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capitalism, economic system based on private ownership of the means of production, in which personal profit can be acquired through investment of capital and employment of labor. Capitalism is grounded in the concept of free enterprise, which argues that government intervention in the economy should be restricted and that a free market, based on supply and demand, will ultimately maximize consumer welfare. These principles were most notably articulated in Adam Smith's treatise, The Wealth of Nations (1776), in which he opposed the prevailing theory of mercantilism. Capitalism has existed in a limited form in the economies of all civilizations, but its modern importance dates at least from the Industrial Revolution that began in the 18th cent., when bankers, merchants, and industrialists—the bourgeoisie—began to displace landowners in political, economic, and social importance and when innovations and efficiencies in commercial agriculture made available a large body of surplus labor, particularly in Great Britain. Capitalism stresses freedom of individual economic enterprise; however, government action has been and in some cases remains required to curb its abuses, which have ranged from terrible working conditions, slavery (particularly in Britain and the United States), and apartheid (in South Africa) to monopoly cartels and financial fraud.

Capitalism does not presuppose a specific form of social or political organization: the democratic socialism of the Scandinavian states, the consensus politics of Japan, and the state-sponsored rapid industrial growth of South Korea while under military dictatorship all have coexisted with capitalism. Yet despite the capitalist ideal of “hands-off” government, significant government intervention has existed in most capitalist nations at least since the Great Depression in the 1930s. In the United States, it exists in the form of subsidies, tax credits, incentives, and other types of exemptions. Though private production plays a major role in the economies of Germany and Japan, both nations have had centrally planned industrial policies in which bankers, industrialists, and labor unions meet and seek to agree to wage policies and interest rates; these countries reject the idea of letting the market wholly determine the economy. The collapse of the Soviet Union and its satellite states in Eastern Europe (1989–91) represented a substantial retreat in the power of capitalism's traditional economic opponent, socialism; while some of those nations have move toward free-market capitalism, in others the state retained or has reasserted its control over many aspects of the economy. In China, Communist economic principles were gradually abandoned during the late 20th cent. and capitalism became increasingly important—but within a strictly Communist political framework.


See M. Friedman, Capitalism and Freedom (1952, rev. ed. 1981); J. K. Galbraith, American Capitalism (1952, repr. 1982); J. A. Schumpeter, Capitalism, Socialism, and Democracy (1983); R. L. Heilbroner and L. C. Thurow, Economics Explained (1987); C. R Sunstein, Free Markets and Social Justice (1997); J. Appleby, Capitalism and a New Social Order: The Republican Vision of the 1790s (1984) and The Relentless Revolution: A History of Capitalism (2010); E. E. Baptist, The Half Has Never Been Told: Slavery and the Making of American Capitalism (2014).

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capitalist society



any society based on a capitalist economy or where capitalist ownership of the means of production plays a principal role. See CAPITALISM AND CAPITALIST MODE OF PRODUCTION.
Collins Dictionary of Sociology, 3rd ed. © HarperCollins Publishers 2000
The following article is from The Great Soviet Encyclopedia (1979). It might be outdated or ideologically biased.



social and economic structure based on private property in the means of production and the exploitation of wage labor by capital; capitalism replaces feudalism and precedes socialism, the first phase of communism.

The main attributes of capitalism are the dominance of commodity-money relations and private property in the means of production, developed social division of labor, the increasing socialization of production, the transformation of labor power into a commodity, and the exploitation of wage laborers by capitalists. The aim of capitalist production is the appropriation of the surplus value created by the labor of wage workers. As the relations of capitalist exploitation become the dominant type of productive relations and bourgeois political, legal, ideological, and other social institutions come to replace precapitalist forms of the superstructure, capitalism becomes a social and economic structure that includes the capitalist mode of production and the corresponding superstructure. Capitalism passes through several stages in its development, but its most characteristic features remain essentially unchanged. Antagonistic contradictions are inherent in capitalism. Its main contradiction, that between the social nature of production and the private capitalist form of appropriation of the result of production, engenders anarchy of production, unemployment, economic crises, and an implacable struggle between the basic classes of capitalist society, the proletariat and the bourgeoisie; this basic contradiction predetermines the historical doom of the capitalist system

