CAPITALISM

INTRODUCTION
Definitions:

Capitalism is a social system based on the

recognition of individual rights, including property
rights, in which all property is privately owned.
(Source:
http://aynrandlexicon.com/lexicon/capitalism.html)

Capitalism is the economic system in which the

means of production are predominantly privately
owned and operated for profit, and distribution and
exchange is in a mainly market economy. (Source:
http://www.philosophybasics.com/branch_capitalism.html)

Capitalism is the only

moral social system
because it is the only
system that respects the
freedom of the producers
to think and the right of
the individual to set his
own goals and pursue his
own happiness.

- The Moral Basis of

Capitalism by Robert W.
Tracinski

HISTORY OF
CAPITALISM

Although some
features of Capitalist
organization existed in
the ancient world (e.g. the
early Roman Empire, the
medieval Caliphate in the
Middle East), Capitalist
economic practices became
institutionalized
in England between
the 16th and 19th
Centuries, and then spread
throughout Europe.

During the16th to
the 18th
Centuries, mercantilis
m became dominant in
Europe.

Mercantilism the
economic theory that
the prosperity of a
nation depends upon
the accumulation of
gold and silver.

The classical
tradition in Capitalist
thought emerged
in Britain in the late
18th Century, with
Adam Smith, David
Ricardo, and John
Stuart Mill, as well
as with JeanBaptiste Say (1767 1832) in France.
English philosopher
John Locke - argued
that the right to
private property is
a natural right.

A. SMITH

D. RICARDO

J. S. MILL

J. LOCKE

In his "The Wealth of

Nations" (1776), Adam
Smith
criticized monopolies, t
ariffs, duties, and
other state-enforced
restrictions of his time.
He devised theory of
the "invisible hand :
the pursuit of individual
selfinterest unintentionally
produces a collective
good for society.
ADAM SMITH

David Ricardo, in his

"The Principles of
Political Economy
and Taxation"
(1817), developed
the law of
comparative
advantage which
explains
how trade can
benefit all
parties involved as
long as they produce
goods with
different relative
costs.
DAVID RICARDO

In the wake of industrialization, the repeal

of restrictive laws, and the teachings
of Adam Smith and David
Ricardo, laissez-faire Capitalism gained
favour over mercantilism in Britain in
the mid-19th Century.
Mid 19th-Century Capitalism was marked by
the concentration of capital into large
monopolistic or oligopolistic holdings by
banks and financiers, and by the growth
of large corporations.

During the late 19th

and early 20th
Century, Capitalism
set itself in opposition
to the rising tide
of Socialist, Marxist
(Karl Marx), and
Communist thought,
and to the whole
concept of centrallyplanned economies.

KARL MARX

FRIEDRICH ENGELS

By the end of the 19th

Century, economic
depressions and "boo
m and bust" business
cycles had become a
recurring problem. In
particular, the Long
Depression of the
1870s and 1880s and
the Great
Depression of the
1930s affected almost
the entire capitalist
world.

After the long postwar boom, during

which the
Keynesian "state
capitalism" was in
the ascendant, a new
push towards laissezfaire Capitalism and
classical Liberalism w
as led by the
economists Friedrich
Hayek and Milton
Friedman.

J. M. KEYNES

F. H. HAYEK

M. FRIEDMAN

SOME CRITICISMS OF
CAPITALISM
1. The free market and property
rights
Philosophers Pierre-Joseph
Proudhon and Friedrich
Engels have argued that the
free market is not necessarily
free, but weighted towards those
who already own property,
forcing those without property to
sell their labor to capitalists and
to accept low wages in order to
survive.
FRIEDRICH ENGELS

2. Profit and exploitation

Since capitalists control
the means of
production (e.g. factories,
businesses, machinery) and
workers control only
their labour, the worker is
naturally coerced into
allowing their labour to be
exploited, and is not paid
according to the true worth of
his labour but arbitrarily
according to what the
employer is willing to pay.

3. Democracy
Off-cited examples include workers not being able
to criticize their employer out of risk of
getting fired, and not being able to express their
thoughts due to lack of money to afford access to
the social media.
4. Religious
The Catholic Church forbids usury, and in
2013, Pope Francis attacked capitalism as a
"tyranny" that judged human beings purely by
their ability to consume goods. The Pope said that
the "dictatorship" of the global financial system
and the "cult of money" were making people
miserable.