Editing Capitalism (section)

== History ==
{{Main|History of capitalism}}
[[File:Jacopo Pontormo 055.jpg|thumb|upright=0.8|[[Cosimo de' Medici]] (pictured in a 16th-century portrait by [[Pontormo]]) built an international financial empire and was one of the first [[Medici bank]]ers.]]
[[File:Augsburg - Markt.jpg|thumb|upright=0.8|[[Augsburg]], the centre of early capitalism<ref>{{cite encyclopedia |last1=Behringer |first1=Wolfgang |contribution=Core and Periphery: The Holy Roman Empire as a Communication(s) Universe |title=The Holy Roman Empire, 1495–1806 |date=2011 |publisher=Oxford University Press |location=Oxford |isbn=978-0-19-960297-1 |pages=347–358|url=https://perspectivia.net/servlets/MCRFileNodeServlet/pnet_derivate_00004689/behringer_core.pdf |archive-url=https://ghostarchive.org/archive/20221009/https://perspectivia.net/servlets/MCRFileNodeServlet/pnet_derivate_00004689/behringer_core.pdf |archive-date=9 October 2022 |url-status=live |access-date=7 August 2022}}</ref>]]

Capitalism, in its modern form, can be traced to the emergence of agrarian capitalism and mercantilism in the early [[Renaissance]], in city-states like [[Florence]].<ref>{{cite news |url=http://www.economist.com/node/13484709 |title=Cradle of capitalism |newspaper=[[The Economist]] |date=16 April 2009 |access-date=9 March 2015 |archive-date=18 January 2018 |archive-url=https://web.archive.org/web/20180118055643/http://www.economist.com/node/13484709 |url-status=live}}</ref> [[Capital (economics)|Capital]] has existed incipiently on a small scale for centuries<ref name="WarburtonDavid">{{cite book |last=Warburton |first=David |title=Macroeconomics from the beginning: The General Theory, Ancient Markets, and the Rate of Interest |location=Paris |publisher=Recherches et Publications |date=2003 |pages=49}}</ref> in the form of merchant, renting and lending activities and occasionally as small-scale industry with some wage labor. Simple [[commodity]] exchange and consequently simple commodity production, which is the initial basis for the growth of capital from trade, have a very long history. During the [[Islamic Golden Age]], [[Arabs]] promulgated capitalist economic policies such as free trade and banking. Their use of [[Indo-Arabic numerals]] facilitated [[bookkeeping]]. These innovations migrated to Europe through trade partners in cities such as Venice and Pisa. Italian [[mathematicians]] traveled the Mediterranean talking to Arab traders and returned to popularize the use of Indo-Arabic numerals in Europe.<ref name="Koehler, Benedikt">{{cite book |last=Koehler |first=Benedikt |title=Early Islam and the Birth of Capitalism |quote=In Baghdad, by the early tenth century a fully-fledged banking sector had come into being... |pages=2 |publisher=[[Lexington Books]] |date=2014}}</ref>

=== Agrarianism ===
The economic foundations of the feudal agricultural system began to shift substantially in 16th-century England as the [[manorial system]] had broken down and land began to become concentrated in the hands of fewer landlords with increasingly large estates. Instead of a [[serf]]-based system of labor, workers were increasingly employed as part of a broader and expanding money-based economy. The system put pressure on both landlords and tenants to increase the productivity of agriculture to make profit; the weakened coercive power of the [[aristocracy]] to extract peasant [[Excess supply|surpluses]] encouraged them to try better methods, and the tenants also had incentive to improve their methods in order to flourish in a competitive [[labor economics|labor market]]. Terms of rent for land were becoming subject to economic market forces rather than to the previous stagnant system of custom and feudal obligation.<ref>{{cite journal |last1=Brenner |first1=Robert |title=The Agrarian Roots of European Capitalism |journal=[[Past & Present (journal)|Past & Present]] |date=1 January 1982 |issue=97 |pages=16–113 |doi=10.1093/past/97.1.16 |jstor=650630}}</ref><ref>{{cite web |url=http://monthlyreview.org/1998/07/01/the-agrarian-origins-of-capitalism |title=The Agrarian Origins of Capitalism |access-date=17 December 2012 |date=July 1998 |archive-date=11 December 2019 |archive-url=https://web.archive.org/web/20191211183143/https://monthlyreview.org/1998/07/01/the-agrarian-origins-of-capitalism/ |url-status=live}}</ref>

