Capitalism is an economic system based on private property, the means of production, the division of labour and the accumulation of capital.

Capitalism has its origins in the Middle Ages, following the trade of goods and services between travelers who traveled through Asia and Europe, who sought to satisfy a need or obtain benefits through exchange.

At that time, feudalism, a social structure based on the relationship between lords who owned the land and vassals who exploited them in exchange for protection and who paid an established price in products or money, constituted the predominant social structure. However, at the end of the 13th century, wars and plagues caused the loss of labor and the abandonment of farms, favoring the growth of cities and increased trade. The growing use of coins and the development of a merchant class as merchants acquired wealth and economic power, through the accumulation of capital, weakened feudalism.

The collapse of the feudal and manorial system in the 16th century facilitated the growth of land tenants, who had greater freedom to trade the goods they produced, being able to revert their benefits in technological improvements, or in buying the lands they exploited. These land lessors generated the first job opportunities, through the hiring of free workers, who sold their own work.

The Industrial Revolution, which took place in the 18th century, was a defining moment in the history of capitalism. Started in the 18th century in England, it spread throughout Europe and North America in the 19th century, which had its origin thanks to the accumulation of large amounts of capital, and its investment in machinery, where the industrialist replaced the merchant as the main actor. .

Productivity gains generated a sustained increase at the beginning of the 19th century, moving from manual to mechanical production, facilitating the implementation of new manufacturing processes, the optimization of the use of hydraulic energy and the use of steam energy, as well as the replacement of wood with coal.

The loom, the water frame and the rotating mule, the steam engine, the seeder, the turbines and gas lighting were some of the technologies that emerged in those years. The growth of the industry stimulated the growth of the financial and credit system, favoring the appearance of investments in securities, checks and money orders.

Capitalism was consolidated as the dominant economic system in the 19th century. The great European powers, such as Great Britain, France and Germany, became industrial powers. Capitalism spread to other parts of the world, through colonization and commercial expansion.

The invention of new machines and technologies made it possible to increase productivity and production. This gave rise to the development of large industrial companies, which revolutionized the world economy. At the beginning of the 20th century, companies became larger and more powerful, operating internationally, generating monopolies and oligopolies in the economic system, which caused governments to intervene in the economy to regulate certain business practices and behaviors, and protect the consumers.

Between the years 1840 and 1870, banks began issuing banknotes linked to gold reserves; paper money throughout the world represented a revolution, facilitating economic transactions. In the 19th century, the so-called International Gold Standard was approved as a mechanism to control the issuance of currencies by countries and avoid disorders in the world economy.

In the mid-19th century, free trade and the first era of globalization began, industrialization allowed the production of household items using economies of scale, sustained by population growth, which which generated a demand for basic products.

However, the Russian Revolution and the Great Depression questioned the existing capitalist system, giving rise to socialist, communist and in some cases fascist ideologies, which defended state intervention.

After the Second World War, economic recovery facilitated the emergence of States as entities capable of regulating the capitalist system, the emergence of Kynesianism with the aim of stimulating demand, increasing supply, increasing production and facilitating access for citizens to these goods, through the reduction of taxes, the lowering of interest rates and the increase in public spending, in order to reduce unemployment levels, should generate a scenario that increases the profits of companies, which would return to the state, through their taxes, the investments made by it.

Karl Marx, philosopher, economist and intellectual, considered along with Friedrich Engels the father of scientific socialism, modern communism and Marxism and author of works such as “Capital” or “The Manifesto of the Communist Party “, was the first to use the term Capitalism, to refer to the system in which the means of production are in the hands of a property-owning class, with workers having to sell their work in exchange for a salary, in order to survive.

Capitalism at the end of the 19th century consolidated inequality in society, concentrating wealth in 10% of the population, triggered demographic growth, sevenfold the number of inhabitants of the planet in the last two centuries, and increased world GDP and income. per capita.

As an example, GDP per capita (gross domestic product divided by population) went from just over $450 in 1960 to $12,647 (calculated at current currency value) in 2022, and from 1.38 Trillion GDP world in 1960 to more than 100 Billion in 2022, increasing more than 7240% in just over 60 years.

However, capitalism has not managed to end social inequalities, although in the last sixty years it has managed to reduce the percentage of the population living below the poverty line, going from 43% of the population in 1985. 26% from 2015, the year in which according to data published by the World Bank, there were more than 1.9 billion people who lived on incomes less than $3.2 a day, today, even more than 10% of the world’s population lives under circumstances of severe poverty.

With technological improvements, the increase in the number of multinational companies and the development of international trade policies and agreements, globalization has made it possible to distribute products and services from one country to any part of the world.

In the 21st century, capitalism remains the dominant economic system in the world. However, climate change, social inequality, globalization, geopolitical tensions and technological advances pose future challenges that will surely influence the rules of the current economic board and the rules of capitalism, as we understand it today. .