When examining the effects and attributes of capitalism as a whole, it is necessary to understand that not all capitalism is created equal. There are many different types of capitalism, which all have their differences that make their particular brand of society unique. There are several major forms of capitalism: mercantilism, free-market capitalism, social market economy, state capitalism, and corporate capitalism, all working toward the idea that societies run on the exchange of goods and services.
Mercantilism is one of the earliest forms of capitalism, and is mostly identified by the give and take of trade between nations (Aizenman 2012, p. 1). This type of capitalism intrinsically ties private enterprise with the will of a state, making their interests mutual. For example, The Opium War between China and England in the 18th century stemmed from English mercantilists importing goods from China while limiting exports (Aizeman 2012, p. 3). The colonies were effectively used as an economic resources for the host country, and this is how private industry is treated in a mercantilist state.
Free-market capitalism is the most popular and well-known kind of capitalism, also sometimes known as laissez faire capitalism (Ayal 1998, p. 327). In the free market, governments play a smaller part in running the economy, instead allowing private enterprise to determine supply and demand. This type of capitalism is much more competitive and autonomous, allowing private companies to behave on their own recognizance with little oversight by governmental entities (Ayal 1998, p. 329). While the United States and other countries ostensibly run on the free market, governmental regulation is much too rigid for it to be a strictly free-market system. Instead, it is a social-market economy, in which the free-market system is supplemented by the state offering peripheral social services that benefit the worker. These often include social security, labor rights legislation and unemployment benefits (Kippstein & Lichbach 2005, p. 29). This is meant to address some of the more blatant problems with a free-market economy, including a lack of competition and the threat of monopolizing.
In conclusion, there are five major types of capitalism which make up the spectrum of the capitalist system. They all largely fall upon the idea that societies are run by the exchange of goods and services, but each type varies in its approach to governmental regulation. Mercantilism is essentially an economy that works for a country; free-market capitalism and its varieties walk along the spectrum of public and private control of the marketplace. The advent of the Industrial Revolution saw an end to mercantilism, and now capitalism’s variants rest upon just how much power companies have over the state.
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