Controlling the economy by private owners of capital whose operations are directed toward new returns with a view to reinvesting surpluses.
Capitalism did not emerge fully as a social reality until the middle of the 19th century. This is because neither the royal absolutism of feudalism nor the tradition of mercantilism permitted it. It began in UK and spread to the European Continent and North America. The rise of the machine age, the spirit of the Puritan ethic, the human drive for more and more and the discovery and exploitation of three continents, have all been offered as reasons for this emergence.
Capitalism is a politico-economic system based on private ownership of the means of production and characterized by the pursuit of material self-interest. Under capitalism, each individual obtains the cooperation of others by means of a process of voluntary exchange, in which both parties gain.
Entrepreneurs and free agents operating within the system use bank credit as a source of investment funds and generate energy for the system by developing innovations in processes and products. These innovations, when securing in clusters, release a force of creative destruction. Traditional ways of doing things are rendered obsolete by new or better means of production, new products or new markets. The drive behind the innovations is the profit motive, but the profits that accrue to particular successful innovations gradually disappear through pressures from competing innovations.
Combating poverty and achieving sustainability depends on the growth of per capita income, on its distribution, on appropriate domestic policies, and on international policies that support them.
Capitalism is a 19th century term for the free-market economy. The international free market economy of the 20th century has been the driving force behind the scientific advances in medicine, physics, mathematics, information and communication technologies, as well as in agriculture, public health and interdisciplinary studies. It is the only force that is likely to meet the challenge of the 21st century.
Capitalism seeks profit and increased competitiveness by laying off workers and replacing them with temporaries; by intentionally increasing job insecurity for almost everyone; by reducing the availability of health insurance; by speeding up environmental degradation; by cutting social spending; by reducing regulation; by cutting training; and by reducing taxes on corporations and on the wealthy, shifting the tax burden onto the middle class and the working poor.
The main cause of unemployment in privileged countries is the introduction of "rationalisation" technologies over which underprivileged peoples have no influence. Increasing exploitation is solely the responsibility of capitalists, not of peoples.
The three main drawbacks inherent in capitalism, and highlighted by Keynes, have been confirmed by experience: instability, social inequalities and unemployment. Efficiency, equity, solidarity, and freedom are not fully compatible: they imply dilemmas, compromises and trade-offs. This Keynesian assessment of capitalism continues to apply today, after the collapse of socialism, its rival.