Perspectives on capitalism
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Throughout
modern history The term modern period or modern era (sometimes also called modern history or modern times) is the period of history that succeeds the Middle Ages (which ended approximately 1500 AD). This terminology is a historical periodization that is applie ...
, a variety of perspectives on
capitalism Capitalism is an economic system based on the private ownership of the means of production and their operation for Profit (economics), profit. Central characteristics of capitalism include capital accumulation, competitive markets, pric ...
have evolved based on different
schools of thought A school of thought, or intellectual tradition, is the perspective of a group of people who share common characteristics of opinion or outlook of a philosophy, discipline, belief, social movement, economics, cultural movement, or art movement. H ...
.


Overview

Adam Smith Adam Smith (baptized 1723 – 17 July 1790) was a Scottish economist and philosopher who was a pioneer in the thinking of political economy and key figure during the Scottish Enlightenment. Seen by some as "The Father of Economics"——— ...
was one of the first influential writers on the topic with his book ''
The Wealth of Nations ''An Inquiry into the Nature and Causes of the Wealth of Nations'', generally referred to by its shortened title ''The Wealth of Nations'', is the ''magnum opus'' of the Scottish economist and moral philosopher Adam Smith. First published in 1 ...
'', which is generally considered to be the start of
classical economics Classical economics, classical political economy, or Smithian economics is a school of thought in political economy that flourished, primarily in Britain, in the late 18th and early-to-mid 19th century. Its main thinkers are held to be Adam Smith ...
which emerged in the 18th century. To the contrary,
Karl Marx Karl Heinrich Marx (; 5 May 1818 – 14 March 1883) was a German philosopher, economist, historian, sociologist, political theorist, journalist, critic of political economy, and socialist revolutionary. His best-known titles are the 1848 ...
considered
capitalism Capitalism is an economic system based on the private ownership of the means of production and their operation for Profit (economics), profit. Central characteristics of capitalism include capital accumulation, competitive markets, pric ...
to be a historically specific
mode of production In the Marxist theory of historical materialism, a mode of production (German: ''Produktionsweise'', "the way of producing") is a specific combination of the: * Productive forces: these include human labour power and means of production (tools ...
and considered capitalism a phase of economic development that would pass and be replaced by
pure communism In Marxist thought, a communist society or the communist system is the type of society and economic system postulated to emerge from technological advances in the productive forces, representing the ultimate goal of the political ideology of ...
. In conjunction with his
criticism of capitalism Criticism of capitalism ranges from expressing disagreement with the principles of capitalism in its entirety to expressing disagreement with particular outcomes of capitalism. Criticism of capitalism comes from various political and philoso ...
was Marx's belief that exploited labor would be the driving force behind a
social revolution Social revolutions are sudden changes in the structure and nature of society. These revolutions are usually recognized as having transformed society, economy, culture, philosophy, and technology along with but more than just the political syst ...
to a socialist-style economy.Wheen, Francis ''Books That Shook the World: Marx's Das Kapital''. 1st ed. London: Atlantic Books, 2006 For Marx, this cycle of the extraction of the surplus value by the owners of
capital Capital may refer to: Common uses * Capital city, a municipality of primary status ** List of national capital cities * Capital letter, an upper-case letter Economics and social sciences * Capital (economics), the durable produced goods used f ...
or the
bourgeoisie The bourgeoisie ( , ) is a social class, equivalent to the middle or upper middle class. They are distinguished from, and traditionally contrasted with, the proletariat by their affluence, and their great cultural and financial capital. They ...
becomes the basis of
class struggle Class conflict, also referred to as class struggle and class warfare, is the political tension and economic antagonism that exists in society because of socio-economic competition among the social classes or between rich and poor. The forms ...
. This argument is intertwined with Marx's version of the
labor theory of value The labor theory of value (LTV) is a theory of value that argues that the economic value of a good or service is determined by the total amount of " socially necessary labor" required to produce it. The LTV is usually associated with Marxian e ...
asserting that labor is the source of all value and thus of profit.
Max Weber Maximilian Karl Emil Weber (; ; 21 April 186414 June 1920) was a German sociologist, historian, jurist and political economist, who is regarded as among the most important theorists of the development of modern Western society. His ideas profo ...
considered
market Market is a term used to describe concepts such as: *Market (economics), system in which parties engage in transactions according to supply and demand *Market economy *Marketplace, a physical marketplace or public market Geography *Märket, an ...
exchange Exchange may refer to: Physics *Gas exchange is the movement of oxygen and carbon dioxide molecules from a region of higher concentration to a region of lower concentration. Places United States * Exchange, Indiana, an unincorporated community * ...
rather than production as the defining feature of capitalism. In contrast to their counterparts in prior modes of economic activity, capitalist enterprises was their rationalization of production, directed toward maximizing
efficiency Efficiency is the often measurable ability to avoid wasting materials, energy, efforts, money, and time in doing something or in producing a desired result. In a more general sense, it is the ability to do things well, successfully, and without ...
and
productivity Productivity is the efficiency of production of goods or services expressed by some measure. Measurements of productivity are often expressed as a ratio of an aggregate output to a single input or an aggregate input used in a production proces ...
; a tendency leading to a sociological process of enveloping rationalization. According to Weber, workers in pre-capitalist economic institutions understood work in terms of a personal relationship between
master Master or masters may refer to: Ranks or titles * Ascended master, a term used in the Theosophical religious tradition to refer to spiritually enlightened beings who in past incarnations were ordinary humans *Grandmaster (chess), National Master ...
and
journeyman A journeyman, journeywoman, or journeyperson is a worker, skilled in a given building trade or craft, who has successfully completed an official apprenticeship qualification. Journeymen are considered competent and authorized to work in that fie ...
in a
guild A guild ( ) is an association of artisans and merchants who oversee the practice of their craft/trade in a particular area. The earliest types of guild formed as organizations of tradesmen belonging to a professional association. They sometimes ...
, or between
lord Lord is an appellation for a person or deity who has authority, control, or power over others, acting as a master, chief, or ruler. The appellation can also denote certain persons who hold a title of the peerage in the United Kingdom, or ar ...
and
peasant A peasant is a pre-industrial agricultural laborer or a farmer with limited land-ownership, especially one living in the Middle Ages under feudalism and paying rent, tax, fees, or services to a landlord. In Europe, three classes of peasants ...
in a manor. Meanwhile
institutional economics Institutional economics focuses on understanding the role of the Sociocultural evolution, evolutionary process and the role of institutions in shaping Economy, economic Human behavior, behavior. Its original focus lay in Thorstein Veblen's instin ...
, once the main
school of economic thought In the history of economic thought, a school of economic thought is a group of economic thinkers who share or shared a common perspective on the way economies work. While economists do not always fit into particular schools, particularly in moder ...
in the United States, holds that capitalism cannot be separated from the political and social system within which it is embedded. In the late 19th century, the
German Historical School :''This is an article about a school of thought in the area of law. For economics, see historical school of economics.'' The German Historical School of Jurisprudence is a 19th-century intellectual movement in the study of German law. With Romant ...
of economics diverged with the emerging
Austrian School The Austrian School is a heterodox school of economic thought that advocates strict adherence to methodological individualism, the concept that social phenomena result exclusively from the motivations and actions of individuals. Austrian school ...
of economics, led at the time by
Carl Menger Carl Menger von Wolfensgrün (; ; 28 February 1840 – 26 February 1921) was an Austrian economist and the founder of the Austrian School of economics. Menger contributed to the development of the theories of marginalism and marginal utility ...
. Later generations of followers of the Austrian School continued to be influential in Western economic thought through much of the 20th century. The Austrian economist
Joseph Schumpeter Joseph Alois Schumpeter (; February 8, 1883 – January 8, 1950) was an Austrian-born political economist. He served briefly as Finance Minister of German-Austria in 1919. In 1932, he emigrated to the United States to become a professor at Ha ...
, a forerunner of the Austrian School of economics, emphasized the
creative destruction Creative destruction (German: ''schöpferische Zerstörung'') is a concept in economics which since the 1950s is the most readily identified with the Austrian-born economist Joseph Schumpeter who derived it from the work of Karl Marx and pop ...
of capitalism—the fact that market economies undergo constant change. The Austrian economists
Ludwig von Mises Ludwig Heinrich Edler von Mises (; 29 September 1881 – 10 October 1973) was an Austrian School economist, historian, logician, and Sociology, sociologist. Mises wrote and lectured extensively on the societal contributions of classical liberali ...
and
Friedrich Hayek Friedrich August von Hayek ( , ; 8 May 189923 March 1992), often referred to by his initials F. A. Hayek, was an Austrian–British economist, legal theorist and philosopher who is best known for his defense of classical liberalism. Haye ...
were among the leading defenders of
market economy A market economy is an economic system in which the decisions regarding investment, production and distribution to the consumers are guided by the price signals created by the forces of supply and demand, where all suppliers and consumers ...
against 20th century proponents of socialist
planned economies A planned economy is a type of economic system where investment, production and the allocation of capital goods takes place according to economy-wide economic plans and production plans. A planned economy may use centralized, decentralized, part ...
. Among Mises's arguments were the
economic calculation problem The economic calculation problem (sometimes abbreviated ECP) is a criticism of using economic planning as a substitute for market-based allocation of the factors of production. It was first proposed by Ludwig von Mises in his 1920 article "Eco ...
