Capitalism

Definition

Capitalism is an economic system characterized by private ownership of the means of production, where investments, production, and distribution are guided by profit motives in a competitive market. This system emphasizes free markets, minimal government intervention, and the role of individual entrepreneurship. It has significantly shaped social and political landscapes in various regions, influencing reforms, labor movements, and international relations.

5 Must Know Facts For Your Next Test

1. Capitalism emerged prominently in Latin America during the 19th century as countries sought to modernize their economies following independence from colonial rule.
2. Liberal reforms aimed to integrate capitalist principles by promoting private property rights, investment in infrastructure, and encouraging foreign capital, impacting social structures.
3. Labor movements arose in response to harsh working conditions under capitalism, pushing for workers' rights, better wages, and improved labor laws as a reaction to economic inequalities.
4. The U.S.-Cuba relations during the Cold War were heavily influenced by capitalism, with the U.S. promoting its capitalist model against Cuba's socialist framework after the revolution of 1959.
5. Capitalism has been both praised for its ability to generate wealth and criticized for exacerbating social inequalities and leading to exploitation of labor.

Review Questions

• How did liberal reforms influence the development of capitalism in Latin America?
  • Liberal reforms were crucial in shaping capitalism in Latin America as they introduced policies that encouraged private property rights and investment opportunities. These reforms aimed at modernizing economies by building infrastructure and promoting foreign investment. The changes not only facilitated economic growth but also led to social shifts as traditional hierarchies were challenged by new capitalist dynamics.
• In what ways did labor movements challenge the capitalist system in Latin America during the 20th century?
  • Labor movements emerged as a direct response to the adverse effects of capitalism on workers' lives. These movements organized strikes and protests to demand fair wages, better working conditions, and legal protections. By uniting workers across various sectors, labor movements not only challenged capitalist exploitation but also pushed for significant social reforms that reshaped labor laws and improved rights for the proletariat.
• Evaluate the impact of capitalism on U.S.-Cuba relations during the Cold War period.
  • The rise of capitalism significantly impacted U.S.-Cuba relations during the Cold War as the U.S. sought to contain the spread of communism following Fidel Castro's revolution in 1959. Capitalism was positioned as a counter-model to Cuba's socialist policies, leading to economic sanctions and attempts at isolation by the U.S. This ideological conflict fueled tensions that shaped not just bilateral relations but also influenced broader geopolitical dynamics within Latin America.

Related terms

Laissez-Faire: An economic philosophy advocating for minimal government intervention in economic affairs, allowing the market to regulate itself.

Proletariat: The working class who sell their labor for wages in a capitalist system, often contrasted with the bourgeoisie or capitalist class.

Market Economy: An economic system where supply and demand determine prices and production levels, often associated with capitalist economies.