What is Capitalism?

The word capitalism It is very commonly used to describe the social system we live in today. It is believed that, although it has not existed since the beginning of time, it has for most of human history. Even so, the capitalism it is an economic system relatively new.

But exactly what does "capitalism" mean?

Class division

Capitalism is the prevailing social system in all countries of the world today. Under this system, the means of production and distribution of goods (land, factories, technology, transportation systems, etc.) are owned by a small minority of people. We refer to this group of people as the capitalist class. Most people have to "sell" their ability to work in exchange for a salary or salary (which we refer to as the working class.)

TO the working class they are paid to produce goods and services and then, once they are sold, produce for a profit. The benefit is obtained the capitalist class because you can make money selling what has been made for a higher price than what it would cost on the job market. In this sense, the working class is exploited by the capitalist class. The capitalists live on the profits of exploitation.

This is what we mean when we say that there are two classes of society. It is a claim based on mere facts about the society we live in today. This class division is the essential characteristic of capitalism. Popularme is talked about several other existing ‘classes’: for example, the “middle class«, But the two classes defined here are the keys to understanding capitalism.

The profit motive

In the capitalism, the motive for producing goods and services is to sell in order to make a profit, not to satisfy people's needs. The products of capitalist production have to find a buyer, of course, but this is only a condition. so that your main objective of making a profit is met, of ending up with more money than was invested originally.

These ideas are not theories that economists have invented, or thought of, but can actually be easily confirmed by reading the financial press.

To the capitalists the imperative need to get benefit so as not to lose their investments and their position as the ruling class. Competition with other capitalists forces investors to reinvest most of its benefits, in order to have the best tools to be able to produce more than its rivals in the sector.

As you can see, the division of classes and the profit motive are the two fundamental characteristics that best define the dominant economic system globally today, the capitalism, and at the same time, in these two aspects are based all the social, political and monetary problems that society lives current.