, which was first proposed by Mises in 1920 and later expounded by Hayek.F. A. Hayek, (1935), "The Nature and History of the Problem" and "The Present State of the Debate," in F. A. Hayek, ed. ''Collectivist Economic Planning'', pp. 1–40, 201–43. The problem referred to is that of how to distribute resources rationally in an economy. The
free market In economics, a free market is an economic system in which the prices of goods and services are determined by supply and demand expressed by sellers and buyers. Such markets, as modeled, operate without the intervention of government or any o ...
solution is the
price mechanism In economics, a price mechanism is the manner in which the profits of goods or services affects the supply and demand of goods and services, principally by the price elasticity of demand. A price mechanism affects both buyer and seller who nego ...
, wherein people individually have the ability to decide how a good or service should be distributed based on their willingness to give money for it. Mises and Hayek argued that only market capitalism could manage a complex, modern economy. Partially opposed to that view, the British economist
John Maynard Keynes John Maynard Keynes, 1st Baron Keynes, ( ; 5 June 1883 – 21 April 1946), was an English economist whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments. Originally trained in ...
argued in his 1937 ''
The General Theory of Employment, Interest, and Money ''The General Theory of Employment, Interest and Money'' is a book by English economist John Maynard Keynes published in February 1936. It caused a profound shift in economic thought, giving macroeconomics a central place in economic theory and ...
'' that capitalism suffered a basic problem in its ability to recover from periods of slowdowns in investment. Keynes argued that a capitalist economy could remain in an indefinite equilibrium despite high
unemployment Unemployment, according to the OECD (Organisation for Economic Co-operation and Development), is people above a specified age (usually 15) not being in paid employment or self-employment but currently available for Work (human activity), w ...
. Keynes tried to provide solutions to many of Marx’s problems without completely abandoning the classical understanding of capitalism. His work attempted to show that
regulation Regulation is the management of complex systems according to a set of rules and trends. In systems theory, these types of rules exist in various fields of biology and society, but the term has slightly different meanings according to context. For ...
can be effective and that economic stabilizers can rein in the aggressive expansions and
recession In economics, a recession is a business cycle contraction when there is a general decline in economic activity. Recessions generally occur when there is a widespread drop in spending (an adverse demand shock). This may be triggered by various ...
s that Marx disliked. These changes sought to create more stability in the
business cycle Business cycles are intervals of Economic expansion, expansion followed by recession in economic activity. These changes have implications for the welfare of the broad population as well as for private institutions. Typically business cycles are ...
and reduce the abuses of
laborers A laborer (or labourer) is a person who works in manual labor types in the construction industry workforce. Laborers are in a working class of wage-earners in which their only possession of significant material value is their labor. Industries ...
.
Keynesian Keynesian economics ( ; sometimes Keynesianism, named after British economist John Maynard Keynes) are the various macroeconomic theories and models of how aggregate demand (total spending in the economy) strongly influences economic output and ...
economists argue that Keynesian policies were one of the primary reasons capitalism was able to recover following the
Great Depression The Great Depression (19291939) was an economic shock that impacted most countries across the world. It was a period of economic depression that became evident after a major fall in stock prices in the United States. The economic contagio ...
.Erhardt III, Erwin. "History of Economic Development." University of Cincinnati. Lindner Center Auditorium, Cincinnati. 7 Nov. 2008.
Supply-side economics Supply-side economics is a macroeconomic theory that postulates economic growth can be most effectively fostered by lowering taxes, decreasing regulation, and allowing free trade. According to supply-side economics, consumers will benefit fr ...
developed during the 1970s in response to Keynesian economic policy and in particular the failure of
demand management Demand management is a planning methodology used to forecast, plan for and manage the demand for products and services. This can be at macro-levels as in economics and at micro-levels within individual organizations. For example, at macro-leve ...
to stabilize Western economies during the
stagflation of the 1970s In economics, stagflation or recession-inflation is a situation in which the inflation rate is high or increasing, the economic growth rate slows, and unemployment remains steadily high. It presents a dilemma for economic policy, since actions ...
in the wake of the oil crisis in 1973.Case, Karl E. & Fair, Ray C. (1999). ''Principles of Economics'' (5th ed.), p. 780. Prentice-Hall. . It drew on a range of non-Keynesian economic thought, particularly Austrian School thinking on
entrepreneurship Entrepreneurship is the creation or extraction of economic value. With this definition, entrepreneurship is viewed as change, generally entailing risk beyond what is normally encountered in starting a business, which may include other values th ...
and
new classical macroeconomics New classical macroeconomics, sometimes simply called new classical economics, is a school of thought in macroeconomics that builds its analysis entirely on a neoclassical economics, neoclassical framework. Specifically, it emphasizes the importa ...
. The intellectual roots of supply-side economics have also been traced back to various early economic thinkers such as
Ibn Khaldun Ibn Khaldun (; ar, أبو زيد عبد الرحمن بن محمد بن خلدون الحضرمي, ; 27 May 1332 – 17 March 1406, 732-808 AH) was an Arab The Historical Muhammad', Irving M. Zeitlin, (Polity Press, 2007), p. 21; "It is, of ...
,
Jonathan Swift Jonathan Swift (30 November 1667 – 19 October 1745) was an Anglo-Irish Satire, satirist, author, essayist, political pamphleteer (first for the Whig (British political party), Whigs, then for the Tories (British political party), Tories), poe ...
,
David Hume David Hume (; born David Home; 7 May 1711 NS (26 April 1711 OS) – 25 August 1776) Cranston, Maurice, and Thomas Edmund Jessop. 2020 999br>David Hume" ''Encyclopædia Britannica''. Retrieved 18 May 2020. was a Scottish Enlightenment philo ...
,
Adam Smith Adam Smith (baptized 1723 – 17 July 1790) was a Scottish economist and philosopher who was a pioneer in the thinking of political economy and key figure during the Scottish Enlightenment. Seen by some as "The Father of Economics"——— ...
and
Alexander Hamilton Alexander Hamilton (January 11, 1755 or 1757July 12, 1804) was an American military officer, statesman, and Founding Father who served as the first United States secretary of the treasury from 1789 to 1795. Born out of wedlock in Charlest ...
. Typical policy recommendations of supply-side economics are lower
marginal tax rate In a tax system, the tax rate is the ratio (usually expressed as a percentage) at which a business or person is taxed. There are several methods used to present a tax rate: statutory, average, marginal, and effective. These rates can also be p ...
s and less regulation. Maximum benefits from taxation policy are achieved by optimizing the marginal tax rates to spur growth, although it is a common misunderstanding that supply side economics is concerned only with
taxation A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal person, legal entity) by a governmental organization in order to fund government spending and various public expenditures (regiona ...
policy when it is about removing barriers to production more generally. Today, the majority academic research on capitalism in the
English-speaking world Speakers of English are also known as Anglophones, and the countries where English is natively spoken by the majority of the population are termed the '' Anglosphere''. Over two billion people speak English , making English the largest languag ...
draws on neoclassical economic thought. It favors extensive market coordination and relatively neutral patterns of governmental market regulation aimed at maintaining property rights; deregulated labor markets; corporate governance dominated by financial owners of firms; and financial systems depending chiefly on
capital market A capital market is a financial market in which long-term debt (over a year) or equity-backed securities are bought and sold, in contrast to a money market where short-term debt is bought and sold. Capital markets channel the wealth of savers t ...
-based financing rather than state financing.
Milton Friedman Milton Friedman (; July 31, 1912 – November 16, 2006) was an American economist and statistician who received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory and the ...
took many of the basic principles set forth by Adam Smith and the classical economists and gave them a new twist. One example of this is his article in the September 1970 issue of ''
The New York Times ''The New York Times'' (''the Times'', ''NYT'', or the Gray Lady) is a daily newspaper based in New York City with a worldwide readership reported in 2020 to comprise a declining 840,000 paid print subscribers, and a growing 6 million paid ...
'', where he claims that the social responsibility of business is "to use its resources and engage in activities designed to increase its profits…(through) open and free competition without deception or fraud". This is similar to Smith’s argument that self-interest in turn benefits the whole of society.Friedman, Milton. "The Social Responsibility of Business is to Increase its Profits." The New York Times Magazine 13 Sep. 1970. Work like this helped lay the foundations for the coming
marketization Marketisation or marketization is a restructuring process that enables state enterprises to operate as market-oriented firms by changing the legal environment in which they operate. This is achieved through reduction of state subsidies, organizati ...
(or
privatization Privatization (also privatisation in British English) can mean several different things, most commonly referring to moving something from the public sector into the private sector. It is also sometimes used as a synonym for deregulation when ...
) of state enterprises and the supply-side economics of
Ronald Reagan Ronald Wilson Reagan ( ; February 6, 1911June 5, 2004) was an American politician, actor, and union leader who served as the 40th president of the United States from 1981 to 1989. He also served as the 33rd governor of California from 1967 ...
and
Margaret Thatcher Margaret Hilda Thatcher, Baroness Thatcher (; 13 October 19258 April 2013) was Prime Minister of the United Kingdom from 1979 to 1990 and Leader of the Conservative Party (UK), Leader of the Conservative Party from 1975 to 1990. S ...
. The
Chicago School of economics The Chicago school of economics is a neoclassical school of economic thought associated with the work of the faculty at the University of Chicago, some of whom have constructed and popularized its principles. Milton Friedman and George Stigle ...
is best known for its free market advocacy and
monetarist Monetarism is a school of thought in monetary economics that emphasizes the role of governments in controlling the amount of money in circulation. Monetarist theory asserts that variations in the money supply have major influences on national ...
ideas. According to Friedman and other monetarists, market economies are inherently stable if left to themselves and depressions result only from government intervention.