=== Mercantilism ===
{{Main|Mercantilism}}
[[File:Lorrain.seaport.jpg|left|thumb|A painting of a French seaport from 1638 at the height of [[mercantilism]]]]
[[File:Lord Clive meeting with Mir Jafar after the Battle of Plassey.jpg|left|thumb|[[Robert Clive]] with the [[Nawabs of Bengal]] after the [[Battle of Plassey]] which began the British rule in [[Bengal Presidency|Bengal]]]]
The economic doctrine prevailing from the 16th to the 18th centuries is commonly called [[mercantilism]].<ref name=GSGB>{{cite book |url=https://books.google.com/books?id=Pf9Jd1sIMJ0C |title=An Introduction to Marxist Economic Theory |date= 2002 |publisher=[[Resistance Books]] |via=[[Google Books]] |isbn=978-1-876646-30-1 |access-date=27 August 2016 |archive-date=11 December 2016 |archive-url=https://web.archive.org/web/20161211173733/https://books.google.com/books?id=Pf9Jd1sIMJ0C |url-status=live}}</ref><ref name="Burnham">{{cite book |last=Burnham |first=Peter |author-link=Peter Burnham |title=Capitalism: The Concise Oxford Dictionary of Politics |publisher=[[Oxford University Press]] |year=2003}}</ref> This period, the [[Age of Discovery]], was associated with the geographic exploration of foreign lands by merchant traders, especially from England and the [[Low Countries]]. Mercantilism was a system of trade for profit, although commodities were still largely produced by non-capitalist methods.<ref name="Scott" /> Most scholars consider the era of merchant capitalism and mercantilism as the origin of modern capitalism,<ref name="Burnham"/><ref name="Encyclopædia Britannica 2006">''Encyclopædia Britannica'' (2006)</ref> although [[Karl Polanyi]] argued that the hallmark of capitalism is the establishment of generalized markets for what he called the "fictitious commodities", i.e. land, labor and money. Accordingly, he argued that "not until 1834 was a competitive labor market established in England, hence industrial capitalism as a social system cannot be said to have existed before that date".<ref>{{cite book |last=Polanyi |first=Karl |author-link=Karl Polanyi |title=The Great Transformation |publisher=[[Beacon Press]] |location=Boston |date=1944 |pages=87}}</ref>

England began a large-scale and integrative approach to mercantilism during the [[Elizabethan Era]] (1558–1603). A systematic and coherent explanation of balance of trade was made public through [[Thomas Mun]]'s argument ''England's Treasure by Forraign Trade, or the Balance of our Forraign Trade is The Rule of Our Treasure.'' It was written in the 1620s and published in 1664.<ref>{{cite book |first1=David |last1=Onnekink |first2=Gijs |last2=Rommelse |title=Ideology and Foreign Policy in Early Modern Europe (1650–1750) |url=https://books.google.com/books?id=M1QdbzdTimsC&pg=PA257 |year=2011 |publisher=[[Ashgate Publishing]] |page=257 |isbn=978-1-4094-1914-3 |access-date=27 June 2015 |archive-date=19 March 2015 |archive-url=https://web.archive.org/web/20150319130220/http://books.google.com/books?id=M1QdbzdTimsC&pg=PA257 |url-status=live}}</ref>

European [[merchant]]s, backed by state controls, subsidies and [[monopoly|monopolies]], made most of their profits by buying and selling goods. In the words of [[Francis Bacon]], the purpose of mercantilism was "the opening and well-balancing of trade; the cherishing of manufacturers; the banishing of idleness; the repressing of waste and excess by sumptuary laws; the improvement and husbanding of the soil; the regulation of prices...".<ref>Quoted in {{cite book |first=George |last=Clark |title=The Seventeenth Century |location=New York |publisher=[[Oxford University Press]] |date=1961 |page=24}}</ref>

After the period of the [[proto-industrialization]], the [[British East India Company]] and the [[Dutch East India Company]], after massive contributions from the [[Mughal Bengal]],<ref name="Prakash">[[Om Prakash (historian)|Om Prakash]], "[http://link.galegroup.com/apps/doc/CX3447600139/WHIC?u=seat24826&xid=6b597320 Empire, Mughal]", ''History of World Trade Since 1450'', edited by [[John J. McCusker]], vol. 1, Macmillan Reference USA, 2006, pp. 237–240, ''World History in Context''. Retrieved 3 August 2017</ref><ref name="ray">{{cite book |first=Indrajit |last=Ray |year=2011 |title=Bengal Industries and the British Industrial Revolution (1757–1857) |url=https://books.google.com/books?id=CHOrAgAAQBAJ&pg=PA57 |publisher=[[Routledge]] |pages=57, 90, 174 |isbn=978-1-136-82552-1 |access-date=20 June 2019 |archive-date=29 May 2016 |archive-url=https://web.archive.org/web/20160529021839/https://books.google.com/books?id=CHOrAgAAQBAJ |url-status=live}}</ref> inaugurated an expansive era of commerce and trade.<ref name=Banaji>{{cite journal |last=Banaji |first=Jairus |year=2007 |title=Islam, the Mediterranean and the rise of capitalism |journal=[[Journal Historical Materialism]] |volume=15 |pages=47–74 |doi=10.1163/156920607X171591 |url=http://eprints.soas.ac.uk/15983/1/Islam%20and%20capitalism.pdf |access-date=20 April 2018 |archive-date=29 March 2018 |archive-url=https://web.archive.org/web/20180329015002/http://eprints.soas.ac.uk/15983/1/Islam%20and%20capitalism.pdf |url-status=dead}}</ref><ref name="britannica2">{{cite book |title=Economic system:: Market systems |url=https://www.britannica.com/EBchecked/topic/178493/economic-system/61117/Market-systems#toc242146 |publisher=Encyclopædia Britannica |year=2006 |access-date=4 January 2009 |archive-date=24 May 2009 |archive-url=https://web.archive.org/web/20090524075921/https://www.britannica.com/EBchecked/topic/178493/economic-system/61117/Market-systems#toc242146 |url-status=live}}</ref> These companies were characterized by their [[colonialism|colonial]] and [[Expansionism|expansionary]] powers given to them by nation-states.<ref name="Banaji" /> During this era, merchants, who had traded under the previous stage of mercantilism, invested capital in the East India Companies and other colonies, seeking a [[return on investment]].

