Blackwell Reference Online

Extract

Capitalism is a form of economic organization, a set of institutions in which the resources available to a society, including all human resources, are organized to produce goods and services for that society. Four features of capitalist organization serve to distinguish it from other methods of organizing an economy. The first is the institution of private property. Private property requires that social conventions or law prevent others from taking property by force, and that the property owner has complete freedom of action in respect of the use and disposition of that property. In particular, the government and other authorities may not interfere in any way with private decisions. Their role is to protect the rights of property holders. The doctrine of unconditional and exclusive use of property is based on the natural rights concept of Roman law. The second feature of capitalism is a reliance on markets for the exchange of goods and services. Money acts as a medium of exchange (and a store of value) so that economic agents are delivered from the constraints of barter, where an agent's wants have to be coincident with another's supplies and vice versa. In a market system, an agent can sell a wide range of services (including labour services) and goods to one group, and then with the proceeds make purchases from a quite different group. A market system provides both incentives ... log in or subscribe to read full text