Capitalism: Origin of Capitalism and its characteristics

The complete Marx ideology is against capitalism. Capitalist society  is the one in which “Man exploits Man”. In such type of society, the rich becomes richer and the poor becomes poorer. Capitalist society  sucks the blood of poor masses and the labourers. In other words Capitalist society oppress the working class which is the very foundation of its economic life. It exploits them and in doing so digs its own grave. Capitalism is generally considered to be an economic system that is associated with

  • private ownership of means of production
  • Creation of goods and services for profit or financial gain
  • The accumulation of  capital, competitive markets, voluntary exchange and wage labour.


Capitalism is a type of economy which emerged during the period of social and industrial development in 18th and 19th Century. The origin and beginning of capitalism lie in the feudal stage of society. The tax rent taken from the peasants make the feudal lords into capitalist. Hence Capitalist economy emerged in the west from the ruins of feudal society which has agrarian economy. Agriculture was the dominant way of life. But during capitalism, there was transition from feudal to industrial society. It began with the growing conflict between the rural economy of the countryside and economy of the city. Thereby leading to separation between production and commerce.

The workers were expelled from the land by divorcing them from the ownership of means of production. With this, the feudal land fell into private hands and creation of private property took place. Marx called this process as “primitive accumulation”. During this process feudal land was coercively transformed into private property. Agricultural labourers were coercively divorced from means of production by the outright appropriation of land based on parliamentary approval.

Land began to be enclosed and seizure of property became common place. Serf labourers were unable to meet their basic economic needs. They had to bear all the burdens of society without enjoying any kind of advantage.The detached landless serfs who had nothing but their labour to sell began to move to the emerging industrial centres in search of livelihood. By this time, town economies had become dominant over rural economies. In this light of the historical conditions, Marx defined Capitalism as the system of social relations set in motion historically during the transition from feudal economies to the economies of industry.

Characteristics of Capitalism

Mehanad Desai has explained some fundamental characteristics of Capitalistic system in detail. These characteristics also explains its main elements:

1. Private ownership only in the hand of one class

With the growth of Capitalism, the one part of society owns the means of production which divided the society into two unequal classes. The working class lost all the freedom and autonomy and have no part to play in decision-making process. Their lives were under the control of capitalists.

2. Market

The central concept of capitalist system is the market economic system. In the earlier capitalist age, the economic system was local and self-sufficient. Every family produced according to their needs. In case of products that family does not produce, they were obtained from the product distribution system. In the early capitalist system the division of labour hardly exist.

The products in such society are not judged and controlled by tradition and nor by the order of state. They are priced by the market, and the market belongs to nobody. And only the law of economics “Demand and Supply” run the market. In the market economy, the consumer is most powerful. It is such a place where labour-power is bought and workers are getting daily wages.

3. Distribution of money

In capitalist system, money is determining factor. In older times, in the villages of India barter exchange system existed. Whereas the complete distribution is controlled by money in capitalist system. The banks and other financial institutions play an important part in distribution system.

4. Control of production

The manager appointed by the capitalist controls the complete production activities of labour and power. The power to appoint skilled and unskilled workers, how many to be dismissed. Also what method should be used for working and how to manage production processes all comes under this control.

5 Control of Financial rules and regulations

Capitalism came to our country during the British Raj. They opened machines-factories every where and also gave communication facilities and laws. So, the first attack on feudalistic system in the villages was when British started a chain of fundamental changes in land system, only after consolidating their position in India. As a result the new tax system finished the age-old Land lord system and thereby established land ownership in two forms. Zamindari system in certain parts of country and Private land ownership of farmers in other parts.

So, by giving legal rights of land property ownership to farmers the British started capitalist system in agriculture. Which means that the land no longer belong to state, it became privatised. A. R. Desai has written in the social background of Indian nationalism:

“In this way the victory of British over India, brought in agricultural revolution. By starting the custom of private land ownership, the British created the necessary ground for the expansion of Capitalism in agriculture. One of the main reasons for bringing the change from the old capitalist-feudal economic system in India to capitalist formation were related to land related changes”.


Marx has written a clear description of capitalist state in “Das Capital”. His analysis is based on productive powers and production. He argues that, when there is increase in productive powers, capitalism expands. So with this expansion, the distance between the production powers and production relationship increases. As the result there is struggle. As a result, Marx thesis states that as the capitalism increases, so does the opposition to it. And a stage will come when there will be revolution. Just as feudalism was built on the corpse of slavery, capitalism was built on the corpse of feudalism. So will socialism be built on the corpse of Capitalism. This is materialistic dialectics, the materialism concept of history. And the result of the changed means of production.


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