Classical political economy

The classical school of economic thought emerged in Britain in the late 18th century. The classical political economists
Adam Smith Adam Smith (baptized 1723 – 17 July 1790) was a Scottish economist and philosopher who was a pioneer in the thinking of political economy and key figure during the Scottish Enlightenment. Seen by some as "The Father of Economics"——— ...
,
David Ricardo David Ricardo (18 April 1772 – 11 September 1823) was a British Political economy, political economist. He was one of the most influential of the Classical economics, classical economists along with Thomas Robert Malthus, Thomas Malthus, Ad ...
,
Jean-Baptiste Say Jean-Baptiste Say (; 5 January 1767 – 15 November 1832) was a liberal French economist and businessman who argued in favor of competition, free trade and lifting restraints on business. He is best known for Say's law—also known as the law of ...
and
John Stuart Mill John Stuart Mill (20 May 1806 – 7 May 1873) was an English philosopher, political economist, Member of Parliament (MP) and civil servant. One of the most influential thinkers in the history of classical liberalism, he contributed widely to ...
published analyses of the production, distribution and exchange of goods in a
market Market is a term used to describe concepts such as: *Market (economics), system in which parties engage in transactions according to supply and demand *Market economy *Marketplace, a physical marketplace or public market Geography *Märket, an ...
that have since formed the basis of study for most contemporary economists. In France,
Physiocrats Physiocracy (; from the Greek for "government of nature") is an economic theory developed by a group of 18th-century Age of Enlightenment French economists who believed that the wealth of nations derived solely from the value of "land agricultur ...
like
François Quesnay François Quesnay (; 4 June 1694 – 16 December 1774) was a French economist and physician of the Physiocratic school. He is known for publishing the "Tableau économique" (Economic Table) in 1758, which provided the foundations of the ideas of ...
promoted
free trade Free trade is a trade policy that does not restrict imports or exports. It can also be understood as the free market idea applied to international trade. In government, free trade is predominantly advocated by political parties that hold econo ...
based on a conception that wealth originated from land. Quesnay's ''Tableau Économique'' (1759) described the economy analytically and laid the foundation of the Physiocrats' economic theory, followed by
Anne Robert Jacques Turgot Anne Robert Jacques Turgot, Baron de l'Aulne ( ; ; 10 May 172718 March 1781), commonly known as Turgot, was a French economist and statesman. Originally considered a physiocrat, he is today best remembered as an early advocate for economic libe ...
who opposed tariffs and
customs duties A tariff is a tax imposed by the government of a country or by a supranational union on imports or exports of goods. Besides being a source of revenue for the government, import duties can also be a form of regulation of foreign trade and poli ...
and advocated
free trade Free trade is a trade policy that does not restrict imports or exports. It can also be understood as the free market idea applied to international trade. In government, free trade is predominantly advocated by political parties that hold econo ...
.
Richard Cantillon Richard Cantillon (; 1680s – ) was an Irish-French economist and author of '' Essai Sur La Nature Du Commerce En Général'' (''Essay on the Nature of Trade in General''), a book considered by William Stanley Jevons to be the "cradle of p ...
defined long-run equilibrium as the balance of flows of income and argued that the
supply and demand In microeconomics, supply and demand is an economic model of price determination in a Market (economics), market. It postulates that, Ceteris paribus, holding all else equal, in a perfect competition, competitive market, the unit price for a ...
mechanism around land influenced short-term prices. Smith's attack on
mercantilism Mercantilism is an economic policy that is designed to maximize the exports and minimize the imports for an economy. It promotes imperialism, colonialism, tariffs and subsidies on traded goods to achieve that goal. The policy aims to reduce a ...
and his reasoning for "the system of natural liberty" in ''
The Wealth of Nations ''An Inquiry into the Nature and Causes of the Wealth of Nations'', generally referred to by its shortened title ''The Wealth of Nations'', is the ''magnum opus'' of the Scottish economist and moral philosopher Adam Smith. First published in 1 ...
'' (1776) are usually taken as the beginning of classical political economy. Smith devised a set of concepts that remain strongly associated with capitalism today, particularly his theory of the "
invisible hand The invisible hand is a metaphor used by the British moral philosopher Adam Smith that describes the unintended greater social benefits and public good brought about by individuals acting in their own self-interests. Smith originally mention ...
" of the market, through which the pursuit of individual self-interest unintentionally produces a collective good for society. It was necessary for Smith to be so forceful in his argument in favor of free markets because he had to overcome the popular mercantilist sentiment of the time period. He criticized monopolies, tariffs, duties and other state enforced restrictions of his time and believed that the market is the most fair and efficient arbitrator of resources. This view was shared by David Ricardo, second most important of the classical political economists and one of the most influential economists of modern times. In '' The Principles of Political Economy and Taxation'' (1817), Ricardo developed the law of
comparative advantage In an economic model, agents have a comparative advantage over others in producing a particular good if they can produce that good at a lower relative opportunity cost or autarky price, i.e. at a lower relative marginal cost prior to trade. Comp ...
, which explains why it is profitable for two parties to trade, even if one of the trading partners is more efficient in every type of economic production. This principle supports the economic case for free trade. Ricardo was a supporter of
Say's law In classical economics, Say's law, or the law of markets, is the claim that the production of a product creates demand for another product by providing something of value which can be exchanged for that other product. So, production is the source ...
and held the view that full employment is the normal equilibrium for a competitive economy. He also argued that
inflation In economics, inflation is an increase in the general price level of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reductio ...
is closely related to changes in quantity of money and
credit Credit (from Latin verb ''credit'', meaning "one believes") is the trust which allows one party to provide money or resources to another party wherein the second party does not reimburse the first party immediately (thereby generating a debt), ...
and was a proponent of the law of
diminishing returns In economics, diminishing returns are the decrease in marginal (incremental) output of a production process as the amount of a single factor of production is incrementally increased, holding all other factors of production equal ( ceteris paribu ...
, which states that each additional unit of input yields less and less additional output. The values of classical political economy are strongly associated with the
classical liberal Classical liberalism is a political tradition and a branch of liberalism that advocates free market and laissez-faire economics; civil liberties under the rule of law with especial emphasis on individual autonomy, limited government, economic ...
doctrine of minimal government intervention in the economy, though it does not necessarily oppose the state's provision of a few basic
public goods In economics, a public good (also referred to as a social good or collective good)Oakland, W. H. (1987). Theory of public goods. In Handbook of public economics (Vol. 2, pp. 485-535). Elsevier. is a good that is both non-excludable and non-riva ...
.Eric Aaron, ''What's Right?'' (Dural, Australia: Rosenberg Publishing, 2003), 75. Classical liberal thought has generally assumed a clear division between the economy and other realms of social activity, such as the state.