The emergence of capitalism was prepared by the social division of labor and the development of a commodity economy within the womb of feudalism. As capitalism emerges, the class of capitalists, which concentrates money capital and the means of production in its own hands, forms at one pole of society, and the mass of people deprived of the means of production and thus forced to sell their labor power to the capitalists forms at the other pole. Advanced capitalism is preceded by a period of the so-called primitive accumulation of capital, the essence of which is the robbery of peasants and small artisans and the seizing of colonies. The transformation of labor power into a commodity and of the means of production into capital signified the transition from simple commodity production to capitalist production. Simultaneously, the initial accumulation of capital was a process of rapid expansion of the internal market. Peasants and craftsmen who had previously lived on the proceeds of their own entrprises were turned into wage workers and forced to live by selling their labor power and to buy the essential articles of consumption. The means of production, which were concentrated in the hands of the minority, were turned into capital. An internal market was created for the means of production essential to the renewal and expansion of production. The great geographical discoveries (mid-15th to mid-17th centuries) and the seizing of colonies (15th to 18th centuries) secured for the nascent European bourgeoisie new sources of capital accumulation (the export of precious metals from the seized countries, the robbery of peoples, income from trade with other countries, and the slave trade) and led to the growth of international economic ties. The development of commodity production and exchange, accompanied by the differentiation of commodity producers, served as the basis for the further development of capitalism. Scattered commodity production could no longer meet a growing demand for goods.

Simple capitalist cooperation—that is, the joint labor of many people carrying out separate production operations under the control of capitalists—became the point of departure for capitalist production. The source of cheap labor power for the first capitalist entrepreneurs was the mass ruination of craftsmen and peasants as a result of property differentiation, “enclosures” of land, the adoption of laws concerning the poor, devastating taxes, and other measures of extraeconomic constraint. The gradual strengthening of the economic and political positions of the bourgeoisie prepared the way in a number of countries of Western Europe for bourgeois revolutions (the Netherlands in the late 16th century, Great Britain in the mid-17th century, France in the late 18th century, and a number of other European countries in the mid-19th century). Having made radical changes in the political superstructure, the bourgeois revolutions accelerated the replacement of feudal productive relations by capitalist relations; they cleared the ground for the capitalist system, which had ripened in the womb of feudalism, and for the replacement of feudal property by capitalist property. The development of the productive forces of bourgeois society took a major step with the appearance of the manufactory (mid-16th century). However, by the mid-18th century, the further development of capitalism in the advanced bourgeois countries of Western Europe had run up against the narrowness of the manufactory’s technical base. The need developed to shift to large-scale factory production involving the use of machines. The transition from the manufactory to the factory system was achieved in the course of the industrial revolution, which began in Great Britain in the second half of the 18th century and was completed around the mid-19th century. The invention of the steam engine led to the appearance of a multitude of machines. The growing need for machines and machinery resulted in the modification of the technical base of machine-building and the transition to the production of machines by machines. The emergence of the factory system signified the establishment of capitalism as the dominant mode of production and the creation of the material and technical base corresponding to capitalism. The transition to the machine stage of production promoted the development of productive forces; the emergence of new branches and the incorporation of new resources into economic circulation; the rapid increase in the population of cities; and increasingly lively external economic ties. It was accompanied by a further increase in the exploitation of wage laborers: that is, the broader use of the labor of women and children, the lengthening of the work day, the intensification of labor, transformation of the worker into an appendage of the machine, the growth of unemployment, and the sharpening of the opposition between mental and physical labor and between the city and the countryside. The basic laws of development of capitalism are identical in all countries. However, the genesis of capitalism has different features in different countries, features that are determined by the concrete historical conditions in each one.

The classical path of capitalist development—primitive accumulation of capital, simple cooperation, manufactory production, and the capitalist factory—is characteristic of a small number of Western European countries, chiefly Great Britain and the Netherlands. The industrial revolution was completed, the factory system of production emerged, and the advantages and contradictions of the new, capitalist mode of production were fully manifested earlier in Great Britain than in other countries. The growth of industrial production was extraordinarily rapid in comparison with other European countries and was accompanied by the proletarianization of a substantial portion of the population, the deepening of social conflicts, and cyclical crises of overproduction that have been repeated regularly since 1825. Great Britain became the classical country of bourgeois parliamentarism, and at the same time the birthplace of the contemporary workers’ movement. By the mid- 19th century, Great Britain had achieved world industrial, commercial, and financial hegemony and was the country where capitalism had attained its highest development. It was no accident that the theoretical analysis of the capitalist mode of production provided by K. Marx was based primarily on the British situation. V. I. Lenin noted that the major distinguishing features of British capitalism of the second half of the 19th century were “vast colonial possessions and a monopolist position on the world market” (Poln. sobr. soch., 5th ed., vol. 27, p. 405).

