The Dynamics of Capitalism

In this chapter, capitalism is viewed as the set of economic relationships that emerged with the rise of the industrial or factory system during the 18th Century. To be sure, there were earlier precedents--e.g., the commercial ventures, local and international, of Venetian and Florentine businessmen during the Renaissance. But here we focus on production in privately owned, often capital-intensive, facilities embodying ever more advanced technologies--a phenomenon whose origins are commonly characterized as the Industrial Revolution. The Industrial Revolution set in motion dynamic forces that will be our primary concern here. Most important among them are technological advances that propelled accelerated economic growth, changes in the structure of enterprise ownership and in the distribution of income among workers and owners, and a tendency toward more or less cyclical fluctuations in economic activity. These will be the "dynamics" on which this essay focuses.