Capital, Capitalist And Capitalism

Today the word 'capitalism' means "an economic system in which the means of production are privately owned" (as opposed to socialism – in which the means of production are owned by the government). But the original meaning of the word was quite different. The word 'capital' came first – in the 1200s. It meant simply money or wealth. The word 'capitalist' came next – in the 1600s. It meant "an owner of capital/money/wealth" – ie, merchants. Around 1800, the Industrial Revolution began and the word 'capital' acquired today's meaning – not simply money/wealth but the means of production (ie, machines and factories). Consequently, the word 'capitalist' also changed – from "owner of money/wealth" to "owner of machines/factories". Then the word 'capitalism' came in the 1800s – meaning "the economic system consisting of capitalists". This looks like a trivial definition but it is not. Defined this way, capitalism was indeed a revolutionary new economic system. Why?

Since the beginning of civilisation, capital (the means of production) consisted of small simple tools. And these tools were owned by the respective workers. The farmer owned his plough and sickle. The blacksmith owned his anvil and furnace. The carpenter owned his saw and hammer. The potter owned his wheel and the weaver owned his loom. In other words – the workers owned the capital. The Industrial Revolution changed all this – by giving birth to big complex machines (and the buildings that contained them – ie, factories). These were too expensive to be owned by ordinary workers – only rich merchants could afford to own them. So for the first time in history, capital was not owned by workers – but by another group of people: the capitalists. And the new economic system was called 'capitalism'. This was the original meaning of the word 'capitalism'.