The Economist defines capitalism as the winner, at least for now, of the battle of economic ‘isms’.
The Economist adds:
“Capitalism is a free-market system built on private ownership, in particular, the idea that owners of capital have property rights that entitle them to earn a profit as a reward for putting their capital at risk in some form of economic activity. Opinion (and practice) differs considerably among capitalist countries about what role the state should play in the economy. But everyone agrees that, at the very least, for capitalism to work the state must be strong enough to guarantee property rights. According to Karl Marx, capitalism contains the seeds of its own destruction, but so far this has proved a more accurate description of Marx’s progeny.”
Robert Hessen, in the Concise Encyclopedia of Economics (reference below), describes capitalism as a term of disparagement coined by socialists in the mid-nineteenth century and says the better term is “economic individualism,” which Adam Smith earlier called “the obvious and simple system of natural liberty.”
“Economic individualism’s basic premise is that the pursuit of self-interest and the right to own private property are morally defensible and legally legitimate. Its major corollary is that the state exists to protect individual rights. Subject to certain restrictions, individuals (alone or with others) are free to decide where to invest, what to produce or sell, and what prices to charge. There is no natural limit to the range of their efforts in terms of assets, sales, and profits; or the number of customers, employees, and investors; or whether they operate in local, regional, national, or international markets. …
“Socialist theorists repudiated individualism’s leading tenets: that individuals possess inalienable rights, that government should not restrain individuals from pursuing their own happiness, and that economic activity should not be regulated by government. Instead, they proclaimed an organic conception of society. They stressed ideals such as brotherhood, community, and social solidarity and set forth detailed blueprints for model utopian colonies in which collectivist values would be institutionalized.
“The short life span of these utopian societies acted as a brake on the appeal of socialism. But its ranks swelled after Karl Marx offered a new “scientific” version, proclaiming that he had discovered the laws of history and that socialism inevitably would replace capitalism. Beyond offering sweeping promises that socialism would create economic equality, eradicate poverty, end specialization, and abolish money, Marx supplied no details at all about how a future socialist society would be structured or would operate.”
Atlas topic, subject, and course
The Economist, Economics A-Z, at http://www.economist.com/economics-a-to-z/c#node-21529534, accessed 2 May 2016.
Robert Hessen, Capitalism, The Concise Encyclopedia of Economics, at http://www.econlib.org/library/Enc/Capitalism.html, accessed 2 May 2016.
Page created by: Ian Clark, last modified 2 May 2016.