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How is capitalism differentiated from other forms of market economies?

+2 votes
Markets have existed for thousands of years, but capitalism is said to be a fairly recent type of economy. What sets capitalism apart from trade/mercantilism? Or are all market economies essentially the same?

I've searched for similar questions about the defining aspects of capitalism but haven't found a very satisfying answer
asked Jan 27 by anonymous

3 Answers

+1 vote
interesting question. not one i feel especially studied up on or anything. but in the interest of getting the conversation started, i would begin by saying that among other things it's an issue of scale. also, capitalism has to keep expanding, which markets-as-markets do not.

someone recently suggested that capitalism could be used instead of spectacle in places in Society of the Spectacle (specifically that it is about valuing people less than commodities, iirc), which is also an interesting direction to go in.
answered Jan 27 by dot (52,800 points)
–1 vote

Well, for starters, one difference is mercantilism was more or less an economic policy, of a state while capitalism is economic system. I'd say that'd be one of the major differences between the two. I guess, it's kinda like comparing apples to oranges in ways.

In mercantilism, they believed that wealth in the world was in a way fixed, so the state would try to accumulate as much wealth as they could by doing stuff like exporting expensive goods, while importing cheap materials to make said expensive goods. The state would also establish a lot of tariffs to deter  or extinguish competition from other countries. Another aspect of mercantilism was the view that it wasn't enough to have the biggest military for the state's own security, but they also needed to have economic security, which in turn would make the state all the more powerful and secure.

Capitalism is just that industry and businesses are privately owned. That would be the defining aspect of capitalism to me. Mercantilism wasn't much involved in who owned what per se. Capitalism is more concerned with the creation of wealth and capital and private ownership. Trade itself is just the exchange of goods and/or services with or without the intention of profit. Like bartering is a good example of trade without the intention of profiting. Not all market economies are the same, but currently they're all rooted in capitalism.

There are theories of market economies based on socialism, but I don't think any of them have been put into practice or if they have haven't lasted long. There's another one based on christianity, but I forgot the name of it. I'll try to remember what it's called. That's all I got

answered Jan 28 by Zubaz (4,120 points)
+1 vote
I think the only satisfying answer is in Marx's mature social theory. He thinks that the fundamental thing which differentiates capital from previous social forms is that capital involves a historically specific form of wealth, which he calls value.

In capitalism, not only are there markets, but the exchange that happens in capitalist markets depends on the principle that the thing I am exchanging has (or rather "is") both a "use-value" and an "exchange-value," which are invisibly in contradiction with one another. Its value in exchange is determined by the average socially necessary labor time required for its production, whereas its use-value has to do with its physical qualities. In capitalist society, absolutely everything has an exchange-value and therefore a price, so absolutely everything can be exchanged for.

The result is that -- whereas previous forms of society might distinguish between, on the one hand, things that existed to be admired, to mediate relations between people, to indicate status, (often these are the things you can't buy or sell) and on the other hand things that existed to be used, (which you could) -- capitalism makes this distinction untenable. Every use turns out to itself be a mediation and every mediation a kind of use.

According to Marx this has immense consequences, and his book Capital is basically an attempt to show that it's ultimately because of this double character of commodities (the coexistence of use- and exchange-value) that capital is (or rather "has") a dynamic/logic. Very simply, this is because though people think of themselves as "using" things in capitalism, the "reason" things are made is because their value in exchange is the way invested capital is realized. Firms are compelled to revolutionize their production process making it more efficient by reducing the amount of labor required, which temporarily makes them more profits -- only the long term result is that  other firms must do the same, ultimately lowering the rate of profit. (Since, as we said, exchange-value is a function of average socially necessary labor time). Ultimately, this means that capital is constantly searching for new markets in which it can realize itself, "breaking its local bonds," as Marx puts it.

So capitalism is "dynamic" in the sense that it's compelled by its own logic to blindly expand in every direction, not to get more stuff, as older societies sometimes did, but to get rid of it, by opening new markets that might match the absurd excess of commodities it is constantly producing.
answered Jan 30 by asker (8,200 points)
edited Jan 31 by asker