CAPITALISM

Project submitted to:

Dr. Anita Samal
(Faculty of Political Science)

Project submitted by:

Nikhil Parthsarthi
Semester I, Roll No. 91
Section A
18.10.2016

HIDAYATULLAH NATIONAL LAW UNIVERSITY

RAIPUR, C.G.
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DECLARATION
I hereby declare that the project work entitled "CAPITALISM submitted to the
"HNLU", is a record of original work done by me under the guidance of " Dr. Anita
Samal, Faculty of Political Science, HNLU.

Nikhil Parthsarthi
SEC-A
ROLL NO.-91

ACKNOWLEDGEMENTS
I feel highly elated to work on the topic CAPITALISM because it has significant importance
in the current scenario.
I express my deepest regard and gratitude for our Faculty of Political Science. Their
consistent supervision, constant inspiration and invaluable guidance have been of immense
help in understanding and carrying out the importance of the project report.
I would like to thank my family and friends without whose support and encouragement, this
project would not have been a reality.
I take this opportunity to also thank the University and the Vice Chancellor for providing
extensive database resources in the Library and through Internet.
Nikhil Parthsarthi
Semester I
Roll No. - 91

CONTENTS
INTRODUCTION
OBJECTIVES OF THE STUDY
RESEARCH METHODOLOGY
DEFINITION
QUOTES ON CAPITALISM
CHARACTERISTICS OF CAPITALISM
EMERGENCE OF CAPITALISM
TYPES OF CAPITALISM
CONCLUSION
REFERENCES
BIBLIOGRAPHY AND WEBLIOGRAPHY

INTRODUCTION
No society can surely be flourishing and happy,of which the far greater part of the members
are poor and miserable.
Consumption is the soul end and purpose of all production ;and the interest of the producer
ought to be attended to only so far as it may be necessary for promoting that of the
customer.
Labour was the first price the original purchase-money that was paid for all things .It is not
by gold or by silver ,but by labour the whole wealth of the ,was originally purchased.

I hope that you must have identified that these are the words of nobody else but the man who
gave the concept of The Invisible Hand, he is nobody else but ADAM SMITH the famous
economist who is also known as the father of CAPITALISM.
My project topic is Capitalism. At its root, capitalism is an economic system based on
three things: wage labour (working for a wage), private ownership or control of the means of
production (things like factories, machinery, farms, and offices), and production for exchange
and profit
In this I will through some light on the points that what is capitalism? How it came
into picture? What all are requirements for capitalism? Various types of capitalismand in the
end through my conclusion I will show whether capitalism is good or bad?

OBJECTIVES OF THE STUDY

To study the definition of capitalism.

To study the main characteristics of capitalism.

To study the ideas of various personalities on capitalism.

To study the various kinds of capitalism which exists or existed in the world.

RESEARCH METHODOLOGY
This project report is based on Descriptive Research Methodology. Secondary and Electronic
resources have been largely used to gather information and data about the topic. Books and
other reference as guided by Faculty have been primarily helpful in giving this project a firm
structure. Websites, dictionaries and articles have also been referred.

DEFINITION
An economic system characterized by private or corporate ownership of capital goods, by
investments that are determined by private decision, and by prices, production, and the
distribution of goods that are determined mainly by competition in a free market. Capitalism
is a system of economic enterprise based on market exchange. The Concise Oxford
Dictionary of Sociology (1994) defines it as a system of wage-labour and commodity
production for sale, exchange and profit, rather than for the immediate need of the
producers. Capital refers to wealth or money used to invest in a market with the hope of
achieving a profit (Giddens, 1997).
It is an economic system in which the means of production are largely in private hands and
the main incentive for economic activity is the accumulation of profits. From the perspective
developed by Karl Marx, capitalism is organized around the concept of CAPITOL implying
the ownership and control of the means of production by those who employ workers to
produce goods and services in exchange for wages.
Max Weber, on the other hand, considered market exchange as the defining characteristic of
capitalism. In practice, capitalist systems vary in the degree to which private ownership and
economic activity are regulated by government. It has assumed various forms in industrial
societies.
In common parlance, these days, capitalism is known as a market economy. The goods sold
and the prices they are sold at are determined by the people who buy them and the people
who sell them. In such a system, all people are free to buy, sell and make a profit if they can.
This is why capitalism is often called free market system. It gives freedom to entrepreneur (of
opening industry), to worker (of selling labour), to trader (of buying and selling goods), and
to the individual (of buying and consuming).