The formation of capitalist relations in France, the strongest Western European power of the era of absolutism, was slower than the process in Great Britain and the Netherlands, primarily because of the stability of the absolutist state and the comparative strength of the nobility’s social position and the strength of the small peasant economy. The dispossession of the peasants proceeded not by means of “enclosures,” but by the tax system. The system of farming out taxes and state debts and later the protectionist policies of the government with respect to incipient manufactory production both played a large role in the formation of the bourgeois class. The bourgeois revolution occurred nearly a century and a half later in France than in Great Britain, and the process of primitive accumulation stretched out over three centuries. The Great French Revolution, which radically eliminated the feudal absolutist system that had hindered the growth of capitalism, simultaneously led to the emergence of a stable system of small peasant ownership of land that put its stamp on the entire subsequent development of capitalist productive relations in France. The extensive introduction of machinery did not begin there until the 1830’s. During the 1850’s and 1860’s, France became an industrially developed state. The distinctive feature of French capitalism was its usurious character. The growth of loan capital based on the exploitation of the colonies and on profitable credit operations abroad turned France into a rentier country.

In other countries, the genesis of capitalist relations was accelerated by the influence of the existing seats of developed capitalism. Thus, the USA and Germany set out on the path of capitalist development later than Great Britain, but by the end of the 19th century they had already joined the ranks of the capitalist countries. Feudalism had not existed in the USA as an all-embracing economic system. The displacement of the native population into reservations and the development by farmers of lands that had been opened up in the western part of the country played a major role in the development of American capitalism. This process established what is known as the American path of capitalist development in agriculture, a path based on the growth of capitalist farming. As a result of the rapid growth of American capitalism after the Civil War, as early as 1894 the USA was first in the world in terms of volume of industrial production.

In Germany, the liquidation of the system of serfdom was carried out “from above.” The redemption of feudal obligation on the one hand led to the mass proletarianization of the population and on the other hand put into the landlords’ hands the capital necessary to turn Junker estates into large-scale capitalist farms using hired labor. It was thus that the preconditions for the Prussian path of development of capitalism in agriculture were created. The unification of the German states into a single customs union and the bourgeois revolution of 1848–49 accelerated the development of industrial capital. The railroads played an exceptional role in the industrial upsurge of the mid-19th century in Germany, promoting the economic and political unification of the country and contributing to the rapid development of heavy industry. The political unification of Germany and the war indemnities it received after the Franco-Prussian War of 1870–71 became powerful stimuli to the further development of capitalism. During the 1870’s there was a process of rapid establishment of new branches of the economy and re-equipping of old ones on the basis of the most recent achievements of science and technology. Utilizing the technological achievements of Great Britain and other countries, Germany was able to overtake France in terms of its level of economic development as early as 1870, and by the end of the 19th century it was approaching the level of Great Britain. In the East, capitalism developed most fully in Japan, where, as in the Western European countries, it arose on the foundation of disintegrating feudalism. In the three decades after the bourgeois revolution of 1867–68, Japan developed into one of the industrialized capitalist powers.

By the beginning of the 20th century, as a result of the evolution of capitalism, a number of advanced capitalist states existed in the world and had achieved a high level of economic and military might. A fierce struggle unfolded among these powers for colonies in Africa and Asia, and as a result of this struggle, virtually all of the unoccupied territories on the earth were divided up. A world system of capitalism arose. Capitalist productive relations also began to appear in the countries of Asia, Africa, and Latin America, which had been drawn into the system of the world capitalist economy as markets and sources of raw materials and foodstuffs. The development of capitalism in the colonial and dependent countries was accompanied by cruel exploitation, oppression, and violence on the part of the imperialist states.

Premonopoly capitalism. An all-around analysis of capitalism and the concrete forms of its economic structure in the premonopoly stage was provided by K. Marx and F. Engels in a number of works, primarily Das Kapital, in which they revealed the economic law of movement of capitalism. The doctrine of surplus value—the cornerstone of Marxist political economy—exposed the secret of capitalist exploitation. The appropriation of surplus value by the capitalists occurs as a consequence of the fact that the means of production and the means of livelihood are the property of the small class of capitalists. In order to live, the worker is forced to sell his labor power. With his labor he creates more value than his labor power costs. Surplus value is appropriated by the capitalists; it serves as the source of their enrichment and of the further growth of capital. The reproduction of capital is simultaneously the reproduction of capitalist productive relations, based on the exploitation of the labor of another person.

The pursuit of profit, which is a modified form of surplus value, determines the entire movement of the capitalist mode of production, including the expansion of production, the development of technology, and the increase in the exploitation of workers. In the stage of premonopoly capitalism, the competition of noncooperating, scattered commodity producers is replaced by capitalist competition, which leads to the formation of an average rate of profit—that is, equal profit for equal capital. The value of goods produced assumes a modified form of the price of production, which includes the cost of production and the average profit. The process of averaging out profit takes place in the course of intrabranch and interbranch competition, through the mechanism of market prices and the infusion of capital from one branch to another and through the sharpening of the competitive struggle between capitalists.

