Capitalism Characteristics

Capitalism: Characteristics of Capitalism

Throughout its history, but especially during its ascendency in the 19th century, capitalism has had certain key characteristics. First, basic production facilities-land and capital-are privately owned. Capital in this sense means the buildings, machines, and other equipment used to produce goods and services that are ultimately consumed. Second, economic activity is organized and coordinated through the interaction of buyers and sellers (or producers) in markets. Third, owners of land and capital as well as the workers they employ are free to pursue their own self-interests in seeking maximum gain from the use of their resources and labor in production.

Consumers are free to spend their incomes in ways that they believe will yield the greatest satisfaction. This principle, called consumer sovereignty, reflects the idea that under capitalism producers will be forced by competition to use their resources in ways that will best satisfy the wants of consumers. Self-interest and the pursuit of gain lead them to do this. Fourth, under this system a minimum of government supervision is required; if competition is present, economic activity will be self-regulating. Government will be necessary only to protect society from foreign attack, uphold the rights of private property, and guarantee contracts. This 19th-century view of government’s role in the capitalist system was significantly modified by ideas and events of the 20th century. (1)

The Capitalism contents in this legal Encyclopedia also include: Capitalism, Capitalism Characteristics, Capitalism Origins, Capitalism Mercantilism, Modern Capitalism Beginnings, Physiocrats, Adam Smith, Industrialization Rise, Capitalism in the 20th Century and Capitalism Future.

