Authors: Bogdanor
Summary: In approximately 1300 words, this entry defines capitalism, briefly discusses its historical origins, presents Marx's theories about the concept, introduces some critiques of these theories, and concludes by analyzing capitalism's contemporary evolution.
The term capitalism identifies a particular form of economic organization that became increasingly dominant during the nineteenth century industrial era. This modern conception arose primarily from Marx, who viewed capitalism as a specific stage of economic development. Marx argued that societies differ historically from each other primarily due to different forms of labor organization. He further wrote that labor has been primarily class-based since the rise of agriculture, with the means of production privately owned and a dependent class of wage laborers. Despite this seemingly coercive system, capitalism requires free and voluntary exchange between sovereign individuals. Marx believed capitalism was a transient mode of production and would ultimately give way to socialism.
Critics of Marx argued that capitalism is nothing new, but rather a universal aspect of all social and economic systems, and capitalism does not necessarily have to give way to socialism. According to Max Weber and others, modern economies are capitalist only because they institutionalize rational economic conduct.
The entry concludes with a discussion about capitalism's evolving characteristics. Three specific changes are identified as especially significant for capitalism's evolution: the rise of modern corporate capital, the expanded role of the state and political participation among the working class through trade unions and other democratic means. The entry provides illustrative examples of each of these changes.