QUOTES ON CAPITALISM

The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue
of socialism is the equal sharing of miseries.
WINSTON CHURCHILL
The essence of capitalism is to turn nature into commodities and commodities into
capital. The live green earth is transformed into dead gold bricks, with luxury items
for the few and toxic slag heaps for the many. The glittering mansion overlooks a vast
sprawl of shanty towns, wherein a desperate, demoralized humanity is kept in line
with drugs, television, and armed force.
MICHAEL PARENTI
Capitalism is an organized system to guarantee that greed becomes the primary force
of our economic system and allows the few at the top to get very wealthy and has the
rest of us riding around thinking we can be that way, too - if we just work hard
enough, sell enough Tupperware and Amway products, we can get a pink Cadillac.
MICHAEL MOORE
[Capitalism is] the socio-economic system where social relations are based on
commodities for exchange, in particular private ownership of the means
of production and on the exploitation of wage labour. Wage labour is the labour
process in capitalist society: the owners of the means of production (the bourgeoisie)
buy the labour power of those who do not own the means of production (the
proletariat), and use it to increase the value of their property (capital)...
ENCYCLOPEDIA OF MARXISM
The brilliant creative core of capitalism ... is the story the entrepreneurs and capital
investors tell themselves about the future. How they intend to alter it, what they
expect to gain in return, where they will raise the capital to accomplish their vision.
Many of their stories turn out to be flawed or mistaken, of course, but the capacity to
envision a set of future events and then act to fulfill them is a central source of
capitalism's strength and its dominance of society.
WILLIAM GREIDER, The Soul of Capitalism

Main Characteristics of Capitalism

Capitalism involves new attitudes and institutionsentrepreneurs engaged in the sustained,
systematic pursuit of profit, the market acted as the key mechanism of productive life, and
goods, services and labour become commodities whose use was determined by rational
calculation.
The main characteristics of capitalistic organization in its pure form may briefly be
described as under:
1. Private ownership and control of the economic instruments of production, i.e., CAPITOL.

2. The gearing of economic activity to making profitsmaximization of profits.

3. Free market economya market framework that regulates this activity.

4. The appropriation of profits by the owners of capital. It is the income derived by the
capitalist from selling in the market.

5. The provision of wage labour, which is created by converting labour power into a
commodity. It is this process which produces the working class and inherently hostile
relationships in capitalist society worker (proletariat) versus capitalist, employee versus
employer.

6. Business firms are privately owned, and compete with each other to sell their goods to
consumers.

7. Commercialization of agricultural and industrial production.

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8. Development of new economic groups and expanding across the globe.

9. Capital accumulation by the capitalists as an obligatory activity, for unless there is capital
to invest, the system will fail. Profits produce capital when they are reinvested.

10. Investment and growth are accomplished by using accumulated capital to expand an
enterprise or create a new one. Capitalism, thus, is an economic system that requires constant
investment and constant economic growth.