Resources

Notes and References

1. Encarta Online Encyclopedia

See Also

Further Reading

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• Amable, B. (2003) The Diversity of Modern Capitalism. Oxford: Oxford University Press.
• Berger, S. (1981) Organizing Interests in Western Europe. Cambridge: Cambridge University Press.
• Biggart, N.W. (1991) Explaining Asian Economic Organization: Toward a Weberian Institutional Perspective. Theory and Society, 20, 199–232.
• Boyer, R. (1986) La Théorie de la régulation: Une analyse critique. Paris: La Découverte.
• Callaghan, H., and Höpner, M. (2005) European Integration and the Clash of Capitalisms. Political Cleavages over Takeover Liberalization. Comparative European Politics 3 (3), 307–32.
• Campbell, J.L., and Pedersen, O.-K. (2007) The Varieties of Capitalism and Hybrid Success. Comparative Political Studies 40 (3), 307–32.
• Chandler, A.D. (1990) Scale and Scope: The Dynamics of Industrial Capitalism. Cambridge: Harvard University Press.
• Coates, D. (ed.) (2005) Varieties of Capitalism, Varieties of Approaches. New York: Palgrave Macmillan.
• Crouch, C. (2005) Capitalist Diversity and Change: Recombinant Governance and Institutional Entrepreneurs. Oxford: Oxford University Press.
• Dertouzos, M.L., Lester, R.K., and Solow, R.M. (1989) Made in America: Regaining the Productive Edge. New York: HarperPerennial.
• Dore, R. (1986) Flexible Rigidities: Industrial Policy and Structural Adjustment in the Japanese Economy 1970–80. London: Athlone Press.
• Ebbinghaus, B., and Manow, P. (eds.) (2001) Comparing Welfare Capitalism: Social Policy and Political Economy in Europe, Japan and the USA. London: Routledge.
• Esping-Anderson, G. (1990) The Three Worlds of Welfare Capitalism. Cambridge: Polity.
• Gerschenkron, A. (1966) Economic Backwardness in Historical Perspective. Cambridge: Belknap.
• Goldthorpe, J.H. (ed.) (1984) Order and Conflict in Contemporary Capitalism. Oxford: Clarendon Press.
• Hall, P., and Gingerich, D. (2009) Varieties of Capitalism and Institutional Complementarities in the Macroeconomy: An Empirical Analysis. British Journal of Political Science 39 (3), 449–82.
• Hall, P.A., and Thelen, K. (2009) Institutional Change in Varieties of Capitalism. Socio-Economic Review 7 (1), 7–34.
• Hart, J.A. (1992) Rival Capitalists: International Competitiveness in the United States, Japan, and Western Europe. Ithaca: Cornell University Press.
• Hollingsworth, J.R., and Boyer, R. (1997) Contemporary Capitalism: The Embeddedness of Institutions. Cambridge: Cambridge University Press.
• Hollingsworth, J.R., and Streeck, W. (1994) Countries and Sectors: Concluding Remarks on Performance, Convergence, and Competitiveness. In J.R. Hollingsworth, P.C. Schmitter, and W. Streeck (eds.) Governing Capitalist Economies: Performance and Control of Economic Sectors. Oxford: Oxford University Press.
• Howell, C. (2003) Varieties of Capitalism: And Then There Was One? Comparative Politics 36 (1), 103–24.
• Jackson, G., and Deeg, R. (2008) From Comparing Capitalisms to the Politics of Change. Review of International Political Economy 15 (4), 680–709.
• Katzenstein, P.J. (ed.) (1978) Between Power and Plenty. Madison: University of Wisconsin Press.
• Keohane, R.O., and Milner, H.V. (eds.) (1996) Internationalization and Domestic Politics. Cambridge: Cambridge University Press.
• Lane, C. (2003) Changes in Corporate Governance of German Corporations: Convergence to the Anglo-American Model? Competition and Change 7 (2–3), 79–100.
• Maurice, M., Sellier, F., and Silvestre, J.J. (1986) The Social Foundations of Industrial Power: A Comparison of France and Germany. Cambridge: MIT Press.
• Milgrom, P.R., and Roberts, J. (1994) Complementarities and Systems: Understanding Japanese Economic Organization. Estudios Economicos, 9, 3–42.
• Morgan, G. (2005) Introduction: Changing Capitalisms? Internationalization, Institutional Change, and Systems of Economic Organization. In G. Morgan, R. Whitley, and E. Moen (eds.) Changing Capitalisms? Internationalization, Institutional Change, and Systems of Economic Organization. Oxford: Oxford University Press.
• Piore, M.J., and Sabel, C.F. (1984) The Second Industrial Divide: Possibilities for Prosperity. New York: Basic Books.
• Radice, H. (2000) Globalization and National Capitalisms: Theorizing Convergence and Differentiation. Review of International Political Economy 7 (4), 719–42.
• Scharpf, F.W. (1991) Crisis and Choice in European Social Democracy. Ithaca: Cornell University Press.
• Schmitter, P.C., and Lehmbruch, G. (eds.) (1979) Trends Toward Corporatist Intermediation, Beverly Hills: Sage.
• Simmons, B.A. (2001) The International Politics of Harmonization: The Case of Capital Market Regulation. International Organization 55 (3), 589–620.
• Soederberg, S., Menz, G., and Cerny, P.G. (eds.) (2005) Internalizing Globalization: The Rise of Neoliberalism and the Decline of National Varieties of Capitalism. Basingstoke: Palgrave Macmillan.
• Sorge, A., and Warner, M. (1986) Comparative Factory Organization: An Anglo-German Comparison of Manufacturing, Management and Manpower. Aldershot: Gower.
• Streeck, W. (1992) Productive Constraints: On the Institutional Conditions of Diversified Quality Production. In W. Streeck (ed.) Social Institutions and Economic Performance. London: Sage.
• Streeck, W., and Schmitter, P.C. (1991) From National Corporatism to Transnational Pluralism: Organized Interests in the Single European Market. Politics and Society 19 (2), 133–64.
• Streeck, W., and Yamamura, K. (eds.) (2001) The Origins of Nonliberal Capitalism: Germany and Japan in Comparison. Ithaca: Cornell University Press.
• Thelen, K. (2004) How Institutions Evolve: The Political Economy of Skills in Germany, Britain, the United States and Japan. Cambridge: Cambridge University Press.
• Vitols, S. (2004) Negotiated Shareholder Value: The German Version of an Anglo-American Practice. Competition and Change, 8 (4), 331–7.
• Wade, R. (1990) Governing the Market. Princeton: Princeton University Press.
• Whitley, R. (2005) How National are Business Systems? The Role of States and Complementary Institutions in Standardizing Systems of Economic Coordination and Control at the National Level. In G. Morgan, R. Whitley, and E. Moen (eds.) Changing Capitalisms? Internationalization, Institutional Change, and Systems of Economic Organization. Oxford: Oxford University Press.
• Williamson, O.E. (1975) Markets and Hierarchies: Analysis and Anti-Trust Implications. New York: Free Press.
• Zysman, J. (1983) Governments, Markets, and Growth: Financial Systems and the Politics of Industrial Change. Ithaca: Cornell University Press.