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What is Capitalism?

Capitalism is a system of production and economic organization in which the factors of production are majorly owned by private individuals rather than the government. As an economic system, capitalism incorporates certain features such as free enterprise, market price determination mechanisms, perfectly competitive markets in some instances, private ownership of property, accumulation of capital, and paid labour. Individually owned businesses are usually operated based on the profit motive but in some cases may incorporate elements of not-for profit organizations.

Forms of Capitalism

There is hardly any nation that runs an idealistically pure capitalist economy. Usually, there are various levels of government control and intervention thereby leaving economists, social and political scientists to conclude that most nations that are described as being capitalists are in fact of mixed economies. Consequently, historians, economists and political economists have acknowledged that there are in fact various models of capitalism practiced by the capitalist nations of the world. These forms of capitalism include: free market - or laissez- faire - capitalism, welfare capitalism, crony capitalism as well as state capitalism among others. In each of these models, various levels of state control via social policies by government are exercised.

History of Capitalism

Capitalism in its present form began to emerge around the sixteenth century. It is important to recognize the fact that for capitalism to emerge, certain important societal conditions had to emerge and merge to create conditions suitable for capitalism to develop and thrive. Some of these conditions include: technologies for the mass production of goods, opportunity for private ownership of land, property and other factors of production, a suitable framework of legal processes for the protection of individual rights and liberties, an emergent working class, physical infrastructure for mass distribution of goods, and security for individual or private stock of capital. The rise of agrarian capitalism especially in England in the sixteenth century as well as the spread of mercantilism - explorative and exploitative ventures of merchants in foreign lands - in Europe aided the emergence of capitalism as a system of economic organization. The industrial revolution which took place in England in the 18th century was spurred by the theories of a new breed of economists, notably, Adam Smith, who propounded economic theories that challenged the predominant mercantilism and paved the way for full-fledged capitalism to emerge.

Criticism of Capitalism

Some of the criticisms levelled against capitalism include the fact that the emphasis of the capitalist on wage labour is likened to slavery and the endless accumulation of wealth by a relatively few number of individuals give rise to acute income inequalities and undue economic and political power in the hands of a few individuals.

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