Capitalism – What is it and where will it go next
Capitalism is an economic system that has been around since before the word was even invented. Now more than ever it is questioned, denounced, defended and advocated. As an Iconic man, you should have an informed, unbiased opinion on Capitalism, as it is the dominant form of economic and social organization in the world. Not only will it make a great conversational topic but it will shed some light on the way society functions and how it is going to develop moving forward.
Capitalism did not start out as a form of theorized economic and social structure. It appeared organically as the world moved on through the ages and commerce begun to prevail as the traditional means of trade. That is to say, nobody invented capitalism. Humanity stumbled upon the meaning (and indeed the term) much later. But we will try to highlight the essential parts and not drag you through the complete DNA of capitalism.
Depending on whether you ask economists, sociologists or historians, they will all have different timelines and definitions regarding capitalism. But they all boil down to the fact that Capitalism is an economic system characterized by, private and corporate property, investments that are determined by private decisions and by prices, production, and competition set by competing in a free market.
Like all economic systems it all sounds better and more complicated than it is. But, over time, capitalist societies went through consistent economic growth and an increase in the standard of living.
From the fall of the British manorial system due to the incentive to maximize profit, to the industrial revolution and the theories of Adam Smith, capitalism steadily developed its grip as a somewhat de facto economic system. In fact, being all but a consolidation and development of systems the world already employed. It began to be strongly linked to democracy as most merchants and early industrialists came in close competition to nobles when it came to policies that would favor one side or the other. New money brought new power.
Blending trading practices from around the world, merchants and industrialists began to use a more or less unified way of doing business. Powered by the industrial revolution, commodities became more accessible, trade grew faster and nobles were being replaced as the dominant economic force.
From there on it seemed like everything was possible. And for a while it was.
Capitalism ensures economical growth by rewarding innovation. Innovation and more efficient production methods lead to new products and continuous development of technology. The driving force behind research and technology, innovation is not only encouraged but also paramount to the survival and development of companies. It is what led the pharmaceutical industry in post-WWI Germany to become one of the biggest in the world. An industry that brought innovation and revolutionary treatments for the whole world was born after the Germans were defeated and were forced to move from a mainly heavy industry-based economy to other means of industrial production.
The same drive for innovation is what led entrepreneurs like Steve Jobs, Elon Musk or Mark Zuckerberg to believe in their ideas.
- Competition
Capitalism always drives the market towards the best product at the best price. Such a tight growth-oriented economic structure will not be able to succeed if consumers were not willing to pay more for what they want the most. In this way products and the whole manufacturing process become as efficient as possible. This in terms increases competition and leads businesses to be efficient while cutting costs and avoiding waste.
- Political Freedom
If the means of production are owned by private or corporate players the government is left with a regulatory role regarding the economy. Of course, in practice, that role differs from one country to another and social security systems are put in place. But it also means that it is hard for the government to overstep its attributes and interfere too much with the economy or private individuals.
The flaws in the system
Much like the British manor system, or similar medieval feudal systems in Europe, Capitalism started having problems when vast sums of money began to accumulate in fewer and fewer hands. The incentive to maximize profit struck once again. By having a more productive workforce and fewer employees, businessmen no longer had the incentive to invest. But by continuing to produce they would accumulate more wealth, which led to more money, which led to more power, which led to more money.
Thus businessmen started to have huge political power. In time political influence and accumulation of wealth led to inequalities. Despite that, Capitalism and Democracy are not interchangeable. Capitalism is an economical system while Democracy is a political doctrine. They may seem very related now but that was not always the case, and both can survive without the other. In fact, there is no such thing as a true capitalist state from an economic point of view, nor a true democracy from a political one. Both could use improvements and both will evolve as societies change their views on priorities, moral values and the importance of individuals.
Will Capitalism Survive?
With all the challenges and debates surrounding tariffs, global warming and the reduction of dependency on fossil fuels, capitalism seem to have everything stacked against it. But it would not be the first time. The reality is - Capitalism is going to survive. Not necessarily in this form but as long as there is commerce and capital some form of capitalist economic model will exist.
If the emergence of Silicon Valley and the entrepreneur age is any lesson, it may very well be forced to shift some of its weight away from big traditional industries and corporations to smaller, more adaptable business models that are setting the market trends, to add more social components and to cut some of its ties to politics.
For now, one thing is certain. It doesn’t even matter if we like capitalism or not. The reality is that, like that last Alien that is always alive to chase Sigourney Weaver, capitalism will be hard to do away with. And you as an Iconic man need to adapt, innovate and become the best version of yourself regardless of your surroundings or economic and political beliefs.