Marx and critique of political economy

Karl Marx Karl Heinrich Marx (; 5 May 1818 – 14 March 1883) was a German philosopher, economist, historian, sociologist, political theorist, journalist, critic of political economy, and socialist revolutionary. His best-known titles are the 1848 ...
considered capitalism to be a historically specific
mode of production In the Marxist theory of historical materialism, a mode of production (German: ''Produktionsweise'', "the way of producing") is a specific combination of the: * Productive forces: these include human labour power and means of production (tools ...
. Marx's critique of political economy encompasses the study and exposition of the mode of production and ideology of bourgeois society, that is, the fundamental "economic" and social categories present within what for Marx is the capitalist mode of production. In contrast to the classics of political economy, Marx was concerned with lifting the "ideological veil" of surface phenomena and exposing the norms, axioms, social practices, institutions and so on, that reproduced the social phenomenon of capital. The central works in Marx's critique of political economy are ''
Grundrisse The ''Grundrisse der Kritik der Politischen Ökonomie'' (''Foundations of a Critique of Political Economy'') is an unfinished manuscript by the German philosopher Karl Marx. The series of seven notebooks was rough-drafted by Marx, chiefly for ...
'', ''
A Contribution to the Critique of Political Economy ''A Contribution to the Critique of Political Economy'' (german: Zur Kritik der Politischen Ökonomie) is a book by Karl Marx, first published in 1859. The book is mainly a critique of political economy achieved by critiquing the writings of the ...
'' and ''Das Kapital''. Marx's companion
Friedrich Engels Friedrich Engels ( ,"Engels"
'' Outlines of a Critique of Political Economy ''Outlines of a Critique of Political Economy'' is an article by Friedrich Engels, first published in German in 1843 for the Deutsch-Französische Jahrbücher.https://tilde.town/~xat/rt/pdf/engels_1843_outline_political_economy.pdf The article ...
'' (1844), which helped lay down some foundation for what Marx was to take further, and Engels just like Marx also compared economists with theologians, e.g by referring to Adam Smith as the ''economic Luther''. Some foundational concepts in Marx critique of political economy are the following: * Labour and capital are historically specific forms of social relations, and labour isn't the source of all wealth. * Labour is the other side of the same coin as capital, labour presupposes capital, and capital presupposes labour. * Money is not in any way something trans-historical or "natural" (which goes for the other categories of the economy as well), and gains its value due to social relations rather than any inherent quality. * The individual doesn't exist in some form of vacuum but is rather enmeshed in social relations. For Marx, the capitalist stage of development or "
bourgeois The bourgeoisie ( , ) is a social class, equivalent to the middle or upper middle class. They are distinguished from, and traditionally contrasted with, the proletariat by their affluence, and their great cultural and financial capital. They ...
society" represented the most advanced form of social organization to date, but he also thought that the working classes would come to power in a worldwide
socialist Socialism is a left-wing economic philosophy and movement encompassing a range of economic systems characterized by the dominance of social ownership of the means of production as opposed to private ownership. As a term, it describes the e ...
or
communist Communism (from Latin la, communis, lit=common, universal, label=none) is a far-left sociopolitical, philosophical, and economic ideology and current within the socialist movement whose goal is the establishment of a communist society, a s ...
transformation of human society as the end of the series of first aristocratic, then capitalist and finally working class rule was reached. Following
Adam Smith Adam Smith (baptized 1723 – 17 July 1790) was a Scottish economist and philosopher who was a pioneer in the thinking of political economy and key figure during the Scottish Enlightenment. Seen by some as "The Father of Economics"——— ...
, Marx distinguished the
use value Use value (german: Gebrauchswert) or value in use is a concept in classical political economy and Marxist economics. It refers to the tangible features of a commodity (a tradeable object) which can satisfy some human requirement, want or need, or ...
of commodities from their
exchange value In political economy and especially Marxian economics, exchange value (German: ''Tauschwert'') refers to one of the four major attributes of a commodity, i.e., an item or service produced for, and sold on the market, the other three attributes be ...
in the market. According to Marx,
capital Capital may refer to: Common uses * Capital city, a municipality of primary status ** List of national capital cities * Capital letter, an upper-case letter Economics and social sciences * Capital (economics), the durable produced goods used f ...
is created with the purchase of commodities for the purpose of creating new commodities with an exchange value higher than the sum of the original purchases. For Marx, the use of
labor power Labour power (in german: Arbeitskraft; in french: force de travail) is a key concept used by Karl Marx in his critique of capitalism, capitalist political economy. Marx distinguished between the capacity to do work, labour power, from the physi ...
had itself become a commodity under capitalism because the exchange value of labor power—as reflected in the wage—is less than the value it produces for the capitalist. He argues this difference in values constitutes
surplus value In Marxian economics, surplus value is the difference between the amount raised through a sale of a product and the amount it cost to the owner of that product to manufacture it: i.e. the amount raised through sale of the product minus the cost ...
, which the capitalists extract and accumulate. In his book ''
Capital Capital may refer to: Common uses * Capital city, a municipality of primary status ** List of national capital cities * Capital letter, an upper-case letter Economics and social sciences * Capital (economics), the durable produced goods used f ...
'', Marx argues that the capitalist mode of production is distinguished by how the owners of capital extract this surplus from workers—all prior class societies had extracted
surplus labor Surplus labour (German: ''Mehrarbeit'') is a concept used by Karl Marx in his critique of political economy. It means labour performed in excess of the labour necessary to produce the means of livelihood of the worker ("necessary labour"). The "su ...
, but capitalism was new in doing so via the sale-value of produced commodities. He argues that a core requirement of a capitalist society is that a large portion of the population must not possess sources of self-sustenance that would allow them to be independent and must instead be compelled to survive to sell their labor to manage to survive. In conjunction with his criticism of capitalism was Marx's belief that exploited labor would be the driving force behind a revolution . For Marx, this cycle of the extraction of the surplus value by the owners of capital or the bourgeoisie becomes the basis of
class struggle Class conflict, also referred to as class struggle and class warfare, is the political tension and economic antagonism that exists in society because of socio-economic competition among the social classes or between rich and poor. The forms ...
. In ''
Imperialism, the Highest Stage of Capitalism ''Imperialism, the Highest Stage of Capitalism'' (russian: Империализм как высшая стадия капитализма, Imperializm kak vysshaja stadija kapitalizma, link=no), originally published as ''Imperialism, the Newest S ...
'' (1916),
Vladimir Lenin Vladimir Ilyich Ulyanov. ( 1870 – 21 January 1924), better known as Vladimir Lenin,. was a Russian revolutionary, politician, and political theorist. He served as the first and founding head of government of Soviet Russia from 1917 to 19 ...
modified classic Marxist theory and argued that capitalism necessarily induced
monopoly capitalism ''Monopoly Capital: An Essay on the American Economic and Social Order'' is a 1966 book by the Marxian economists Paul Sweezy and Paul A. Baran. It was published by Monthly Review Press. It made a major contribution to Marxian theory by shiftin ...
—which he also called "imperialism"—to find new markets and resources, representing the last and highest stage of capitalism. Some 20th-century
Marxian economists Marxian economics, or the Marxian school of economics, is a heterodox school of political economic thought. Its foundations can be traced back to Karl Marx's critique of political economy. However, unlike critics of political economy, Marxian e ...
consider capitalism to be a social formation where capitalist class processes dominate, but are not exclusive. To these thinkers, capitalist class processes are simply those in which surplus labor takes the form of
surplus value In Marxian economics, surplus value is the difference between the amount raised through a sale of a product and the amount it cost to the owner of that product to manufacture it: i.e. the amount raised through sale of the product minus the cost ...
, usable as capital while other tendencies for utilization of labor nonetheless exist simultaneously in existing societies where capitalist processes are predominant. However, other late Marxian thinkers argue that a social formation as a whole may be classed as capitalist if capitalism is the mode by which a surplus is extracted even if this surplus is not produced by capitalist activity as when an absolute majority of the population is engaged in non-capitalist economic activity.
David Harvey David W. Harvey (born 31 October 1935) is a British-born Marxist economic geographer, podcaster and Distinguished Professor of anthropology and geography at the Graduate Center of the City University of New York (CUNY). He received his PhD ...
extends Marxian thinking through which he theorizes the differential production of place, space and political activism under capitalism. He uses Marx’s theory of crisis to aid his argument that capitalism must have its "fixes", but that we cannot predetermine what fixes will be implemented, nor in what form they will be. This idea of fix is suggestive and could mean fix as in stabilize, heal or solve, or as in a junky needing a fix—the idea of preventing feeling worse in order to feel better. In ''Limits to Capital'' (1982), Harvey outlines an overdetermined, spatially restless capitalism coupled with the spatiality of crisis formation and its resolution. Furthermore, his work has been central for understanding the contractions of capital accumulation and international movements of capitalist modes of production and money flows.Lawson, Victoria. Making Development Geography (Human Geography in the Making). New York: A Hodder Arnold Publication, 2007. Print. In his essay, "Notes towards a theory of uneven geographical development", Harvey examines the causes of the extreme volatility in contemporary political economic fortunes across and between spaces of the world economy. He bases this uneven development on four conditionalities: (1) the material embedding of capital accumulation processes in the web of socio-ecological life; (2) accumulation by dispossession; (3) the law-like character of capital accumulation in space and time; and (4) political, social and "class" struggles at a variety of geographical scales.


Weberian political sociology

In some
social science Social science is one of the branches of science, devoted to the study of societies and the relationships among individuals within those societies. The term was formerly used to refer to the field of sociology, the original "science of soc ...
s, the understanding of the defining characteristics of capitalism has been strongly influenced by 19th century German social theorist
Max Weber Maximilian Karl Emil Weber (; ; 21 April 186414 June 1920) was a German sociologist, historian, jurist and political economist, who is regarded as among the most important theorists of the development of modern Western society. His ideas profo ...
. Weber considered
market Market is a term used to describe concepts such as: *Market (economics), system in which parties engage in transactions according to supply and demand *Market economy *Marketplace, a physical marketplace or public market Geography *Märket, an ...
exchange Exchange may refer to: Physics *Gas exchange is the movement of oxygen and carbon dioxide molecules from a region of higher concentration to a region of lower concentration. Places United States * Exchange, Indiana, an unincorporated community * ...
rather than production as the defining feature of capitalism. In contrast to their counterparts in prior modes of economic activity, capitalist enterprises are characterized by their rationalization of production, directed toward maximizing
efficiency Efficiency is the often measurable ability to avoid wasting materials, energy, efforts, money, and time in doing something or in producing a desired result. In a more general sense, it is the ability to do things well, successfully, and without ...
and
productivity Productivity is the efficiency of production of goods or services expressed by some measure. Measurements of productivity are often expressed as a ratio of an aggregate output to a single input or an aggregate input used in a production proces ...
, a tendency leading to a sociological process of enveloping rationalization. According to Weber, workers in pre-capitalist economic institutions understood work in terms of a personal relationship between
master Master or masters may refer to: Ranks or titles * Ascended master, a term used in the Theosophical religious tradition to refer to spiritually enlightened beings who in past incarnations were ordinary humans *Grandmaster (chess), National Master ...
and
journeyman A journeyman, journeywoman, or journeyperson is a worker, skilled in a given building trade or craft, who has successfully completed an official apprenticeship qualification. Journeymen are considered competent and authorized to work in that fie ...
in a
guild A guild ( ) is an association of artisans and merchants who oversee the practice of their craft/trade in a particular area. The earliest types of guild formed as organizations of tradesmen belonging to a professional association. They sometimes ...
, or between
lord Lord is an appellation for a person or deity who has authority, control, or power over others, acting as a master, chief, or ruler. The appellation can also denote certain persons who hold a title of the peerage in the United Kingdom, or ar ...
and
peasant A peasant is a pre-industrial agricultural laborer or a farmer with limited land-ownership, especially one living in the Middle Ages under feudalism and paying rent, tax, fees, or services to a landlord. In Europe, three classes of peasants ...
in a manor. In his book ''
The Protestant Ethic and the Spirit of Capitalism ''The Protestant Ethic and the Spirit of Capitalism'' (german: Die protestantische Ethik und der Geist des Kapitalismus) is a book written by Max Weber, a German sociologist, economist, and politician. Begun as a series of essays, the original ...
'' (1904–1905), Weber sought to trace how a particular form of religious spirit, infused into traditional modes of economic activity, was a condition of possibility of modern Western capitalism. For Weber, the spirit of capitalism was in general that of ascetic Protestantism—this ideology was able to motivate extreme rationalization of daily life, a propensity to accumulate capital by a religious ethic to advance economically and thus also the propensity to reinvest capital: this was sufficient then to create "self-mediating capital" as conceived by Marx. This is pictured in Proverbs 22:29 "Seest thou a man diligent in his calling? He shall stand before kings" and in Colossians 3:23 "Whatever you do, do your work heartily, as for the Lord rather than for men". In the ''Protestant Ethic'', Weber further stated that "moneymaking—provided it is done legally—is, within the modern economic order, the result and the expression of diligence in one’s calling" and "If God show you a way in which you may lawfully get more than in another way (without wrong to your soul or to any other), if you refuse this, and choose the less gainful way, you cross one of the ends of your calling, and you refuse to be God's steward, and to accept His gifts and use them for him when He requireth it: you may labour to be rich for God, though not for the flesh and sin" (p. 108). Most generally for Weber, Western capitalism was the "rational organization of formally free labor". The idea of the "formally free" laborer meant in the double sense of Marx that the laborer was both free to own property and free of the ability to reproduce his labor power, i.e. was the victim of expropriation of his means of production. It is only on these conditions, still abundantly obvious in the modern world of Weber, that Western capitalism is able to exist. For Weber, modern Western capitalism represented the order "now bound to the technical and economic conditions of machine production which to-day determine the lives of all the individuals who are born into this mechanism, not only those directly concerned with economic acquisition, with irresistible force. Perhaps it will so determine them until the last ton of fossilized coal is burnt" (p. 123). This is further seen in his criticism of "specialists without spirit,
hedonists Hedonism refers to a family of theories, all of which have in common that pleasure plays a central role in them. ''Psychological'' or ''motivational hedonism'' claims that human behavior is determined by desires to increase pleasure and to decre ...
without a heart" that were developing in his opinion with the fading of the original
Puritan The Puritans were English Protestants in the 16th and 17th centuries who sought to purify the Church of England of Catholic Church, Roman Catholic practices, maintaining that the Church of England had not been fully reformed and should become m ...
"spirit" associated with capitalism.


