History of technology
The history of technology is the history of the invention of tools and techniques and is one of the categories of the history of humanity. Technology can refer to methods ranging from as simple as stone tools to the complex genetic engineering and information technology that has emerged since the 1980s; the term technology comes from the Greek word techne, meaning art and craft, the word logos, meaning word and speech. It was first used to describe applied arts, but it is now used to described advancements and changes which affect the environment around us. New knowledge has enabled people to create new things, conversely, many scientific endeavors are made possible by technologies which assist humans in traveling to places they could not reach, by scientific instruments by which we study nature in more detail than our natural senses allow. Since much of technology is applied science, technical history is connected to the history of science. Since technology uses resources, technical history is connected to economic history.
From those resources, technology produces other resources, including technological artifacts used in everyday life. Technological change affects and is affected by, a society's cultural traditions, it is a force for economic growth and a means to develop and project economic, military power and wealth. Many sociologists and anthropologists have created social theories dealing with social and cultural evolution. Some, like Lewis H. Morgan, Leslie White, Gerhard Lenski have declared technological progress to be the primary factor driving the development of human civilization. Morgan's concept of three major stages of social evolution can be divided by technological milestones, such as fire. White argued. For White, "the primary function of culture" is to "harness and control energy." White differentiates between five stages of human development: In the first, people use the energy of their own muscles. In the second, they use the energy of domesticated animals. In the third, they use the energy of plants.
In the fourth, they learn to use the energy of natural resources: coal, gas. In the fifth, they harness nuclear energy. White introduced a formula P=E*T, where E is a measure of energy consumed, T is the measure of the efficiency of technical factors using the energy. In his own words, "culture evolves as the amount of energy harnessed per capita per year is increased, or as the efficiency of the instrumental means of putting the energy to work is increased". Nikolai Kardashev extrapolated his theory, creating the Kardashev scale, which categorizes the energy use of advanced civilizations. Lenski's approach focuses on information; the more information and knowledge a given society has, the more advanced. He identifies four stages of human development, based on advances in the history of communication. In the first stage, information is passed by genes. In the second, when humans gain sentience, they can pass information through experience. In the third, the humans start develop logic. In the fourth, they can develop language and writing.
Advancements in communications technology translate into advancements in the economic system and political system, distribution of wealth, social inequality and other spheres of social life. He differentiates societies based on their level of technology and economy: hunter-gatherer, simple agricultural, advanced agricultural, special. In economics, productivity is a measure of technological progress. Productivity increases. Another indicator of technological progress is the development of new products and services, necessary to offset unemployment that would otherwise result as labor inputs are reduced. In developed countries productivity growth has been slowing since the late 1970s. For example, employment in manufacturing in the United States declined from over 30% in the 1940s to just over 10% 70 years later. Similar changes occurred in other developed countries; this stage is referred to as post-industrial. In the late 1970s sociologists and anthropologists like Alvin Toffler, Daniel Bell and John Naisbitt have approached the theories of post-industrial societies, arguing that the current era of industrial society is coming to an end, services and information are becoming more important than industry and goods.
Some extreme visions of the post-industrial society in fiction, are strikingly similar to the visions of near and post-Singularity societies. The following is a summary of the history of technology by time period and geography: During most of the Paleolithic – the bulk of the Stone Age – all humans had a lifestyle which involved limited tools and few permanent settlements; the first major technologies were tied to survival and food preparation. Stone tools and weapons and clothing were technological developments of major importance during this period. Human ancestors have been using stone and other tools since long before the emergence of Homo sapiens 200,000 years ago; the earliest methods of stone tool making, known as the Oldowan "industry", date back to at least 2.3 million years ago, with the earliest direct evidence of tool usage found in Ethiopia within the Great Rift Valley, dating back to 2.5 million years ago. This era of stone tool use is called the Paleolithic
Environmental degradation is the deterioration of the environment through depletion of resources such as air and soil. It is defined as any change or disturbance to the environment perceived to be deleterious or undesirable; as indicated by the I=PAT equation, environmental impact or degradation is caused by the combination of an very large and increasing human population, continually increasing economic growth or per capita affluence, the application of resource-depleting and polluting technology. Environmental degradation is one of the ten threats cautioned by the High-level Panel on Threats and Change of the United Nations; the United Nations International Strategy for Disaster Reduction defines environmental degradation as "the reduction of the capacity of the environment to meet social and ecological objectives, needs". Environmental degradation comes in many types; when natural habitats are destroyed or natural resources are depleted, the environment is degraded. Efforts to counteract this problem include environmental protection and environmental resources management.