=== Industrial Revolution ===
{{Main|Industrial Revolution}}
[[File:Maquina vapor Watt ETSIIM.jpg|thumb|The [[Watt steam engine]], fuelled primarily by [[coal]], propelled the [[Industrial Revolution]] in [[United Kingdom|Britain]].<ref>Watt steam engine image located in the lobby of the Superior Technical School of Industrial Engineers of the [[Technical University of Madrid|UPM]]{{clarify|date=April 2016}} ([[Madrid]]).</ref>]]
In the mid-18th century a group of economic theorists, led by [[David Hume]] (1711–1776)<ref>{{cite book |last=Hume |first=David |author-link=David Hume |title=Political Discourses |url=https://archive.org/details/McGillLibrary-125702-2590 |location=Edinburgh |publisher=A. Kincaid & A. Donaldson |year=1752}}</ref> and [[Adam Smith]] (1723–1790), challenged fundamental mercantilist doctrines—such as the belief that the world's wealth remained constant and that a state could only increase its wealth at the expense of another state.

During the [[Industrial Revolution]], [[industrialists]] replaced merchants as a dominant factor in the capitalist system and effected the decline of the traditional handicraft skills of [[artisan]]s, guilds and [[journeyman|journeymen]]. Industrial capitalism marked the development of the [[factory system]] of manufacturing, characterized by a complex [[division of labor]] between and within work process and the routine of work tasks; and eventually established the domination of the [[Capitalist mode of production (Marxist theory)|capitalist mode of production]].<ref>{{cite book |last1=Burnham |first1=Peter |author1-link=Peter Burnham |year=1996 |chapter=Capitalism |editor1-last=McLean |editor1-first=Iain |editor2-last=McMillan |editor2-first=Alistair |title=The Concise Oxford Dictionary of Politics |url=https://books.google.com/books?id=8JkyAwAAQBAJ |series=Oxford Quick Reference |edition=3 |location=Oxford |publisher=[[Oxford University Press]] |publication-date=2009 |isbn=978-0-19-101827-5 |access-date=14 September 2019 |quote=Industrial capitalism, which Marx dates from the last third of the eighteenth century, finally establishes the domination of the capitalist mode of production. |archive-date=27 July 2020 |archive-url=https://web.archive.org/web/20200727163404/https://books.google.com/books?id=8JkyAwAAQBAJ |url-status=live}}</ref>

Industrial Britain eventually abandoned the [[protectionist]] policy formerly prescribed by mercantilism. In the 19th century, [[Richard Cobden]] (1804–1865) and [[John Bright]] (1811–1889), who based their beliefs on the [[Manchester capitalism|Manchester School]], initiated a movement to lower [[tariffs]].<ref name="laissezf">{{cite web |title=Laissez-faire |url=http://www.bartleby.com/65/la/laissezf.html |url-status=dead |archive-url=https://web.archive.org/web/20081202050426/http://www.bartleby.com/65/la/laissezf.html |archive-date=2 December 2008}}</ref> In the 1840s Britain adopted a less protectionist policy, with the 1846 repeal of the [[Corn Laws]] and the 1849 repeal of the [[Navigation Acts]].<ref>{{cite book |last1=Burnham |first1=Peter |author1-link=Peter Burnham |year=1996 |chapter=Capitalism |editor1-last=McLean |editor1-first=Iain |editor2-last=McMillan |editor2-first=Alistair |title=The Concise Oxford Dictionary of Politics |url=https://books.google.com/books?id=8JkyAwAAQBAJ |series=Oxford Quick Reference |edition=3 |location=Oxford |publisher=[[Oxford University Press]] |publication-date=2009 |isbn=978-0-19-101827-5 |access-date=14 September 2019 |quote=For most analysts, mid- to late-nineteenth century Britain is seen as the apotheosis of the laissez-faire phase of capitalism. This phase took off in Britain in the 1840s with the repeal of the Corn Laws, and the Navigation Acts, and the passing of the Banking Act. |archive-date=27 July 2020|archive-url=https://web.archive.org/web/20200727163404/https://books.google.com/books?id=8JkyAwAAQBAJ |url-status=live}}</ref> Britain reduced tariffs and [[import quota|quotas]], in line with David Ricardo's advocacy of [[free trade]].

=== Modernity ===
[[File:McKinley Prosperity.jpg|thumb|upright|The [[gold standard]] formed the financial basis of the international economy from 1870 to 1914.]]