In perfecting the technology in various enterprises, using the achievements of science, developing the means of transportation and communication, and improving the organization of production and commodity exchange, the capitalists automatically develop social productive forces. The concentration and centralization of capital promote the emergence of large-scale enterprises, in which thousands of workers are concentrated, and lead to the growing socialization of production. However, the enormous, constantly increasing wealth is appropriated by individual capitalists, which leads to a deepening of the basic contradiction of the system. The greater the degree of socialization in capitalist production, the wider the gap between the actual producers and the means of production, which are private capitalist property. The contradiction between the social nature of production and capitalist appropriation assumes the form of antagonism between the proletariat and the bourgeoisie. It is also manifested in the contradiction between production and consumption. The contradictions of the capitalist mode of production are revealed most acutely in periodic economic crises. These crises, which are the objective form of the forcible overcoming of the contradictions of capitalism, do not resolve the contradictions but further deepen and aggravate them—evidence of the inevitability of the downfall of capitalism. Thus, capitalism itself creates the objective preconditions for a new system based on social ownership of the means of production.

The antagonistic contradictions and historically foredoomed nature of capitalism are reflected in the superstructure of bourgeois society. The bourgeois state, in whatever form it takes, always remains the instrument of the class rule of the bourgeoisie, the organ for suppressing the toiling masses. Bourgeois democracy is restricted and formal in nature. In addition to the two main classes of bourgeois society (the bourgeoisie and the proletariat), the classes inherited from feudalism, that is, the peasantry and the owners of landed estates, are preserved under capitalism. With the development of industry, science and technology, and culture in capitalist society, the social stratum of the intelligentsia grows—that is, the people performing mental labor. The main tendency of development of the class structure of capitalist society is the polarization of society into two main classes as a result of the erosion of the peasantry and intermediate strata. The main class contradiction of capitalism is that between the workers and the bourgeoisie, which is expressed in the sharp class struggle between them. In the course of this struggle, revolutionary ideology is worked out, political parties of the working class are created, and the objective preconditions of socialist revolution are prepared.

Monopoly capitalism. In the late 19th century and early 20th century, capitalism entered a higher, final stage of its development—imperialism, that is, monopoly capitalism. At a certain stage, free competition resulted in such a high level of concentration and centralization of capital that it naturally entailed the emergence of monopolies. It is these monopolies that determine the essence of imperialism. Rejecting free competition in individual branches, the monopolies do not eliminate competition as such, “but exist above it and alongside it, and thereby give rise to a number of very acute, intense antagonisms, frictions, and conflicts” (Lenin, Poln. sobr. sock, 5th ed., vol. 27, p. 386). Lenin worked out the scientific theory of monopoly capitalism in his work Imperialism, the Highest Stage of Capitalism. He defined imperialism as “capitalism at the stage of development at which the dominance of the monopolies and finance capital is established, in which the export of capital has acquired pronounced importance, in which the division of the world among the international trusts has begun, in which the division of all territories of the globe among the biggest capitalist powers has been completed” (ibid., p. 387). In the monopoly stage of capitalism, the exploitation of labor by finance capital leads to the redistribution, to the benefit of the monopolies, of the portion of the total surplus value falling to the share of the nonmonopolistic bourgeoisie and of a part of the necessary product of wage laborers, through the mechanism of monopoly pricing. Certain displacements in the class structure of society occur. The rule of finance capital is personified in the financial oligarchy—the big monopoly bourgeoisie, which subordinates most of the national wealth of the capitalist countries to its own control. Under the conditions of state-monopoly capitalism, the leading circles of the big bourgeoisie are substantially strengthened; they exert a definite influence on the economic policies of the bourgeois state. The economic and political weight of the nonmonopoly middle and petite bourgeoisie decreases. Fundamental changes in the composition and size of the working class take place. In the advanced capitalist countries taken together, while the growth of the total gainfully employed population was 91 percent from 1900 to the 1970’s, the number of people working for wages increased by nearly 200 percent, and the proportion of them in relation to the total number of employed people grew during this period from 53.3 to 79.5 percent. Under the conditions of modern technological progress, with the expansion of the service sphere and the growth of the bureaucratic state apparatus, the numbers and relative weight of office employees have increased. The social position of these workers approaches that of the industrial proletariat. Under the leadership of the working class, the most revolutionary forces in capitalist society and all toiling classes and social strata are waging the struggle against their oppression by the monopolies.