One major component of environmental degradation is the depletion of the resource of fresh water on Earth. Only 2.5g% of all of the water on Earth is fresh water, with the rest being salt water. 69% of fresh water is frozen in ice caps located on Antarctica and Greenland, so only 30% of the 2.5% of fresh water is available for consumption. Fresh water is an exceptionally important resource, since life on Earth is dependent on it. Water transports nutrients and chemicals within the biosphere to all forms of life, sustains both plants and animals, moulds the surface of the Earth with transportation and deposition of materials; the current top three uses of fresh water account for 95% of its consumption. It is estimated that one in three people over the entire globe are facing water shortages one-fifth of the world population live in areas of physical water scarcity, one quarter of the world's population live in a developing country that lacks the necessary infrastructure to use water from available rivers and aquifers.
Water scarcity is an increasing problem due to many foreseen issues in the future including population growth, increased urbanization, higher standards of living, climate change. Climate change affects the Earth's water supply in a large number of ways, it is predicted that the mean global temperature will rise in the coming years due to a number of forces affecting the climate. The amount of atmospheric carbon dioxide will rise, both of these will influence water resources. Transpiration from plants can be affected by a rise in atmospheric CO2, which can decrease their use of water, but can raise their use of water from possible increases of leaf area. Temperature rise can reduce the snow season in the winter and increase the intensity of the melting snow leading to peak runoff of this, affecting soil moisture and drought risks, storage capacities depending on the area. Warmer winter temperatures cause a decrease in snowpack, which can result in diminished water resources during summer; this is important at mid-latitudes and in mountain regions that depend on glacial runoff to replenish their river systems and groundwater supplies, making these areas vulnerable to water shortages over time.
Thermal expansion of water and increased melting of oceanic glaciers from an increase in temperature gives way to a rise in sea level. This can affect the fresh water supply to coastal areas as well; as river mouths and deltas with higher salinity get pushed further inland, an intrusion of saltwater results in an increase of salinity in reservoirs and aquifers. Sea-level rise may consequently be caused by a depletion of groundwater, as climate change can affect the hydrologic cycle in a number of ways. Uneven distributions of increased temperatures and increased precipitation around the globe results in water surpluses and deficits, but a global decrease in groundwater suggests a rise in sea level after meltwater and thermal expansion were accounted for, which can provide a positive feedback to the problems sea-level rise causes to fresh-water supply. A rise in air temperature results in a rise in water temperature, very significant in water degradation as the water would become more susceptible to bacterial growth.
An increase in water temperature can affect ecosystems because of a species' sensitivity to temperature, by inducing changes in a body of water's self-purification system from decreased amounts of dissolved oxygen in the water due to rises in temperature. A rise in global temperatures is predicted to correlate with an increase in global precipitation but because of increased runoff, increased rates of soil erosion, mass movement of land, a decline in water quality is probable, because while water will carry more nutrients it will carry more contaminants. While
Thomas Robert Malthus
Thomas Robert Malthus was an English cleric and scholar, influential in the fields of political economy and demography. Malthus himself used only Robert. In his 1798 book An Essay on the Principle of Population, Malthus observed that an increase in a nation's food production improved the well-being of the populace, but the improvement was temporary because it led to population growth, which in turn restored the original per capita production level. In other words, mankind had a propensity to utilize abundance for population growth rather than for maintaining a high standard of living, a view that has become known as the "Malthusian trap" or the "Malthusian spectre". Populations had a tendency to grow until the lower class suffered hardship and greater susceptibility to famine and disease, a view, sometimes referred to as a Malthusian catastrophe. Malthus wrote in opposition to the popular view in 18th-century Europe that saw society as improving and in principle as perfectible, he saw population growth as being inevitable whenever conditions improved, thereby precluding real progress towards a utopian society: "The power of population is indefinitely greater than the power in the earth to produce subsistence for man".