Broader processes of [[globalization]] carried capitalism across the world. By the beginning of the nineteenth century, a series of loosely connected market systems had come together as a relatively integrated global system, in turn intensifying processes of economic and other globalization.<ref name="SAGE Publications">{{cite book |year=2007 |last1=James |first1=Paul |author-link=Paul James (academic) |last2=Gills |first2=Barry |title=Globalization and Economy, Vol. 1: Global Markets and Capitalism |url=https://www.academia.edu/4199690 |publisher=[[SAGE Publications]] |location=London |page=xxxiii}}</ref><ref>{{cite journal |title=Impact of Global Capitalism on the Environment of Developing Economies |url=http://s-space.snu.ac.kr/bitstream/10371/93716/1/04_Osariyekemwen%20Igiebor.pdf |journal=Impact of Global Capitalism on the Environment of Developing Economies: The Case of Nigeria |pages=84 |access-date=31 July 2020 |archive-date=20 March 2020 |archive-url=https://web.archive.org/web/20200320071239/http://s-space.snu.ac.kr/bitstream/10371/93716/1/04_Osariyekemwen%20Igiebor.pdf |url-status=live}}</ref> Late in the 20th century, capitalism overcame a challenge by [[Planned economy|centrally-planned economies]] and is now the encompassing system worldwide,<ref name="britannica">{{cite book |title=Capitalism |publisher=Encyclopædia Britannica |url=https://www.britannica.com/EBchecked/topic/93927/capitalism |date=10 November 2014 |access-date=24 March 2015 |archive-date=29 June 2011 |archive-url=https://web.archive.org/web/20110629021539/https://www.britannica.com/EBchecked/topic/93927/capitalism |url-status=live}}</ref><ref>{{cite book |last=James |first=Fulcher |title=Capitalism, A Very Short Introduction |quote=In one respect there can, however, be little doubt that capitalism has gone global and that is in the elimination of alternative systems |pages=99 |publisher=[[Oxford University Press]] |date=2004 |isbn=978-0-19-280218-7}}</ref> with the [[mixed economy]] as its dominant form in the industrialized Western world.

[[Industrialization]] allowed cheap production of household items using [[economies of scale]], while rapid [[population growth]] created sustained demand for commodities. The [[imperialism]] of the 18th-century decisively shaped globalization.<ref name="SAGE Publications" /><ref>{{cite journal |last1=Thomas |first1=Martin |last2=Thompson |first2=Andrew |date=1 January 2014 |title=Empire and Globalisation: from 'High Imperialism' to Decolonisation |journal=The International History Review |volume=36 |issue=1 |pages=142–170 |doi=10.1080/07075332.2013.828643 |s2cid=153987517 |issn=0707-5332|doi-access=free }}</ref><ref>{{cite journal |title=Globalization and Empire |url=https://core.ac.uk/download/pdf/47230635.pdf |journal=Globalization and Empire |access-date=31 July 2020 |archive-date=23 September 2020 |archive-url=https://web.archive.org/web/20200923063531/https://core.ac.uk/download/pdf/47230635.pdf |url-status=live}}</ref><ref>{{cite journal |title=Europe and the causes of globalization |url=https://core.ac.uk/download/pdf/7045619.pdf |journal=Europe and the Causes of Globalization, 1790 to 2000 |access-date=31 July 2020 |archive-date=7 December 2017 |archive-url=https://web.archive.org/web/20171207091124/https://core.ac.uk/download/pdf/7045619.pdf |url-status=live}}</ref>

After the [[First Opium War|First]] and [[Second Opium War]]s (1839–60) by [[United Kingdom of Great Britain and Northern Ireland|Britain]] and [[France]] and the completion of the [[British people|British]] conquest of India by 1858 and the [[French people|French]] conquest of [[Africa]], [[Polynesia]] and [[Indochina]] by 1887, vast populations of Asia became consumers of European exports. Europeans colonized areas of Africa and the Pacific islands. Colonisation by Europeans, notably of Africa by the British and French, yielded valuable natural resources such as [[rubber]], [[diamonds]] and [[coal]] and helped fuel trade and investment between the European imperial powers, their colonies and the United States:

{{blockquote|The inhabitant of London could order by telephone, sipping his morning tea, the various products of the whole earth, and reasonably expect their early delivery upon his doorstep. Militarism and imperialism of racial and cultural rivalries were little more than the amusements of his daily newspaper. What an extraordinary episode in the economic progress of man was that age which came to an end in August 1914.<ref>{{cite web |url=https://www.pbs.org/wgbh/commandingheights/shared/minitext/tr_show01.html |title=Commanding Heights: Episode One: The Battle of Ideas |publisher=[[PBS]] |date=24 October 1929 |access-date=31 July 2010 |archive-date=30 March 2010 |archive-url=https://web.archive.org/web/20100330093746/http://www.pbs.org/wgbh/commandingheights/shared/minitext/tr_show01.html |url-status=live}}</ref>}}