In its process of development, monopoly capitalism evolves into state monopoly capitalism, which is characterized by the interlocking of the financial oligarchy with the upper echelons of the bureaucracy, the increased role of the state in all spheres of social life, the growth of the state sector in the economy, and increasingly active policies aimed at mitigating the socioeconomic contradictions of capitalism. Imperialism, particularly in the state-monopoly stage, signifies a profound crisis of bourgeois democracy, an intensification of reactionary tendencies, and the increased role of force in domestic and foreign policy. It is inseparable from the growth of militarism and of military expenditures, the arms race, and tendencies toward the unleashing of aggressive wars.

Imperialism sharply aggravates the basic contradiction of capitalism and all other contradictions of the bourgeois system that follow from it, contradictions that can be resolved only by socialist revolution. Lenin made a profound analysis of the law of the uneven economic and political development of capitalism in the era of imperialism and reached the conclusion that the victory of the socialist revolution, initially in a single capitalist country, was inevitable.

World War I and the victory of the Great October Socialist Revolution, which abolished capitalism in Russia, inaugurated the general crisis of capitalism, which decisively influenced the internal contradictions of imperialism on the one hand and the course of the world revolutionary process on the other. The general crisis of capitalism is characterized primarily by the formation of two opposite socioeconomic systems (the capitalist and socialist systems) and by the struggle between them, in the course of which the forces of socialism steadily gain strength and the positions of capitalism steadily weaken; the disintegration of the colonial system of imperialism takes place. The internal contradictions of the imperialist states and of the world capitalist economy become aggravated, the crisis of bourgeois politics and ideology is intensified, and the struggle between labor and capital grows, as does the struggle between the toiling and exploited classes and the monopoly bourgeoisie.

The general crisis of capitalism accelerates the development of state-monopoly capitalism and a further increase in the socialization of production. Such new phenomena as state regulation of the economy, programming, capitalist integration, and the shift from the old colonial rule to neocolonialism signify a certain modification of the basic characteristics of imperialism without the alteration of its essence. Free competition capitalism, imperialism, and state-monopoly capitalism all represent different stages of a single socioeconomic structure. During this historical development, the structure of production and the mechanism of appropriating surplus value change, but the basic features of capitalism—commodity production, private property in the means of production, and the exploitation of wage labor by capital—remain unchanged.

The characteristic feature of contemporary capitalism is that it has been forced to adapt to new circumstances in the world. With a contemporary condition of economic competition and the struggle between two opposite systems, the ruling circles of the capitalist countries fear the development of the class struggle into a mass revolutionary movement; thus, the bourgeoisie strives to employ more disguised forms of exploiting and oppressing workers, and often readily carries out partial reforms to keep the masses under their ideological influence and political control. The monopolies use the achievements of scientific and technological progress to strengthen their own positions and increase exploitation of the toiling masses. But the adaptation to new conditions and processes, which has been prompted by the general laws of development of productive forces and by the scientific and technological revolution, does not mean the stabilization of capitalism as a system. The general crisis is deepening. Even the most developed capitalist countries experience serious economic shocks, accompanied by growing inflation and unemployment and the crisis of the currency and financial system. At the beginning of the 1970’s, there were about 8 million unemployed people in the advanced capitalist countries. None of the attempts of contemporary capitalism to adapt to the new conditions eliminate the contradictions between the imperialist states. The economic and political struggle unfolds among the main centers of imperialist rivalry: the USA, Western Europe, and Japan.

Historical place of capitalism. In its time, capitalism played a progressive role as a natural stage in historical development. It destroyed the patriarchal and feudal relations among people based on personal dependence and replaced them with money relations. Capitalism created large cities, sharply increased the urban population at the expense of the rural population, did away with feudal fragmentation, which led to the formation of bourgeois nations and centralized states, and raised the productivity of social labor to a higher level.