As an Anglican cleric, Malthus saw this situation as divinely imposed to teach virtuous behaviour. Malthus wrote: That the increase of population is limited by the means of subsistence,That population does invariably increase when the means of subsistence increase, and,That the superior power of population is repressed by moral restraint and misery. Malthus criticized the Poor Laws for leading to inflation rather than improving the well-being of the poor, he supported taxes on grain imports, because food security was more important than maximizing wealth. His views became influential, controversial, across economic, political and scientific thought. Pioneers of evolutionary biology read him, notably Alfred Russel Wallace, he remains a much-debated writer. The sixth child of Henrietta Catherine and Daniel Malthus, Robert Malthus grew up in The Rookery, a country house in Westcott, near Dorking in Surrey. Thomas was bullied from webbed feet; this sparked his controversial ideas about eugenics. Petersen describes Daniel Malthus as "a gentleman of good family and independent means... a friend of David Hume and Jean-Jacques Rousseau".
The young Malthus received his education at home in Bramcote, at the Warrington Academy from 1782. Warrington was a dissenting academy, which closed in 1783. Malthus entered Jesus College, Cambridge in 1784. While there he took prizes in English declamation and Greek, graduated with honours, Ninth Wrangler in mathematics, his tutor was William Frend. He took the MA degree in 1791, was elected a Fellow of Jesus College two years later. In 1789, he took orders in the Church of England, became a curate at Oakwood Chapel in the parish of Wotton, Surrey. Malthus came to prominence for his 1798 essay on population growth. In it, he argued that population multiplies food arithmetically. Between 1798 and 1826 he published six editions of An Essay on the Principle of Population, updating each edition to incorporate new material, to address criticism, to convey changes in his own perspectives on the subject, he wrote the original text in reaction to the optimism of his father and his father's associates regarding the future improvement of society.
Malthus constructed his case as a specific response to writings of William Godwin and of the Marquis de Condorcet. The Essay gave rise to the Malthusian controversy during the next decades; the content saw an emphasis on marriage rates. The neo-Malthusian controversy, or related debates of many years has seen a similar central role assigned to the numbers of children born. In 1799 Malthus made a European tour with William Otter, a close college friend, travelling part of the way with Edward Daniel Clarke and John Marten Cripps, visiting Germany and Russia. Malthus used the trip to gather population data. Otter wrote a Memoir of Malthus for the second edition of his Principles of Political Economy. During the Peace of Amiens of 1802 he travelled to France and Switzerland, in a party that included his relation and future wife Harriet. In 1803 he became rector of Lincolnshire. In 1805 Malthus became Professor of History and Political Economy at the East India Company College in Hertfordshire, his students affectionately referred to him as "Population", or "web-toe" Malthus.
At the end of 1817 the proposed appointment of Graves Champney Haughton to the College was made a pretext by Randle Jackson and Joseph Hume to launch an attempt to close it down. Malthus wrote a pamphlet defending the College, reprieved by the East India Company in 1817. In 1818 Malthus became a Fellow of the Royal Society. During the 1820s there took place a setpiece intellectual discussion within the proponents of political economy called the "Malthus–Ricardo debate", after the leading figures of Malthus and David Ricardo, a theorist of free trade, both of whom had written books with the title Principles of Political Economy. Under examination were the nature and methods of political economy itself, while it was under attack from others; the roots of the debate were in the previous decade. In The Nature of Rent, Malthus had dealt wit
There ain't no such thing as a free lunch
"There ain't no such thing as a free lunch" is a popular adage communicating the idea that it is impossible to get something for nothing. The acronyms TANSTAAFL, TINSTAAFL, TNSTAAFL are used; the phrase was in use by the 1930s. The "free lunch" in the saying refers to the nineteenth-century practice in American bars of offering a "free lunch" in order to entice drinking customers; the phrase and the acronym are central to Robert Heinlein's 1966 science-fiction novel The Moon Is a Harsh Mistress, which helped popularize it. The free-market economist Milton Friedman increased its exposure and use by paraphrasing it as the title of a 1975 book, it is used in economics literature to describe opportunity cost. Campbell McConnell writes that the idea is "at the core of economics"; the "free lunch" refers to the once-common tradition of saloons in the United States providing a "free" lunch to patrons who had purchased at least one drink. Many foods on offer were high in salt, so those. Rudyard Kipling, writing in 1891, noted how he...came upon a bar-room full of bad Salon pictures, in which men with hats on the backs of their heads were wolfing food from a counter.