From the 1870s to the early 1920s, the global financial system was mainly tied to the [[gold standard]].<ref>{{cite book|last=Eichengreen|first=Barry|author-link=Barry Eichengreen|date=6 August 2019|title=Globalizing Capital: A History of the International Monetary System|edition=3rd|publisher=[[Princeton University Press]]|doi=10.2307/j.ctvd58rxg|isbn=978-0-691-19458-5|s2cid=240840930 |lccn=2019018286}}{{page needed|date=December 2023}}</ref><ref>{{cite book|last1=Eichengreen|first1=Barry|author-link=Barry Eichengreen|last2=Esteves|first2=Rui Pedro|date=2021|editor1-last=Fukao|editor1-first=Kyoji|editor2-last=Broadberry|editor2-first=Stephen|editor2-link=Stephen Broadberry|section=International Finance|title=The Cambridge Economic History of the Modern World|publisher=[[Cambridge University Press]]|volume=2: ''1870 to the Present''|pages=501–525|isbn=978-1-107-15948-8}}</ref> The United Kingdom first formally adopted this standard in 1821. Soon to follow were [[United Province of Canada|Canada]] in 1853, [[History of Newfoundland and Labrador|Newfoundland]] in 1865, the United States and Germany (''[[de jure]]'') in 1873. New technologies, such as the [[telegraph]], the [[transatlantic telegraph cable|transatlantic cable]], the [[radiotelephone]], the [[steamship]] and [[railway]]s allowed goods and information to move around the world to an unprecedented degree.<ref>{{Cite web|url=https://www.nber.org/papers/w7195 |last1=Bordo |first1=Michael D. |author1-link=Michael D. Bordo |last2=Eichengreen |first2=Barry |author2-link=Barry Eichengreen |last3=Irwin |first3=Douglas A. |title=Is Globalization Today Really Different than Globalization a Hundred Years Ago? |series=NBER |number=Working Paper No. 7195 |date=June 1999|doi=10.3386/w7195 }}</ref>

In the United States, the term "capitalist" primarily referred to powerful businessmen<ref>{{Cite book |last=Andrews |first=Thomas G. |title=Killing for Coal: America's Deadliest Labor War |publisher=[[Harvard University Press]] |year=2008 |isbn=978-0-674-03101-2 |location=Cambridge |page=64 |author-link=Thomas G. Andrews (historian)}}</ref> until the 1920s due to widespread societal skepticism and criticism of capitalism and its most ardent supporters.

[[File:NY stock exchange traders floor LC-U9-10548-6.jpg|thumb|left|The New York [[stock exchange]] [[trading room|traders' floor]] (1963)]]

Contemporary capitalist societies developed in the West from 1950 to the present and this type of system continues throughout the world—relevant examples started in the [[United States in the 1950s|United States after the 1950s]], [[Trente Glorieuses|France after the 1960s]], [[Spanish miracle|Spain after the 1970s]], [[Economy of Poland|Poland after 2015]], and others. At this stage most capitalist markets are considered{{by whom|date=July 2021}} developed and characterized by developed private and public markets for equity and debt, a high [[standard of living]] (as characterized by the [[World Bank]] and the [[International Monetary Fund|IMF]]), large institutional investors and a well-funded [[banking system]]. A significant [[managerial class]] has emerged{{when|date=July 2021}} and decides on a significant proportion of investments and other decisions. A different future than that envisioned by Marx has started to emerge—explored and described by [[Anthony Crosland]] in the United Kingdom in his 1956 book ''[[The Future of Socialism]]''<ref>{{cite book |last=Crosland |first=Anthony |title=The Future of Socialism |publisher=Jonathan Cape |year=1956 |location=United Kingdom}}{{page needed|date=December 2023}}</ref> and by [[John Kenneth Galbraith]] in North America in his 1958 book ''[[The Affluent Society]]'',<ref>{{cite book |last=Galbraith |first=John Kenneth |title=The Affluent Society |publisher=[[Houghton Mifflin]] |year=1958 |location=United States}}{{page needed|date=December 2023}}</ref> 90 years after Marx's research on the state of capitalism in 1867.<ref>{{cite book |last=Shiller |first=Robert |title=Finance and The Good Society |publisher=[[Princeton University Press]] |year=2012 |location=United States}}{{page needed|date=December 2023}}</ref>

The [[Post–World War II economic expansion|postwar boom]] ended in the late 1960s and early 1970s and the economic situation grew worse with the rise of [[stagflation]].<ref>{{cite book |last=Barnes |first=Trevor J. |title=Reading economic geography |publisher=[[Blackwell Publishing]] |isbn=978-0-631-23554-5 |page=127 |year=2004}}</ref> [[Monetarism]], a modification of [[Keynesian economics|Keynesianism]] that is more compatible with ''laissez-faire'' analyses, gained increasing prominence in the capitalist world, especially under the years in office of [[Ronald Reagan]] in the United States (1981–1989) and of [[Margaret Thatcher]] in the United Kingdom (1979–1990). Public and political interest began shifting away from the so-called [[Collectivism and individualism|collectivist]] concerns of Keynes's managed capitalism to a focus on individual [[choice]], called "remarketized capitalism".<ref name="Fulcher, James 2004">{{cite book |last=Fulcher |first=James |title=Capitalism |edition=1st |location=New York |publisher=[[Oxford University Press]] |date=2004}}{{page needed|date=December 2023}}</ref>