As early as the mid-19th century, Marx and Engels wrote: “The bourgeoisie, during its rule of scarce one hundred years, has created more massive and more colossal productive forces than have all preceding generations together. Subjection of Nature’s forces to man, machinery, the application of chemistry to industry and agriculture, steam navigation, railroad, the electric telegraphs, clearing of whole continents for cultivation, the canalization of rivers, whole populations conjured out of the ground—what earlier century had even a presentiment that such productive forces slumbered in the lap of social labor?” (Soch., 2nd ed., vol. 4, p. 429). From that time on, the development of productive forces, despite unevenness and periodic crises, continued at an even more highly accelerated rate. By the 20th century, capitalism was able to place at its service many achievements of the modern scientific and technological revolution: atomic energy, electronics, automation, jet technology, and chemical synthesis, to name a few. But under the conditions of capitalism, social progress is continued at the price of a marked aggravation of social contradictions, the wasting of productive forces, and the suffering of the masses of people of the whole world. The era of primitive accumulation and capitalist “development” of the outlying areas of the world was accompanied by the annihilation of entire tribes and nationalities. Colonialism, which served as the source of enrichment of the imperialist bourgeoisie and the so-called worker aristocracy in the parent countries, resulted in protracted stagnation of the productive forces in the countries of Asia, Africa, and Latin America and was conducive to the preservation of precapitalist productive relations in these countries. Capitalism used the progress of science and technology to create means of mass destruction and annihilation. It bears responsibility for the enormous human and material losses in the increasingly frequent destructive wars. Solely in the two world wars unleashed by imperialism, more than 60 million people died and 110 million were wounded or became invalids. In the stage of imperialism, economic crises became more acute in character. In the context of the general crisis of capitalism, there is a steady narrowing of the sphere of capitalist domination: the worldwide socialist economic system is developing rapidly, and its share in world production is growing steadily, while the share of the capitalist world economic system is decreasing.

Capitalism cannot cope with the productive forces it has created, forces that have outgrown capitalist productive relations, which are like fetters on their further development. The objective material preconditions for the transition to socialism are created within the womb of bourgeois society in the process of the development of capitalist production. Under capitalism, the working class grows, unites, and organizes; in alliance with the peasantry, at the forefront of all toiling people, it makes up a mighty social force capable of overthrowing the obsolete capitalist system and replacing it by socialism.

In the struggle against imperialism, the embodiment of capitalism under contemporary conditions, three revolutionary streams are united—world socialism, the antimonopoly forces in the advanced capitalist countries, headed by the working class, and the world national liberation movement. “Imperialism is powerless to regain the historical initiative it has lost, to reverse the development of the modern world. The main path of development for humanity is determined by the world socialist system, the international working class, and all revolutionary forces” (Mezhdunarodnoe soveshchanie kommunisticheskikh i rabochikh partii, Moscow, 1969, p. 289).

By means of apologist theories, bourgeois ideologists attempt to prove that contemporary capitalism is a system devoid of class antagonism and that in highly developed capitalist countries factors giving rise to social revolution are generally absent. However, such theories are defeated by reality, which exposes more and more the irreconcilable contradictions of capitalism.


Russia. The development of capitalism in Russia was accomplished essentially on the basis of the same socioeconomic laws as in other countries, but it had distinctive features of its own. The history of capitalism in Russia is divided into two main periods: the genesis of capitalist relations (second quarter of the 17th century to 1861) and the consolidation and dominance of the capitalist mode of production (1861–1917). The period of the genesis of capitalism consists of two stages: the origin and formation of the capitalist structure (second quarter of the 17th century through the 1760’s) and the development of the capitalist structure (1770’s to 1861). The period of capitalist dominance is also divided into two stages: the stage of progressive, ascendant development (1861 to the end of the 19th century) and the stage of imperialism (the beginning of the 20th century to 1917). (The question of the genesis of capitalist relations is a complex and controversial one in the history of Russian capitalism. Certain historians adhere to the periodization given above, and others see the genesis of capitalism beginning earlier, in the 16th century; still others date the beginning of capitalism at a later period, the 1760’s.) It is an important characteristic of the development of capitalism in Russia that the genesis of capitalist relations was a slow process, stretching out for more than two centuries in the context of the dominance of feudal relations in the economy.

Simple capitalist cooperation developed increasingly in industry beginning in the second quarter of the 17th century. At the same time, the manufactory was becoming a stable and ever growing form of production. In contrast to the Western European countries where the capitalist manufactory prevailed, Russian manufactories were divided into three types in terms of their social nature: capitalist manufactories, in which hired labor was utilized; serf manufactories, based on forced labor; and mixed manufactories, which employed both forms of labor. At the end of the 17th century, there were more than 40 metallurgical, textile, and other manufactories of all types in the country. Capitalist relations developed a great deal in the area of river transport. In the first half of the 18th century, simple capitalist cooperation developed and the number of manufactories grew. At the end of the 1760’s, there were 663 manufactories, including 481 in manufacturing industry and 182 in mining and metallurgy.

