Capitalism Flashcards
(9 cards)
Who Invented Capitalism?
Modern capitalist theory is traditionally traced to the 18th-century treatise An Inquiry into the Nature and Causes of the Wealth of Nations by Scottish political economist Adam Smith, and the origins of capitalism as an economic system can be placed in the 16th century.
When Did Capitalism Start?
The rise of capitalism followed the decline of feudalism in Europe. Under feudalism, peasants had little opportunity to improve their situation, with society structured around lords, knights, and kings. However, between the 16th and 19th centuries, demands for autonomy and accountability led to the fall of feudalism. This, alongside events like the Protestant Reformation and the Industrial Revolution, paved the way for modern capitalism.
Religion in Capitalism
Although religion may not seem to have a strong impact on a state economy, it was nonetheless a motivating force in the development of capitalism. Many Christians, especially Protestants, valued material wealth and the skilled management of money and resources as a sign of God’s approval and blessing.
Modern Capitalism
Modern capitalism, developed during the Enlightenment, was championed by Adam Smith, known as the “Father of Economics.” In his work Wealth of Nations, Smith promoted a free market with minimal government interference, where supply and demand regulated businesses. This system evolved from earlier practices of private ownership and market forces into the capitalism we know today.
What is the Definition of Capitalism?
Capitalism refers to a system where individuals have the freedom to operate their businesses and manage their income. In capitalism, you can offer services, set the admission price, charge whatever you want, and keep the net profit. Capitalism allows companies the right to make decisions for their company and grow it as big as the market will support.
Types of Capitalism
There are different types of capitalism. Their range includes advanced capitalism, corporate capitalism, finance capitalism, social capitalism, and free-market capitalism.
Taxes and Capitalism
In a capitalistic system, taxes are a set rate and do not require individuals’ entire earnings to be surrendered to the government. Advocates for capitalism normally oppose taxes as they believe the free market should provide the majority of services instead of the government.
Capitalism vs Socialism
Capitalism and socialism differ in ownership, competition, and social distinctions:
Ownership: In capitalism, citizens have private ownership; in socialism, ownership is shared.
Competition: Capitalism encourages competition, leading to better products, while socialism often lacks competition, resulting in lower-quality goods.
Social Distinctions: Capitalism can lead to vast wealth inequality, while socialism ensures more equality among citizens.
Criticisms of Capitalism
Critics of capitalism argue it leads to inequality, as successful businesses can monopolize the market, pushing others out. In a pure laissez-faire system, wealth disparity grows, and basic services may become privately owned, requiring tolls. This makes capitalism impractical, potentially shifting toward communism. Some advocate for a balanced approach, with more market influence and less government control.