The end of the [[Cold War]] and the [[dissolution of the Soviet Union]] allowed for capitalism to become a truly global system in a way not seen since before [[World War I]]. The development of the [[neoliberal]] global economy would have been impossible without the fall of [[communism]].<ref>{{cite book |last=Gerstle |first=Gary |author-link=Gary Gerstle |date=2022 |title=The Rise and Fall of the Neoliberal Order: America and the World in the Free Market Era |url=https://global.oup.com/academic/product/the-rise-and-fall-of-the-neoliberal-order-9780197519646?cc=us&lang=en& |location= |publisher=[[Oxford University Press]] |pages=10–12, 149 |isbn=978-0-19-751964-6|quote=The collapse of communism, then, opened the entire world to capitalist penetration, shrank the imaginative and ideological space in which opposition to capitalist thought and practices might incubate, and impelled those who remained leftists to redefine their radicalism in alternative terms, which turned out to be those that capitalist systems could more, rather than less, easily manage. This was the moment when neoliberalism in the United States went from being a political movement to a political order.}}</ref><ref>{{cite book |last=Bartel |first=Fritz |date=2022 |title=The Triumph of Broken Promises: The End of the Cold War and the Rise of Neoliberalism |url=https://www.hup.harvard.edu/books/9780674976788 |location= |publisher=[[Harvard University Press]] |pages=5–6, 19 |isbn=978-0-674-97678-8}}</ref><ref>{{cite journal |last1=Greene|first1=Julie|authorlink1= Julie Greene|date=April 2020|title=Bookends to a Gentler Capitalism: Complicating the Notion of First and Second Gilded Ages|url=|journal=[[The Journal of the Gilded Age and Progressive Era]] |volume=19 |issue=2 |publisher=[[Cambridge University Press]]|pages=197–205|doi=10.1017/S1537781419000628|pmc= |pmid= |access-date= |name-list-style=vanc}}</ref>

Harvard Kennedy School economist Dani Rodrik distinguishes between three historical variants of capitalism:<ref>{{citation |last=Rodrik |first=Dani |title=Capitalism 3.0 |date=2009 |url=https://www.jstor.org/stable/j.ctt46mtqx.23 |work=Aftershocks |volume= |pages=185–193 |editor-last=Hemerijck |editor-first=Anton |publisher=[[Amsterdam University Press]] |jstor=j.ctt46mtqx.23 |isbn=978-90-8964-192-2 |access-date=14 January 2021 |editor2-last=Knapen |editor2-first=Ben |editor3-last=van Doorne |editor3-first=Ellen}}</ref>
* Capitalism 1.0 during the 19th century entailed largely unregulated markets with a minimal role for the state (aside from national defense, and protecting property rights);
* Capitalism 2.0 during the post-World War II years entailed Keynesianism, a substantial role for the state in regulating markets, and strong welfare states;
* Capitalism 2.1 entailed a combination of unregulated markets, globalization, and various national obligations by states.

==== Relationship to democracy ====
The relationship between [[democracy]] and capitalism is a contentious area in theory and in popular political movements.<ref>{{cite journal |last1=Milner |first1=Helen V |title=Is Global Capitalism Compatible with Democracy? Inequality, Insecurity, and Interdependence |journal=[[International Studies Quarterly]] |date=2021 |volume=65 |issue=4 |pages=1097–1110 |doi=10.1093/isq/sqab056 |doi-access=free}}</ref> The extension of adult-male [[suffrage]] in 19th-century Britain occurred along with the development of industrial capitalism and [[representative democracy]] became widespread at the same time as capitalism, leading capitalists to posit a causal or mutual relationship between them. However, according to some authors in the 20th-century, capitalism also accompanied a variety of political formations quite distinct from liberal democracies, including [[fascism|fascist]] regimes, [[Absolute monarchy|absolute monarchies]] and [[One-party state|single-party states]].<ref name="Burnham" /> [[Democratic peace theory]] asserts that democracies seldom fight other democracies, but others suggest this may be because of political similarity or stability, rather than because they are "democratic" or "capitalist". Critics argue that though economic growth under capitalism has led to democracy, it may not do so in the future as [[authoritarian]] régimes have been able to manage economic growth using some of capitalism's competitive principles<ref>{{cite magazine |first=Gady |last=Epstein |title=The Winners And Losers in Chinese Capitalism |url=https://www.forbes.com/sites/gadyepstein/2010/08/31/the-winners-and-losers-in-chinese-capitalism/ |magazine=[[Forbes]] |access-date=28 October 2015 |archive-date=5 November 2015 |archive-url=https://web.archive.org/web/20151105210914/http://www.forbes.com/sites/gadyepstein/2010/08/31/the-winners-and-losers-in-chinese-capitalism/ |url-status=live}}</ref><ref>{{cite news |title=The rise of state capitalism |url=http://www.economist.com/node/21543160 |newspaper=[[The Economist]] |access-date=24 October 2015 |issn=0013-0613 |archive-date=15 June 2020 |archive-url=https://web.archive.org/web/20200615124603/https://www.economist.com/leaders/2012/01/21/the-rise-of-state-capitalism |url-status=live}}</ref> without making concessions to greater [[political freedom]].<ref>{{cite web |last=Mesquita |first=Bruce Bueno de |url=http://www.foreignaffairs.org/20050901faessay84507/bruce-bueno-de-mesquita-george-w-downs/development-and-democracy.html |title=Development and Democracy |date=September 2005 |access-date=26 February 2008 |work=[[Foreign Affairs]] |url-status=dead |archive-url=https://web.archive.org/web/20080220154505/http://www.foreignaffairs.org/20050901faessay84507/bruce-bueno-de-mesquita-george-w-downs/development-and-democracy.html |archive-date=20 February 2008}}</ref><ref>{{cite journal |last1=Siegle |first1=Joseph |last2=Weinstein |first2=Michael |last3=Halperin |first3=Morton |date=1 September 2004 |title=Why Democracies Excel |url=http://www.mafhoum.com/press7/212S28.pdf |journal=[[Foreign Affairs]] |volume=83 |issue=5 |pages=57 |doi=10.2307/20034067 |jstor=20034067 |access-date=26 August 2018 |archive-date=12 April 2019 |archive-url=https://web.archive.org/web/20190412055541/http://www.mafhoum.com/press7/212S28.pdf |url-status=live}}</ref>

