You’ve probably heard people talk about something called capitalism. You may have read about capitalism or or heard one of your parents talking about it.
But what does it mean to YOU?
I will attempt to describe capitalism in terms that you can relate to as a teenager or young adult, as capitalism is a big part of the success of many countries, and the centre of our economic system.
SO WHAT’S CAPITALISM, EXACTLY?
Essentially, pure capitalism is an economic system where the production, trade, and industry is completely controlled by private entities and their owners, as opposed to being controlled by a government.
A typical example of capitalism can be seen in the American prison system, where many penal institutions are actually owned and operated by private companies, which profit from products and services that the prisoners produce during their sentences being carried out.
A capitalist economy seeks to generate profit from its activities, like the prison example above. Capitalism is rooted in free markets, controlled by non-government (mostly) companies that operate in a competitive environment.
Free markets, in their purest form, have no controls placed on them by the state, which is the reason that we find conservative, republicans, free marketers, etc., at the right hand side of the political spectrum.
In the USA, the State does, however, have some policy that impacts these independant businesses, primarily for social programs and public safety, so the US doesn’t operate in a purely free market.
WHERE DID IT COME FROM?
Capitalism started from the death of something called feudalism.
Feudalism is a purely hierarchical system in which wealthy land owners employ the work of poor farmers, who would work the land in trade for housing and to some degree at least, protection.
Note that in this situation, a poor farmer can never become a wealthy land owner, or anything other than a poor farmer, really
Obviously, feudalism was an incredibly oppressive and unfair system. It also did little to help competition thrive, which in turn stopped societal growth, much the same way communism and pure socialism prevent societal growth, as they, too prevent competition and remove motive for improvement and change.
As these things go, unhappy populations revolt, and when the poor farmers did so, they assumed the land they worked, and competition on things like price, quality, deliverability, etc., began between the farmers, stimulating growth in society and the economy, as each worked to provide greater value to consumers than the other.
Shrewd farmers figured out how to make more profit and be more efficient through profit motive, and they could become wealthy as a result, and improve their quality of life, as well as the quality of the lives of those around them and working for them.remember the wealthy land owners? well, at this point, they had to begin paying those who worked their land, or they would lose the workers to the more fair paying employer/farmers.
Capitalism had become a way of life.
HOW DOES IT AFFECT US?
Capitalism is in the means of near everything in your life, from your smart phone to the entrepreneurs peppering Silicon valley to Mark Zuckerburg and other overnight successes.
Overall, the effect capitalism has in your day to day life largely is determined by what you do in your community and society. If you are an employer or business owner, you are probably quite fond of what capitalism can do for you and the quality of life it can bring you.
More profit means you can enhance your life, that of your family, and the wages of your employees, who then, ideally, return that value to you in the form of quality wok in your business.
As a minimum, it means you see more money in your wallet. If you are less motivated, and end up being an employee, understand that since you have chosen not to build your own dream, you become an instrument in building someone else’s dream, and your income has a definite cap on it, as does the potential for your lifestyle.
WHY DO PEOPLE SUPPORT IT?
Like I said above, it’s more likely that a boss will support capitalism than a worker. Take Donald Trump for example: He greatly benefited from capitalism, but it was probably at the cost of many workers who struggled to make a living wage as Trump’s businesses thrived.
Supporters of capitalism feel that competition in the economic system is necessary. It prompts innovation. Everyone wants to create and sell the next it product, which, in turn, means there’s constant movement in industries. All of this helps our placement within the greater global economy.
Capitalists believe that those who do well, deserve it. On the other hand, those who struggled, simply didn’t work hard enough.
WHY DO PEOPLE OPPOSE IT?
Those who oppose capitalism often have little understanding of it – they see the meme for capitalism as the banker in the Monopoly game, only out to better his own lot in life. The fact is, that type of approach to capitalism is not sustainable, and is self-correcting, because employees vote for where they want to work by where they work, and will leave an unfair or exploitive employer for a more fair one most of the time.
Sonia Rina Landry is a passionate entrepreneur, speaker, author, and personal development coach. She is an outspoken advocate of the free market economy and has helped countless clients identify their core values, envision and realize goals that resonate with those values. She oversees several businesses online and offline.