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A system based on the absence of political intervention in the economy, which rests on the assumption that politics and economics are distinct from one another. Recently, capitalism has often been discussed in the context of a wider, LibertariaN? social theory that advocates the absence of political intervention in most aspects of society.

An integral element of capitalist theory is the private ownership of property, and privately made decisions regarding employment, sales, purchases, savings and investments. This private ownership and these privately made decisions are said to constitute a FreeMarket?, and the forces of the FreeMarket? are driven by the aforesaid factors. Historically, capitalist economies have been characterized by the potential for rapid accumulation of personal and corporate wealth, high national productivity, and potentially highly unequal distribution of wealth, resulting in extreme differences between the very wealthy and the very poor among private citizens.

A capitalist economy has many features, including both for-profit businesses and non-profit organizations, large scale trade, and prices that fluctuate in response to changes in supply and demand. Some people consider any economy that prominently exhibits such features to be a capitalist economy, regardless of the degree of political intervention. Typically when people define capitalism in this way they are denying or not recognizing the distinction between politics and economics.

No economy in history has been purely capitalist in the sense of having a complete absence of political intervention. In fact, the idea that an economy could be free of political intervention apparently did not occur to anyone until the late 18th century. This makes capitalism one of the more radical ideas in human history.

Capitalist economic theory was first formalized by AdamSmith? in 1776, in an attempt to refute MercantilisM?. In his work, Smith first presented his idea of MarkeT?, that is central to EconomicTheory?. Other theorists who have written about capitalism include Karl Marx, DavidRicardo?, LudwigvonMises?, FreidrichHayek?, JohnMaynardKeynes?, PaulSamuelson?, and MiltonFriedman?.

See CapitalismTalk

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Last edited February 9, 2001 8:04 am by AyeSpy (diff)