During this period, the nature of social relations and industrial production underwent important and contradictory changes. In the first two decades of the 18th century, it was primarily enterprises of the capitalist type that formed in the manufacturing industry. However, the narrow market in labor power and the rapid growth of industry gave rise to a shortage of free hands. For this reason, the government began to attach state peasants to mills on a broad scale. The edict of 1721 allowed merchants to purchase peasant serfs to work in their enterprises. This edict was applied particularly extensively in the 1730’s and 1740’s. At the same time, laws were promulgated registering hired workers to the enterprises in which they were working, and the attachment of state peasants increased. The industrial activities of peasants and posadskie liudi (merchants and artisans) were restricted. As a result, the serf manufactory held the leading position in the mining industry right up until 1861. The use of unfree labor also increased in the manufacturing industry during the 1730’s and 1740’s. However, in this branch, the feudal serf system retarded the development of capitalist relations only briefly. From the early 1750’s, the use of hired labor in manufacturing again began to grow rapidly, particularly in newly built enterprises. The attachment of peasants to manufactories came to an end after 1760. In 1762, the edict of 1721 was revoked. Restrictions on the industrial activity of peasants and posadskie liudi were gradually removed, and so by 1767, by official statistics, of the 43, 600 workers employed in manufacturing industry, 17, 900 (41 percent) were hired laborers and 25, 700 were forced laborers (59 percent). The use of hired labor in river transport continued to increase. In the 1760’s, there were 120, 000 hired workers on ships. In industry as a whole, the number of hired workers, including those employed in small industry and in water transport, amounted to about 220, 000 in the 1760’s. Capitalist relations arose in agriculture in the second half of the 17th century, and the process of stratification of the peasantry began in Russia. There emerged among the rural population a small group of rich peasants who organized commodity production in agriculture, employing the hired labor of impoverished peasants. Another indicator of stratification was the appearance of migratory workers among the peasantry, that is, peasants who went to work for wages in industrial enterprises and in river transport. During this period, the capitalist stratification of the peasantry was most noticeable in the northern coastal areas and the Urals. The substantial weight of wage labor in industry, the new tendencies in government economic policy of the 1750’s and 1760’s, the increased stratification of the peasantry, and changes in the sphere of ideology that were expressed in progressive circles’ realization that serfdom had to be ameliorated or even abolished —all these factors make it possible to assert that by the 1760’s capitalist elements had already formed a system of social relations and that the capitalist structure was forming in the womb of the feudal serf system.

The dominant serf order hindered the formation of new capitalist relations but could not halt the process completely. By the end of the 18th century, there were as many as 2, 294 manufactories—2, 094 in manufacturing and 200 in mining and metallurgy. Between the 1770’s and 1790’s, there was intensive development of the economy from small-scale commodity production to the capitalist manufactory. The number of industrial villages increased, particularly in the central provinces of the country. The newly rich peasant became a noticeable figure among capitalist entrepreneurs. By official data, 81, 747 workers were employed in the manufacturing industry in 1799; of this figure, 33, 567 were hired workers (41.1 percent) and 48, 180 were forced laborers (58.9 percent). By the end of the 18th century, the total number of hired workers in industrial production in the country had nearly doubled since the 1760’s, reaching 420, 000. In certain industrial provinces, the departure of peasants for industrial and agricultural employment involved as much as 20 percent of the male population.

Capitalist relations developed still more intensively in the first half of the 19th century. An important feature in the development of large-scale manufacturing was the further increase in the numbers and relative proportion of hired workers: in 1799— 33, 600 (41.1 percent), in 1825—114, 600 (54.4 percent), and in 1860—462, 000 (81.8 percent). The cotton industry became a leading capitalist branch: hired workers made up 92.1 percent of the total. Capitalist relations were becoming consolidated in the linen, silk, and broadcloth industries. In this area, hired workers numbered about 65 percent of the total. Forced labor remained dominant in the sugar-beet industry and the mining and metallurgy industry. Hired labor was also employed in the gold fields of Siberia, which were developed precisely in this period.

The industrial revolution began in Russia in the mid-1830’s. The manufactory based on manual labor was replaced by the factory. The development of capitalist relations continued in agriculture. By approximate calculations, there were about 4 million hired workers in industry and agriculture on the eve of the reform of 1861. The formation of the basic classes of capitalist society, the proletariat and the bourgeoisie, proceeded along with the development of capitalist relations; a national Russian market took shape. At the same time, the feudal serf system gradually disintegrated, and in the 1830’s it entered a period of profound crisis.

The victory of capitalism as a system occurred in Russia as a result of the implementation of the peasant reform of 1861 and not by revolutionary means. Consequently, vestiges of serfdom were preserved in the economic and political areas (estate land ownership, autocracy, and so forth), and these determined a number of features in the subsequent development of capitalism.