Political scientists [[Torben Iversen]] and [[David Soskice]] see democracy and capitalism as mutually supportive.<ref>{{cite book |last1=Iversen |first1=Torben |url=https://www.jstor.org/stable/j.ctv4g1r3n |title=Democracy and Prosperity: Reinventing Capitalism through a Turbulent Century |last2=Soskice |first2=David |date=2019 |publisher=[[Princeton University Press]] |jstor=j.ctv4g1r3n |isbn=978-0-691-18273-5}}</ref> [[Robert Dahl]] argued in ''On Democracy'' that capitalism was beneficial for democracy because economic growth and a large middle class were good for democracy.<ref name=":0a">{{cite book |last=Dahl |first=Robert A. |url=https://books.google.com/books?id=ZG4JEAAAQBAJ |title=On Democracy |date=2020 |publisher=[[Yale University Press]] |isbn=978-0-300-25799-1 |language=en}}</ref> He also argued that a market economy provided a substitute for government control of the economy, which reduces the risks of tyranny and authoritarianism.<ref name=":0a" />

In his book ''[[The Road to Serfdom]]'' (1944), [[Friedrich Hayek]] (1899–1992) asserted that the free-market understanding of [[economic freedom]] as present in capitalism is a requisite of [[political freedom]]. He argued that the market mechanism is the only way of deciding what to produce and how to distribute the items without using coercion. [[Milton Friedman]] and [[Ronald Reagan]] also promoted this view.<ref>{{cite journal |last1=Pryor |first1=Frederic L. |title=Capitalism and freedom? |journal=Economic Systems |date=2010 |volume=34 |issue=1 |pages=91–104 |doi=10.1016/j.ecosys.2009.09.003}}</ref> Friedman claimed that centralized economic operations are always accompanied by [[political repression]]. In his view, transactions in a market economy are voluntary and the wide diversity that voluntary activity permits is a fundamental threat to repressive [[political leader]]s and greatly diminishes their power to coerce. Some of Friedman's views were shared by [[John Maynard Keynes]], who believed that capitalism was vital for freedom to survive and thrive.<ref>{{cite journal |first=Friedrich |last=Hayek |author-link=Friedrich Hayek |title=The Road to Serfdom |journal=[[Nature (journal)|Nature]] |volume=154 |issue=3911 |pages=473–474 |publisher=[[University of Chicago Press]] |year=1944 |isbn=978-0-226-32061-8 |bibcode=1944Natur.154..473C |doi=10.1038/154473a0 |s2cid=4071358}}</ref><ref>{{cite book |last=Bellamy |first=Richard |title=The Cambridge History of Twentieth-Century Political Thought |publisher=[[Cambridge University Press]] |year=2003 |isbn=978-0-521-56354-3 |page=60}}</ref> [[Freedom House]], an American [[think-tank]] that conducts international research on, and advocates for, democracy, political freedom and [[human rights]], has argued that "there is a high and statistically significant correlation between the level of political freedom [[Freedom in the World|as measured by Freedom House]] and economic freedom [[Index of Economic Freedom|as measured by the Wall Street Journal/Heritage Foundation survey]]".<ref>{{cite book |first=Adrian |last=Karatnycky |title=Freedom in the World: The Annual Survey of Political Rights and Civil Liberties |publisher=[[Transaction Publishers]] |date=2001 |isbn=978-0-7658-0101-2 |page=11}}</ref>

In ''[[Capital in the Twenty-First Century]]'' (2013), [[Thomas Piketty]] of the [[Paris School of Economics]] asserted that inequality is the inevitable consequence of economic growth in a capitalist economy and the resulting [[Wealth concentration|concentration of wealth]] can destabilize democratic societies and undermine the ideals of social justice upon which they are built.<ref>{{cite book |author-link=Thomas Piketty |last=Piketty |first=Thomas |date=2014 |title=Capital in the Twenty-First Century |publisher=[[Belknap Press]] |isbn=978-0-674-43000-6 |page=571}}</ref>