But what is Capitalism and how did it evolve?
Let’s take a step backCapitalism did not start out as a form of theorized economic and social structure. It appeared organically as the world moved on through the ages and commerce begun to prevail as the traditional means of trade. That is to say, nobody invented capitalism. Humanity stumbled upon the meaning (and indeed the term) much later. But we will try to highlight the essential parts and not drag you through the complete DNA of capitalism.
Depending on whether you ask economists, sociologists or historians, they will all have different timelines and definitions regarding capitalism. But they all boil down to the fact that Capitalism is an economic system characterized by, private and corporate property, investments that are determined by private decisions and by prices, production, and competition set by competing in a free market.
Like all economic systems it all sounds better and more complicated than it is. But, over time, capitalist societies went through consistent economic growth and an increase in the standard of living.
From the fall of the British manorial system due to the incentive to maximize profit, to the industrial revolution and the theories of Adam Smith, capitalism steadily developed its grip as a somewhat de facto economic system. In fact, being all but a consolidation and development of systems the world already employed. It began to be strongly linked to democracy as most merchants and early industrialists came in close competition to nobles when it came to policies that would favor one side or the other. New money brought new power.
Blending trading practices from around the world, merchants and industrialists began to use a more or less unified way of doing business. Powered by the industrial revolution, commodities became more accessible, trade grew faster and nobles were being replaced as the dominant economic force.
From there on it seemed like everything was possible. And for a while it was.
The advantages of capitalism
- Innovation
Capitalism ensures economical growth by rewarding innovation. Innovation and more efficient production methods lead to new products and continuous development of technology. The driving force behind research and technology, innovation is not only encouraged but also paramount to the survival and development of companies. It is what led the pharmaceutical industry in post-WWI Germany to become one of the biggest in the world. An industry that brought innovation and revolutionary treatments for the whole world was born after the Germans were defeated and were forced to move from a mainly heavy industry-based economy to other means of industrial production.
The same drive for innovation is what led entrepreneurs like Steve Jobs, Elon Musk or Mark Zuckerberg to believe in their ideas.
- Competition
Capitalism always drives the market towards the best product at the best price. Such a tight growth-oriented economic structure will not be able to succeed if consumers were not willing to pay more for what they want the most. In this way products and the whole manufacturing process become as efficient as possible. This in terms increases competition and leads businesses to be efficient while cutting costs and avoiding waste.
- Political Freedom
If the means of production are owned by private or corporate players the government is left with a regulatory role regarding the economy. Of course, in practice, that role differs from one country to another and social security systems are put in place. But it also means that it is hard for the government to overstep its attributes and interfere too much with the economy or private individuals.
The flaws in the system
Much like the British manor system, or similar medieval feudal systems in Europe, Capitalism started having problems when vast sums of money began to accumulate in fewer and fewer hands. The incentive to maximize profit struck once again. By having a more productive workforce and fewer employees, businessmen no longer had the incentive to invest. But by continuing to produce they would accumulate more wealth, which led to more money, which led to more power, which led to more money.
Thus businessmen started to have huge political power. In time political influence and accumulation of wealth led to inequalities. Despite that, Capitalism and Democracy are not interchangeable. Capitalism is an economical system while Democracy is a political doctrine. They may seem very related now but that was not always the case, and both can survive without the other. In fact, there is no such thing as a true capitalist state from an economic point of view, nor a true democracy from a political one. Both could use improvements and both will evolve as societies change their views on priorities, moral values and the importance of individuals.
Will Capitalism Survive?
With all the challenges and debates surrounding tariffs, global warming and the reduction of dependency on fossil fuels, capitalism seem to have everything stacked against it. But it would not be the first time. The reality is - Capitalism is going to survive. Not necessarily in this form but as long as there is commerce and capital some form of capitalist economic model will exist.
If the emergence of Silicon Valley and the entrepreneur age is any lesson, it may very well be forced to shift some of its weight away from big traditional industries and corporations to smaller, more adaptable business models that are setting the market trends, to add more social components and to cut some of its ties to politics.
For now, one thing is certain. It doesn’t even matter if we like capitalism or not. The reality is that, like that last Alien that is always alive to chase Sigourney Weaver, capitalism will be hard to do away with. And you as an Iconic man need to adapt, innovate and become the best version of yourself regardless of your surroundings or economic and political beliefs.
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Loves to play with new ideas, binge writing, traveling and gourmet coffee. Professional writer of non fiction with over 8 years experience in putting words to paper. Fan of iconic movies, sports, The Arctic Monkeys and city breaks. Yes, he knows how good his coffee is.