It was the institution of the "free lunch". You got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco though he be a bankrupt. Remember this if you are stranded in these parts. TANSTAAFL, on the other hand, indicates an acknowledgement that in reality a person or a society cannot get "something for nothing". If something appears to be free, there is always a cost to the person or to society as a whole, although that may be a hidden cost or an externality. For example, as Heinlein has one of his characters point out, a bar offering a free lunch will charge more for its drinks. According to Robert Caro, Fiorello La Guardia, on becoming mayor of New York in 1933, said "È finita la cuccagna!", meaning "Cockaigne is finished" or, more loosely, "No more free lunch". The earliest known occurrence of the full phrase, in the form "There ain't no such thing as free lunch", appears as the punchline of a joke related in an article in the El Paso Herald-Post of June 27, 1938, entitled "Economics in Eight Words".
In 1945, "There ain't no such thing as a free lunch" appeared in the Columbia Law Review, "there is no free lunch" appeared in a 1942 article in the Oelwein Daily Register and in a 1947 column by economist Merryle S. Rukeyser. In 1949, the phrase appeared in an article by Walter Morrow in the San Francisco News and in Pierre Dos Utt's monograph TANSTAAFL: A Plan for a New Economic World Order, which describes an oligarchic political system based on his conclusions from "no free lunch" principles; the 1938 and 1949 sources use the phrase in relating a fable about a king seeking advice from his economic advisors. Morrow's retelling, which claims to derive from an earlier editorial reported to be non-existent, but follows the story as related in the earlier article in the El Paso Herald-Post, differs from Dos Utt's in that the ruler asks for ever-simplified advice following their original "eighty-seven volumes of six hundred pages" as opposed to a simple failure to agree on "any major remedy".
The last surviving economist advises that "There ain't no such thing as free lunch." In 1950, a New York Times columnist ascribed the phrase to economist Leonard P. Ayres of the Cleveland Trust Company: "It seems that shortly before the General's death... a group of reporters approached the general with the request that he might give them one of several immutable economic truisms that he had gathered from his long years of economic study...'It is an immutable economic fact,' said the general,'that there is no such thing as a free lunch.'"The September 8, 1961, issue of LIFE magazine has an editorial on page 4, "'TANSTAFL,' It's the Truth," that closes with an anecdotal farmer explaining this slight variant of TANSTAAFL. In 1966, author Robert A. Heinlein published his novel The Moon Is a Harsh Mistress, in which TANSTAAFL was a central, libertarian theme, mentioned by name and explained; this increased its use in the mainstream. Edwin G. Dolan used the phrase as the title of his 1971 book TANSTAAFL – A Libertarian Perspective on Environmental Policy.
ScienceIn the sciences, TANSTAAFL means that the universe as a whole is a closed system. There is no source of matter, energy, or light that draws resources from something else which will not be exhausted. Therefore, the TANSTAAFL argument may be applied to natural physical processes in a closed system; the bio-ecologist Barry Commoner used this concept as the last of his famous "Four Laws of Ecology". According to American theoretical physicist and cosmologist Alan Guth "the universe is the ultimate free lunch", given that in the early stage of its expansion the total amount of energy available to make particles was large. EconomicsIn economics, TANSTAAFL demonstrates opportunity cost. Greg Mankiw described the concept as follows: "To get one thing that we like, we have to give up another thing that we like. Making decisions requires trading off one goal
In economics, competition is a condition where different economic firms seek to obtain a share of a limited good by varying the elements of the marketing mix: price, product and place. In classical economic thought, competition causes commercial firms to develop new products and technologies, which would give consumers greater selection and better products; the greater selection causes lower prices for the products, compared to what the price would be if there was no competition or little competition. Early economic research focused on the difference between price- and non-price-based competition, while economic theory has focused on the many-seller limit of general equilibrium. Competition is accepted as an essential component of markets, results from scarcity—there is never enough to satisfy all conceivable human wants—and occurs "when people strive to meet the criteria that are being used to determine who gets what." In offering goods for exchange, buyers competitively bid to purchase specific quantities of specific goods which are available, or might be available if sellers were to choose to offer such goods.
