Meaning of Capitalism

Meaning of Capitalism

After the fall of feudalism, the economic model that emerged in Europe during the 16th century and managed to impose itself at that time, was baptized as capitalism. Among its main characteristics is the stockpiling of capital as the axis of economic life.

The capitalism is a system of economic fundamentals in which the ownership of production resources is private. These media operate on a profit basis, while financial decisions are made based on capital investment and with a view to competition for consumer markets and wage labor. The highest social class that falls within this model is called the capitalist bourgeoisie.

The definition of capitalism, however, is not exact. Liberal democracies, for example, understand capitalism as that system where the production, commercialization and values ​​of goods and services are established and conditioned by some form of free market.

In capitalism, all those involved act and commit themselves according to their interests: the capitalist, who has the resources, seeks to expand his profit through the accumulation and reproduction of capital; the worker, for his part, fulfills his work to receive a material remuneration (salary); Consumers seek to obtain the greatest possible satisfaction or utility when purchasing products or contracting services of various kinds.

In broad strokes, capitalism differs from its predecessor economic system, feudalism, because the capitalists buy work from the workers in exchange for wages and not under a moralistic demand that forces people to work as slaves. Likewise, the most marked difference between capitalism and socialism is the existence of private property as a right that all individuals have, in socialism there is social property of the elements of production and the exchange of goods. It should be noted that no socialist state kept these ideas to the letter and that the way to impose said economic and social system was through forceful measures.

In capitalism, propertyThe private sector occupies a fundamental place, not only does it consist of the basic principle of capitalism but also, thanks to it, all the other elements that form it are regulated, such as the freedom of companies, self-interest as the main motivation, price system, reduced state interference in the market and existence of competition.

If we are guided by what was stated by Ayn Rand, one of the most essential intellectuals of the last century, we can affirm that capitalism is the only economic system that could help the human being to develop following the demands of his nature: rational and free. The moral justification of capitalism would lie in the fact that in this system the human being has the right to life and property, which Rand considers fundamental to develop as free people and that if they were not, none of the other rights could be exercised.

It should be noted that capitalism has been criticized from different currents of thought that accuse it of promoting exploitation, by conceiving the task of the human being as another commodity. The very contradiction of the system lies in the fact that it relies on private means of production that work with a workforce of collective scope: that is, while capitalism reproduces itself collectively, the wealth that is obtained is the private property of the capitalist..

Talking about capitalism as the perfect economic system is also a mistake, it should be noted the great flaws it presents, such as increasing the enrichment of a few at the cost of the impoverishment of the most vulnerable. In any case, if certain changes could be established, possibly life in society would improve considerably. It would be enough to change the conditions of the exchange of goods and services, the market bases, the degree of competitiveness and measures that the state takes based on the economic market.