Institutional economics

Once the main school of economic thought in the United States, institutional economics holds that capitalism cannot be separated from the political and social system within which it is embedded. It emphasizes the legal foundations of capitalism (see
John R. Commons John Rogers Commons (October 13, 1862 – May 11, 1945) was an American institutional economist, Georgist, progressive and labor historian at the University of Wisconsin–Madison. Early years John R. Commons was born in Hollansburg, Ohio on ...
) and the evolutionary, habituated and volitional processes by which institutions are erected and then changed (see
John Dewey John Dewey (; October 20, 1859 – June 1, 1952) was an American philosopher, psychologist, and educational reformer whose ideas have been influential in education and social reform. He was one of the most prominent American scholars in the f ...
,
Thorstein Veblen Thorstein Bunde Veblen (July 30, 1857 – August 3, 1929) was a Norwegian-American economist and sociologist who, during his lifetime, emerged as a well-known critic of capitalism. In his best-known book, ''The Theory of the Leisure Class'' ...
and
Daniel Bromley Daniel W. Bromley (born 1940) is an economist, the former Anderson-Bascom Professor of applied economics at the University of Wisconsin–Madison, and since 2009, Emeritus Professor. His research in institutional economics explains the foundati ...
). One key figure in institutional economics was
Thorstein Veblen Thorstein Bunde Veblen (July 30, 1857 – August 3, 1929) was a Norwegian-American economist and sociologist who, during his lifetime, emerged as a well-known critic of capitalism. In his best-known book, ''The Theory of the Leisure Class'' ...
who in his book ''
The Theory of the Leisure Class ''The Theory of the Leisure Class: An Economic Study of Institutions'' (1899), by Thorstein Veblen, is a treatise of economics and sociology, and a critique of conspicuous consumption as a function of social class and of consumerism, which are ...
'' (1899) analyzed the motivations of wealthy people in capitalism who conspicuously consumed their riches as a way of demonstrating success. The concept of
conspicuous consumption In sociology and in economics, the term conspicuous consumption describes and explains the consumer practice of buying and using goods of a higher quality, price, or in greater quantity than practical. In 1899, the sociologist Thorstein Veblen co ...
was in direct contradiction to the neoclassical view that capitalism was efficient. In '' The Theory of Business Enterprise'' (1904), Veblen distinguished the motivations of industrial production for people to use things from business motivations that used, or misused, industrial infrastructure for profit, arguing that the former is often hindered because businesses pursue the latter. Output and technological advance are restricted by business practices and the creation of monopolies. Businesses protect their existing capital investments and employ excessive credit, leading to depressions and increasing military expenditure and war through business control of political power.


German Historical School and Austrian School

From the perspective of the
German Historical School :''This is an article about a school of thought in the area of law. For economics, see historical school of economics.'' The German Historical School of Jurisprudence is a 19th-century intellectual movement in the study of German law. With Romant ...
, capitalism is primarily identified in terms of the organization of production for
markets Market is a term used to describe concepts such as: * Market (economics), system in which parties engage in transactions according to supply and demand * Market economy *Marketplace, a physical marketplace or public market Geography *Märket, a ...
. Although this perspective shares similar theoretical roots with that of Weber, its emphasis on markets and money lends it different focus. For followers of the German Historical School, the key shift from traditional modes of economic activity to capitalism involved the shift from medieval restrictions on credit and money to the modern
monetary economy Monetary economics is the branch of economics that studies the different competing theories of money: it provides a framework for analyzing money and considers its functions (such as medium of exchange, store of value and unit of account), and it ...
combined with an emphasis on the
profit motive In economics, the profit motive is the motivation of firms that operate so as to maximize their profits. Mainstream microeconomic theory posits that the ultimate goal of a business is "to make money" - not in the sense of increasing the firm's s ...
. In the late 19th century, the German Historical School of economics diverged with the emerging
Austrian School The Austrian School is a heterodox school of economic thought that advocates strict adherence to methodological individualism, the concept that social phenomena result exclusively from the motivations and actions of individuals. Austrian school ...
of economics, led at the time by
Carl Menger Carl Menger von Wolfensgrün (; ; 28 February 1840 – 26 February 1921) was an Austrian economist and the founder of the Austrian School of economics. Menger contributed to the development of the theories of marginalism and marginal utility ...
. Later generations of followers of the Austrian School continued to be influential in Western economic thought through much of the 20th century. The Austrian economist
Joseph Schumpeter Joseph Alois Schumpeter (; February 8, 1883 – January 8, 1950) was an Austrian-born political economist. He served briefly as Finance Minister of German-Austria in 1919. In 1932, he emigrated to the United States to become a professor at Ha ...
, a forerunner of the Austrian School of economics, emphasized the "
creative destruction Creative destruction (German: ''schöpferische Zerstörung'') is a concept in economics which since the 1950s is the most readily identified with the Austrian-born economist Joseph Schumpeter who derived it from the work of Karl Marx and pop ...
" of capitalism—the fact that market economies undergo constant change. At any moment of time, posits Schumpeter, there are rising industries and declining industries. Schumpeter and many contemporary economists influenced by his work argue that resources should flow from the declining to the expanding industries for an economy to grow, but they recognized that sometimes resources are slow to withdraw from the declining industries because of various forms of institutional resistance to change. The Austrian economists
Ludwig von Mises Ludwig Heinrich Edler von Mises (; 29 September 1881 – 10 October 1973) was an Austrian School economist, historian, logician, and Sociology, sociologist. Mises wrote and lectured extensively on the societal contributions of classical liberali ...
and
Friedrich Hayek Friedrich August von Hayek ( , ; 8 May 189923 March 1992), often referred to by his initials F. A. Hayek, was an Austrian–British economist, legal theorist and philosopher who is best known for his defense of classical liberalism. Haye ...
were among the leading defenders of
market economy A market economy is an economic system in which the decisions regarding investment, production and distribution to the consumers are guided by the price signals created by the forces of supply and demand, where all suppliers and consumers ...
against 20th century proponents of socialist
planned economies A planned economy is a type of economic system where investment, production and the allocation of capital goods takes place according to economy-wide economic plans and production plans. A planned economy may use centralized, decentralized, part ...
. Mises and Hayek argued that only market capitalism could manage a complex, modern economy. Among their arguments were the
economic calculation problem The economic calculation problem (sometimes abbreviated ECP) is a criticism of using economic planning as a substitute for market-based allocation of the factors of production. It was first proposed by Ludwig von Mises in his 1920 article "Eco ...
, which was first proposed by Mises in 1920 and later expounded by Hayek. The problem referred to is that of how to distribute resources rationally in an economy. The
free market In economics, a free market is an economic system in which the prices of goods and services are determined by supply and demand expressed by sellers and buyers. Such markets, as modeled, operate without the intervention of government or any o ...
solution is the
price mechanism In economics, a price mechanism is the manner in which the profits of goods or services affects the supply and demand of goods and services, principally by the price elasticity of demand. A price mechanism affects both buyer and seller who nego ...
, wherein people individually have the ability to decide how a good or service should be distributed based on their willingness to give money for it. The price conveys embedded information about the abundance of resources as well as their desirability which in turn allows corrections that prevent
shortages In economics, a shortage or excess demand is a situation in which the demand for a product or service exceeds its supply in a market. It is the opposite of an excess supply (surplus). Definitions In a perfect market (one that matches ...
and surpluses on the basis of individual consensual decisions. Mises and Hayek argued that this is the only possible solution and without the information provided by market prices socialism lacks a method to rationally allocate resources. Mises argued in a famous 1920 article "
Economic Calculation in the Socialist Commonwealth ''Economic Calculation in the Socialist Commonwealth'' is an article by Austrian School economist Ludwig von Mises. Its critique against economic calculation in a planned economy triggered the decades-long economic calculation debate. The arti ...
" that the pricing systems in socialist economies were necessarily deficient because if government owned or controlled the
means of production The means of production is a term which describes land, labor and capital that can be used to produce products (such as goods or services); however, the term can also refer to anything that is used to produce products. It can also be used as an ...
, then no rational prices could be obtained for
capital goods The economic concept of a capital good (also called complex product systems (CoPS),H. Rush, "Managing innovation in complex product systems (CoPS)," IEE Colloquium on EPSRC Technology Management Initiative (Engineering & Physical Sciences Researc ...
as they were merely internal transfers of goods in a socialist system and not "objects of exchange", unlike final goods, therefore they were unpriced and hence the system would be necessarily inefficient since the central planners would not know how to allocate the available resources efficiently. This led him to declare "that rational economic activity is impossible in a socialist
commonwealth A commonwealth is a traditional English term for a political community founded for the common good. Historically, it has been synonymous with "republic". The noun "commonwealth", meaning "public welfare, general good or advantage", dates from the ...
". Mises developed his critique of socialism more completely in his 1922 book '' Socialism: An Economic and Sociological Analysis''. Since a modern economy produces such a large array of distinct goods and services and consists of such a large array of consumers and enterprises, asserted Mises and Hayek, the information problems facing any other form of economic organization other than market capitalism would exceed its capacity to handle information. Thinkers within
supply-side economics Supply-side economics is a macroeconomic theory that postulates economic growth can be most effectively fostered by lowering taxes, decreasing regulation, and allowing free trade. According to supply-side economics, consumers will benefit fr ...
built on the work of the Austrian School and particularly emphasize
Say's law In classical economics, Say's law, or the law of markets, is the claim that the production of a product creates demand for another product by providing something of value which can be exchanged for that other product. So, production is the source ...
that "supply creates its own demand". To this school, capitalism is defined by lack of state restraint on the decisions of producers. Austrian economists claim that Marx failed to make the distinction between
capitalism Capitalism is an economic system based on the private ownership of the means of production and their operation for Profit (economics), profit. Central characteristics of capitalism include capital accumulation, competitive markets, pric ...
and
mercantilism Mercantilism is an economic policy that is designed to maximize the exports and minimize the imports for an economy. It promotes imperialism, colonialism, tariffs and subsidies on traded goods to achieve that goal. The policy aims to reduce a ...
. They argue that Marx conflated the
imperialistic Imperialism is the state policy, practice, or advocacy of extending power and dominion, especially by direct territorial acquisition or by gaining political and economic control of other areas, often through employing hard power (economic ...
, colonialistic,
protectionist Protectionism, sometimes referred to as trade protectionism, is the economic policy of restricting imports from other countries through methods such as tariffs on imported goods, import quotas, and a variety of other government regulations. ...
and interventionist doctrines of mercantilism with capitalism. Austrian economics has been a major influence on some forms of
right-libertarianism Right-libertarianism,Rothbard, Murray (1 March 1971)"The Left and Right Within Libertarianism" ''WIN: Peace and Freedom Through Nonviolent Action''. 7 (4): 6–10. Retrieved 14 January 2020.Goodway, David (2006). '' Anarchist Seeds Beneath the ...
in which ''
laissez-faire ''Laissez-faire'' ( ; from french: laissez faire , ) is an economic system in which transactions between private groups of people are free from any form of economic interventionism (such as subsidies) deriving from special interest groups. ...
'' capitalism is considered to be the ideal economic system. It influenced economists and political philosophers and theorists including
Henry Hazlitt Henry Stuart Hazlitt (; November 28, 1894 – July 9, 1993) was an American journalist who wrote about business and economics for such publications as ''The Wall Street Journal'', ''The Nation'', ''The American Mercury'', ''Newsweek'', and '' ...
,
Hans-Hermann Hoppe Hans-Hermann Hoppe (; ; born 2 September 1949) is a German-American economist of the Austrian School, philosopher and political theorist. He is Professor Emeritus of Economics at the University of Nevada, Las Vegas (UNLV), Senior Fellow of t ...
,
Israel Kirzner Israel Meir Kirzner (also Yisroel Mayer Kirzner ; born February 13, 1930) is a British-born American economist closely identified with the Austrian School. Early life and education The son of a well-known rabbi and Talmudist, Kirzner was born in ...
,
Murray Rothbard Murray Newton Rothbard (; March 2, 1926 – January 7, 1995) was an American economist of the Austrian School, economic historian, political theorist, and activist. Rothbard was a central figure in the 20th-century American libertarian m ...
,
Walter Block Walter Edward Block (born August 21, 1941) is an American Austrian School economist and anarcho-capitalist theorist. He currently holds the Harold E. Wirth Eminent Scholar Endowed Chair in Economics at the School of Business at Loyola Universit ...
and Richard M. Ebeling.


