Capitalism
Capitalism is an economic system based on the private ownership of the means of production and their operation for profit.[1][2][3][4][5] Central characteristics of capitalism include capital accumulation, competitive markets, price systems, private property, property rights recognition, voluntary exchange, and wage labor.[6][7][8] In a market economy, decision-making and investments are determined by owners of wealth, property, or ability to maneuver capital or production ability in capital and financial markets—whereas prices and the distribution of goods and services are mainly determined by competition in goods and services markets.[9]
This article is about an economic system. For other uses, see Capitalism (disambiguation).
Economists, historians, political economists, and sociologists have adopted different perspectives in their analyses of capitalism and have recognized various forms of it in practice. These include laissez-faire or free-market capitalism, anarcho-capitalism, state capitalism, and welfare capitalism. Different forms of capitalism feature varying degrees of free markets, public ownership,[10] obstacles to free competition, and state-sanctioned social policies. The degree of competition in markets and the role of intervention and regulation, as well as the scope of state ownership, vary across different models of capitalism.[11][12] The extent to which different markets are free and the rules defining private property are matters of politics and policy. Most of the existing capitalist economies are mixed economies that combine elements of free markets with state intervention and in some cases economic planning.[13]
Capitalism in its modern form emerged from agrarianism in England, as well as mercantilist practices by European countries between the 16th and 18th centuries. The Industrial Revolution of the 18th century established capitalism as a dominant mode of production, characterized by factory work and a complex division of labor. Through the process of globalization, capitalism spread across the world in the 19th and 20th centuries, especially before World War I and after the end of the Cold War. During the 19th century, capitalism was largely unregulated by the state, but became more regulated in the post–World War II period through Keynesianism, followed by a return of more unregulated capitalism starting in the 1980s through neoliberalism.
Market economies have existed under many forms of government and in many different times, places, and cultures. Modern industrial capitalist societies developed in Western Europe in a process that led to the Industrial Revolution. Capitalist economies promote economic growth through accumulation of capital, however a business cycle of economic growth followed by recession is a common characteristic of such economies.[14]
Definition[edit]
There is no universally agreed upon definition of capitalism; it is unclear whether or not capitalism characterizes an entire society, a specific type of social order, or crucial components or elements of a society.[34] Societies officially founded in opposition to capitalism (such as the Soviet Union) have sometimes been argued to actually exhibit characteristics of capitalism.[35] Nancy Fraser describes usage of the term "capitalism" by many authors as "mainly rhetorical, functioning less as an actual concept than as a gesture toward the need for a concept".[8] Scholars who are uncritical of capitalism rarely actually use the term "capitalism".[36] Some doubt that the term "capitalism" possesses valid scientific dignity,[34] and it is generally not discussed in mainstream economics,[8] with economist Daron Acemoglu suggesting that the term "capitalism" should be abandoned entirely.[37] Consequently, understanding of the concept of capitalism tends to be heavily influenced by opponents of capitalism and by the followers and critics of Karl Marx.[36]