21st Century Capitalism Explainer
Capitalism, like other economic systems throughout history, will one day cease to exist. As people become more aware of the problems within the capitalist system, they seek a clear explanation of how it functions. This article aims to provide a concise overview of capitalismâs essentials so that it may be better understood.
At its core, capitalism is a system for organizing the production and distribution of goods and services. It differs from systems like slavery and feudalism but shares some similarities. Capitalism divides participants into two groups: employers (a small group) and employees (a larger group). Employers control the economic system and use production and distribution to increase their wealth. Capital refers to wealth involved in self-expansion, and those who facilitate this growth are capitalists.
On the other hand, employees are the majority in the system and perform most of the work. They can be divided into two groups: productive workers directly involved in producing goods or services and unproductive workers who provide the conditions and context for the productive workers to do their jobs.
Productive workers use tools, equipment, and materials provided by employers to add value to the final output. The key point is that the value added by productive workers exceeds the wages paid to them. The difference, known as surplus value, is what employers call profit. The capitalist employers prioritize profit maximization and use their dominant position in the workplace to suppress wages and salaries. This ensures that they can accumulate more surplus value, benefiting themselves at the expense of the employees.
Markets play a significant role in capitalism, as employers purchase labor power from employees to secure the surplus value. However, the profit and market systems are not absolute and can change over time. Capitalism is not an eternal economic system. As history shows, various economic systems have risen and fallen through the centuries. As more people become dissatisfied with capitalism, understanding its basics can help society progress toward potential alternatives.
đ Â This summary was human-edited with AI-assist.
