Capitalism

Capitalism — an economic system based on private ownership of the means of production, free market exchange, wage labor, and the pursuit of profit — became the dominant global economic model through the Industrial Revolution and has remained so despite powerful challenges from socialism and communism.

The theoretical foundations were laid by Adam Smith in The Wealth of Nations (1776), which argued that free markets, driven by individual self-interest and guided by the 'invisible hand' of supply and demand, would produce the most efficient allocation of resources and the greatest collective prosperity. The Industrial Revolution demonstrated capitalism's extraordinary productive power — generating more wealth in a few decades than all previous economic systems combined.

But capitalism also generated fierce criticism. Karl Marx argued that it inevitably produced exploitation, inequality, and crisis. Workers labored in appalling conditions for subsistence wages while factory owners accumulated vast fortunes. The boom-and-bust cycles that produced the Great Depression seemed to confirm capitalism's instability. In response, capitalist societies developed labor laws, social safety nets, progressive taxation, and financial regulation. The debate between free-market capitalism and various forms of state intervention remains central to modern politics.