Meaning, History, and Characteristics of Capitalism, Complete with Advantages and Disadvantages

Kapanlagi.com - The history of capitalism has been known for centuries. Where the origin of capitalism developed from business and trade activities. But do you know what capitalism really means?

The meaning of capitalism according to some experts is defined with different opinions. Where the owners of capital have full control over their businesses without government intervention.

That is why this economic activity is run by private capital owners outside the government. In addition, there are several capitalist characteristics that are also important to know.

First, understand the definition and history of capitalism. Here is a review of the meaning of capitalism that has been summarized by kapanlagi.com from various sources.

1. The General Meaning of Capitalist

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You must have heard the term capitalist before. This term is a concept of what we know as capitalism. But what is the actual meaning of capitalist?

To dissect the meaning of capitalist, you can refer to the Great Indonesian Dictionary (KBBI). The meaning of capitalist in KBBI is a wealthy person or a person with a large amount of capital. Another definition of capitalist is a person who has abundant wealth.

The meaning of capitalist is closely related to economic and business activities. This is because the focus of capitalism is on obtaining large and abundant profits, especially by reducing production costs. However, capitalism can also refer to bureaucracy with the aim of enriching oneself. In KBBI, the term bourgeoisie is also known, referring to wealthy people, usually from the upper class.

2. The Meaning of Capitalist According to Experts

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A number of experts also define the meaning of capitalism. Yes, the meaning of capitalism is basically the actors of the capitalist system. Or also known as capital referring to the actors of capitalism. An explanation of the meaning of capitalists is an economic activity that the actors can control their own activities.

Generally, the meaning of capitalists is that their capital is private capital, private companies that have freedom over economic activities. In other words, this activity is not to gain profits together with the government. To understand what the meaning of capitalists is according to experts, just read the reviews below KLovers.

1. The meaning of capitalists according to Karl Marx: The meaning of capitalists according to Karl Marx is a system with a market policy controlled by capital owners. Whether it's the price of goods or other policies, it's in the hands of capital owners. That's why capital owners play a role in determining their profits.

2. The meaning of capitalists according to Adam Smith: The meaning of capitalists according to Adam Smith is a system that can create prosperity for society if the government does not intervene.

3. The meaning of capitalists according to Max Weber: The meaning of capitalism is an economic system aimed at a market and driven to provide profits from exchange activities in that market.

4. The meaning of capitalists according to Ir. Soekarno: Capitalism is a social system that arises from the production method by separating workers from the means of production.

Those are some explanations of the definition of the meaning of capitalists that you need to know. So that it makes it easier for you to understand the meaning of the term capitalist.

3. The History of Capitalism

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Discussing about capitalism, it feels incomplete if we do not delve into its history. This is because there is a long history of the emergence of this capitalist system that began in the 16th century until the 19th century.

Yes, based on its history, capitalism first emerged in the Middle Ages in Europe. Then, this capitalism continued to develop in several European countries such as the Netherlands and England. Trade and commerce were carried out by traders in Amsterdam and London, then formed joint stock rentals. Subsequently, stock exchange, banking, and insurance institutions began to be established, which became one form of the development of the capitalist system.

At that time, European commercial banking could carry out trading transactions, whether it was private goods or capital (land and human) to produce a finished product. However, to produce a finished product, raw materials and tools or machines were needed.

This is what then gave rise to what is called labor. Where a worker can process these raw materials with machines or tools owned by the capital owners to produce finished goods. Then citing from katadata.co.id, according to the book Capitalism: A Brief Introduction, capitalism emerged in 18th century England.

The emergence of capitalism is none other than causing an increase in production in the industrial sector, causing the market demand to be quite high. Therefore, many people started looking for jobs in the industrial sector to earn money and meet the production needs of capital owners. Thus, profits will also be obtained. That's a brief history of capitalism that needs to be known.

4. Characteristics of Capitalism

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There are several characteristics of capitalism that you need to know. These characteristics can help you recognize what the capitalist system is like. Let's check out below what the characteristics of capitalism are.

- Focusing on self-interest to gain as much profit as possible.

- Guarantee of individual property rights.

- Having full freedom to control their economic activities.

- Free competition.

- The existence of a pricing system according to supply and demand.

5. Advantages and Disadvantages of Capitalism

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Meanwhile, there are several advantages and disadvantages of capitalism. After understanding the meaning of capitalism, it is also important to learn about its advantages and disadvantages. Here are the reviews of the advantages and disadvantages of capitalism.

Advantages of Capitalism:

- For capitalists, they can compete to get the best prices for the goods and services offered.

- Encourages product innovation.

- Business competition benefits consumers because of price competition from capitalists.

- Production costs are minimized to achieve optimal profits and efficiency.

- Encourages everyone to become entrepreneurs in starting their own businesses.

Disadvantages of Capitalism:

- Business monopolies can occur due to uneven distribution of capital.

- Worker welfare may not be guaranteed because profit is the main priority.

- It can trigger the use of large amounts of raw materials which can potentially exploit nature for big profits.

- Inequality due to private ownership.

From the explanation above, you must have understood what capitalism is, along with its characteristics, advantages, and disadvantages. With this, you can differentiate capitalism from other systems, such as socialism or liberalism.

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