Keynesian economics

In his 1937 ''
The General Theory of Employment, Interest, and Money ''The General Theory of Employment, Interest and Money'' is a book by English economist John Maynard Keynes published in February 1936. It caused a profound shift in economic thought, giving macroeconomics a central place in economic theory and ...
'', the British economist
John Maynard Keynes John Maynard Keynes, 1st Baron Keynes, ( ; 5 June 1883 – 21 April 1946), was an English economist whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments. Originally trained in ...
argued that capitalism suffered a basic problem in its ability to recover from periods of slowdowns in investment. Keynes argued that a capitalist economy could remain in an indefinite equilibrium despite high
unemployment Unemployment, according to the OECD (Organisation for Economic Co-operation and Development), is people above a specified age (usually 15) not being in paid employment or self-employment but currently available for Work (human activity), w ...
. Essentially rejecting
Say's law In classical economics, Say's law, or the law of markets, is the claim that the production of a product creates demand for another product by providing something of value which can be exchanged for that other product. So, production is the source ...
, he argued that some people may have a
liquidity preference __NOTOC__ In macroeconomic theory, liquidity preference is the demand for money, considered as liquidity. The concept was first developed by John Maynard Keynes in his book ''The General Theory of Employment, Interest and Money'' (1936) to expl ...
that would see them rather hold money than buy new goods or services, which therefore raised the prospect that the
Great Depression The Great Depression (19291939) was an economic shock that impacted most countries across the world. It was a period of economic depression that became evident after a major fall in stock prices in the United States. The economic contagio ...
would not end without what he termed in the ''General Theory'' "a somewhat comprehensive socialization of investment".
Keynesian economics Keynesian economics ( ; sometimes Keynesianism, named after British economist John Maynard Keynes) are the various macroeconomic theories and models of how aggregate demand (total spending in the economy) strongly influences economic output an ...
challenged the notion that ''laissez-faire'' capitalist economics could operate well on their own without state intervention used to promote
aggregate demand In macroeconomics, aggregate demand (AD) or domestic final demand (DFD) is the total demand for final goods and services in an economy at a given time. It is often called effective demand, though at other times this term is distinguished. This is ...
, fighting high unemployment and
deflation In economics, deflation is a decrease in the general price level of goods and services. Deflation occurs when the inflation rate falls below 0% (a negative inflation rate). Inflation reduces the value of currency over time, but sudden deflation ...
of the sort seen during the 1930s. He and his followers recommended " pump-priming" the economy to avoid
recession In economics, a recession is a business cycle contraction when there is a general decline in economic activity. Recessions generally occur when there is a widespread drop in spending (an adverse demand shock). This may be triggered by various ...
: cutting taxes, increasing government borrowing and spending during an economic down-turn. This was to be accompanied by trying to control wages nationally partly through the use of
inflation In economics, inflation is an increase in the general price level of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reductio ...
to cut real wages and to deter people from holding money. Keynes tried to provide solutions to many of Marx’s problems without completely abandoning the classical understanding of capitalism. His work attempted to show that regulation can be effective and that economic stabilizers can rein in the aggressive expansions and recessions that Marx disliked. These changes sought to create more stability in the business cycle and reduce the abuses of laborers. Keynesian economists argue that Keynesian policies were one of the primary reasons capitalism was able to recover following the Great Depression. However, the premises of Keynes’s work have since been challenged by neoclassical and
supply-side economics Supply-side economics is a macroeconomic theory that postulates economic growth can be most effectively fostered by lowering taxes, decreasing regulation, and allowing free trade. According to supply-side economics, consumers will benefit fr ...
and the Austrian School. Another challenge to Keynesian thinking came from his colleague
Piero Sraffa Piero Sraffa (5 August 1898 – 3 September 1983) was an influential Italian economist who served as lecturer of economics at the University of Cambridge. His book ''Production of Commodities by Means of Commodities'' is taken as founding the neo- ...
and subsequently from the
Neo-Ricardian school The neo-Ricardian school is an economic school of thought that derives from the close reading and interpretation of David Ricardo by Piero Sraffa, and from Sraffa's critique of neoclassical economics as presented in his ''The Production of Com ...
that followed Sraffa. In Sraffa's highly technical analysis, capitalism is defined by an entire system of social relations among both producers and consumers, but with a primary emphasis on the demands of production. According to Sraffa, the tendency of capital to seek its highest
rate of profit In economics and finance, the profit rate is the relative profitability of an investment project, a capitalist enterprise or a whole capitalist economy. It is similar to the concept of rate of return on investment. Historical cost ''vs.'' market ...
causes a dynamic instability in social and economic relations.