The development of industry accelerated after the abolition of serfdom. Enterprises using forced labor shifted to hired labor or closed down. New, purely capitalist branches of heavy industry appeared: in the Donbas, coal mining and metal smelting; in Baku, oil drilling; and in St. Petersburg, machine building. Railroad construction assumed enormous dimensions. A capitalist credit system was created. During the 1880’s and 1890’s, the influx of foreign capital into Russia increased. Crises arose in the Russian capitalist economy in 1867 and 1873. A sharp increase in industry began in the 1890’s and continued to the end of the century: coal mining increased more than three times and oil drilling and iron smelting by nearly three times, the length of railroads almost doubled, and so forth. During these years, Russia’s industry developed more rapidly than that of Germany or the USA. The process of the formation of the proletariat was accelerated. At the end of the 19th century, there were about 10 million hired workers in the country, including about 3.5 million agricultural workers. Including their families, the proletariat numbered no less than 22 million people, that is, 18 percent of the entire population of the country.

The development of agriculture from 1861 to the end of the 19th century was characterized primarily by an increase in commodity production and the growth of domestic and foreign markets. With respect to social relations, the most important phenomenon in the countryside was the disintegration of the peasantry into the rural bourgeoisie and rural proletariat. At the end of the 19th century, the rural bourgeoisie amounted to about 20 percent of all peasant households in a number of regions. Economically, however, it was dominant in the countryside. Between 34 and 50 percent of peasant land belonged to the rural bourgeoisie, including half or more of the rented land; this class owned 38 to 62 percent of the draft animals and 70 to 80 percent of the improved implements of production. The rural poor made up about 50 percent of peasant households, but they owned only 18 to 32 percent of the land, 10 to 30 percent of the draft animals, and 1 to 3.6 percent of the improved implements of production. The middle peasantry made up about 30 percent of the peasant households; their position was very unstable, and their disintegration was proceeding. The landlords deprived of the free labor of peasants by the reform of 1861 were forced to reorganize their farms in conformity with capitalist conditions. In the late 19th century, the capitalist system of agriculture predominated in 19 provinces of European Russia. The economy of these provinces (the Baltic coast, western and central Byelorussia, the Right-bank and Steppe Ukraine, Bessarabia, the Don, and the Lower Volga Region) was more closely bound up with the domestic and foreign market and was marked by more highly developed capitalist relations than that of other areas. In 17 provinces of the central chernozem region, the nonchernozem belt, and the Middle Volga Region, areas in which large landlord latifundia survived and which were remote from markets, the corvée system predominated. In seven provinces of the Left-bank Ukraine, eastern Byelorussia, and neighboring Russian regions, a mixed system of estate farming was prevalent.

The most typical feature of the history of capitalism in the post reform period was the contradiction between bourgeois productive relations, which had become dominant and were conducive to the development of productive forces, and vestiges of serfdom in the form of dvorianstvo (nobility) land ownership and autocracy, which hindered this process. The most advanced industrial and finance capitalism were combined in Russia with the most backward agriculture. The second feature was the development of capitalism not only in depth (that is, the further growth of capitalist agriculture and capitalist industry in a given territory), but also in breadth (that is, the spread of capitalist relations to new territories and regions, such as the Caucasus, Middle Asia, and Siberia). The development of capitalism in breadth proceeded by various routes, and the degree of its penetration into the economy of the national borderlands was not uniform. But as capitalism grew, the economic ties and all the other ties of the national borderlands with the center of the country and among each other constantly expanded and became stronger; these areas became organic parts of the capitalist economy of Russia. The rapid development of capitalism in breadth slowed its development in depth in the older areas. As a consequence, the sharpness of the contradictions inherent in capitalism and engendered by it was lessened and their resolution was retarded. On the whole, the development of capitalism was uneven: capitalist industry was concentrated primarily in the central part of European Russia, in the south, and in the Baltic region. The third important characteristic of Russian capitalism was the extremely high level of concentration of production in the main areas of industry. This preordained a comparatively brief term of development along progressive lines and its rapid growth into monopoly capitalism.

At the turn of the 20th century, capitalism in Russia entered the monopoly stage, the stage of imperialism. In the course of its development, the necessary preconditions for socialist revolution were created. The concentration and centralization of production and capital reached such a level that their socialization and shift into the hands of the people became an urgent social necessity. Imperialism exacerbated the contradictions inherent in capitalism to the extreme. The force capable of resolving the second tradictions also grew—the Russian proletariat, which, under the leadership of the Bolshevik Party, united all the toiling people and oppressed masses of Russia around itself and in October1917 overthrew capitalism, opening a new, socialist era in the history of humanity.



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an economic system based on the private ownership of the means of production, distribution, and exchange, characterized by the freedom of capitalists to operate or manage their property for profit in competitive conditions
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