Capitalsim History Essay Research Paper CapitalismCapitalism is

Adam Smith, the man who ushered in modern capitalism, attacked the idea of mercantilism. Smith believed in a natural economic order, or one with limited government regulation. Smith also felt the division of labor was important. He thought it was, ?The extension of markets almost limitless possibilities for society to expand and trade.? (Heilbroner2 143) Another key step toward modern capitalism was the Industrial Revolution. This was when mechanical power took over the place of animal power in the production of goods and services. In effect, production became more specialized and concentrated in larger units known as factories. (Heilbroner1 152)

When the Industrial Revolution took full swing in the United States, the government adopted Laissez-Faire Capitalism. This meant that the idea of government regulation of business was alien to the prevailing economic beliefs of capitalism. Quite simply the government left business alone and a business either made it or it did not. Adam Smith said, ?Businesses should be regulated, not by the government, but by the invisible hand of the law of supply and demand.? (Newman 339) The theory was, if government kept their hands off, businesses would be motivated by their own self interests to offer improved goods and services at low prices. This basically meant only the ?fit? would survive in the economy. That is exactly what happened and the monopolistic trusts began to rise, which decreased the competition needed for natural regulation. Anti-trust laws were eventually passed and allowed for the restoration of the competition in the market. (Newman 342)

During the twentieth century wars, revolution, and depression have buffeted capitalism. The greatest challenge to face capitalism came in the late 1920?s to the 1930?s during the Great Depression. The Great depression was caused by many reasons, mainly over speculation of the stock market. President Franklin D. Roosevelt restructured the financial system with his New Deal so as to prevent a repeat of the excess speculation that had led to the financial collapse in 1929. Action was taken to encourage collective bargaining and build a strong labor movement in order to offset the concentration of economic power in large industrial corporations. Also modern welfare was introduced through social security and unemployment insurance. These were measures that were designed to protect people from the dangers of a capitalist system. (Newman 492) The New Deal is an example of a capitalist system?s remarkable ability to survive and adapt to change. Also the New Deal is an example of how some government regulation can be beneficial to a capitalist system.

Today in the year 2000, capitalism is still the dominant economic system. The question for the future is will Global Capitalization take place and more importantly will it succeed? Global Capitalization is the rise of market capitalism around the world. It incorporates a free market system throughout the world with no economic boundaries. However the question remains how can this be done efficiently and erase all of the current problems? One of these problems for example could be an American company building a factory in Africa and globalize. However the problem could be that the American company is doing business in Africa because there may be certain regulations such as environmental laws in the U.S. that do not exist elsewhere. For Global Capitalism to move into the next stage will require a much more sophisticated look at the costs and benefits of open markets. (Engardio 72-76) Only the future may decide where capitalism is heading, but if the past is any indication, capitalism will correct itself where needed and succeed.