lDefinition of Capitalism
Capitalism is an economic system which based on individual rights but not the government or society. Compared with other social institution, private ownership, competitive market, wage labor and production for profit are the main properties of capitalism.

lHistory of Capitalism
Adam Smith

Most of the capitalists emerged in the 18th,19th and 20th century, such as Adam Smith, David Ricardo, Karl Marx in industrial revolution, John Maynard Keynes inGreat Depression and Friedrich August von Hayek and Milton Friedman in Cold War.

The concept of capitalism is changing with the time passed by and is different due to the political view and the way of analysis. Economic liberalism supported by Adam Smith focuses on the importance of the invisible hand (supply and demand in the market).
Some supporters (Milton Friedman, Ayn Rand and Alan Greenspan) emphasized the importance of the free market that can promote cooperation and creation among individuals, the development of economy and freedom. Some people ( like Immanuel Wallerstein ) consider capitalism as a key to promote products and services for trading in market, while capital products are owned by non-country organizations and operated in global scale.
As for others (like Karl Marx), capitalism is defined as a social connection which has never been seen before causing the engenderment of labor market in which most people should betray their labor. Many people consider capitalism as market economy.

lTypes of Capitalism

There are varieties of capitalism existing in the world. Several main types are listed below:

1. Mercantilism
A painting of a French seaport from 1638 at the height of mercantilism.

- A form of capitalism which considers that trade generates wealth through accumulation of profitable balance of trade. It also suggests that government should take control of the country’s economy in order to increase its own wealth by damaging its competed countries.

2. Free-market capitalism
- An economic system in which the price of goods and services is influenced by supply and demand of the products and is not controlled by the government. The role of government here is to protect property rights.

3. Social market economy
- A social market economy is based on a free market system where government provides social security, unemployment benefits and recognition of labor rights to elderly and unemployed.

4. State capitalism
- A political system in which the state controls the production of goods and the use of capital.

5. Mixed economy
- A mixed economy consists of both private and public ownership. Specifically, some companies are owned privately while some are operated by the government.

6. Other
Other types of capitalism include:

lControversy over Capitalism

Anders Chydenius: the first person who advocates freedom of trade and industry

People have been holding different opinions towards the strength and weakness of capitalism for hundreds of years.
Some people consider capitalism as the best choose for countries’ development since they believe private ownership, free market and labor market can boost economic prosperity. Also, capitalism insists open election and supervision for officials, which advocates democracy and competition diminishing official corruption.
However, others think that it is a sign for capitalism to broaden the gap between rich and poor and to monopoly the market since it can make contribution to exploitation of cultural and economy, increase of unemployment rate and unrest of economy.

lComparison with other Economic System
Carl Marx
Compared with capitalism, in feudalism, the emperor controls legislative authority and ownership of land. In socialism, means of production is controlled and operated by government and people. In communism, means of production is owned by community but not employers in order to abolish property of capitalism. In addition, as what Karl Marx mentioned, the production of work is distributed due to the demand of individual, and the purchase and traffic should be abolished.
Meanwhile, capitalism which is based on market economy is opposed to planned economy. In planned economy, the demands of economy (like labor, capital and nature resource) are all controlled and censored by government in order to catch up the plan of economic development made by government. In corporatism, it is said to serve for government’s profit, private corporations are closely connected with government.

lConnection with Anthem

1. One of the philosophy Any Rand provided in Anthem is that man-every man-is an end in himself (he must exist for his own sake). Similarly, capitalism emphasizes the importance of individual rights that consumers have freedom to choose their preferred needs and wants and will not be limited by government or other organizations. However, in Anthem, the Council decides the limited needs for the citizens. For example, it takes the Council fifty years to secure the approval of all the Councils for the Candle, and to decide upon the number needed. It is ridiculous to monopoly one type of goods and even to control the numbers in capitalism, which reveals the weakness of communism.

2. In Anthem, the Council owns all the capital resources and force citizens to do specific work for the Council without paying. In stark contrast, capitalism in which individual owns the means of production considers government as a policeman that protects man’s rights and prevents illegal trading among entrepreneurs. Ideally, state and economics should be separated completely so that the invisible hand can play a significant role in the free market.

3. In Anthem, Equality discovers electricity by himself which seems to be a horrible sin and cannot be accepted by the Council of Scholars. By contrast, capitalism encourages all the innovations and inventions which can promote the development of economy.
The Benefit of Capitalism: This graph reveals that people can choose their preferred goods in capitalism society.

4. The Council sets people to live and work in groups and cannot think about the thing that never occurred. For example, some people who worked in the Council of Scholar had some great ideas but they had to give up their thoughts under the pressure of conformity. Moreover, the Council even says that what is not thought by all men cannot be true. The Council is afraid of development and makes stability and conformity as the crucial limitation for citizens and society while development and individuality are the key words in capitalism.

5. After entering the Uncharted Forest, Equality finds that he is free to do everything and can pursuit his own sake, which reveals the harmfulness of conformity and encourages the benefit of capitalism in which man have more freedom to pursuit their aspiration.

lUseful Links in Class

Laissez-Faire Market – a kind of capitalism

Individualism– describe this concept in greater detail
Socialism– do some research on this concept of society
Communesresearch modern day communal living
Objectivism – provide the basics of Ayn Rand’s Philosophy


  • The Capitalism Site | Laissez-faire Capitalism Is the Political Economic System Based on Individual Rights. Capitalism Magazine, 2011. Web. 13 Nov. 2011. <>.

  • "Capitalism: Definition from" Wiki Q&A Combined with Free Online Dictionary, Thesaurus, and Encyclopedias. Answers Corporation, 2011. Web. 13 Nov. 2011. <>.

  • "Capitalism Is a Social System Founded upon Individual Rights." The Capitalism Site | Laissez-faire Capitalism Is the Political Economic System Based on Individual Rights. Capitalism Magazine, 2004. Web. 13 Nov. 2011. <>.