Social Research Glossary

 

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Citation reference: Harvey, L., 2012-17, Social Research Glossary, Quality Research International, http://www.qualityresearchinternational.com/socialresearch/

This is a dynamic glossary and the author would welcome any e-mail suggestions for additions or amendments. Page updated 2 January, 2017 , © Lee Harvey 2012–2017.

 

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Capitalism


core definition

Capitalism is an economic and social system in which private capital or wealth is used in the production and distribution of goods.


explanatory context

In such a system the accumulation of capital occurs when owners of capital (productive plant, etc) appropriate the value of the wealth created by non-owners/workers which is surplus to the value of the incomes paid to workers. This surplus value is usually referred to as profit and profit-making is a legitimate activity in capitalist systems.


analytical review

The Socialist Party of Great Britain (2013) states:

What is Capitalism?

The word capitalism is now quite commonly used to describe the social system in which we now live. It is also often assumed that it has existed, if not forever, then for most of human history. In fact, capitalism is a relatively new social system.

But what exactly does 'capitalism' mean?

Class division

Capitalism is the social system which now exists in all countries of the world. Under this system, the means for producing and distributing goods (the land, factories, technology, transport system etc) are owned by a small minority of people. We refer to this group of people as the capitalist class. The majority of people must sell their ability to work in return for a wage or salary (who we refer to as the working class.)

The working class are paid to produce goods and services which are then sold for a profit. The profit is gained by the capitalist class because they can make more money selling what we have produced than we cost to buy on the labour market. In this sense, the working class are exploited by the capitalist class. The capitalists live off the profits they obtain from exploiting the working class whilst reinvesting some of their profits for the further accumulation of wealth.

 

The ideologically opposite view comes from Encyclopædia Britannica (2013):

capitalism, also called free market economy, or free enterprise economy, economic system, dominant in the Western world since the breakup of feudalism, in which most of the means of production are privately owned and production is guided and income distributed largely through the operation of markets.

 

Investopedia (2013) expands this:

Definition of 'Capitalism'
An economic system based on a free market, open competition, profit motive and private ownership of the means of production. Capitalism encourages private investment and business, compared to a government-controlled economy. Investors in these private companies (i.e. shareholders) also own the firms and are known as capitalists.

Investopedia explains 'Capitalism'
In such a system, individuals and firms have the right to own and use wealth to earn income and to sell and purchase labor for wages with little or no government control. The function of regulating the economy is then achieved mainly through the operation of market forces where prices and profit dictate where and how resources are used and allocated. The U.S. is a capitalistic system.


Raynet Sociology Glossary (undated) defines capitalism as follows:

(Given the importance of this concept to this dictionary and to the social reality that we face each day, we choose to yield to the socialist G. D. H. Cole.) "The term capitalism denotes and economic system in which the greater proportion of economic life, particularly ownership of and investment in production goods, is carried on under private (i.e., non-governmental) auspices through the process of economic competition and the avowed incentive of profit... Capitalism is often regarded as passing through three successive stages, beginning with commercial capitalism, under which large-scale operators come to dominate the process of exchange, running on with the Industrial Revolution, into the stage of industrial capitalism, dominated by the owners of large factories, mines, and other industrial enterprises, and then to the stage of finance, or financial capitalism, in which control passes more and more into the hands of bankers and financiers dominating industrial enterprises to which they advance money, or to great investors divorced from the day-to-day management of industrial enterprises, but controlling them and extracting profit from them by their financial power. These stages are not, of course, mutually exclusive: the earlier do not cease to exist when the lager are superimposed upon them. Reference is sometimes made to a fourth form, state capitalism, defined by Lenin as a system under which the State takes over and exploits means of production in the interest of the class which controls the state... Still a fifth form is frequently described in the literature concerned with those economies in which there is an increased element of state intervention either in terms of welfare programmes or of responsibility for employment and lessening the impact of the business cycle. This form is denoted by such phrases as welfare capitalism or protected capitalism..." - From G. D. H. Cole, "Capitalism," in Julius Gould and William L. Kolb, editors, A Dictionary of the Social Sciences (New York: The Free Press of Glencoe, 1964), pp. 70-71.

 

The McGraw-Hill (2004) Sociological Theory site Glossary defines capitalism as:

An economic system composed mainly of capitalists and the proletariat, in which one class (capitalists) exploits the other (proletariat). (Marx)

 

Elwell's Glossary of Sociology (undated) defines capitalism as:

An economic system based on the private ownership of the means of production and distribution in which the goal is to produce profit.


associated issues

 


related areas

See also

communism

marxism

Weber


Sources

Cole, G.D.H., 1964, 'Capitalism', in Gould, J.and Kolb, W.L., (Eds.), 1964, A Dictionary of the Social Sciences, pp. 70-71(New York: The Free Press of Glencoe).

Encyclopædia Britannica, 2013, 'Capitalism', available at http://www.britannica.com/EBchecked/topic/93927/capitalism , last update 1 March 2008, accessed 1 February 2013, still available 14 December 2016.

Elwell's Glossary of Sociology, undated, available at http://campus.murraystate.edu/academic/faculty/frank.elwell/prob3/glossary/socgloss.htm, page not available 20 December 2016.

Investopedia, 2013, 'Capitalism' available at http://www.investopedia.com/terms/c/capitalism.asp#axzz2JdeBMiTM, accessed 1 February 2013, still available 14 December 2016.

McGraw-Hill, 2004, Sociological Theory: Glossary , available at http://highered.mcgraw-hill.com/sites/0072817186/student_view0/glossary.html, accessed 14 May 2013, page not available 14 December 2016.

Raynet Sociology Glossary, undated, available at http://www.raynet.mcmail.com/sociology_gloss.htm, no longer available 20 December 2016.

The Socialist Party of Great Britain, 2013, 'What is capitalism?' available at http://www.worldsocialism.org/spgb/what-capitalism, accessed 1 February 2013, still available 14 December 2016.


copyright Lee Harvey 2012–2017


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