Capitalism is an economic system based on the private ownership of the means of production and their operation for profit. Central characteristics of capitalism include capital accumulation, competitive markets, and a price system. Here is a detailed overview:
The roots of capitalism can be traced back to the Renaissance and the Age of Exploration, but it truly began to take shape during the Industrial Revolution in the 18th and 19th centuries. This period saw significant changes in agriculture, manufacturing, and transportation, which led to increased trade and economic expansion.
The theoretical foundation of capitalism was laid by economists like Adam Smith with his concept of the "invisible hand," where individual self-interest in a free market leads to economic well-being for society as a whole. Later, Karl Marx critiqued capitalism, predicting its eventual downfall due to inherent contradictions, particularly the exploitation of labor.
Capitalism has been criticized for creating economic inequality, promoting consumerism, and leading to environmental degradation. Defenders argue that capitalism drives innovation, raises living standards, and provides economic freedom. The debate continues with various schools of thought like Neoliberalism, which advocates for free market policies, and more regulated or mixed economy models.
Capitalism has spread globally, influencing economic policies worldwide. Organizations like the World Bank and the International Monetary Fund often promote policies aligned with capitalist principles to foster economic development.