5 most important types of CAPITALISM

The economic system The most important and most widespread today is the so-called capitalism, being the economic form of the vast majority of nations on the planet, with only a few small exceptions. Even so, we must bear in mind that capitalism is not the same throughout the world, and it has not remained the same as throughout history, and therefore to understand this very important system in the lesson of a PROFESSOR we must talk about the different types of capitalism.

The capitalism is an economic system based on the constant movement of the market, which considers essential the use of private property to generate production through capital. Its operation is based on the relationship between companies, which must seek profit and investment, the existence of workers being essential for its operation.

To better understand the simplest model of capitalism in this lesson we must talk about the main features of this economic system, in order to better understand what are the great differences between the different types of capitalism. The main characteristics of capitalism are the following:

• Ownership of the means of production must be in private hands, although in some cases some of them may be in public hands. The aim is that the intervention of the State is as little as possible and that production should be private.
• There must be money, capital and their accumulation. The accumulation of money is the basis of the capitalist system, it seeks to have as much money and capital as possible, using this to generate even more.
• Existence of financial markets, open and whose importance is vital. These markets can suffer problems such as monopolies or similar situations, being then when a market failure occurs.
• Class system based on economic power, a person can go from the lowest echelon of society to the highest if he gets money, being the only thing on paper that separates social classes.
• Existence of wages, as a way to pay workers. The employer regulates the salaries of his employees, who charge for their work and at the same time spend this money in the market.
• Search for profit to increase capital, it seeks to cut as much as possible in order to achieve a greater profit.
• Free market in which anyone can participate, market barriers may be higher or lower but in a perfect capitalist system anyone can enter to participate in any market economic.

To continue this lesson, we must talk about the many types of capitalism that exist or have existed, in order to understand the great versatility that this economic system can have. We must bear in mind that in most nations there is no general type of capitalism, but rather it can be influenced by different classes, looking for a type of capitalism that is a middle ground.

Mercantilism

He considered how the first stage of capitalism had its origin in the Modern age and it was characterized by the search for greater exports than imports. The monarchy intervened in the economy, but at the same time left free trade, betting especially on companies located abroad. With the passage of society to the contemporary stage and the arrival of the Industrial Revolution, this type of capitalism was seen as outdated and it opted for other systems.

Free market capitalism

Free market capitalism o laissez faire is based on the use of contracts between people, without any type of intervention from a third person such as the State, for example. The entire market is regulated by the law of supply and demand, it is considered that this generates a balance in the market and great competition. The State in this type of capitalism only functions as a source of security. This kind of capitalism is what everyone has in mind when talking about capitalism, although today very few nations have an economic system totally based on the free market.

Social market economy

This is another of the types of capitalism that exist. Similar to free market capitalism, but with a greater State intervention, which uses mechanisms such as social security, unemployment benefits or protection of certain labor rights. It was the first step of the capitalist systems that considered that the State should have more relevance in the market, being therefore a type of precursor capitalism of others such as the mixed one.

Mixed economy

This type of capitalism is considered in which private and public property coexist of the means of production. It is also an economy marked by the intervention of the State, which intervenes to avoid market failures, although always supporting the free market. The merger between the private sector and the public sector makes it a type of capitalism very different from the traditional one, but with the time has become the most relevant in the world, with many nations having a mixed or evolved system of this.

Corporate capitalism

A type of capitalism that is based on importance of large corporations and companies, causing a kind of monopoly in which large corporations dominate the market, even being the State participates since it protects other companies from the possible entry of competitive companies.