where did it come from?

Since about the 14th century, modern capitalism has been rapidly expanding its reach. Some

would say that it has become a necessary competitive tool within a global economy, and point to

its success as a productive and innovative system. Others say  that capitalism’s end

result causes class inequality, worker exploitation, and stifles freedom. Maybe they’re both

right. But what exactly is Capitalism?

Simply put, Capitalism is a social and economic system where both the means of production

and any associated trade are privately owned. This isn’t the end-all be-all definition of capitalism.

But it does illustrate its tenets as opposed to other systems like socialism,

communism, fascism, and a bunch of other “isms”. Generally, societies tend to be mixtures of

different systems, and pretty much every country is a mixture. So, why is capitalism so pervasive?

Well, capitalism grew directly out of failed middle age feudalism. Think of feudalism as

a lot of tiny dictatorships. The lords would own land and set the rules. Serfs would live

on that land and work the farms in exchange for protection by the lord. But since each

system was self contained, neither the lords nor the serfs had any incentive to work harder

than they had to. A serf could never surpass a lord, and everyone was essentially set for

life. In short, feudalism meant that there was no financial competition. And without

competition, there was no reason to innovate technology or improve their society.

So when the serfs finally had enough of being self-sufficient slaves, and revolted, it left

a new class of farmers competing with each other to sell the crops they had previously

exchanged for land and protection. This was the birth of modern day capitalist markets,

and the quote “almighty dollar”, which allowed serfs to become lords themselves if

they were competitive enough in the marketplace. In turn, lords would pay their workers instead

of offering housing and protection, transforming a collective into a system of individual self-responsibility.

After entering the socio-economic system, capitalism spread like wildfire, and became

a part of nearly every country’s policymaking process. Even materially poor third world

countries unable to establish free markets or private ownership strive for capitalist

policy. To find out why capitalism became so attractive and pervasive, check out part

2 of this video.  

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