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Capitalism is an economic system in which there is private ownership of natural resources and capital goods. The returns of rent, interest, and profit are paid to private individuals as owners who decide on the use of their natural resources and capital goods.
In practice, an economic system of private ownership has never existed in pure form—some public ownership and some public decision-making about the use of the means of production have existed in every society. The term, therefore, refers to economies in which the means of production (natural resources and capital) are predominantly privately owned and managed. Examples of rather pure forms of capitalism are the UK or the US during the 19th century.
As the 20th century has progressed, governments in capitalist countries have been taking on a growing role in ownership and/or management of natural resources and capital. On the other hand, socialist countries have increasingly permitted their farmers to sell at least part of their produce in markets for their own benefit, and socialist countries more and more have turned toward market direction of production to increase efficiency. It appeared that countries were moving at varying rates of speed from relatively pure capitalism and relatively pure socialism toward some combination of capitalism and socialism, becoming ‘mixed economies’. However, during the 1980s, the US, UK and France seemed to be moving toward less government ownership in the economy. And in 1989 and 1990, a bloodless revolution occurred in most of the socialist countries of Eastern Europe as the people deposed their Communist leaders: they have since attempted to adopt democratic forms of government, and continue to struggle to shift to market economies with private ownership of the means of production. TF
Further reading J. Scott, Corporations, Classes and Capitalism; , A. Shonfield, Modern Capitalism. |
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