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Capitalism is the economic and political system in which a country’s trade and industry are controlled by private owners; these owners are the capitalists, using their own proclaimed wealth to propel the investment of further wealth. The word capitalism comes from the word “capital” meaning something of value, generally, but not necessarily money. “Capital” originates from the Latin word caput, meaning “head”, which was used to mean how many head of cattle a wealthy person owned. Economics surrounding this subject are neither uniform nor complete, but throughout this essay the origin and development is visible. The French Revolution to overthrow feudalism, the Industrial Revolution that pushed and advanced capitalism globally and the underlining affects all these events had on Australia is stated throughout the following paragraphs.
Before capitalism the world ran off a certain economic system called feudalism. In a way the system is similar to capitalism. Celine from Differencebetween.net writes that even renowned economists such as Karl Marx could recognise the association between the two constitutions, such as in both structures, the power of the dominant class is based on the manipulation of the subordinate class. In other words the wealthy (the noble) were powerful families owning all the land in the country, therefore dictating who leased it, similar to how capitalist are able to dictate who gets the money. However in feudalism you are born into wealth and power, whereas capitalism you progress to power no matter what your social status was before you gained the wealth. So the kings, queens, barons and Lords weren’t the capitalists in those times, the capitalists were the merchants.
The Industrial Revolution was one of the first big steps for capitalism. Phyllis Deane, in The First Industrial Revolution, begins to incorporate the role of capital in a developing economy by contrasting the differences between a pre-industrial and an industrial society. An industrialized society is where more is produced with the same amount of effort and time as a pre-industrialized society. There was a huge creation of labour forces and factory manufacturing; the wealthy individuals could only afford to set up their factory, and pay wages to their employees. Here path of the economic system of capitalism was paved. The company and factory owners acquired the wealth from the production and sells, while the proletarians saw little of the profit the capitalist was achieving. The Industrial Revolution was an extremely important event for capitalism and quite possibly the biggest, it also affected the public in a way the great social and economic divide between the wealthy owners and the poor workers became and the economic theory of socialism arose. The people had begun to believe that society as a whole should control the means of production, therefore industrial capitalism was introduced, the first system to benefit all levels of society, rather than just the noble class. Wages increased, helped tremendously by the formation of unions (such as the American Federation of Labour) and the standard of living also increased with the affordable products being mass-produced. The middle and upper class gained the ability to swell their ranks. The greater availability and existence of capital flourished production, opening more resources and taking its effect on the revolution.
All over the world, capitalism grew beyond pure industrial capitalism into forms more palatable to the region it settled. The U.S. raised one of the purest types of capitalism with a minimum of government regulation, while Canada and the Nordic countries created a balance between socialism and capitalism. Australia has multiple perspectives of capitalism in the country; an article in Australian Financial Review from late 2011 raised the question “Have Australians become the spoilt children of the world’s economy?” Australia has opened its’ economy to vast