Supply-side economics

Supply-side economics is a school of
macroeconomic Macroeconomics (from the Greek prefix ''makro-'' meaning "large" + ''economics'') is a branch of economics dealing with performance, structure, behavior, and decision-making of an economy as a whole. For example, using interest rates, taxes, and ...
thought that argues that economic growth can be most effectively created by lowering barriers for people to produce (supply) goods and services, such as adjusting
income tax An income tax is a tax imposed on individuals or entities (taxpayers) in respect of the income or profits earned by them (commonly called taxable income). Income tax generally is computed as the product of a tax rate times the taxable income. Tax ...
and
capital gains tax A capital gains tax (CGT) is the tax on profits realized on the sale of a non-inventory asset. The most common capital gains are realized from the sale of stocks, Bond (finance), bonds, precious metals, real estate, and property. Not all count ...
rates and by allowing greater flexibility by reducing regulation. Consumers will then benefit from a greater supply of goods and services at lower prices. The term "supply-side economics" was thought for some time to have been coined by journalist
Jude Wanniski Jude Thaddeus Wanniski (June 17, 1936 – August 29, 2005) was an American journalist, conservative commentator, and political economist. Early life and education Wanniski was born in Pottsville, Pennsylvania, the son of Constance, who worked at ...
in 1975, but according to Robert D. Atkinson's ''Supply-Side Follies'' the term "supply side" ("supply-side fiscalists") was first used in 1976 by Herbert Stein (a former economic adviser to President Nixon) and only later that year was this term repeated by Jude Wanniski. Its use connotes the ideas of economists
Robert Mundell Robert Alexander Mundell (October 24, 1932 – April 4, 2021) was a Canadian economist. He was a professor of economics at Columbia University and the Chinese University of Hong Kong. He received the Nobel Memorial Prize in Economic Sciences i ...
and
Arthur Laffer Arthur Betz Laffer (; born August 14, 1940) is an American economist and author who first gained prominence during the Reagan administration as a member of Reagan's Economic Policy Advisory Board (1981–1989). Laffer is best known for the Laf ...
. Today, supply-side economics is often conflated with the politically rhetorical term "
trickle-down economics Trickle-down economics is a term used in critical references to economic policies that favor the upper income brackets, corporations, and individuals with substantial wealth or capital. In recent history, the term has been used by critics of ...
", but as Jude Wanniski points out in his book ''The Way The World Works'' trickle-down economics is conservative Keynesianism associated with the Republican Party. Typical policy recommendations of supply-side economics are lower
marginal tax rate In a tax system, the tax rate is the ratio (usually expressed as a percentage) at which a business or person is taxed. There are several methods used to present a tax rate: statutory, average, marginal, and effective. These rates can also be p ...
s and less regulation. Maximum benefits from taxation policy are achieved by optimizing the marginal tax rates to spur growth, although it is a common misunderstanding that supply side economics is concerned only with taxation policy when it is about removing barriers to production more generally. Many early proponents argued that the size of the economic growth would be significant enough that the increased government revenue from a faster-growing economy would be sufficient to compensate completely for the short-term costs of a tax cut and that tax cuts could in fact cause overall revenue to increase.


Neoclassical economics and the Chicago School

Today, the majority academic research on capitalism in the
English-speaking world Speakers of English are also known as Anglophones, and the countries where English is natively spoken by the majority of the population are termed the '' Anglosphere''. Over two billion people speak English , making English the largest languag ...
draws on neoclassical economic thought. It favors extensive market coordination and relatively neutral patterns of governmental market regulation aimed at maintaining property rights; deregulated labor markets; corporate governance dominated by financial owners of firms; and financial systems depending chiefly on
capital market A capital market is a financial market in which long-term debt (over a year) or equity-backed securities are bought and sold, in contrast to a money market where short-term debt is bought and sold. Capital markets channel the wealth of savers t ...
-based financing rather than state financing.
Milton Friedman Milton Friedman (; July 31, 1912 – November 16, 2006) was an American economist and statistician who received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory and the ...
took many of the basic principles set forth by
Adam Smith Adam Smith (baptized 1723 – 17 July 1790) was a Scottish economist and philosopher who was a pioneer in the thinking of political economy and key figure during the Scottish Enlightenment. Seen by some as "The Father of Economics"——— ...
and the classical economists and gave them a new twist. One example of this is his article in the September 1970 issue of ''The New York Times'', where he claims that the social responsibility of business is "to use its resources and engage in activities designed to increase its profits…(through) open and free competition without deception or fraud". This is similar to Smith’s argument that self-interest in turn benefits the whole of society. Work like this helped lay the foundations for the coming
marketization Marketisation or marketization is a restructuring process that enables state enterprises to operate as market-oriented firms by changing the legal environment in which they operate. This is achieved through reduction of state subsidies, organizati ...
(or
privatization Privatization (also privatisation in British English) can mean several different things, most commonly referring to moving something from the public sector into the private sector. It is also sometimes used as a synonym for deregulation when ...
) of state enterprises and the
supply-side economics Supply-side economics is a macroeconomic theory that postulates economic growth can be most effectively fostered by lowering taxes, decreasing regulation, and allowing free trade. According to supply-side economics, consumers will benefit fr ...
of
Ronald Reagan Ronald Wilson Reagan ( ; February 6, 1911June 5, 2004) was an American politician, actor, and union leader who served as the 40th president of the United States from 1981 to 1989. He also served as the 33rd governor of California from 1967 ...
and
Margaret Thatcher Margaret Hilda Thatcher, Baroness Thatcher (; 13 October 19258 April 2013) was Prime Minister of the United Kingdom from 1979 to 1990 and Leader of the Conservative Party (UK), Leader of the Conservative Party from 1975 to 1990. S ...
. The
Chicago School of economics The Chicago school of economics is a neoclassical school of economic thought associated with the work of the faculty at the University of Chicago, some of whom have constructed and popularized its principles. Milton Friedman and George Stigle ...
is best known for its free market advocacy and
monetarist Monetarism is a school of thought in monetary economics that emphasizes the role of governments in controlling the amount of money in circulation. Monetarist theory asserts that variations in the money supply have major influences on national ...
ideas. According to Friedman and other monetarists, market economies are inherently stable if left to themselves and depressions result only from government intervention. Friedman argued that the
Great Depression The Great Depression (19291939) was an economic shock that impacted most countries across the world. It was a period of economic depression that became evident after a major fall in stock prices in the United States. The economic contagio ...
was result of a contraction of the money supply controlled by the
Federal Reserve The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States of America. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a ...
and not by the lack of investment as
John Maynard Keynes John Maynard Keynes, 1st Baron Keynes, ( ; 5 June 1883 – 21 April 1946), was an English economist whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments. Originally trained in ...
: "There is likely to be a lag between the need for action and government recognition of the need; a further lag between recognition of the need for action and the taking of action; and a still further lag between the action and its effects".
Ben Bernanke Ben Shalom Bernanke ( ; born December 13, 1953) is an American economist who served as the 14th chairman of the Federal Reserve from 2006 to 2014. After leaving the Fed, he was appointed a distinguished fellow at the Brookings Institution. Durin ...
, former Chairman of the
Federal Reserve The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States of America. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a ...
, is among the economists today generally accepting Friedman's analysis of the causes of the Great Depression. Neoclassical economists, today the majority of economists, consider value to be subjective, varying from person to person and for the same person at different times and thus reject the labor theory of value.
Marginalism Marginalism is a theory of economics that attempts to explain the discrepancy in the value of goods and services by reference to their secondary, or marginal, utility. It states that the reason why the price of diamonds is higher than that of wa ...
is the theory that economic value results from marginal utility and
marginal cost In economics, the marginal cost is the change in the total cost that arises when the quantity produced is incremented, the cost of producing additional quantity. In some contexts, it refers to an increment of one unit of output, and in others it r ...
(the
marginal concepts In economics, marginal concepts are associated with a ''specific change'' in the quantity used of a good or service, as opposed to some notion of the over-all significance of that class of good or service, or of some total quantity thereof.{{citati ...
). These economists see capitalists as earning profits by forgoing current consumption, by taking risks, and by organizing production.


Mainstream economics

Mainstream economics Mainstream economics is the body of knowledge, theories, and models of economics, as taught by universities worldwide, that are generally accepted by economists as a basis for discussion. Also known as orthodox economics, it can be contrasted to h ...
is a loose term used to refer to the non-
heterodox economics Heterodox economics is any economic thought or theory that contrasts with orthodox schools of economic thought, or that may be beyond neoclassical economics.Frederic S. Lee, 2008. "heterodox economics," ''The New Palgrave Dictionary of Economics' ...
taught in prominent universities. It is most closely associated with
neoclassical economics Neoclassical economics is an approach to economics in which the production, consumption and valuation (pricing) of goods and services are observed as driven by the supply and demand model. According to this line of thought, the value of a good ...
, or more precisely by the
neoclassical synthesis The neoclassical synthesis (NCS), neoclassical–Keynesian synthesis, or just neo-Keynesianism was a neoclassical economics academic movement and paradigm in economics that worked towards reconciling the macroeconomic thought of John Maynard Key ...
, which combines neoclassical approach to microeconomics with Keynesian approach to macroeconomics.Clark, B. (1998). ''Political-economy: A comparative approach''. Westport, CT: Praeger. Mainstream economists are not generally separated into schools, but two major contemporary orthodox
economic schools of thought In the history of economic thought, a school of economic thought is a group of economics, economic thinkers who share or shared a common perspective on the way economy, economies work. While economists do not always fit into particular schools, pa ...
are the " saltwater and freshwater schools". The saltwater schools consist of the
universities A university () is an institution of higher (or tertiary) education and research which awards academic degrees in several academic disciplines. Universities typically offer both undergraduate and postgraduate programs. In the United States, t ...
and other institutions located near the East and West Coast of the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...
, such as
Berkeley Berkeley most often refers to: *Berkeley, California, a city in the United States **University of California, Berkeley, a public university in Berkeley, California * George Berkeley (1685–1753), Anglo-Irish philosopher Berkeley may also refer ...
,
Harvard Harvard University is a private Ivy League research university in Cambridge, Massachusetts. Founded in 1636 as Harvard College and named for its first benefactor, the Puritan clergyman John Harvard, it is the oldest institution of higher le ...
,
Massachusetts Institute of Technology The Massachusetts Institute of Technology (MIT) is a private land-grant research university in Cambridge, Massachusetts. Established in 1861, MIT has played a key role in the development of modern technology and science, and is one of the ...
,
University of Pennsylvania The University of Pennsylvania (also known as Penn or UPenn) is a private research university in Philadelphia. It is the fourth-oldest institution of higher education in the United States and is ranked among the highest-regarded universitie ...
,
Princeton Princeton University is a private research university in Princeton, New Jersey. Founded in 1746 in Elizabeth as the College of New Jersey, Princeton is the fourth-oldest institution of higher education in the United States and one of the nine ...
, Columbia,
Duke Duke is a male title either of a monarch ruling over a duchy, or of a member of royalty, or nobility. As rulers, dukes are ranked below emperors, kings, grand princes, grand dukes, and sovereign princes. As royalty or nobility, they are ran ...
,
Stanford Stanford University, officially Leland Stanford Junior University, is a private research university in Stanford, California. The campus occupies , among the largest in the United States, and enrolls over 17,000 students. Stanford is considere ...
and
Yale Yale University is a private research university in New Haven, Connecticut. Established in 1701 as the Collegiate School, it is the third-oldest institution of higher education in the United States and among the most prestigious in the wor ...
. Freshwater schools include the
University of Chicago The University of Chicago (UChicago, Chicago, U of C, or UChi) is a private research university in Chicago, Illinois. Its main campus is located in Chicago's Hyde Park neighborhood. The University of Chicago is consistently ranked among the b ...
,
Carnegie Mellon University Carnegie Mellon University (CMU) is a private research university in Pittsburgh, Pennsylvania. One of its predecessors was established in 1900 by Andrew Carnegie as the Carnegie Technical Schools; it became the Carnegie Institute of Technology ...
, the
University of Rochester The University of Rochester (U of R, UR, or U of Rochester) is a private research university in Rochester, New York. The university grants undergraduate and graduate degrees, including doctoral and professional degrees. The University of Roc ...
and the
University of Minnesota The University of Minnesota, formally the University of Minnesota, Twin Cities, (UMN Twin Cities, the U of M, or Minnesota) is a public university, public Land-grant university, land-grant research university in the Minneapolis–Saint Paul, Tw ...
. They were referred to as the "freshwater school" since Pittsburgh, Chicago, Rochester and Minneapolis are located nearer to the
Great Lakes The Great Lakes, also called the Great Lakes of North America, are a series of large interconnected freshwater lakes in the mid-east region of North America that connect to the Atlantic Ocean via the Saint Lawrence River. There are five lakes ...
. The Saltwater school is associated with Keynesian ideas of government intervention into the
free market In economics, a free market is an economic system in which the prices of goods and services are determined by supply and demand expressed by sellers and buyers. Such markets, as modeled, operate without the intervention of government or any o ...
while the Freshwater schools are skeptical of the benefits of the government.Kilborn PT. (1988)
'Fresh water' Economists Gain
''New York Times''.
Mainstream economists do not in general identify themselves as members of a particular school, but they may be associated with approaches within a field such as the rational-expectations approach to
macroeconomics Macroeconomics (from the Greek prefix ''makro-'' meaning "large" + ''economics'') is a branch of economics dealing with performance, structure, behavior, and decision-making of an economy as a whole. For example, using interest rates, taxes, and ...
.


