Perspectives on capitalism by school of thought

Adam Smith was one of the first influential writers on the topic with his book The Wealth of Nations, which is generally considered to be the start of classical economics which emerged in the 18th century.

In conjunction with his criticism of capitalism was Marx's belief that exploited labor would be the driving force behind a social revolution to a socialist-style economy.

According to Weber, workers in pre-capitalist economic institutions understood work in terms of a personal relationship between master and journeyman in a guild, or between lord and peasant in a manor.

The free market solution is the price mechanism, wherein people individually have the ability to decide how a good or service should be distributed based on their willingness to give money for it.

Partially opposed to that view, the British economist John Maynard Keynes argued in his 1937 The General Theory of Employment, Interest, and Money that capitalism suffered a basic problem in its ability to recover from periods of slowdowns in investment.

One example of this is his article in the September 1970 issue of The New York Times, where he claims that the social responsibility of business is "to use its resources and engage in activities designed to increase its profits…(through) open and free competition without deception or fraud".

[9] Work like this helped lay the foundations for the coming marketization (or privatization) of state enterprises and the supply-side economics of Ronald Reagan and Margaret Thatcher.

Quesnay's Tableau Économique (1759) described the economy analytically and laid the foundation of the Physiocrats' economic theory, followed by Anne Robert Jacques Turgot who opposed tariffs and customs duties and advocated free trade.

Richard Cantillon defined long-run equilibrium as the balance of flows of income and argued that the supply and demand mechanism around land influenced short-term prices.

Smith devised a set of concepts that remain strongly associated with capitalism today, particularly his theory of the "invisible hand" of the market, through which the pursuit of individual self-interest unintentionally produces a collective good for society.

[11] Among civilized and thriving nations, on the contrary, though a great number of people do no labor at all, many of whom consume the produce of ten times, frequently of a hundred times more labour than the greater part of those who work; yet the produce of the whole labour of the society is so great, that all are often abundantly supplied, and a workman, even of the lowest and poorest order, if he is frugal and industrious, may enjoy a greater share of the necessaries and conveniencies of life than it is possible for any savage to acquire.

— Adam Smith, The Wealth of NationsHe criticized monopolies, tariffs, duties and other state enforced restrictions of his time and believed that the market is the most fair and efficient arbitrator of resources.

Some foundational concepts in Marx critique of political economy are the following: For Marx, the capitalist stage of development or "bourgeois society" represented the most advanced form of social organization to date, but he also thought that the working classes would come to power in a worldwide socialist or communist transformation of human society as the end of the series of first aristocratic, then capitalist and finally working class rule was reached.

Furthermore, his work has been central for understanding the contractions of capital accumulation and international movements of capitalist modes of production and money flows.

[34] In his essay, "Notes towards a theory of uneven geographical development", Harvey examines the causes of the extreme volatility in contemporary political economic fortunes across and between spaces of the world economy.

One key figure in institutional economics was Thorstein Veblen who in his book The Theory of the Leisure Class (1899) analyzed the motivations of wealthy people in capitalism who conspicuously consumed their riches as a way of demonstrating success.

The free market solution is the price mechanism, wherein people individually have the ability to decide how a good or service should be distributed based on their willingness to give money for it.

The price conveys embedded information about the abundance of resources as well as their desirability which in turn allows corrections that prevent shortages and surpluses on the basis of individual consensual decisions.

Mises and Hayek argued that this is the only possible solution and without the information provided by market prices socialism lacks a method to rationally allocate resources.

[41] It influenced economists and political philosophers and theorists including Henry Hazlitt, Hans-Hermann Hoppe, Israel Kirzner, Murray Rothbard, Walter Block and Richard M.

[42][43] In his 1937 The General Theory of Employment, Interest, and Money, the British economist John Maynard Keynes argued that capitalism suffered a basic problem in its ability to recover from periods of slowdowns in investment.

Essentially rejecting Say's law, he argued that some people may have a liquidity preference that would see them rather hold money than buy new goods or services, which therefore raised the prospect that the Great Depression would not end without what he termed in the General Theory "a somewhat comprehensive socialization of investment".

He and his followers recommended "pump-priming" the economy to avoid recession: cutting taxes, increasing government borrowing and spending during an economic down-turn.

— John Maynard Keynes, The General Theory of Employment, Interest and MoneyKeynes tried to provide solutions to many of Marx’s problems without completely abandoning the classical understanding of capitalism.

In Sraffa's highly technical analysis, capitalism is defined by an entire system of social relations among both producers and consumers, but with a primary emphasis on the demands of production.

According to Sraffa, the tendency of capital to seek its highest rate of profit causes a dynamic instability in social and economic relations.

— Thomas Sowell during a discussion in Milton Friedman's "Free to Choose" television series in 1980Typical policy recommendations of supply-side economics are lower marginal tax rates and less regulation.

[9] Work like this helped lay the foundations for the coming marketization (or privatization) of state enterprises and the supply-side economics of Ronald Reagan and Margaret Thatcher.