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Legal Dictionary

capitalism

Definition of capitalism

Etymology

    From the Latin capitalis via the English root capital

First used by novelist William Thackeray in 1854 to mean "owners of capital", within a few years was being used by both Pierre Proudhon and Karl Marx as a pejorative for property-based, free market economics. Eventually caught on to widespread use politically, whether seen as good or bad.

Noun

capitalism (countable and uncountable; plural capitalisms)

  1. (politics, uncountable) a socio-economic system based on private property rights, including the private ownership of resources or capital, with economic decisions made largely through the operation of an unregulated market.
  2. (economics, uncountable) a socio-economic system based on the abstraction of resources into the form of privately-owned capital, with economic decisions made largely through the operation of an unregulated market.
  3. (countable) a specific variation or implementation of either such socio-economic system.

Further reading

Capitalism is an economic and social system in which capital, the non-labor factors of production (also known as the means of production), is privately owned; labor, goods and capital are traded in markets; and profits distributed to owners or invested in technologies and industries.

There is no consensus on the definition of capitalism, nor how it should be used as an analytical category. There are a variety of historical cases over which it is applied, varying in time, geography, politics and culture. Economists, political economists and historians have taken different perspectives on the analysis of capitalism. Scholars in the social sciences, including historians, economic sociologists, economists, anthropologists and philosophers have debated over how to define capitalism, however there is little controversy that private ownership of the means of production, creation of goods or services for profit in a market, and prices and wages are elements of capitalism.

Economists usually put emphasis on the market mechanism, degree of government control over markets (laissez faire), and property rights, while most political economists emphasize private property, power relations, wage labor, and class. There is a general agreement that capitalism encourages economic growth. The extent to which different markets are "free", as well as the rules determining what may and may not be private property, is a matter of politics and policy and many states have what are termed "mixed economies."

Capitalism as a system developed incrementally from the 16th century in Europe, although capitalist-like organizations existed in the ancient world, and early aspects of merchant capitalism flourished during the Late Middle Ages. Capitalism became dominant in the Western world following the demise of feudalism. Capitalism gradually spread throughout Europe, and in the 19th and 20th centuries, it provided the main means of industrialization throughout much of the world.

References:

  1. Wiktionary. Published under the Creative Commons Attribution/Share-Alike License.



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