Brief history of capitalism and its evolution towards a purpose-driven economy

The Evolution of Capitalism

Capitalism has undergone various stages and transformations throughout history, adapting to socio-economic contexts and the ideas of key thinkers who have contributed to its evolution.

Mercantilism (16th-18th Centuries)

Before modern capitalism emerged, mercantilism dominated Europe. This economic system was based on the accumulation of precious metals as a measure of a nation’s wealth and state regulation of foreign trade. Governments sought to maintain a favorable trade balance through controlled exports and by protecting local industries from foreign competition. This early stage of capitalism laid the foundations for the growth of national markets and colonial expansion.

The Industrial Revolution and Classical Capitalism (18th-19th Centuries)

With the Industrial Revolution, capitalism underwent a profound change. The development of new technologies, such as the steam engine and mechanization, increased productivity and transformed labor relations. Private property and capital accumulation were consolidated, and factories replaced artisanal workshops. In this context, Adam Smith played a crucial role by proposing that divided and specialized labor increased efficiency and that free competition fostered innovation and economic growth.

Capitalism in Crisis: Marxism and Critiques of the System

As industrial capitalism grew, so did social inequalities. Karl Marx and Friedrich Engels were the leading critics of capitalism in the 19th century. Marx saw capitalism as an inherently unstable system in which the capitalist class (owners of the means of production) exploited the working class (the proletariat). According to Marx, the system was doomed to generate cyclical crises and concentrations of wealth, which would eventually lead to its self-destruction.

Marx and Engels proposed communism as an alternative, where the means of production would be collectively controlled, eliminating exploitation and class divisions. While their ideas did not overthrow capitalism at the time, they inspired revolutionary movements in the 20th century, such as the 1917 Russian Revolution.

The 20th Century: The Great Depression and the Rise of Keynesianism

At the beginning of the 20th century, capitalism faced one of its greatest challenges: the Great Depression of 1929. The collapse of financial markets and rising unemployment prompted a reevaluation of the free-market economy. British economist John Maynard Keynes introduced the idea that government should play an active role in the economy, especially in times of recession. According to Keynes, state intervention, through public spending and expansive fiscal policies, was necessary to stimulate aggregate demand and prevent economic collapse.

Keynesianism dominated much of economic policy in the decades following World War II, particularly in Western countries, where social welfare systems were created to reduce inequalities and protect citizens from economic crises.

Neoliberalism and the Return to Free Markets

In the 1970s, Keynesianism began to be questioned due to problems with stagflation (simultaneous inflation and unemployment). Neoliberalism emerged, led by economists like Milton Friedman and the Chicago School. Friedman criticized state interventionism and advocated for free-market policies and monetarism, which focused on controlling the money supply to stabilize the economy.

Neoliberalism gained momentum in the 1980s under the governments of Ronald Reagan in the United States and Margaret Thatcher in the United Kingdom. Both leaders promoted policies of deregulation, privatization, and reduced public spending, giving prominence back to market forces.

21st Century Capitalism: Globalization and New Challenges

In recent decades, capitalism has been shaped by globalization and the technological revolution. The expansion of global markets, international trade, and multinational supply chains have transformed national economies. However, it has also generated new inequalities, environmental criticisms, and anti-globalization movements. Contemporary economists like Thomas Piketty have analyzed the growing concentration of wealth in the hands of an elite, proposing higher taxes on the rich to reduce inequalities.

The Purpose-Driven Economy

At the same time, purpose-driven capitalism, which seeks to balance economic profit with positive social and environmental impact, has gained ground, partly in response to demands from consumers and citizens who call for greater corporate responsibility.

Capitalism continues to evolve, facing the challenges of automation, climate change, and social tensions. Although it is a system with deep historical roots, its future is subject to changes and adaptations, driven by both economic ideas and global needs. Without a purpose-driven economy, where companies have dual accountability (economic and social), inequalities will continue to grow, and environmental degradation will force millions to migrate and face serious survival issues.