Sociology: Capitalism and Globalization

Sociology: Capitalism and Globalization

The concept of capitalism has evolved over time? with later thinkers often building on the analysis of earlier thinkers. Moreover? the component concepts used in defining capitalism — such as private ownership? markets and investment — have evolved along with changes in theory? in law? and in practice.

Classical political economy

The "classical" tradition in economic thought emerged in Britain in the late 18th century. The classical political economists Adam Smith? David Ricardo? Jean-Baptiste Say? and John Stuart Mill published analyses of the production? distribution? and exchange of goods in a capitalist economy that have since formed the basis of study for most contemporary economists. Contributions to this tradition are also found in the earlier work of David Hume and the physiocrats like Richard Cantillon.

Adam Smith's attack on mercantilism and his reasoning for "the system of natural liberty" in The Wealth of Nations (1776) are usually taken as the beginning of classical political economy. 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. He 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. This view was shared by David Ricardo? second most important of the classical political economists and one of the most influential economists of modern times.

In The Principles of Political Economy and Taxation (1817) he developed the law of comparative advantage? which explains why it is profitable for two parties to trade? even if one of the trading partners is more efficient in every type of economic production. This principle supports the economic case for free trade. Ricardo was a ...