What Is Capitalism in World History?

Capitalism is an economic system that has played a significant role in world history. It is based on the principles of private ownership, free markets, and the profit motive. In this article, we will explore what capitalism is, how it originated, and its impact on the world.

Origins of Capitalism

Capitalism emerged in Europe during the 16th century as a response to the decline of feudalism. The rise of merchant capitalism in cities such as Venice and Amsterdam laid the foundations for a new economic system based on trade and commerce. This was followed by the Industrial Revolution in Britain during the 18th century, which saw the emergence of factory-based production and modern banking systems.

Key Features of Capitalism

Capitalism is characterized by several key features:

  • Private Ownership: In a capitalist system, individuals or corporations own most of the resources and means of production.
  • Free Markets: Prices are determined by supply and demand in competitive markets with little government intervention.
  • Profit Motive: Individuals and corporations seek to maximize profits through efficient production methods and innovation.

The Impact of Capitalism on Society

Capitalism has had both positive and negative effects on society. On one hand, it has led to unprecedented economic growth and technological advancement. It has created new industries, increased productivity, and raised living standards for many people around the world.

On the other hand, capitalism has also contributed to income inequality and environmental degradation. The pursuit of profit often comes at the expense of workers’ rights and environmental sustainability. Many argue that capitalism prioritizes short-term gains over long-term social and ecological well-being.


One of the most significant criticisms of capitalism is that it exacerbates inequality. The wealthy elite hold a disproportionate amount of power and resources, while the working class struggles to make ends meet. This can lead to social unrest and political instability.

Environmental Degradation

Capitalism’s emphasis on growth and profit has also contributed to environmental degradation. Industries such as oil and gas, mining, and agriculture often prioritize profits over sustainability, leading to pollution and resource depletion.


In conclusion, capitalism is an economic system based on private ownership, free markets, and the profit motive. It has had a significant impact on world history, contributing to economic growth but also exacerbating inequality and environmental degradation. As we move forward into the future, it is crucial to consider how we can create a more sustainable and equitable economic system that balances short-term gains with long-term well-being.