Capitalism

Definition

Capitalism is an economic system where private individuals or businesses own capital goods, and production and prices are determined by competition in a free market. This system encourages innovation and wealth creation, but can also lead to inequality and conflict over resources, especially on an international scale.

5 Must Know Facts For Your Next Test

1. Capitalism emerged in Europe during the late Middle Ages and has since evolved into various forms, such as laissez-faire capitalism and welfare capitalism.
2. The Industrial Revolution played a crucial role in advancing capitalism, leading to mass production, increased trade, and the rise of a consumer economy.
3. Capitalism has been linked to international conflicts over resources, as nations compete for markets, labor, and raw materials in a globalized economy.
4. Critics of capitalism argue that it can lead to economic inequality and exploitation, creating tensions within and between nations.
5. The collapse of communism in Eastern Europe in the late 20th century led to a resurgence of capitalist practices and ideologies globally.

Review Questions

• How has capitalism influenced the historical development of international conflict?
  • Capitalism has significantly influenced international conflict through its competitive nature, as nations seek to secure resources, markets, and labor. This competition often leads to tensions between countries, resulting in conflicts over trade routes, access to natural resources, or dominance in specific industries. Furthermore, the disparities created by capitalist economies can incite conflict both within nations and across borders, as marginalized groups may resist exploitation or inequality.
• Discuss the relationship between capitalism and globalization in the context of international conflicts.
  • Capitalism and globalization are closely intertwined, as globalization facilitates the spread of capitalist practices across national boundaries. This relationship has led to increased economic interdependence among countries but has also generated conflicts due to competition for market dominance and resources. As nations engage more deeply in global trade networks, disparities in wealth and power can lead to disputes, prompting conflicts both economically and politically as states vie for advantageous positions.
• Evaluate how the principles of capitalism could contribute to either the resolution or escalation of international conflicts.
  • The principles of capitalism can contribute to the resolution of international conflicts through economic cooperation and interdependence. When countries engage in trade relationships based on mutual benefits, they may find common ground that discourages conflict. However, capitalism can also escalate tensions when competition for resources becomes aggressive or when economic disparities lead to exploitation. The balance between cooperation and competition ultimately shapes whether capitalism serves as a force for peace or conflict on the international stage.

Related terms

Free Market: An economic system where prices for goods and services are determined by open competition among businesses, without government intervention.

Supply and Demand: An economic model that describes how prices fluctuate based on the availability of a product (supply) and the desire of consumers to purchase it (demand).

Globalization: The process by which businesses or other organizations develop international influence or operate on an international scale, significantly impacting capitalism through trade and investment.