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The Philosophy of Capitalism
We've all heard the words “capitalist” and “capitalism” used before in various circumstances. But what does the term really mean and how does it apply to the economy? Capitalism is best understood by examining the conditions of the free market. The free market is where buyer and seller determine the price of goods and services with no intervention from the government. This is capitalism in action where people have the freedom to determine how they purchase commodities and at what price.
The word “capitalism” today is used in many different contexts. It is used to describe a social system just as Communism is. It means different things to different people depending on background, social status and geographic location. For example, the idea of capitalism in the U.S. differs significantly from European ideas. In some non-Western countries where capitalism is not part of daily life, the word has connotations of wealth and luxury that many cannot afford. For this reason, the term “capitalist” can be used negatively to describe the wealthy or those that enjoy a more privileged status in society.
The idea of capitalism first developed in the times of the Roman Empire where most liberals encouraged the idea of a market where seller and buyer could meet and trade without government influence. As time went by, capitalist practices became commonplace. People generally thought that capitalism encouraged individuals to protect their own interests and that it advanced society as a whole.
Of course, no market exists without some government intervention. A government will impose taxes on goods and services and will charge tariffs on imported and exported goods. This means that true capitalism is almost non-existent because while most governments prefer to let the law of supply and demand run its course, some regulation of industry is necessary.
Today, most Western nations operate a capitalist economy where free enterprise is encouraged and rewarded. Capitalism has contributed greatly to the consumer culture inherent in Western society. People who purchase goods and services are known as consumers and a whole industry of advertising and marketing has arisen as a result of capitalism.
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