How many types of capitalism are there


Capitalist diversity of forms

What is capitalism It all depends on who you ask. Since the term was coined, many theorists have tried to define it - with widely differing results. In addition, there is basically no such thing as capitalism in its pure form. He evolves and changes; there are different temporal phases and different characteristics.

Anglo-Saxon capitalism in North America is different from that in Europe. And in Europe there are again different forms, for example the German one called "Rhenish Capitalism". A completely different variety has been emerging in China, Brazil and India for several years: so-called state capitalism.

Important basics

Basically, capitalism is not simply about money, nor is it simply about trade or markets. All of this has been around for a very long time. Rather, capitalism is a whole economic and social order that has certain characteristics and needs them in order to function.

The focus is on growth. Use of technology and investments ensure that more and more goods and services can be produced. Most of the money invested, as well as factories and machines, are privately owned.

The economy, in which large corporations have a dominant position, is controlled decentrally and via the market. The state only intervenes when it is necessary - for example when it comes to social issues or competition law.

Good wages and strong unions enforcing them are also an important pillar without which the capitalism system cannot function. This is important because the employees must also benefit. Without them there would be no markets for goods.

The genesis

When capitalism emerged in northern England around the middle to the end of the 18th century, it went completely unnoticed. One of the prerequisites for it to thrive was the high wage level of the workers. It ensured that England was no longer competitive internationally with its textiles. For the first time, it was now worthwhile to use expensive technology to become more productive and to outperform foreign competition.

New techniques such as the mechanical loom, the mechanical spinning machine and the steam engine made this development possible. In addition, there were investments in the infrastructure - in the newly emerging railway network and in the expansion of canals and roads.

First crises

The economy grew and yet there was an imbalance in England: the broad mass of workers became poorer and poorer. The reason for this was the lack of an important pillar of capitalism: the trade unions as representatives of the workers.

It was only when they were founded and when they stood up for the workers that the working people also benefited, that the standard of living rose and, at the same time, the economy was further boosted.

Capitalism experienced its worst crisis in 1929: On October 24th, "Black Thursday", the world economic crisis in the USA began with the stock market crash.

This was preceded by years of rising productivity and profits, while wages in the US tended to stagnate. As a result, the sales market shrank and the entrepreneurs were literally sitting on their money.

In addition to the problem of too low wages, there was now a second: The owners of capital began to speculate and to increase their money more or less uncontrollably on the financial market until the house of cards of fictitious winnings and speculation collapsed.

A worldwide economic crisis lasting several years was the result. Even then it became clear that capitalism is dependent on a strong state and regulations in some areas.

What's next?

Capitalism survived the crisis - and was more strictly regulated for many decades. With the disappearance of the "competitor" communism at the end of the 1980s, however, the situation changed again. Formerly socialist states like Russia and China turned to the free market economy.

The capitalist states of the West rely on deregulation to remove obstacles to growth. A new phase began: that of so-called "turbo-capitalism".

And while dream sums are being earned in the financial markets, the real economy is treading on the spot, wages remain low and the gap between rich and poor is widening.

There have been global crises twice since the turn of the millennium, once triggered by the so-called "dot-com bubble" in 2000, the collapse of the market for new technology companies. And again in 2007 after the so-called "real estate bubble" burst in the USA.

And in the future? There are many proposals around the world when it comes to preventing future financial crises and organizing economic growth in an environmentally and socially acceptable manner. However, there is no patent recipe (yet).