Capitalist mode of production (Marxist theory) facts for kids

The capitalist mode of production is a way of organizing how things are made and sold in a capitalist society. It's a term used by Karl Marx and others who study how economies work.

Before this system, people made money in different ways, like renting things out, banking, or trading goods. But the capitalist mode of production is special because it really took off during the Industrial Revolution in Europe. It then spread across the world.

This system is mainly about:

• Private ownership: Most factories, tools, and land (called the means of production) are owned by private individuals or companies, not the government or everyone together.
• Wage labor: Most people work for a wage or salary. They sell their ability to work (their "labor power") to business owners.
• Making a profit: The main goal of businesses is to make a profit. They do this by selling goods for more than it cost to make them.
• Market-based: Goods and services are bought and sold in markets, where prices are set by supply and demand.

What is a Mode of Production?

A "mode of production" simply means a specific way of producing things. It describes how society is organized to make goods and services, and what kinds of tools and technology are used.

Under the capitalist mode of production:

• The things needed to make products (like raw materials) and the products themselves are mostly privately owned. They are bought and sold in markets.
• The main reason for making things is to sell them in the market and earn a profit.
• The people who own the factories and tools (called capitalists) make money from the "surplus value". This is a term that means the extra value created by workers' labor that they don't get paid for.
• Many people depend on working for wages. These workers, often called the working class, don't own factories or tools. They have to sell their ability to work to business owners to earn money and buy what they need to live.

The capitalist mode of production can exist in countries with different political systems, like liberal democracy or even some forms of Communist state. It can also be found alongside different social setups, like farming communities or industrial cities.

Even though people have been trading and making money for a long time, the capitalist mode of production became dominant only when it started to control the entire process of making things. Before, trade was often a smaller part of society.

Key Features of Capitalism

Capitalist society is often described as a cycle of making money from goods. Businesses use money to buy materials and pay workers. They then make a product and sell it for more money than they started with. This extra money is the profit. Making a profit is essential for the system to keep going and for businesses to grow.

This system is all about "production for exchange." This means things are made to be sold and traded, driven by the desire to make money. In contrast, in a socialist or communist society, the idea is "production for use"—making things because people need them, not just to make a profit.

What makes the "capitalist mode of production" special is that almost everything involved in making things—from the raw materials to the finished products—is bought and sold in a market. For example, in the past, under feudalism, land and workers were often owned by lords, and products were used directly or traded locally without a big market system.

This market-driven approach means that how things are produced is constantly changed to fit "commercial logic." This means decisions are made based on prices, costs, sales, and profits. The main goal is to make more money and grow the business.

Summary of Main Differences

Here’s a quick summary of what defines capitalism as an economic system:

• Making more capital: The main goal of production is to make a profit and grow the amount of money and assets a business has. This often means stopping older ways of making things at home or in small communities.
• Making goods to sell: Products are made to be sold in a market. The focus is on their "exchange-value" (how much they can be sold for) rather than just their "use-value" (how useful they are).
• Private ownership of tools and factories: Factories, machines, and land are owned by private individuals or companies. These owners make decisions about investments and how things are managed.
• Wages for work: Most people work for wages. They have to sell their labor because they don't own the means to produce things themselves. They are "free" to choose their employer, but they also don't own any productive assets.

How it Started

Karl Marx believed that basic forms of making money, like trading and lending, existed for centuries. Small workshops with some paid workers also existed long before large capitalist industries. Simple trading of goods has a very long history. Marx thought the "capitalistic era" really began around the 16th century with merchant trading and small city workshops.

For the capitalist mode of production to become the main way things were made in society, many different things had to come together. These included social, economic, cultural, technical, and legal changes.

For most of human history, these conditions weren't all present. Money and trade existed, but they didn't lead to big factories and large-scale capitalist industries. This needed new things like:

• New technologies for making many products at once.
• The ability to privately own and trade factories and tools.
• A group of workers who had to sell their labor to make a living.
• Laws that supported trade and business.
• Good transportation and infrastructure to move goods around.
• Safety and security for private wealth.

Even today, in some parts of the world, even if there's money and labor, these conditions might not all be there. This shows that developing capitalist markets isn't just about technology, but also about social, cultural, and political factors.

A society is considered "capitalist" if most of its income and products come from capitalist activities. However, this doesn't always mean the capitalist mode of production is fully in charge of everything in that society.

Key Features of the Capitalist System

While Marx never gave a super short definition, his big book Capital explains it all. Here are the main features:

• Making things for sale: Factories and consumer goods are mostly made to be sold in a market. Businesses make a profit only by selling their products. Also, the things needed to make products are bought in the market. Prices are set by how much is available and how much people want to buy (supply and demand). A capitalist uses money to buy materials and pay workers, makes products, sells them for a profit, and then reinvests that profit to make even more.
• Private ownership: Factories and businesses are privately owned. Owners make decisions about investments and management on their own, often keeping their plans secret from competitors. Businesses can set their own prices, and new technology is developed based on what will make a profit.
• Wage work: People who make the products (the workers) are paid wages. They have to sell their labor because they don't own the factories or tools themselves. They can only buy what they need by earning money through work. These workers are "free" in two ways: they don't own productive assets, and they are free to choose which employer they work for.
• Competition: Because many private owners make decisions separately, there's a lot of competition. Businesses compete for profits, customers, and resources. Owners and workers also compete over wages and working conditions. Workers compete with each other for jobs.
• Goals of capitalism: Under competition, the main goals are to make the most profit possible by cutting costs, increasing sales, and sometimes controlling markets. Another goal is to accumulate more capital (money and assets). Most of the extra money made from labor is usually put back into the business to help it grow.
• Social classes: From these features, different social classes appear. There's a class of owners and managers of private businesses, a class of wage and salary earners, and a group of unemployed people (sometimes called a "reserve army of labor"). There are also in-between groups like self-employed people and highly skilled professionals.
• Government and money: The government (the capitalist state) mostly gets its money from taxes and borrowing. It usually doesn't own many businesses itself. The government sets up the laws for business, society, and politics, defining rights and property rules.
• Economic ups and downs: Because capitalist development happens through private decisions without much overall planning, it often has periods of crisis. Sometimes too many goods are produced, or there's too much capacity to produce, and these goods can't be sold for a good profit. This leads to a recession (slower economic growth) or even a depression (a big drop in production). When this happens, many people lose their jobs. This has happened more than 20 times since 1820.

While there might be exceptions in different places or times, these main features generally define the capitalist mode of production.

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