How Capitalism Has Made America!


Capitalism is an economic system characterized by the concentration of the means of production in private ownership. They are exploited exclusively to make a profit. Investments, production, set prices and resulting income depend on market forces. There is no centralized control by the state in a capitalist society.

How Capitalism Started in America: Key Points

When did capitalism start in America? The formation of the United States is dated 1776. By this time, capitalist relations had already been established in Europe, and therefore the Americans had a shining example. But the development of the system in America had several peculiarities. We will talk about them below.

North American capitalism is commonly called migrant capitalism. This is due to the fact that at the beginning of the 17th century, the colonies were created by the English, the Dutch, and the French. By the end of the XVIII century, there were three regions (northeast, west, south) in North America.

They had a different character of production and business structure, which influenced the difference in the level of economic development. The division also made adjustments to the ways of industrial capitalism formation.

The Northeast Territory

The English bourgeoisie, who had the skills of trade and the tenacity of industrialists, moved to the Northeast. Manufacturing industries emerged in the area. Marketplaces were also established. As for the agrarian segment, the small farms appeared here.

Southern Area

The South attracted attention because of the fertility of its land. English aristocrats rushed here, and the government allocated large tracts of land to them. But the shortage of workers played its part. It served as the basis for organizing plantations with slave labor.

Western Territory

The West was uncultivated land that was not inhabited by anyone. The brave and adventurous moved here. They were called squatters. They occupied the land of their own will, creating farms.

The Industrial Revolution in the Formation of Capitalism

Capitalism in the USA did not develop only within the feudal system. From 1775 to 1783, the War of Independence of the North American Colonies took place. It played the role of a bourgeois revolution, thanks to which the restrictions on entrepreneurial freedom were removed. The demand for labor significantly rose, which led to an increase in its cost.

Entrepreneurs could not afford such high costs and therefore looked for a replacement in the form of specialized equipment. The solution to the high cost of labor was the stimulus for:

  • the emergence of inventions;
  • import of equipment from neighboring countries;
  • publication of the Patent Act.

The continuing European wars (1792 – 1815) initiated a surge in American foreign trade with other countries. This was the basis of enormous profits and helped form large financial fortunes. Trade expanded both through exports and intermediation. Because of its neutrality, America delivered to Europe those goods produced in the West Indies, the Far East, and the Middle East.

The beginning of the industrial revolution in the United States dates back to the first decade of the 19th century. If we consider the Northeast, the process here was similar to the English model. By 1860, the leading sectors of the economy had moved to factory-type production. But this rapid economic development of the United States was a springboard for the growing contradictions that arose between north and south.


Slavery was a key problem that caused tension between parts of the country. Americans from the South were in favor of keeping it. They wanted to move the system to western lands. The northern region leaned toward the farming way. That is why slavery and capitalism were closely related.

The outcome of the controversy was war. The northern region won the confrontation with great difficulty. After the elimination of the slave system and the settlement of the western part by farmers, the rapid growth of capitalism in all of America began. This was due to the following points:

  • the leasing of land by former black slaves;
  • the transfer of land taken from Indians to settler farmers;
  • the use of special equipment and fertilizers in agriculture.

The liberated black slaves did not receive any land, so they were forced to rent it from the former slave owners. This generated additional income for the landowners. The Indians were moved to reservations, and their land was given to farmers. This approach increased the amount of agricultural production.

Additional Economic Growth Factors

The creation of the railroad connection had an impact on the active growth of the economy. The length of the tracks increased five times in 10 years (1870 – 1890). At the same time, there was a large inflow of capital from European countries as well as mass immigration of workers. The creation of new equipment and mechanisms played an equally important role.

The Transition to Monopolistic Capitalism

From the end of the 19th century up to 1913, there was a struggle for the markets. Their presence is a stable development of the economy. The production of a large number of goods without their distribution inside and outside the country entails a crisis.

That is why developed nations tried to find a way to other markets, and America was no exception. This approach marked a new turn in the development of capitalism in the US.

The peculiarity is that the heavy industry has displaced the light industry in the transition to the next stage. This is due to the development of new industries:

  • rubber;
  • electrical engineering;
  • automobile;
  • aluminium.

There was still a shortage of workers in the United States. This was the basis for inventions that improved manufacturing processes. The result was a huge jump in the manufacturing output. The growth rate of industrial production increased from 1870 to 1913: 5 times in the world and 8.6 times in America.

The Modern World Economy

From 1914 to 1990, the formation of the modern capitalist order took place. After World War I, America became the leader as the industrial and economic activities of European countries were severely disrupted. During the years of confrontation, the production of industrial goods increased by 20%, and their exports increased by 1.5 times. America turned from a debtor to a creditor, providing loans to Europe.

From 1938 to 1990, production increased by 10.1 times. For comparison, the same figure for the rest of the developed countries combined was 8.5 times. A lot of books have been written about this, and a lot of research has been done. In the age of the Internet, plenty of information can be looked up online for your convenience.

There are capitalism essay examples on StudyDriver for those who want to gain relatable knowledge quickly or refresh their memory about significant facts on this topic. Such accessible sources of information will help a student when writing a paper, as well as anyone interested in the stages of development of the United States.


Capitalism and ideology became the basis for building a powerful state. They have been the basis for the formation of a modern world where every resident can enjoy products and services. It affects society as a whole, including elements of everyday life. Clothes, food, apartments, and cars are all the result of free market capitalism.

Capitalism article and permission to publish here provided by Gabriel Jones. Originally written for Supply Chain Game Changer and published on September 29, 2022.