Capitalism definition Study Sections

    Capitalism is a socio-economic and socio-political system that came to replace feudalism initially in the countries of the West, and during the 20th century, spread throughout the globe. Capitalism, like any other socio-political system, is characterized by its political institutions, property and other relations, social class composition, economic infrastructure, etc. Accordingly, capitalism is based on a particular ideological paradigm, which includes the most critical components of liberalism, conservatism, social democracy and other leading socio-philosophical and ideological-political trends.

    Such thinkers of the New Age as T. Hobbes, J. Locke, Sh. Montesquieu, I. Kant, representatives of the European and American Enlightenment, classical political economy, and the French physiocrats made a significant contribution to the formation of the fundamental principles, values, and attitudes of the capitalist worldview. M. Weber connected the origin of the “spirit of capitalism” with the formation and adoption of Protestant ethics, especially with the valuesof vocation, diligence, enterprise and thrift. The basic system-forming principles and attitudes of capitalism were formulated in the famous work of A. Smith, “The Study of the Nature and Causes of the Wealth of Nations” (1776), the works of the founding fathers and leading representatives of the classical political economy, such as D. Ricardo, J. Say. The milestones in the formation and establishment of capitalist relations are the English bourgeois revolution of the mid-17th century, the war for US independence and the Great French Revolution of the late 18th century, as well as a series of bourgeois revolutions of the 19th century. From the formation of the social and economic system of capitalism, the industrial revolution, which had unprecedentedly accelerated the processes of modernization, industrialization and urbanization, determined the very appearance of capitalism, was of crucial importance.

    Capitalism is associated with such notions and categories as private property, individual freedom, market economy, free competition, free enterprise, equality of opportunities, etc., common to the modern social and political lexicon. With the formation and evolution of capitalism, the formation, approval and development of such principles, values, phenomena and institutions of a modern, socio-political system, such as civil society, the rule of law, principles separation of powers, equality of all citizens before the law, universal suffrage, etc.

    Private ownership of the means of production is the basis of the foundations of the capitalist system (see Ownership). It is private property that determines all the above-mentioned essential characteristics of capitalism. It also defines the form of distribution of material goods, which can be expressed by the formula: to each according to his abilities, which in turn are determined by the size of the private property, capital, and also by personal diligence, enterprise, etc.

    Another significant difference in capitalism is individualism, which underlies free competition, without which, in turn, it is impossible to imagine a market economy. Individualism rejects class and other privileges and places first on the freedom and natural abilities of the individual as an independent rational being, as an independent unit of social action. The individualistic ideal promised opportunities for moving up the social ladder, success in the struggle for a place under the sun; it stimulated enterprise, perseverance in search of new ways of achieving success, hard work, innovation and other values and orientations that together made capitalism such a dynamic system. It is obvious that the rising bourgeois (see the Bourgeoisie) understood freedom in a negative sense, that is, in the sense of freedom from political, ecclesiastical and social control by the feudal state. The struggle for freedom for the bourgeois meant fighting for the destruction of external restrictions imposed on the economic, physical and intellectual freedom of man. This approach assumed for all members of society equal opportunities for self-realization and equal rights in achieving their goals and interests. Hence – the principle of laissez-faire, laissez-passer, free market and free competition in the social and economic spheres. Therefore, capitalism in the 19th century not without reason are called free-entrepreneurial.

    In the late 19 – early 20-century capitalism entered a qualitatively new stage of its development. It was found that free competition and the market in themselves are by no means a self-regulating mechanism, which solves some problems, they generate many other equally complex and difficult solvable ones. In the conditions of the emergence of large corporations, which subordinated their power to the economy and unceremoniously violated the principles of free competition, if they did not meet their interests, the need for expanding the role of the state in regulating economic life became evident.

    The watershed that clearly and irrevocably marked this boundary was the great economic crisis of the 1930s when it became clear the need to complement the traditional capitalism principles of individualism, free competition and the free market of state regulation of the economic and social spheres. Therefore, modern capitalism is called mixed.

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