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THE EMERGENCE OF CAPITALISM

Capitalism started to emerge during the 17th Century. At first the merchants, or buyer
uppers, as they became known, were a link between the consumer and producer. However,
gradually, they began to dominate the latter, first by placing orders and paying in advance,
then by supplying the raw materials, and paying a wage for the work done in producing
finished goods.
The concept of a waged worker signalled a crucial stage in the development of capitalism. Its
introduction was the final stage in the buyer uppers transition from merchant, (making
money from trade), to capitalist (deriving wealth from the ownership and control of the
means of production). The first stage of capitalism had come into being. This stage saw one
new class, the primitive capitalists, exerting power over another new class, the waged
workers.
Early capitalism also engendered new methods of production. The earliest was the cottage
industry, which saw individual homes become mini-factories, with production directed by
the capitalist. The cottage industry model became so widespread in the woollen textile
industry that it became a method of mass production. In turn, the wool trade became Britains
most important industry by the end of the 17th Century.
Importantly, the hundred-year transition from feudalism to primitive capitalism had strong
state support. The regionally based feudal economies and the power of the aristocracy ran
counter to the interests of this alliance between capitalism and the increasingly centralised
state. The state gained the wealth it desperately needed to maintain its growing bureaucracy
and standing army, by tapping into capitalism through taxes, customs, duties and state loans.
In return, it conquered colonies, fought for dominance of the worlds markets, and took
measures against foreign competition and the power of the aristocracy. Such measures
included bans on the import of manufactured goods, restrictions on the export of raw
materials destined for competitors, and tax concessions on the import of raw materials.
Restrictions on exporting raw materials hit the aristocracy particularly hard as agricultural
produce is, by its very nature, raw materials. Thus, bureaucrats and capitalists defeated the
aristocracy - though a section did survive the transition from feudalism by forming an
alliance with the new capitalists.
It is worth noting here that the alliance between the state and capitalism occurred across
Europe, though in different forms.instance, in Germany, where capitalism was much less
developed and therefore weaker, the more powerful state was able to exercise much more

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control. This was an early indication of the development of the social market in Germany
under which the state has much more power. In Britain, capitalism was much more developed
and so was able to exert much more influence, leading to the development of the free market
system, under which the state has far less influence. A brief look at the history of the
economic and social conditions that pre-dated the industrial revolution shows that capitalism
did not arise from the efforts of a few inventors causing an industrial revolution, nor because
British capitalists had some special enterprising spirit. It arose from the systematic
breakdown of feudalism as a social and economic system and the imposition of a wage labour
system in its place.

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TYPES OF CAPITALISM
There are many variants of capitalism in existence that differ according to country and
region. They vary in their institutional makeup and by their economic policies. The common
features among all the different forms of capitalism is that they are based on the production of
goods and services for profit, predominately market-based allocation of resources, and they
are structured upon the accumulation of capital. The major forms of capitalism are listed
below:
1.MERCANTILISM
An economic system developing during the late 16th century to unify and increase the power
and especially the monetary wealth of a nation by a strict governmental regulation of the
entire national economy usually through policies designed to secure an accumulation of
bullion1, a favorable balance of trade, the development of agriculture and manufactures, and
the establishment of foreign trading monopolies.
2. FREE MARKET ECONOMY

Free-market economy refers to a capitalist economic system where prices for goods and
services are set freely by the forces of supply and demand and are allowed to reach their point
of equilibrium without intervention by government policy. It typically entails support for
highly competitive markets, private ownership of productive enterprises. Laissez-faire is a
more extensive form of free-market economy where the role of the state is limited to
protecting property rights.
3.STATE CAPITALISM
State capitalism occurs when state owned industries play a key role within the market
economy. Under state capitalism, the government also plays a key role in planning, for
example deciding to invest in transport and communication. To some extent, China has
become a model of state capitalism. Private firms play a key role, but the government also
plays a key role in planning energy, transport and the Chinese government influences
monetary policy and exchange rate policy. The difference between state capitalism and state
socialism is that under state socialism there is no room for private enterprise and competition.
4. MIXED ECONOMY
A mixed economy is an economic system that incorporates aspects of more than one
economic system. This usually means an economy that contains both privately-owned and
state-owned enterprises or that combines elements of capitalism and socialism

Bullion- uncoined gold or silver in bars or ingots

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5. CORPORATE CAPITALISM
Corporate capitalism is a free or mixed-market economy characterized by the dominance of
hierarchical, bureaucratic corporations.
6. CRONY CAPITALISM
A term used to refer to the situation where business success is related to strategic influences
with civil servants, politicians and those in authority. It could be used to refer to situations in
early twentieth century US where business leaders had to buy off politicians in return for
favours. Arguably a degree of crony capitalism occurs in countries like China, South Korea
and Latin America. The power of the Mafia in Italy is also an example of crony capitalism.