See also


Concepts

*
Consumption (economics) Consumption is the act of using resources to satisfy current needs and wants. It is seen in contrast to investing, which is spending for acquisition of ''future'' income. Consumption is a major concept in economics and is also studied in many o ...
*
Economic liberalism Economic liberalism is a political and economic ideology that supports a market economy based on individualism and private property in the means of production. Adam Smith is considered one of the primary initial writers on economic liberalism ...
*
Economic sociology Economic sociology is the study of the social cause and effect of various economic phenomena. The field can be broadly divided into a classical period and a contemporary one, known as "new economic sociology". The classical period was concerned ...
*
Financial market A financial market is a market in which people trade financial securities and derivatives at low transaction costs. Some of the securities include stocks and bonds, raw materials and precious metals, which are known in the financial markets ...
*
Free price system A free price system or free price mechanism (informally called ''the price system'' or ''the price mechanism'') is a mechanism of resource allocation that relies upon prices set by the interchange of supply and demand. The resulting price signals ...
*
Gains from trade In economics, gains from trade are the net benefits to economic agents from being allowed an increase in voluntary trading with each other. In technical terms, they are the increase of consumer surplus plus producer surplus from lower tariffs ...
*
History of capitalism The history of capitalism is diverse and the concept of capitalism has many debated roots. The history of the past 500 years is concerned with the development of capitalism in its various forms. Capital accumulated by a variety of methods, at a v ...
*
History of economic thought History (derived ) is the systematic study and the documentation of the human activity. The time period of event before the History of writing#Inventions of writing, invention of writing systems is considered prehistory. "History" is an umbr ...
*
Industrial Revolution The Industrial Revolution was the transition to new manufacturing processes in Great Britain, continental Europe, and the United States, that occurred during the period from around 1760 to about 1820–1840. This transition included going f ...
*
Mass production Mass production, also known as flow production or continuous production, is the production of substantial amounts of standardized products in a constant flow, including and especially on assembly lines. Together with job production and batch ...
*
Objectivism Objectivism is a philosophical system developed by Russian Americans, Russian-American writer and philosopher Ayn Rand. She described it as "the concept of man as a heroic being, with his own happiness as the moral purpose of his life, with prod ...
*
Positive non-interventionism Positive non-interventionism was the economic policy of Hong Kong; this policy can be traced back to the time when Hong Kong was under United Kingdom, British rule. It was first officially implemented in 1971 by Financial Secretary (Hong Kong), Fin ...
*
Spontaneous order Spontaneous order, also named self-organization in the hard sciences, is the spontaneous emergence of order out of seeming chaos. The term "self-organization" is more often used for physical changes and biological processes, while "spontaneous o ...


People

*
Amartya Sen Amartya Kumar Sen (; born 3 November 1933) is an Indian economist and philosopher, who since 1972 has taught and worked in the United Kingdom and the United States. Sen has made contributions to welfare economics, social choice theory, econom ...
*
Andrew Carnegie Andrew Carnegie (, ; November 25, 1835August 11, 1919) was a Scottish-American industrialist and philanthropist. Carnegie led the expansion of the American steel industry in the late 19th century and became one of the richest Americans i ...
*
Ayn Rand Alice O'Connor (born Alisa Zinovyevna Rosenbaum;, . Most sources transliterate her given name as either ''Alisa'' or ''Alissa''. , 1905 – March 6, 1982), better known by her pen name Ayn Rand (), was a Russian-born American writer and p ...
*
Eugen von Böhm-Bawerk Eugen Ritter von Böhm-Bawerk (; born Eugen Böhm, 12 February 185127 August 1914) was an Austrian economist who made important contributions to the development of the Austrian School of Economics and neoclassical economics. He served intermitten ...
*
Frank Stilwell Frank C. Stilwell (1856 – March 20, 1882) was an outlaw Cowboy who killed at least two men in Cochise County during 1877–82. Both killings were considered to have been self-defense. For four months he was a deputy sheriff in Tombstone, ...
* Frederic Bastiat *
Friedrich Engels Friedrich Engels ( ,"Engels"
'' John D. Rockefeller John Davison Rockefeller Sr. (July 8, 1839 – May 23, 1937) was an American business magnate and philanthropist. He has been widely considered the wealthiest American of all time and the richest person in modern history. Rockefeller was ...
*
John Locke John Locke (; 29 August 1632 – 28 October 1704) was an English philosopher and physician, widely regarded as one of the most influential of Age of Enlightenment, Enlightenment thinkers and commonly known as the "father of liberalism ...
*
Joseph Stiglitz Joseph Eugene Stiglitz (; born February 9, 1943) is an American New Keynesian economist, a public policy analyst, and a full professor at Columbia University. He is a recipient of the Nobel Memorial Prize in Economic Sciences (2001) and the Joh ...
*
J. P. Morgan John Pierpont Morgan Sr. (April 17, 1837 – March 31, 1913) was an American financier and investment banker who dominated corporate finance on Wall Street throughout the Gilded Age. As the head of the banking firm that ultimately became known ...
*
Karl Marx Karl Heinrich Marx (; 5 May 1818 – 14 March 1883) was a German philosopher, economist, historian, sociologist, political theorist, journalist, critic of political economy, and socialist revolutionary. His best-known titles are the 1848 ...
*
Milton Friedman Milton Friedman (; July 31, 1912 – November 16, 2006) was an American economist and statistician who received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory and the ...


Works

* ''
Capitalism and Freedom ''Capitalism and Freedom'' is a book by Milton Friedman originally published in 1962 by the University of Chicago Press which discusses the role of economic capitalism in liberal society. It has sold more than half a million copies since 1962 and ...
'' * '' Capitalism: The Unknown Ideal'' * ''
Economics in One Lesson ''Economics in One Lesson'' is an introduction to economics written by Henry Hazlitt and first published in 1946. It is based on Frédéric Bastiat's essay ' (English: "What is Seen and What is Not Seen"). The "One Lesson" is stated in Part On ...
'' * '' Free to Choose'' * ''
Grundrisse The ''Grundrisse der Kritik der Politischen Ökonomie'' (''Foundations of a Critique of Political Economy'') is an unfinished manuscript by the German philosopher Karl Marx. The series of seven notebooks was rough-drafted by Marx, chiefly for ...
'' * '' Individualism and Economic Order'' * ''
Man, Economy, and State ''Man, Economy, and State: A treatise on economic principles'' is a 1962 book of Austrian School economics by Murray Rothbard Murray Newton Rothbard (; March 2, 1926 – January 7, 1995) was an American economist of the Austrian School ...
'' * '' The Anti-Capitalistic Mentality'' * '' The Law''


References


Further reading

* Abu-Lughod, Janet L. ''Before European Hegemony The World System A.D. 1250–1350''. New York: Oxford UP. 1991. * * * * * * * * * * * * * * * * * * * Josephson, Matthew, ''The Money Lords; the great finance capitalists, 1925–1950'', New York, Weybright and Talley, 1972. * * * * * * * * * * * * * * * * * {{DEFAULTSORT:Perspectives On Capitalism Capitalism Capitalist systems Economic liberalism Ideologies Social philosophy Individualism