Overview of Economic History:
Capitalism
Outline:
A) The defining characteristics of capitalism as an economic system
B) The key changes brought about by capitalism
A) The defining characteristics of capitalism as an economic system:
1) Institution of
private property
and “rule of the law”
2)
Market-system
: most economic exchanges occur through monetary exchanges in markets (sellers, buyers, prices as regulating mechanisms).
3) According to conventional economics, in a capitalist system we can identify a “representative individual.” In contrast, according to critical economics, capitalism always has always at least 4 different economic classes:
A) The class of wealthy capitalists
B) The class of small business people and independent professionals
C) The class of working people
D) The class of destitute
4) Objective = Profit => in a capitalist economy, it is the pursuit of profit that determines:
- What will be produced;
- How and where will be produced;
- By whom and for whom it will be produced.
B) The key changes brought about by capitalism
Capitalism began in Western Europe around the 16th century (England, the Netherlands, Belgium and Italy) => Mercantilism.
It spread around the world through colonialism.
The development of capitalism became particularly rapid and intense after the Industrial Revolution at the end of the 18th century.
The notion of change itself, which is now taken for granted, was essentially unknown in human history before capitalism.
1. Technical change
2. Expansion of consumption possibilities
3. Growing inequality (especially within countries)
4. Population growth
5. Migration
6. Urbanization
7. The nature of work
8. The transformation of the family
9. Environmental degradation
10. Political developments
=> the rise of democratic institutions/the welfare state
11. Globalization
=> shift away from “Keynesianism” (Post-WW2-1970s) to “Neoliberalism” (early 1980s - )
12. Propensity to economic crises
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