Capitalist Mode of Production

In Karl Marx's critique of political economy and subsequent Marxian analyses, the capitalist mode of production refers to the system of organizing production and distribution within capitalist societies. The process of capitalism, the dynamic of capital accumulation, preceded the development of the capitalist mode of production, beginning sometime in the 15th century. The capitalist mode of production, involving the dominance of wage-based labour and private ownership of the means of production, began growing rapidly in Western Europe from the 18th century, later extending to most of the world.

The capitalist mode of production is characterised by private ownership of the means of production, extraction of the surplus value created in production by a class of private owners (referred to as exploitation), wage-based labour, and distribution of both capital goods and consumer goods in a mainly market-based economy (referred to as commodity production).

A "mode of production" (in German: Produktionsweise) means simply "the distinctive way of producing," which could be defined in terms of how it is socially organized and what kinds of technologies and tools are used. Under the capitalist mode of production

• both the inputs and outputs of production are mainly privately owned, priced goods and services purchased in the market.
• production is carried out for exchange and circulation in the market, aiming to obtain a net profit income from it.
• the owners of the means of production (capitalists) are the dominant class (bourgeoisie) who derive their income from the surplus product produced by the workers and appropriated freely by the capitalists.
• A defining feature of capitalism is the dependency on wage-labor for a large segment of the population; specifically, the working class (proletariat) do not own capital and must live by selling their labour power in exchange for a wage.

The capitalist mode of production may exist within societies with differing political systems (e.g. liberal democracy, Social democracy, fascism, Communist state, Czarism), and alongside different social structures such as tribalism, the caste system, an agrarian-based peasant society, urban industrial society and post-industrialism. Although capitalism has existed in the form of merchant activity, banking, renting land, and small-scale manufactures in previous stages of history, it was usually a relatively minor activity and secondary to the dominant forms of social organization and production with the prevailing property system keeping commerce within clear limits.