Capitalism as we know it in specifics today, including not only its economic theory but powerful political and social effects, emerged in form, as noted, rather slowly over a period of several centuries. It should be stated upfront that there is no complete agreement amongst economic historians/theorists as to what the essential features of capitalism really are. We will, however, reduce its historical characterization (which some will likely find debatable) to four basic features.
- Market-based production/distribution: Commodity production is based around rather complex interrelationships and dependencies that do not involve direct personal interactions between producers and consumers. Supply and demand is mediated by the "market" system.
- Private ownership of production means: This means that society grants to private persons the right to dictate how the raw materials, tools, machinery, and buildings necessary for production can be used.
- Decoupling of ownership and labor: In short, a constant class divide is inherent where on the top level, “capitalists”, by historical definition, own the means of production, but yet have no obligation to contribute to production itself. The capitalist owns everything produced by the laborers, who only own their own labor, by legal authority.
- Self-maximizing incentive assumed: Individualistic, competitive and acquisitive interests are necessary for the successful functioning of capitalism since a constant pressure to consume and expand is needed to avoid recessions, depressions and other negatives. In many ways, this is the “rational” behavioral view held where if all humans acted in a certain assumed way, the system would function without inhibition.