Capitalism

Capitalism has been the dominant economic system in the world since at least the 18th century. Its main pillars are private property, profit and wage labor.

Capitalism It is an economic system that has its roots at the end of the European feudal period, having been consolidated since the First Industrial Revolution, which took place in Europe in the 18th century. Capitalism corresponds to the dominant system in the world today, based on private property, profit, wage labor, the market economy and a society formed by classes.

See also: Transition from feudalism to capitalism — how industry reshaped the mode of production

Summary on Capitalism

Capitalism is the prevailing economic system in the world today.
Its origins date back to the end of feudalism and the rise of mercantilism.
It was definitively installed at the time of the First Industrial Revolution, in the 18th century.
Its main characteristics are:private ownership of the means of production, the pursuit of profit, wage labor, division of society into classes and a market economy.
It is divided into three phases:commercial, industrial and monopolistic (or financial).
Socialism emerged as an alternative system to capitalism.

Video Lesson on Capitalism

What is capitalism?

Capitalism is an economic system which was consolidated after the First Industrial Revolution , which took place in the 18th century, and is currently prevalent among all countries in the world. The foundations of capitalism are founded on the private ownership of the means of production, on the profit that is obtained through the productive process and on the division of society into different classes, namely the bourgeoisie and the proletariat.

The presence of capitalism in society is not restricted to the structure of the economy. It permeates the organization and political structure of territories, especially in the current phase of monopoly (or financial) capitalism, with the coexistence of the State and the market in the context of decision-making and with sociocultural relations around the world, which can be observed, for example, in consumption patterns and speed.

Origin of Capitalism

Although capitalism was only consolidated in the 18th century, in what became known as its industrial phase, its origins go back to earlier periods , even when the feudal system of social, political and economic organization was predominant on the European continent. More precisely, many sociologists and historians argue that this new system began to emerge at the time of crisis and subsequent end of feudalism, which took place between the 14th and 15th centuries.

Among the social and economic transformations that were taking place in the period was the formation of small workshops of artisanal production , which made the worker who used to own a piece of land now sell his labor power to guarantee his subsistence, which is an incipient form of work (wage-earners), which is characteristic of capitalism. This period was described by Karl Marx as that of primitive accumulation.

The owners of these facilities who managed to prosper and increase their establishments ended up later forming the bourgeois class, owner of capital and means of production. The workers, who are the proletarian class, became increasingly alienated from the productive means and impoverished, being holders only of their own workforce.

The capital accumulated in that first moment allowed the emergence of the first industries , which happened in England during the 18th century, starting a new phase of the capitalist system. It was mainly from the 19th century onwards that capitalism advanced on a larger scale throughout the world, becoming increasingly robust until it reached its current stage.

Also read: Mercantilism — the set of European economic practices between the 15th and 18th centuries

What are the characteristics of capitalism?

Capitalism has important characteristics that allow us to distinguish it from other economic systems. We list some of them below.

Private ownership of means of production: This is perhaps the main characteristic of capitalism. The means of production, which are the manufacturing facilities and all the equipment used in the development of a certain activity, are the property of an individual or group, and not of the group of workers or the State. In a broader sense, private or individual property lies at the heart of capitalism.
Making profit and accumulating wealth: making a profit on production is one of the aspects of capitalism in all its different phases.
Division of society into classes: in the capitalist system, the two main classes into which society is divided are the bourgeoisie, which owns the means of production, and the proletariat, which corresponds to the workforce.
Salaried work: the proletarian, since he does not own the means of production, sells his labor power, thus receiving a periodic payment, which is the salary.
Market economy ruled by the laws of demand and demand: In theory, there are no intermediaries between consumers and producers. The consumer market is responsible for generating a demand, whether or not it is met by production, which is also decisive in the cost of that product or service to the final consumer. In this sense, the system is also based on free competition between establishments.

Types of Capitalism

The history of the formation of capitalism shows us that it developed through phases that reflect the historical and technical period in which they belong. In view of this, three types of capitalism are identified .