States with capitalistic economic systems have thrived under political regimes deemed to be authoritarian or oppressive. [[Singapore]] has a successful open market economy as a result of its competitive, business-friendly climate and robust rule of law. Nonetheless, it often comes under fire for its style of government which, though democratic and consistently one of the least corrupt,<ref>{{cite web |title=Transparency International Corruption Measure 2015 |url=https://www.transparency.org/country/#SGP |website=Transparency International Corruption Measure 2015 – By Country / Territory |publisher=Transparency International |access-date=20 September 2016 |archive-date=31 March 2016 |archive-url=https://web.archive.org/web/20160331114640/http://www.transparency.org/country/#SGP |url-status=dead}}</ref> operates largely under a one-party rule. Furthermore, it does not vigorously defend freedom of expression as evidenced by its government-regulated [[Censorship in Singapore|press]], and its penchant for upholding laws protecting ethnic and religious harmony, judicial dignity and personal reputation. The private (capitalist) sector in the People's Republic of China has grown exponentially and thrived since its inception, despite having an authoritarian government. [[Augusto Pinochet]]'s [[Military dictatorship of Chile (1973–1990)|rule in Chile]] led to economic growth and high levels of inequality<ref>[[Naomi Klein|Klein, Naomi]] (2008). ''[[The Shock Doctrine: The Rise of Disaster Capitalism]].'' [[Picador (imprint)|Picador]]. {{ISBN|0-312-42799-9}} [https://books.google.com/books?id=PwHUAq5LPOQC&pg=PA105 p. 105] {{Webarchive|url=https://web.archive.org/web/20150319071518/http://books.google.com/books?id=PwHUAq5LPOQC&lpg=PP1&pg=PA105 |date=19 March 2015 }}.</ref> by using authoritarian means to create a safe environment for investment and capitalism. Similarly, [[Suharto]]'s authoritarian reign and [[Indonesian mass killings of 1965–66|extirpation]] of the [[Communist Party of Indonesia]] allowed for the expansion of capitalism in [[Indonesia]].<ref>{{cite journal |last=Farid |first=Hilmar |date=2005 |title=Indonesia's original sin: mass killings and capitalist expansion, 1965–66 |journal=[[Inter-Asia Cultural Studies]] |volume=6 |issue=1 |pages=3–16 |doi=10.1080/1462394042000326879 |s2cid= 145130614}}</ref><ref>{{cite book |last=Robinson |first=Geoffrey B. |date=2018 |title=The Killing Season: A History of the Indonesian Massacres, 1965–66 |url=https://press.princeton.edu/titles/11135.html |publisher=[[Princeton University Press]] |page=177 |isbn=978-1-4008-8886-3 |access-date=1 August 2018 |archive-date=19 April 2019 |archive-url=https://web.archive.org/web/20190419011656/https://press.princeton.edu/titles/11135.html |url-status=live}}</ref>

The term "capitalism" in its modern sense is often attributed to [[Karl Marx]].<ref name="Scott">{{cite book |title=Industrialism: A Dictionary of Sociology |last=Scott |first=John |publisher=[[Oxford University Press]] |year=2005}}</ref><ref>{{cite web |title="capitalism, n.2". OED Online |url=http://www.oed.com/view/Entry/27454?rskey=ZVI1hr&result=2&isAdvanced=false |access-date=19 January 2013 |archive-date=23 September 2020 |archive-url=https://web.archive.org/web/20200923063611/https://www.oed.com/start;jsessionid=A9CBE07460C68ED291D7D6CDCE84A1B1?authRejection=true&url=%2Fview%2FEntry%2F27454%3Frskey%3DZVI1hr%26result%3D2%26isAdvanced%3Dfalse |url-status=live}}</ref> In ''[[Das Kapital]]'', Marx analyzed the "[[Capitalist mode of production (Marxist theory)|capitalist mode of production]]" using a method of critique that later became known as [[Marxism]]. However, while Marx did discuss capitalism extensively, he used the term "capitalism" less frequently than "capitalist mode of production." His collaborator, [[Friedrich Engels]], played a significant role in popularizing the term in more political interpretations of their work. In the 20th century, supporters of the capitalist system often replaced the term "capitalism" with phrases such as "free enterprise" or "private enterprise" to avoid its negative connotations. Similarly, the term "capitalist" was sometimes substituted with "[[investor]]" or "[[Entrepreneurship|entrepreneur]]" to emphasize productive roles rather than passive wealth accumulation.<ref name="Williams 1983 51">{{cite book |last=Williams |first=Raymond |title=Keywords: A vocabulary of culture and society, revised edition |publisher=[[Oxford University Press]] |year=1983 |isbn=978-0-19-520469-8 |page=[https://archive.org/details/keywordsvocabula00willrich/page/51 51] |chapter=Capitalism |chapter-url=https://archive.org/details/keywordsvocabula00willrich/page/51}}</ref>