3. AGENDA
INTRODUCTION
HISTORY OF CAPITALISM
TYPES OF CAPITALISM
PERSPECTIVES OF CAPITALISM
ADVOCACY
CRITICISM
4. INTRODUCTION
Philosophy of economic systems that favors
private ownership of the means of production,
creation of goods or services for profit or income
by individuals or corporations, competitive
markets, voluntary exchange, wage labor, capital
accumulation, and personal finance.
7. PRE HISTORY
Modern capitalist system has its origin in the
“Crisis Of The Fourteenth Century“
Marx labeled this period the
Pre-History of
8. MERCANTILISM
A System of Trade for Profit
Under mercantilism, European merchants,
backed by state controls, subsidies, and
monopolies, made most of their profits from
the buying and selling of goods.
9. INDUSTRIALIZATION
During the Industrial Revolution,
the industrialist replaced the
merchant as a dominant actor in the
capitalist system and affected the
decline of the traditional handicraft
skills of artisans, guilds, and
journeymen.
10. GLOBALIZATION
Capitalism should now be viewed as a
truly world system.
Number of trends associated with
globalization have acted to increase the
mobility of people and capital since the
last quarter of the 20th century (the start
of globalization)
11. MERCANTILISM
An economic system to increase a nation's wealth
by government regulation of all of the nation's
commercial interests
It demands a positive balance of trade
Dominated Western European economic policy
from 16th to late-18th centuries
Mercantilist policies have included
Building a network of overseas colonies
Forbidding colonies to trade with other nations
Promote accumulation of gold and silver
Maximizing the use of domestic resources
Forbidding trade to be carried in foreign ships
12. FREE MARKET CAPITALISM
A free-price system where prices are determined
by supply and demand
Laissez-faire (let them do)
No government/state intervention
Productive enterprises are privately owned
Role of government is limited to protecting the
rights of life, liberty and property
A laissez-fair state and free market has never
existed
13. SOCIAL MARKET ECONOMY
Economic system implemented by most of the
German political parties since World War II
Seeks a middle path between capitalism and
laissez-fair economic liberalism and state
intervention provides
Fair competition
Balance between a high rate of economic growth
Low inflation
Low levels of unemployment
Social welfare
Public services
14. STATE CAPITALISM
State ownership of the means of production
within a state
State has considerable control over the allocation
of credit and investment
Examples of state capitalism include
Corporatized government agencies
States that own controlling shares of publicly-listed
corporations
15. CORPORATE CAPITALISM
Characterized by the dominance of hierarchical,
bureaucratic corporations
Legally required to pursue the profit
State monopoly capitalism
Corporate capitalism has been criticized for the
amount of power and influence, corporations
have over government policy
16. MIXED ECONOMY
Both state and private sector direct economy
Means of production are mainly under private
ownership
Indirect influence of government
Governments in mixed economies provide
Environmental protection
Maintenance of employment standards
Standardized welfare system
Maintenance of competition
17. PERSPECTIVES ON CAPITALISM
Classical political economy
Marxist political economy
Weberian political sociology
Institutional economics
Keynesian economics
Neoclassical economics
18. CLASSICAL POLITICAL ECONOMY
Emerged in Britain in the late 18th century
Adam Smith, David Ricardo, Jean-Baptiste Say,
and John Stuart Mill
Criticized monopolies, tariffs, duties, and other
state enforced restrictions
Developed the law of comparative advantage
It is profitable for two parties to trade, even if
one of the trading partners is more efficient
19. MARXIST POLITICAL ECONOMY
Developed by Karl Marx
Believed that the working classes would come to
power in a communist transformation of human
society
Labor is the source of all value, and thus of profit
Criticized capitalism that exploited labor would
result in a revolution to a socialist-style economy
20. WEBERIAN POLITICAL SOCIOLOGY
Developed by 19th century German social
theorist Max Weber
Considered market exchange as the defining
feature of capitalism
Laborer was both free to own property, and free
of the ability to reproduce his labor power
21. INSTITUTIONAL ECONOMICS
Pioneered by John Dewey, Thorstein Veblen, and
Daniel Bromley
Was once the main school of economic thought In
the United States
Holds that capitalism cannot be separated from
the political and social system
Businesses protect their existing capital
investments leading to depressions
Increasing military expenditure and war through
business control of political power
22. KEYNESIAN ECONOMICS
Developed by the British economist John
Maynard Keynes
Capitalism suffered a basic problem in its ability
to recover from periods of slowdowns in
investment
Capitalist economy could remain in an indefinite
equilibrium despite high unemployment
Showed that regulation can be effectives
23. NEOCLASSICAL ECONOMICS
Majority of the world draws on neoclassical
economic thought
Favors extensive market coordination and
neutral patterns of governmental market
regulation
Market economies are inherently stable if left to
themselves and depressions result only from
government intervention
Value is subjective, varying from person to
person, and thus reject the labor theory of value
24. ADVOCACY FOR CAPITALISM
Increased Economic Growth
Capitalist nations have emphasized
capitalism's ability to promote economic growth, as
measured by Gross Domestic Product (GDP).
In years 1000–1820 world economy grew six fold,
50 % per person. After capitalism had started to
spread more widely, in years 1820–1998 world
economy grew 50-fold, i.e., 9-fold per person.
25. ADVOCACY FOR CAPITALISM
Increasing GDP (per capita) is empirically shown
to bring about improved standards of living, such
as better availability of food, housing, clothing,
and health care.
Proponents also believe that a capitalist economy
offers far more opportunities for individuals to
raise their income through new professions or
businesses.
26. SELF-ORGANIZATION
Capitalism can organize itself into a complex
system without an external guidance or central
planning mechanism.
Prices serve as a signal as to the urgent and
unfilled wants of people
The promise of profits gives entrepreneurs
incentive to use their knowledge and resources to
satisfy those wants
27. CRITICISMS ON CAPITALISM
Critics of capitalism associate it with:
social inequality
unfair distribution of wealth and power
Notable critics of capitalism have included:
socialists, communists, national socialists, social
democrats, technocrats, some types of conservatives,
Shakers and some types of nationalists.
28. CRITICISMS ON CAPITALISM
Requires huge investments in capital. This has
resulted in a very small number of people to have
over control over the productive resources of the
entire society.
The employees have limited motivation to put in
their best to the work they do. In this way their
capabilities are used much below their potential.
29. CONCLUSION
Advantages
As a consumer, you can get the best quality goods and
services at the best prices
As a consumer or a producer, you have the greatest
possible freedom to do what you want
Rewards hard work, ingenuity and talent
Disadvantages
Inequality and injustice
Rewards corruption and influence peddling
Wealthy can dictate policy with donations
