
Advanced capitalism describes societies where the capitalist model integrated deeply over prolonged periods. Antonio Gramsci sought to explain how capitalism adapted to avoid revolutionary overthrow during the 19th century. Jürgen Habermas observed concentration of industrial activity in few large firms alongside reliance on state stabilization. Corporate capitalism characterizes economies dominated by hierarchical bureaucratic corporations rather than individual entrepreneurs. Finance capital subordinates production processes to money profit accumulation within financial systems. Rudolf Hilferding brought finance capitalism into prominence through his 1910 study Finance Capital examining links between German trusts banks and monopolies. Vladimir Lenin concluded banks operated as chief nerve centers of entire national economic systems during early 20th century. Free market economies set prices entirely by supply and demand forces without government intervention. Laissez-faire capitalism limits state roles to protecting property rights while anarcho-capitalists propose private firms protect these rights instead. Mercantilism emerged approximately late 16th century intertwining national business interests with state imperialism. Colonialists lived in America allowed only trade with respective mother countries like United Kingdom France and Portugal. Social market economies keep government price formation minimal yet provide significant services including social security health care unemployment benefits. Rhine capitalism represents contemporary adaptation existing throughout continental Western Europe today. State capitalism dominates markets through state-owned enterprises organized as commercial profit-seeking businesses. Yugoslavia exemplified this designation during parts of 20th and 21st centuries especially among former Eastern Bloc nations. Ludwig von Mises argued state capitalism differed only non-essentially from earlier labels of state socialism or planned economy. Welfare capitalism includes social welfare policies most often associated with Nordic models found across Central and Northern Europe. Mixed economies combine both private public ownership alongside macroeconomic policies intended correcting market failures reducing unemployment keeping inflation low.
Criticism of capitalism comes from anarchist socialist religious nationalist viewpoints seeking removal through revolution or slow modification via reforms. Opponents allege inherent exploitation alienating unsustainable economically inefficient creation massive economic inequality commodification degradation environment undemocratic nature inability providing full employment embedding uneven development nation states erosion human rights incentivization imperialist expansion war. Milton Friedman promoted ethic maximizing shareholder value creating harmful form while Millard Fuller John Bogle advocated ethic enough creating sustainable forms. Equitable ethics unified ethical decision-making theorized create less damaging forms of capitalism overall. Inheritance argued not fundamental part capitalism instead constituting nepotism rather than essential mechanism. Al Gore David Blood described sustainable capitalism integrating environmental social governance aspects risk assessment limiting externalities within Generation Investment Management manifesto. Changes current model require heavy social environmental economic implications demanding efforts individuals compliance local state federal governments. Controversy surrounds concept requiring increase sustainable practices marked decrease current consumptive behaviors despite recognition importance recently. Karl Polanyi argued hallmark capitalism establishment generalized markets fictitious commodities land labor money existing before 1834 when competitive labor market established England. Industrial capitalism social system cannot exist before that date according to his analysis Great Transformation published later. Critics argue inequities due not ethic-neutral construct economic system commonly known capitalism but ethics those shaping executing system.
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Common questions
When did the word capitalist first appear in print?
The word capitalist appeared in the Hollantse Mercurius newspaper during 1653 and 1792. Arthur Young recorded its first English usage four years after this Dutch publication, specifically in his 1792 work Travels in France.
Who coined the modern sense of capitalism and when was it defined?
Louis Blanc coined the modern sense of capitalism in 1850 when he defined it as the appropriation of capital by some to the exclusion of others. Pierre-Joseph Proudhon followed with his own definition in 1861 describing an economic regime where capital does not generally belong to those who make it work through labor.
What defines private ownership of means of production in capitalism?
Private ownership of means of production defines capitalism alongside profit motive and capital accumulation. Hernando de Soto argued that functioning state protection of property rights creates formal systems where transactions are clearly recorded.
Which countries adopted the gold standard and when did they do so?
The United Kingdom formally adopted the gold standard in 1821 followed by Canada in 1853 and Newfoundland in 1865. This standard formed the financial basis of the global economy from 1870 until 1914.
When did contemporary capitalist societies develop in the West after World War II?
Contemporary capitalist societies developed in the West from 1950 to present with relevant examples starting in the United States after the 1950s. France began its development after the 1960s while Spain started after the 1970s and Poland joined the system after 2015.