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Feudalism and mercantilism in Europe
- Capitalism developed out of feudalism and mercantilism in Europe and dramatically expanded industrialization and the large-scale availability of mass-market consumer goods.
www.investopedia.com/terms/c/capitalism.aspWhat Is Capitalism: Varieties, History, Pros & Cons, Socialism
Capitalism is an economic system based on the private ownership of the means of production. This is generally taken to imply the moral permissibility of profit, free trade, capital accumulation, voluntary exchange, wage labor, etc. Its emergence, evolution, and spread are the subjects of extensive research and debate.
- Overview
- History of capitalism
Also known as: free enterprise economy, free market economy, private enterprise economy
Written byRobert L. Heilbroner,
Robert L. Heilbroner
Norman Thomas Professor Emeritus of Economics, New School for Social Research, New York City. Author of The Worldly Philosophers; The Nature and Logic of Capitalism; and others.
Peter J. Boettke
Peter J. Boettke
Although the continuous development of capitalism as a system dates only from the 16th century, antecedents of capitalist institutions existed in the ancient world, and flourishing pockets of capitalism were present in Europe during the later Middle Ages. The development of capitalism was spearheaded by the growth of the English cloth industry during the 16th, 17th, and 18th centuries. The feature of this development that distinguished capitalism from previous systems was the use of accumulated capital to enlarge productive capacity rather than to invest in economically unproductive enterprises, such as pyramids and cathedrals. This characteristic was encouraged by several historical events.
In the ethic fostered by the Protestant Reformation of the 16th century, traditional disdain for acquisitive effort was diminished while hard work and frugality were given a stronger religious sanction. Economic inequality was justified on the grounds that the wealthy were more virtuous than the poor.
Another contributing factor was the increase in Europe’s supply of precious metals and the resulting inflation in prices. Wages did not rise as fast as prices in this period, and the main beneficiaries of the inflation were the capitalists. The early capitalists (1500–1750) also enjoyed the benefits of the rise of strong national states during the mercantilist era. The policies of national power followed by these states succeeded in providing the basic social conditions, such as uniform monetary systems and legal codes, necessary for economic development and eventually made possible the shift from public to private initiative.
Beginning in the 18th century in England, the focus of capitalist development shifted from commerce to industry. The steady capital accumulation of the preceding centuries was invested in the practical application of technical knowledge during the Industrial Revolution. The ideology of classical capitalism was expressed in An Inquiry into the Nature and Causes of the Wealth of Nations (1776), by the Scottish economist and philosopher Adam Smith, which recommended leaving economic decisions to the free play of self-regulating market forces. After the French Revolution and the Napoleonic Wars had swept the remnants of feudalism into oblivion, Smith’s policies were increasingly put into practice. The policies of 19th-century political liberalism included free trade, sound money (the gold standard), balanced budgets, and minimum levels of poor relief. The growth of industrial capitalism and the development of the factory system in the 19th century also created a vast new class of industrial workers whose generally miserable working and living conditions inspired the revolutionary philosophy of Karl Marx (see also Marxism). Marx’s prediction of the inevitable overthrow of capitalism in a proletarian-led class war proved shortsighted, however.
Adam Smith, paste medallion by James Tassie, 1787; in the Scottish National Portrait Gallery, Edinburgh.
Courtesy of the Scottish National Portrait Gallery, Edinburgh
From early commercial capitalism in the Arab world, China, and Europe, to nineteenth- and twentieth-century industrialization, to today's globalized financial capitalism, Jürgen Kocka offers an unmatched account of capitalism, one that weighs its great achievements against its great costs, crises, and failures.
- Jürgen Kocka
May 8, 2024 · Capitalism is an economic and political system where trade and industry are controlled by private owners for profit. Its core principles are accumulation, ownership, and profiting from capital.
- Daniel Liberto
- 2 min
Explain the evolution of economic theories from mercantilism to capitalism; Analyze the ways in which mechanization challenged existing social, economic, and political structures; Discuss the ideological responses to capitalism, including Marxism
Jan 7, 2018 · In fact, the system of capitalism has gone through three distinct epochs, beginning with mercantile, moving on to classical (or competitive), and then evolving into Keynesianism or state capitalism in the 20th century before it would morph once more into the global capitalism we know today.
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Why did capitalism emerge first in Europe? Independent cities, a multi-state structure, and the Protestant ethic provided a favourable socio-economic environment within which capitalism could develop.