Sellers bid against other sellers in offering goods on the market, competing for the attention and exchange resources of buyers. The competitive process in a market economy exerts a sort of pressure that tends to move resources to where they are most needed, to where they can be used most efficiently for the economy as a whole. For the competitive process to work however, it is "important that prices signal costs and benefits." Where externalities occur, or monopolistic or oligopolistic conditions persist, or for the provision of certain goods such as public goods, the pressure of the competitive process is reduced. In any given market, the power structure will either be in favor of buyers; the former case is known as a seller's market. In either case, the disadvantaged group is known as price-takers and the advantaged group known as price-setters. Competition bolsters product differentiation as businesses try to innovate and entice consumers to gain a higher market share, it helps in improving the processes and productivity as businesses strive to perform better than competitors with limited resources.
The Australian economy thrives on competition. In his 1776 The Wealth of Nations, Adam Smith described it as the exercise of allocating productive resources to their most valued uses and encouraging efficiency, an explanation that found support among liberal economists opposing the monopolistic practices of mercantilism, the dominant economic philosophy of the time. Smith and other classical economists before Cournot were referring to price and non-price rivalry among producers to sell their goods on best terms by bidding of buyers, not to a large number of sellers nor to a market in final equilibrium. Microeconomic theory distinguished between perfect competition and imperfect competition, concluding that perfect competition is Pareto efficient while imperfect competition is not. Conversely, by Edgeworth's limit theorem, the addition of more firms to an imperfect market will cause the market to tend towards Pareto efficiency. Real markets are never perfect. Economists who believe that in perfect competition as a useful approximation to real markets classify markets as ranging from close-to-perfect to imperfect.
Examples of close-to-perfect markets include share and foreign exchange markets while the real estate market is an example of a imperfect market. In such markets, the theory of the second best proves that if one optimality condition in an economic model cannot be satisfied, the next-best solution can be achieved by changing other variables away from otherwise-optimal values. Within competitive markets, markets are defined by their sub-sectors, such as the "short term" / "long term", "seasonal" / "summer", or "broad" / "remainder" market. For example, in otherwise competitive market economies, a large majority of the commercial exchanges may be competitively determined by long-term contracts and therefore long-term clearing prices. In such a scenario, a “remainder market” is one where prices are determined by the small part of the market that deals with the availability of goods not cleared via long term transactions. For example, in the sugar industry, about 94-95% of the market clearing price is determined by long-term supply and purchase contracts.
The balance of the market are determined by the ad hoc demand for the remainder. In the US real estate housing market, appraisal prices can be determined by both short-term or long-term characteristics, depending on short-term supply and demand factors; this can result in large price variations for a property at one location. Competition requires the existing of multiple firms, so it duplicates fixed costs. In a small number of goods and services, the resulting cost structure means that producing enough firms to effect competition may itself be inefficient; these situations are known as natural monopolies and are publicly provided or regulated. International competition differentially affects sectors of national economies. In order to protect political supporters, governments may introduce protectionist measures such as tariffs to reduce competition. A practice is anti-competitive if it unfairly distorts free and effective competition in the marketplace. Examples include evergreening. Paid exclusivity Competition law Self-compet
Frank Albert Fetter was an American economist of the Austrian School. Fetter's treatise, The Principles of Economics, contributed to an increased American interest in the Austrian School, including the theories of Eugen von Böhm-Bawerk, Friedrich von Wieser, Ludwig von Mises and Friedrich Hayek. Fetter notably debated Alfred Marshall. Fetter's arguments have been credited with prompting mainstream economists to abandon the Georgist idea "that land is a unique factor of production and hence that there is any special need for a special theory of ground rent...." A proponent of the subjective theory of value, Fetter emphasized the importance of time preference and rebuffed Irving Fisher for abandoning the pure time preference theory of interest that Fisher had earlier espoused in his 1907 book, The Rate of Interest. Frank Fetter was born in Peru, Indiana to a Quaker family during the height of the American Civil War. Fetter proved an able student as a youth, as demonstrated by his acceptance to Indiana University in 1879 when he was only sixteen years old.
