Published on September 1, 2020



What is Capitalism?

Capitalism is a social and economic system where private ownership is dominant. Theoretically, it rewards the individual for their skills, handwork and achievements. Capitalism is based on private property ownership, capital, labour, wage, competition.

A capitalist economy is based on generating a profit and protecting human rights both on its liberation and property by enforcing laws in society.

Origin of Capitalism

The term “Capitalism” derived from a Latin word capitale which means “head”. The concept of capitalism was started in the 12th century which means fund. The French economy gradually become capitalist before and after the French Revolution. The ideology of capitalism became more prominent after the 19th century.

Salient Features of Capitalism

1. Private Ownership: In capitalism, most of the companies and land is owned by private companies. The entrepreneurs take the risk and invest their money o build more assets.

2. Wealth Generation: The main objective of capitalism is wealth generation. People use their skills to generate more profits. Products are made on the basis of market demand rather than use demand.

3. Right to Property: No other rights are possible without the implementation of property rights. In capitalism, government responsibility is to protect individual rights so that they can use and dispose of their property.

4. Unequal Human Skills: People are not equal. Different people have different potential to work. Individuals use their skills and hard work to earn money. The employees get paid according to their skills and work experiences.

5. Free market: Free market is a continuous process in which rising demands in people leads to reward the business accordingly. This is ruled by the producers.

6. Competition: Capitalism holds the market by restless competition among the private sectors in both home and abroad. Prof. Woodrow Wilson said, “Wilson no doubt would have preferred the growth of United States foreign trade to come about as a result of free international competition, but he found it easy with his ideas of moralism and duty to rationalize direct American intervention as a means of safeguarding the national interest.”

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