Capitalism

The Capitalism is an economic system in which private entities have in their hands the factors of production . The four factors are entrepreneurship , capital goods , natural resources, and work . The owners of capital goods, natural resources and entrepreneurship exercise control through the companies. Although people have jobs, the only exception is slavery , where someone else owns a person’s job. Although illegal throughout the world, slavery is still widely practiced.

What is capitalism?

Capitalism is that the ownership of productive resources is private , in other words, that these resources must belong to the people and not an organization such as the State. He believes that the market is the best mechanism to satisfy the needs of individuals and therefore believes that it is necessary to promote private property and competition .

Source

Capitalism as an economic system emerged in the 13th century in Europe , and replaced feudalism . It arose to propose work in exchange for wages instead of servitude or slavery .

Historians consider that the origin of capitalism arose from the small trading towns of Europe. The road to capitalism in the thirteenth century took hold thanks to the philosophy of the Renaissance and the Reformation , movements that made the emergence of modern states easier .

Crisis of capitalism

The crisis of the capitalist system began during the First World War at the moment when Russia left the system. As a consequence there was a division of the systems and socialism began to develop displacing capitalism. The second stage of the crisis occurred in the Second World War, when Europe and Asia also left the system.

The crisis affected the economy and the state part , including politics , ideology and the life in general of societies. The main factors that generated the crisis were the rate of profits , the problems that arose with underconsumption and the disproportions of the economic systems .

features

Among the most outstanding characteristics of capitalism we can mention the following:

• The owners control all the factors of production that exist.
• Your income is derived from your property.
• They have the ability to operate their businesses in a very efficient manner .
• Provides the incentive necessary to maximize profits. This incentive is the reason why many capitalists say that greed is good .
• In corporations, the shareholders are the owners.
• Shareholders elect a board of directors and are responsible for hiring executives to run the company.
• It requires a free market economy to be successful.
• Distribute goods and services in accordance with the laws of supply and demand .

Beginning

The basic principles of capitalism are as follows:

• Profit-profit: This is the basic principle of capitalism, the desire to obtain as much capital as possible.
• Private property and individual action: if the resources are in the hands of people other than the State, then they will work more until they generate their own resources.
• Competition and survival of the fittest: competition is basic and new competitors are expected to emerge to generate competition.
• Supply and demand: individuals and companies work individually, but with coordinated actions to satisfy the needs of the market.

Elements

Capitalism has four basic elements: large-scale capital , the concentration of private property, the fundamental labor force, and the proletariat .

Types of capitalism

There are several types of capitalism, among which we mention the following:

• Mercantilism and protectionism : nationalist form characterized by the union of commercial interests through the state and imperialism.
• Free market capitalism: characterized by hiring volunteers without the intervention of third parties. Prices are set by supply and demand.
• Social market economy: State intervention is minimal, but it provides security services, unemployment benefits and recognizes labor rights.
• Corporate Capitalism: Hierarchical and bureaucratic corporations have the upper hand.
• Mixed economy: it is based on the market and there is a relationship between private and public property in terms of the means of production and interventionism.
• Venture capitalism: it is considered a society at risk and has a re-flexibility process where production systems are not centralized.

Stages

The stages of capitalism are:

• Commercial or mercantile capitalism:  it occurred in the 15th and 18th centuries. It became known by the name of mercantilism . Portugal, Spain , Holland, England and France used this type of capitalism and explored new lands, conquered slaves, precious metals and other resources to get rich.
• Industrial capitalism:  it occurred at the time of the Industrial Revolution .
• Financial capitalism: it  emerged after the Second World War when companies exported means of production due to high competition and the growth of the industry.

Causes

The causes of capitalism are various, the progressive collapse of feudal serfdom , the small growth of agrarian income , peasant revolts , mainly in the Holy Roman Empire, which is currently known as Germany, the migration of the nobility to the cities, the desire to unite the families of the bourgeois and noble classes .

Consequences

Capitalism affects human beings in their living conditions, the different problems of society such as unemployment , poverty and lack of education are some of these problems. It is a system based on social injustice and the poor distribution of wealth , which has come to create dictatorships and different systems of oppression that are financed by foreign capital . The lack of work, the infant mortality rate and the discrimination of social groups are some of its consequences since capitalism always seeks the enrichment of a small group.

Advantage

Capitalism has the advantage that it produces the best products at the best prices . That’s because consumers will pay more for what they want most. Companies provide what customers want at higher prices and prices are kept low by competition between companies.

They make your production as efficient as possible to maximize profits. More important for economic growth what it is the intrinsic reward of the capitalist innovation. This includes innovation in production methods which become more efficient as well as new product innovation .

Disadvantages

It is not made for people who do not have competitive skills . To maintain the functioning of society, capitalism requires government policies that value the family unit, however, it does not promote equal opportunities .

In the short term, inequality may seem like the best thing for the winners of capitalism because in this way they have fewer competitive threats . They can also use their power to manipulate the system by creating barriers to entry.

Ignore external costs like pollution and climate change which make everything cheaper. But over time, natural resources are depleted and the quality of life in affected areas decreases and costs increase for everyone.

Representatives of capitalism

Its main representatives are:

• Karl Marx
• Adam smith
• John Locke
• David ricardo
• Thomas Malthus

Examples

As an example of capitalist countries we can mention Germany, Austria, United States, Holland, Argentina , Canada, Brazil, Hong Kong, South Korea, Algeria.