At Indiana, he joined the Phi Kappa Psi Fraternity. Fetter was on track to graduate with the class of 1883, but left college to run his family's bookstore upon news of his father's declining health. Working in the bookstore offered an opportunity for the young man to acquaint himself with some of the economic ideas that would prove formative. Chief among the intellectual influences Fetter encountered at this time was Henry George's Progress and Poverty. After eight years, Fetter returned to academia and completed his B. A. in 1891. In 1892, Jeremiah W. Jenks—who had taught Fetter at Indiana University—acquired a teaching position at Cornell University at the new President White School of History and Political Science and subsequently secured a fellowship for Fetter at that institution. Fetter completed his Master of Philosophy degree the same year. Jenks convinced Fetter to study, as Jenks himself had, under Johannes Conrad at the Sorbonne in Paris, France. Fetter earned his Ph. D. in 1894 from the University of Halle in Germany, where he wrote his doctoral dissertation, a critique of Malthusian population theory.
After earning his doctoral degree, Fetter accepted an instructorship at Cornell, but left after being offered a position as a professor at Indiana University. In 1898, Stanford University lured him away from Indiana, but Fetter resigned from Stanford three years over a dispute regarding academic freedom. After leaving Stanford in 1901, Fetter went back to Cornell, where he remained for ten years. In 1911, he again found himself in professional transition, accepting the position of chairman in an interdisciplinary department at Princeton University which incorporated history and economics. Fetter was the first chairman of Princeton University's Department of Economics and Social institutions. Despite his ideological proximity and personal rapport with eminent Austrian School economists such as Eugen von Böhm-Bawerk and Friedrich von Wieser, as well as his favorable reviews of works by Ludwig von Mises and F. A. Hayek, Fetter referred to himself, Thorstein Veblen, Herbert J. Davenport more as being members of the "American Psychological School."
The appellation "Psychological School" is now considered to be synonymous with "Austrian School."Fetter was a staunch opponent of Franklin D. Roosevelt's plan to end the gold standard and worked with other economists in lobbying against the move to a fiat currency; as some indication of Fetter's role in these efforts, In January 1933, a letter was sent to the president-elect, urging him not only to lower tariff barriers to revive international trade, but to maintain the gold standard "unflinchingly." The letter was signed by a number of prominent "traditional" economists, headed by the American "Austrian," Frank A. Fetter, of Princeton. Fetter participated in a notable debate with English economist Alfred Marshall, both through his 1904 Principles of Economics and a number of journal articles in the American Economic Association's journals and in the Quarterly Journal of Economics, he contested Marshall's position. Fetter argued that such a distinction was impractical, stating that, The notion that it is a simple matter to distinguish between the yield of natural agents and that of improvements is fanciful and confusing....
The objective classification of land and capital as natural and artificial agents is a task that always must transcend the human power of discrimination. Fetter's stand on this issue further led him to oppose Georgist ideas like the land value tax. Mark Blaug, a specialist in the history of economic thought, credits Fetter and John Bates Clark with influencing mainstream economists to abandon the idea "that land is a unique factor of production and hence that there is any special need for a special theory of ground rent.... This is in fact the basis of all the attacks on Henry George by contemporary economists and the fundamental reason why professional economists ignored him." Fetter believed in the subjective theory of value, thus supported a pure time preference theory of interest. Richard Ebeling wrote that Fetter "constructed a consistent theory of value, price and production in the context of emphasizing the time-valuational element in all consumption and production choices." According to Jeffrey Herbener, Fetter asserted that "just as the price of each consumer good is determined by subjective value, the rate of interest is determined by time preference."Likewise, Herbener explains, this led Fetter to conclude that "he rental price of each producer good is imputed to it by entrepreneurial demand a
Capitalism is an economic system based on the private ownership of the means of production and their operation for profit. Characteristics central to capitalism include private property, capital accumulation, wage labor, voluntary exchange, a price system, competitive markets. In a capitalist market economy, decision-making and investment are determined by every owner of wealth, property or production ability in financial and capital markets, whereas prices and the distribution of goods and services are determined by competition in goods and services markets. Economists, political economists and historians have adopted different perspectives in their analyses of capitalism and have recognized various forms of it in practice; these include welfare capitalism and state capitalism. Different forms of capitalism feature varying degrees of free markets, public ownership, obstacles to free competition and state-sanctioned social policies; the degree of competition in markets, the role of intervention and regulation, the scope of state ownership vary across different models of capitalism.
