Capitalism is defined as an economic system in which a country’s trade, industry, and profits are controlled by private companies, rather than the state or the people whose time and labor powers those companies. The origins of capitalism can be traced back to the 16th century when after the Black Death, which killed 60% of Europe’s entire population, the British power largely collapsed.
The merchants began to trade with foreign countries and the local economies were disturbed. Adding to it, the death of feudalism also rendered the people workless who now had to sell their labor in a highly competitive market to survive while the state worked with the newly rich to devise a minimum wage policy.
By the 18th century, England had begun to industrialize. With the dawn of the Industrial Revolution flourished the very idea of Capitalism.
Adam Smith published “An Inquiry into the Nature and Causes of the Wealth of Nations” in 1776, which is widely believed to be the bedrock upon which modern capitalism stands though the ideas and the value differ. Hence he is called ‘the father of capitalism’.
Being a capitalist can be interpreted as having a large amount of invested capital to generate increased and regular profits and thereby adding to the wealth. A capitalist nation is the one which is dominated by the free play of market forces with no intervention of the government, that is, by corporations and private companies in competition. It places a heavy focus on private property and freedom of choice.
The impact differs according to the work you do. For a business owner, it may make sense. Higher the profits, the higher the resources to be shared among the employees. It’s all based on the market forces of demand and supply wherein consumption is the master. This seems perfect theoretically as it improves everyone’s standard of living. The perfect example here would be Germany. It’s one of the most capitalist counties in the world, where Capitalism prevails in banking and educational systems. The government with the support of its people has made it a priority to train and increase the skill sets of its labor force and hence have made a robust market for itself not just domestically but also internationally by leveling them with the global world and empowering them to develop.
It could have been perfect if there was a complete intersection between theory and reality, which to a large extent, is equivalent to zero, hence the critique of capitalism that it drives the economy towards social and economic inequality. It stands with the idea that ‘Greed is Good’, that greed drives profits, profits lead to the well being which further drives innovation and greater commitment. Pro Capitalism stance says that a state-owned production can lead to federal overreach.
But in countries like the US, where the wealth is confined only to the top 1-10% of the population, Capitalism fails.
However, the opposition claims that capitalism is exploitative in its core. It leads to a brutally divided society that tramples the working class and favors the rich. With the resources depleting at a faster rate than they’re being renewed, they are only going to be more valuable. Since they’re only confined in the hands of the rich or the drivers of capitalism, the income would only be generated for and with the already rich. The cut-throat competition would drive the companies to cut the cost, hence the workers would suffer again. It places emphasis on Individual rather than Collective. It’s being called as inhuman, unsustainable and anti-democratic owing to the way it operates. Their major argument is that prosperity in Capitalism is restricted to only a few while the efforts are of everyone and people have no choice other than selling their labor.
In the Southern Christian Leadership Conference, Martin Luther Jr. said “One day we must ask the question, ‘Why are there forty million poor people in America?’…When you ask that question, you begin to question the capitalistic economy.”
Karl Max claimed that it’s the system’s capacity to dehumanize workers by degrading him to the level of a machine and turning him into a hated toil. According to him, Capitalism has a thirst for profits over everything else. He proposed Socialism, which is generally seen as a polar opposite of Capitalism and their discussions are often considered in total opposition to each other.