Politics and economics are closely related. Many economic trends or schools of economics define in their theories the role of the state in building the economy, also in capitalism. Capitalism has become the dominant form of economic expansion, learning about its basis and variants can give rise to many discussions.

Economic dualism

Economic dualism - otherwise known as agrarian dualism or economic dualism, is a phenomenon of the divergence of development paths of the European feudal economy from the mid-15th century. In the countries of Eastern Europe (east of the Elbe River) the farm and serf economy dominated, while in Western Europe (in the countries west of the Elbe River) the seeds of a capitalist economy appeared.

Capitalism

Capitalism it is a socio-economic system based on the division into owners of means of production (land, natural resources, production plants, etc.) and workers. Profit-oriented production is based on combining the means of the capitalist class with the labor power of workers who do not own any means of production. In this mode of production, mercenaries are theoretically free to dispose of their goods, but in practice they are forced to sell them because it is the only way to ensure their livelihood. Capitalists monopolizing the means of production, on the other hand, created a separate social class which, using its advantage, appropriates the produced good and sells it at a price higher than the sum of the means of production and labor costs. As a result, the workers receive a wage for their work much lower than the value of what they produced, and any surplus stays in the hands of the capitalists. The conflict of interests of classes leads to a growing social conflict, and as a result - to class struggle.

The capitalist class and the labor force

Initially, the gap between the capitalist class and the working class was enormous. Workers; deprived of all rights; often they did not receive a living wage for their work. This has led to movements demanding a fair distribution. The result of these activities was the formation of many trade unions.

Capitalism through the eyes of economists

Adam Smith

For Smith, the capitalist system was perfect, harmonious, man-oriented. He believed that such an economy enables the state to develop rapidly while ensuring freedom for its citizens.

Karl Marx

Unlike Adam Smith, he sees many internal contradictions in capitalism, he strongly criticized capitalism for its demoralizing influence on society.

John Maynard Keynes

John Maynard Keynes, hailed as the greatest economist of the 20th century, pointed out the weaknesses of the capitalist system. According to him, while at the beginning of the era of capitalism, saving was beneficial, as it was aimed at collecting funds for later investments, with the development of the system, saving and investing became separate issues. Nowadays, an entrepreneur invests other people's money, which in effect means that if people are cautious about spending money, it will directly affect the activity of investors, who will wait for a better time to invest. In the longer term, such a reduction in economic liquidity leads to depression and crisis. Keynes argues that the solution to the problem is to eliminate unemployment - public works, that is, to allow the government to manage the economy.

Varieties of capitalism

State capitalism

It is a way of conducting economic policy in which the state intervenes in the basic areas of the economy and focuses on developing the state sector.

Collective capitalism

People's capitalism (in other words, collective capitalism) is a view that the totality of transformations of ownership relations in the economy, such as the creation of joint-stock companies, bonds, separation of power from ownership, and the development of technology, lead to the emergence of a branch of capitalism; one in which capital is dispersed, which deprives the capitalist of economic advantage and leads to the disappearance of the main cause of the capitalist-worker conflict.

Source: Bartkowiak, R. (2010). WspóÅ‚czesne teorie ekonomiczne, Heywood A. (2007). Political ideologies. An Introduction