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Capitalism

Economic system based on private ownership of the means of production, in which personal profit can be acquired through investment of capital and employment of labor. Capitalism is grounded in the concept of free enterprise, which argues that government intervention in the economy should be restricted and that a free market, based on supply and demand, will ultimately maximize consumer welfare. These principles were most notably articulated in Adam Smith's treatise, The Wealth of Nations (1776), in which he opposed the prevailing theory of mercantilism. Capitalism has existed in a limited form in the economies of all civilizations, but its modern importance dates at least from the Industrial Revolution that began in the 18th cent., when bankers, merchants, and industrialists—the bourgeoisie—began to displace landowners in political, economic, and social importance, particularly in Great Britain. Capitalism stresses freedom of individual economic enterprise; however, government action has been and is required to curb its abuses, which have ranged from slavery (particularly in Britain and the United States) and apartheid (in South Africa) to monopoly cartels and financial fraud. Capitalism does not presuppose a specific form of social or political organization: the democratic socialism of the Scandinavian states, the consensus politics of Japan, and the state-sponsored rapid industrial growth of South Korea while under military dictatorship all coexist with capitalism. Yet despite the capitalist ideal of "hands–off" government, significant government intervention has existed in most capitalist nations at least since the Great Depression in the 1930s. In the United States, it exists in the form of subsidies, tax credits, incentives, and other types of exemptions. Though private production plays a major role in the economies of Germany and Japan, both nations have centrally planned industrial policies in which bankers, industrialists, and labor unions meet and seek to agree to wage policies and interest rates; these countries reject the idea of letting the market wholly determine the economy. The collapse of the Soviet Union and its satellite states in Eastern Europe (1989–91) left those countries with a heavy burden and an uncertain future, and represented a substantial retreat in the power of capitalism's traditional economic opponent, socialism. Also uncertain is the future course of China's economy, in which small-scale capitalism is increasingly allowed within a strictly Communist political framework.

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REFERENCES

  • Friedman, Milton, Capitalism and Freedom, Chicago: University of Chicago Press, 1962.
  • Galbraith, John Kenneth, The New Industrial State, 4th edition, Boston: Houghton Mifflin, 1985.
  • Hayek, F. A., The Road to Serfdom, Chicago: University of Chicago Press, 1944, new edition1994.
  • Heilbroner, Robert L., The Worldly Philosophers: The Lives, Times and Ideas of Great Economic Thinkers, 6th edition, New York: Simon and Schuster, 1986.
  • Hume, David, Writings on Economics, edited by Rotwein, Eugene, Madison: University of Wisconsin Press, 1970.
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From Credo

  • Marshall, Alfred, Principles of Economics, 9th edition, edited by Guillebaud, C. W., 2 vols, London and New York: Macmillan, 1961 (1st edition1890).
  • Marx, Karl, Capital, vol. 1: A Critical Analysis of Capitalist Production, London and New York: Penguin, 1976 (German edition1867).
  • Novak, Michael, The Spirit of Democratic Capitalism, New York: Simon and Schuster, 1982.
  • Schumpeter, Joseph A., Capitalism, Socialism, and Democracy, New York: Harper, 1941, London: Allen and Unwin, 1943; 6th editionLondon and Boston: Unwin, 1987.
  • Smith, Adam, An Inquiry into the Nature and Causes of the Wealth of Nations, edited by Sutherland, Kathryn, Oxford and New York: Oxford University Press. 1993(first published 1776).
  • Veblen, Thorstein, The Theory of the Leisure Class, New York: Macmillan, 1899;with an introduction by Robert Lekachman,London and New York: Penguin, 1994.
  • Anderson, Perry, Lineages of the Absolutist State, London: New Left Books, 1974.
  • Aston, Trevor (editor), Crisis in Europe, 1560-1660, London: Routledge and Kegan Paul, and New York: Basic Books, 1965.
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  • Brewer, John, The Sinews of Power: War, Money, and the English State, 1688-1783, London: Unwin Hyman, and New York: Knopf, 1989.
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  • Stone, Lawrence, Social Change and Revolution in England, 1540-1640, London: Longman, 1965; New York: Barnes and Noble, 1970.
  • Sweezy, Paul et al., The Transition from Feudalism to Capitalism, London: Fore Publications, 1954; revised edition, introduced by Rodney Hilton, London: New Left Books, and Atlantic Highlands, New Jersey: Humanities Press, 1976.
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  • Taylor, Arthur J. (editor), The Standard of Living in Britain in the Industrial Revolution, London: Methuen, 1975.
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  • Thompson, E P., The Making of the English Working Class, New York: Vintage, and London: Gollancz, 1963.
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  • Wallerstein, Immanuel, The Modern World-System, 3 vols, New York: Academic Press, 1974-89.
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  • Anderson, T. and Leal, D. (1991) Free Market Environmentalism, Boulder, CO: Westview Press.
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  • Carter, A. (1993) ‘Towards a Green Political Theory’, in Dobson, A and Lucardie, P (eds) The Politics of Nature, London: Routledge.
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  • Oser, Jacob (1963) The Evolution of Economic Thought, New York: Harcourt, Brace & World.
  • Werhane, Patricia H. (1991) Adam Smith and His Legacy for Modern Capitalism, Oxford and New York: Oxford University Press.

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