Capitalism

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Capitalism is an economic system in which wealth, and the means of producing wealth, are privately owned and controlled rather than commonly, publicly, or state-owned and controlled.[1] Through capitalism, the land, labor, and capital are owned, operated, and traded by private individuals either singly or jointly, and investments, distribution, income, production, pricing and supply of goods, commodities and services are determined by voluntary private decision in a market economy. A distinguishing feature of capitalism is that each person owns his or her own labor and therefore is allowed to sell the use of it to employers. In a "capitalist state", private rights and property relations are protected by the rule of law of a limited regulatory framework. In the modern capitalist state, legislative action is confined to defining and enforcing the basic rules of the market though the state may provide some public goods and infrastructure.

Some consider laissez-faire to be "pure capitalism." Laissez-faire (French, "leave to do (by itself)"), signifies minimizing or eliminating state interference in economic affairs and the competitive process, allowing the free play of supply and demand. Laissez-faire capitalism has never existed in practice.[2][3][4] Because all large economies today have a mixture of private and public ownership and control, some feel that the term "mixed economies" more precisely describes most contemporary economies. In the "capitalist mixed economy", the state intervenes in market activity and provides many services."all of the capitalistic societies of the West have mixed economies that temper capitalism" with interventionist government regulation and social programs.

During the last century capitalism has often been contrasted with planned economy|centrally planned economies. The central axiom of Capitalism is that the best allocation of resources is achieved through consumers having free choice, and producers responding accordingly to meet collective consumer demand. This contrasts with planned economies in which the state directs what shall be produced. A consequence is the belief that privatizatio of previously state-provided services will tend to achieve a more efficient delivery thereof. Further implications are usually in favor of free trade, and abolition of subsidies. Although individuals and groups must act rationaly in any society for their own good, the consequences of both rational and irrational actions are said to be more readily apparent in a capitalist society.

Capitalistic economic practices have incrementally become institutionalized in England between the 16th and 19th centuries, although some features of capitalist organization existed in the ancient world, and early aspects of merchant capitalism flourished during the Late Middle Ages. Capitalism has been dominant in the Western world since the end of feudalism. From Britain, it gradually spread throughout Europe, across political and cultural frontiers. In the 19th and 20th centuries, capitalism provided the main, but not exclusive, means of industrialization throughout much of the world.

Etymology

Other terms sometimes used for capitalism, include:

The etymology of the word capital has roots in the trade and ownership of animals. The Latin root of the capital is capitalis, from the proto-Indo-European kaput, which means "head", this being how wealth was measured. The terms chattel and cattle itself also derive from this same origin.

According to the Oxford English Dictionary,A New English Dictionary on Historical Principles. Oxford English Press. Vol 2. page 94. capitalism was first used by novelist William Makepeace Thackeray in 1854, by which he meant by having ownership of capital. Arthur Young first used the term capitalist of his economic surveys in his work Travels in France (1792).Travels in France Samuel Taylor Coleridge an English poet, used capitalist in his work Table Talk (1823),Tabel The Complete Works of Samuel Taylor Coleridge. page 267 and Benjamin Disraeli used capitalist in the 1845 work 'Sybil.

Pierre-Joseph Proudhon used capitalist is his first work What is Property? (1840) to refer to the owners of capital. Karl Marx and Friedrich Engels also used capitalist (Kapitalist) as a private owner of capital in The Communist Manifesto (1848), and referred the capitalistic system (kapitalistischen System) Karl Marx. Chapter Sixteen: Absolute and Relative Surplus-Value. Das Kapital.

Die Verlängrung des Arbeitstags über den Punkt hinaus, wo der Arbeiter nur ein Äquivalent für den Wert seiner Arbeitskraft produziert hätte, und die Aneignung dieser Mehrarbeit durch das Kapital - das ist die Produktion des absoluten Mehrwerts. Sie bildet die allgemeine Grundlage des kapitalistischen Systems und den Ausgangspunkt der Produktion des relativen Mehrwerts.}}
The prolongation of the working-day beyond the point at which the labourer would have produced just an equivalent for the value of his labour-power, and the appropriation of that surplus-labour by capital, this is production of absolute surplus-value. It forms the general groundwork of the capitalist system, and the starting-point for the production of relative surplus-value.
Karl Marx. Chapter Twenty-Five: The General Law of Capitalist Accumulation. Das Kapital.
  • Die Erhöhung des Arbeitspreises bleibt also eingebannt in Grenzen, die die Grundlagen des kapitalistischen Systems nicht nur unangetastet lassen, sondern auch seine Reproduktion auf wachsender Stufenleiter sichern
  • Die allgemeinen Grundlagen des kapitalistischen Systems einmal gegeben, tritt im Verlauf der Akkumulation jedesmal ein Punkt ein, wo die Entwicklung der Produktivität der gesellschaftlichen Arbeit der mächtigste Hebel der Akkumulation wird.}}
  • Wir sahen im vierten Abschnitt bei Analyse der Produktion des relativen Mehrwerts: innerhalb des kapitalistischen Systems vollziehn sich alle Methoden zur Steigerung der gesellschaftlichen Produktivkraft der Arbeit auf Kosten des individuellen Arbeiters;}}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.<ref>Karl Marx. Das Kapital.</ref>

According to the OED, Carl Adolph Douai, a German-American ssocialist and abolitionist, used private capitalism in 1863. A work entitled Better Times (1877) and an unknown author in 1884 of the Pall Mall Gazette also used capitalism

However, the first use of capitalism to describe the production system was the German economist Werner Sombart, in his 1902 book The Jews and Modern Capitalism (Die Juden und das Wirtschaftsleben). 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).[11]