Debate Magazine

Captialism Explained

Posted on the 19 October 2011 by Mikeb302000
Actually, capital can refer to a lot of things, but I agree with Marx that it basically refers to investment. That is it is used to buy something only in order to sell it again to realize a financial profit, and for Marx capital only exists within the process of economic exchange—it is wealth that grows out of the process of circulation itself and forms the basis of the economic system of capitalism.
In other words, capital is basically money used for investment. In other words, it is Financial capital, which represents obligations, and is liquidated as money for trade, and owned by legal entities. It is in the form of capital assets, traded in financial markets. Its market value is not based on the historical accumulation of money invested but on the perception by the market of its expected revenues and of the risk entailed.
Hence, it creates an obligation, debt.
Your investment in my factory means I am indebted to you based upon your share of investment. That also applies in the case of a privately held corporation where the liability is shared, which is a major reason for incorporation.
Investment, or capital accumulation, in classical economic theory, is the production of increased capital. Investment requires that some goods be produced that are not immediately consumed, but instead used to produce other goods as a means of production. Investment is closely related to saving, though it is not the same. As Keynes pointed out, saving involves not spending all of one's income on current goods or services, while investment refers to spending on a specific type of goods, i.e., capital goods.
Capitalism is an economic system in which the means of production are privately owned and operated for profit from investment, usually in competitive markets. That is the means of production are owned for the benefit of the owner/shareholder. The system requires that there are winners and losers: debtors and creditors.
There are some who believe that Marxism would make the owner/shareholders not just the bosses, but those who work in the factory. Kind of a popular capitalism, where the investment of labor counts as much as the investment of money. Workers are given more of a voice under this system than being seen as capital in the form of labor cost.
Many religions have criticized, or opposed, specific elements of capitalism. Traditional Judaism, Christianity, and Islam forbid lending money at interest, although alternative methods of banking have been developed. Some Christians have criticized capitalism for its materialist aspects and its inability to account for the wellbeing of all people.
Recent criticism of Capitalism relates to the late-2000s financial crisis, as seen in the Occupy Wall Street movement in the Autumn of 2011. While the movement has not formalised its criticism of capitalism or demands for reforms, political scholars have, nevertheless, begun to identify common themes such as objections to the "ruling economic class", or "the richest 1%", having undue influence on government policies and that this situation reflects a "failure of democratic representation" for the middle and lower classes, or the "other 99%".
The real effect of the Occupy Wall Street Movement is that it is raising awareness and opening up the discussion about the economic system. How does it function and who benefits.

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