Commercial capitalism: characterizes the beginning of the formation of the capitalist system and the expansion of commercial activity on an initially regional and then global scale, with the advent of mercantilism and the Great Navigations of the 16th century.
Industrial Capitalism: corresponds to the second phase of capitalism. It developed in 18th century England, with the emergence of industry and the mechanization of production processes, in addition to the rearrangement of the international economy in a new division of labor.
Monopoly or financial capitalism: this type of capitalism developed between the end of the 19th century and the beginning of the 20th century, with the advent of the international financial system and the gradual increase in banking and speculative capital. From the 1970s onwards, the improvement of communication and information technologies combined with the expansion of multinationals expanded the scope of the market's presence on an international scale, reinforcing the process of financialization of the current economic system.

Differences between capitalism and socialism

socialism emerged as a counterpoint to capitalism during the 18th century , questioning the working conditions offered in the industrial units and the deepening of class inequalities that were observed in the period.

He aimed at a profound reform in the social and economic structures typical of the capitalist system for the establishment of an egalitarian society under a new economic system, a common characteristic between the two strands of socialism:utopian and scientific. However, while the first proposes a kind of systematic adaptation, the second is known as a revolutionary current for proposing a class struggle and the end of private property.

Also read :Crisis of 1929 — one of the biggest economic crises in the history of capitalism

What are the advantages and disadvantages of capitalism?

Capitalism has its advantages and disadvantages. Among the advantages of this economic system we can mention the great diversification of the market that is provided by free competition , leaving the consumer to choose which brand and product he will purchase. From a business perspective, this system of competition favors technological advances in production and the search for constant improvements.

In contrast, capitalism is a system that has periodic crises that affect society as a whole and that can take many years for the economy to recover to levels considered normal, like the world economic crises of 1929 and 2008. In addition, there is a very uneven accumulation of wealth under capitalism, which creates and deepens inequalities social, especially if we consider the groups that are at the extremes — the wealthiest and the poorest.

Resolved Exercises on Capitalism

Question 1

(Enem) The more complicated industrial production became, the more numerous were the elements of the industry that required a guarantee of supply. Three of them were of fundamental importance:work, land and money. In a commercial society, this supply could only be organized in one way:making them available for purchase. Now they had to be arranged for sale in the market. This was in line with the requirement of a market system. We know that in such a system, profits can only be ensured if self-regulation is guaranteed through interdependent competitive markets.

POLANYI, K. The Great Transformation:The Origins of Our Time. Rio de Janeiro:Campus, 2000 (Adapted).

The consequence of the socio-economic transformation process addressed in the text is the

a) expansion of communal lands.

b) limiting the market as a means of speculation.

c) consolidation of the workforce as a commodity.

d) decrease in trade as an effect of industrialization.

e) adequacy of money as a standard element of transactions.

Resolution:

C Alternative

One of the consequences of the transformation process mentioned in the text is the emergence of wage labor, a dynamic in which workers sell their labor as a commodity.

Question 2

(Unicamp) The year 2008 saw the beginning of a world capitalist crisis that continues to the present day. It is a similar crisis, in its amplitude, to the Great Depression of 1929. However, despite receiving the same designation (crisis), this prolonged capitalist crisis differs in its global context and in specific traits from that of 1929, mainly due to the process of financialization that emerged at the end of the 20th century and which allows for immense accumulations of capital.

About this financialized capitalist crisis it is correct to say that

a) is derived from the overproduction of manufactured goods, especially linked to the basic industry, in crisis with the expansion of financing.

b) is produced by the high demand of consumption in poor countries, which has led to an increase in financing for the purchase of goods.

c) results from financial speculation that, without going through the production systems, propitiate accumulations in fictitious capital.

d) proceeds from financial speculation, generating surpluses in the capital goods industry and demanding larger sums in financing.

Resolution:

C Alternative

The financial crisis is the one resulting from a structure based on speculation, in which very high risks are often assumed based on fictitious capital (which does not yet exist) with a promise of return which, due to lack of real capital, will not be implemented, as happened in the case of the mortgage crisis that triggered a global economic crisis in 2008.