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CONCLUSION

Capitalism was not invented. It developed out of the ways in which people deal with each
other, and is one of the most benign things that people have done. Wealth can be spent on
present consumption, or consumption can be deferred, and wealth used to generate more
wealth in the future. When this is done the wealth is called capital, and the process of using it
to create future wealth is called capitalism.
When merchants invested capital to kit out ships for trade, hoping for returns from cargoes
such as spices, they would each take a share of the profits. If they invested equal sums, they
would receive equal shares, but if they invested different sums, their share of the profits
would correspond to the proportion they had put in. This is in essence how companies raise
investment capital. They sell shares in their future profits, and people receive a proportion of
those returns corresponding to the shares they bought.
This kind of investment has made possible specialization, mass production and
mechanization, vastly increasing the output a person can produce, and making lower prices
possible. It takes time, labour and usually machinery to embark on this process, and it is
capitalism that has supplied the investment to make those things possible.
Only in the past few hundred years has capitalism created the wealth to lift huge numbers out
of poverty, starvation and grinding toil. Capitalism has generated the wealth that has enabled
diseases to be conquered, clean water and sanitation to become widespread, and has given
people more opportunities and choices in their lives than any previous generation has
enjoyed.
Some people and businesses use the political process to prevent the outcomes that free market
capitalism would achieve. Through rent-seeking and cronyism, they secure favours from
politicians that limit the free choices people would have made. Such behaviour is a

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corruption of capitalism and acts to limit what capitalism itself could have achieved without
such burdens.
The achievements of capitalism in the advanced industrial economies have spread across the
world as capitalism itself has spread. More people have been lifted from starvation in the
past two decades than ever before in human history, and the economic rise of countries such
as China and India is bringing improved standards of living to millions. Capitalism has
achieved more for humanity than any other institution people have developed.

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REFERENCES
WWW.WIKIPEDIA.ORG
WWW.LIBCOM.ORG
WWW.BRAINYQUOTES.COM
WWW.INVESTOPEDIA.COM
WWW.ECONOMICHELP.COM
WWW.DEBATES.ORG
WWW.NYTIMES.COM
WWW.BUZZLE.COM
WWW.YOUTUBE.COM
WWW.OXFORDDICTIONARIES.COM
WWW.MERRIAM-WEBSTER.COM
WWW.SELFED.ORG.UK
BOOKS REFERRED
THE ORIGIN OF CAPITALISM by ELLEN WOOD
DAS KAPITAL by KARL MARX
COMMUNIST MANIFESTO by KARL MARX AND FREDRICH ENGELS
VARITIES OF CAPITALISM by PETER A. HALL AND DAVID SOSKICE
THE THEORY OF WEALTH OF THE NATIONS by ADAM SMITH
CAPITALISM-A VERY SHORT INTRODUCTION by JAMES FULCHER

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WEBLIOGRAPHY
WWW.WIKIPEDIA.ORG
WWW.LIBCOM.ORG
WWW.BRAINYQUOTES.COM
WWW.INVESTOPEDIA.COM
WWW.ECONOMICHELP.COM
WWW.DEBATES.ORG
WWW.NYTIMES.COM
WWW.BUZZLE.COM
WWW.YOUTUBE.COM
WWW.OXFORDDICTIONARIES.COM
WWW.MERRIAM-WEBSTER.COM
WWW.SELFED.ORG.UK

BIBLIOGRAPHY
THE ORIGIN OF CAPITALISM by ELLEN WOOD
CAPITALISM-A VERY SHORT INTRODUCTION by JAMES FULCHER

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