September 12, 2012
Capitalism is the economic system in which the means of production is privately held. In capitalism, the most important means of production is money rather than land or labor. That is, the ability to raise and use money for the production of goods and services is more important than owning the land from which goods come, or the ability to work in order to create a good or service. Capitalism is grounded in the concept of free enterprise, which argues that government intervention in the economy should be restricted and that a free market, based on supply and demand, will ultimately maximize consumer welfare. The essence of capitalism is economic freedom. Practices like ill-conceived subprime lending and crippling corporate fraud are side effects of a system that revolves around the individual's right to pursue his or her financial goals without the government getting involved. Capitalism has been dominant in the Western world since the end of mercantilism It was fostered by the reformation, which sanctioned hard work and frugality, and by the rise of industry during the industrial revolution, especially the English textile industry (16th–18th centuries). Unlike earlier systems, capitalism used the excess of production over consumption to enlarge productive capacity rather than investing it in economically unproductive enterprises such as palaces or cathedrals. The strong national states of the mercantilist era provided the social conditions, such as uniform monetary systems and legal codes, necessary for the rise of capitalism. There are multiple forms of capitalism, including laissez-faire, welfare capitalism and state capitalism. Laissez-faire means individualism: the doctrine that government should not interfere in commercial affairs. The freedoms to invest, to decide what to produce, and to decide what to charge have always been restricted. A fully free economy, true laissez-faire, never has existed, but...
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