The extent to which different markets are free as well as the rules defining private property are matters of politics and policy. Most existing capitalist economies are mixed economies, which combine elements of free markets with state intervention and in some cases economic planning. Market economies have existed under many forms of government and in many different times and cultures. Modern capitalist societies—marked by a universalization of money-based social relations, a large and system-wide class of workers who must work for wages, a capitalist class which owns the means of production—developed in Western Europe in a process that led to the Industrial Revolution. Capitalist systems with varying degrees of direct government intervention have since become dominant in the Western world and continue to spread. Over time, capitalist countries have experienced consistent economic growth and an increase in the standard of living. Critics of capitalism argue that it establishes power in the hands of a minority capitalist class that exists through the exploitation of the majority working class and their labor.
Supporters argue that it provides better products and innovation through competition, disperses wealth to all productive people, promotes pluralism and decentralization of power, creates strong economic growth, yields productivity and prosperity that benefit society. The term "capitalist", meaning an owner of capital, appears earlier than the term "capitalism" and it dates back to the mid-17th century. "Capitalism" is derived from capital, which evolved from capitale, a late Latin word based on caput, meaning "head"—also the origin of "chattel" and "cattle" in the sense of movable property. Capitale emerged in the 12th to 13th centuries in the sense of referring to funds, stock of merchandise, sum of money or money carrying interest. By 1283, it was used in the sense of the capital assets of a trading firm and it was interchanged with a number of other words—wealth, funds, assets, property and so on; the Hollandische Mercurius uses "capitalists" in 1654 to refer to owners of capital. In French, Étienne Clavier referred to capitalistes in 1788, six years before its first recorded English usage by Arthur Young in his work Travels in France.
In his Principles of Political Economy and Taxation, David Ricardo referred to "the capitalist" many times. Samuel Taylor Coleridge, an English poet, used "capitalist" in his work Table Talk. Pierre-Joseph Proudhon used the term "capitalist" in his first work, What is Property?, to refer to the owners of capital. Benjamin Disraeli used the term "capitalist" in his 1845 work Sybil; the initial usage of the term "capitalism" in its modern sense has been attributed to Louis Blanc in 1850 and Pierre-Joseph Proudhon in 1861. Karl Marx and Friedrich Engels referred to the "capitalistic system" and to the "capitalist mode of production" in Capital; the use of the word "capitalism" in reference to an economic system appears twice in Volume I of Capital, p. 124 and in Theories of Surplus Value, tome II, p. 493. Marx did not extensively use the form capitalism, but instead those of capitalist and capitalist mode of production, which appear more than 2,600 times in the trilogy The Capital. According to the Oxford English Dictionary, the term "capitalism" first appeared in English in 1854 in the novel The Newcomes by novelist William Makepeace Thackeray, where he meant "having ownership of capital".
According to the OED, Carl Adolph Douai, a German American socialist and abolitionist, used the phrase "private capitalism" in 1863. Capitalism in its modern form can be traced to the emergence of agrarian capitalism and mercantilism in the early Renaissance, in city states like Florence. Capital has existed incipiently on a small scale for centuries in the form of merchant and lending activities and as small-scale industry with some wage labour. Simple commodity exchange and simple commodity production, which are the initial basis for the growth of capital from trade, have a long history. Classical Islam promulgated capitalist economic policies such as free banking, their use of Indo-Arabic