Capitalism is an economic system in which the means of production and distribution are privately or corporately owned and the operations are funded by profits.
The principle of individual rights rules the capitalistic ideal and implementation. Private individuals, small businesses, organizations and corporations make independent decision about prices, production and distribution of goods resulting in an, ideally, self-regulating market.
While many would argue that there are no examples of true capitalism, some examples of countries employing capitalism include:
- United States
- United Kingdom
- New Zealand
- South Korea
- San Marino
- Czech Republic
- Hong Kong
- St. Lucia
- El Salvador
- United Arab Emirates
- Costa Rica
- Trinidad and Tobago
- Saint Vincent and the Grenadines Malaysia
- Saudi Arabia
- Cape Verde
- South Africa
Concepts of Capitalism
There are various types of capitalism. For example:
- In the United States, the form of capitalism is Democratic Capitalism. This type of capitalism speaks not only to the economic aspects of capitalism but to social, moral and political facets as well.
- Dr. Edward Younkins, author of Capitalism and Commerce explains this concept best when he states, “Democratic capitalism, the cornerstone of American society, is far more than an economic system: it is a dynamic complex of economic, political, moral-cultural, ideological, and institutional forces. This article provides an introduction to the fundamental concepts that inform American democratic capitalism, concepts that have evolved over centuries in such disciplines as philosophy, economics, law, history, political science and sociology. The survival of democratic capitalism may be in jeopardy unless we understand and appreciate its conceptual foundations.”
Some examples of capitalism as listed by Dr. Younkins include:
- Democratic capitalism is an amalgam of three systems: (1) an economy based predominantly on free markets and economic incentives; (2) a democratic polity; and (3) a classical-liberal moral-cultural system which encourages pluralism.
- Democratic capitalists are free to form innumerable voluntary associations such as the corporation and the labor union.
- The Democratic capitalist system assumes pluralism, recognizes that individuals have differing opinions and interests, and allows them to associate freely in order to further those interests. Pluralism's dynamic multiple groups function to balance and check power.
- Democratic capitalism is characterized by freedom of thought and voluntary action creatively applied to production.
- Democratic capitalism is based on private property rights, economic justice, the profit motive, competition, a division of labor, and requisite social cooperation.
- In order to have an economic system in which "production and distribution are privately or corporately owned," you must have individual rights and specifically property rights. The only way to have an economic system fitting the first definition is to have a political system fitting the second definition.
- In this type of capitalism, the government controls the economic system and may own all or part of the businesses.
- The controlled economies of the great powers during World War I could be categorized as state capitalism since the government was controlling the inventory and the output of production.
- This type of economy is basically an economic system where the government intervention is minimized; but, the state provides a lot of social services (such as unemployment benefits, social security) to reward labor rights.
- This type of economy is seen in the Western and Northern European countries as well as in Japan.
- This is an early form of capitalism, starting in the late 16th century.
- The premise of mercantilism is that the wealth of a nation is increased through a well-managed balance of trade with other nations.
- Mercantilism is the mixture of national business interests, state-grounded interests and imperialism.
- An example of mercantilism is when the early American colonists were only allowed to trade with their mother country (such as Britain or France).
Famous Quotes About Capitalism
- "The ideology of capitalism makes us all into connoisseurs of liberty -- of the indefinite expansion of possibility." - Susan Sontag (1933-2004) American author.
- "Doing well is the result of doing good. That's what capitalism is all about." - Ralph Waldo Emerson
- "The problem of social organization is how to set up an arrangement under which greed will do the least harm, capitalism is that kind of a system." - Milton Friedman
- "The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries." - Winston Churchill
- "The growth of world prosperity is not a "miracle" or any of the other mystifying terms we customarily apply to countries that have succeeded economically and socially. Schools are not built, nor are incomes generated, by sheer luck, like a bolt from the blue. These things happen when people begin to think along new lines and work hard to bring their ideas to fruition. But people do that everywhere, and there is no reason why certain people in certain places during certain periods in history should be intrinsically smarter or more capable than others. What makes the difference is whether the environment permits and encourages ideas and work, or instead puts obstacles in their way. That depends on whether people are free to explore their way ahead, to own property, to invest for the long term, to conclude private agreements, and to trade with others. In short, it depends on whether or not the countries have capitalism." - Johan Norberg, In Defense of Global Capitalism
These examples of capitalism and quotes about capitalism illustrate the basic principles of this economic system.