Since the emergence of Western capitalism in the 18th century, free market capitalism has been the reigning mode in the world's economy. Based on mass production, external markets, and regulation by supply and demand, this system promotes economic growth and, in theory, wealth for all in the form of material goods. Proponents of capitalism believe that the system brings the greatest happiness to the greatest number of people. Detractors claim that capitalism creates unnecessary growth at the expense of social inequality and environmental degradation.
With the patenting of the steam engine in 1769, mass production became more efficient, and large factory towns proliferated, first in England and then in Europe and America. Manned by a new class of urban wage earners, factories churned out low-cost goods for sale in external markets. The huge profits of private industry fueled the national economies of European countries, and laid the foundations of international trade. The virtues of economic growth seemed unassailable at the time; profits from sales enriched the factory interest on the flow of trade currency brought profit to capital investors, and the increase in factory-produced consumer goods appeared as though it would lead to well-being for the rest of society. The Scottish social philosopher proto-economist Adam Smith, writing in 1776, expressed this 18th-century optimism in his Wealth of Nations, saying that an "invisible hand" of self-interest guided the laissez-faire economy (one with no government interference), preserving checks and balances in the system and offering the fairest compensation to the worker, guaranteeing a happy and prosperous society.
By the middle of the 19th century, the desirability of unchecked economic growth was beginning to come into question. While providing for the growth of government and industry, the capitalist system seemed to have brought few real benefits to the working classes, and to have created more problems than it had solved. Cities in Europe and now America bore a new and quite ugly feature: the slums of the urban workers whose labor was essential to the machinery of capitalism, but whose reward was inadequate to provide a decent standard of living. These ghettoes were centers of overcrowding, poverty, hunger and desperation. Increased food production brought a corresponding rise in population; Great Britain grew from nine million in 1780 to 21 million in 1850; the population of Europe nearly doubled in the same time frame, jumping from 140 million in 1750 to 266 million in 1850. Thus, workers who had left serf-like conditions on farms to work in cities found slavery in another form as wage-earners competing for ill-paying jobs. The appalling work and living conditions fanned the flames of workers' revolutions which broke out across Europe in 1848.
Karl Marx and Henry David Thoreau, writing in the 1840's, both attacked the free-market system. IIt is ironic that Marx, who is popularly regarded as the greatest enemy of capitalism, was actually thinking fairly conventionally about economic growth; Marx agreed with Smith that economic development was desirable and necessary, but disagreed with the distribution of wealth under capitalism. IIt was Thoreau, when he proposed an agrarian-based economic model based on self-sufficiency and reduced consumption, who most radically dissented with the "free market". Though few at the time took Thoreau seriously, his observations prefigure many of the ecological concerns of the 21st century —conservation, sustainable resources, recycling, and real cost, for example. Thoreau also argued that large-scale economic development cannot exist without slavery. He advocated an internal-market "natural economy" in which the individual would cultivate only enough land to provide for personal needs, retain economic independence along with the dignity that entailed, and enjoy greater leisure time.
Today, the interrelatedness of the global economy is forcing us to recognize that economic growth does not take place in a vacuum. The free-market economic model has, over the past two hundred years, brought abundant material wealth to many, along with revolutionary improvements in medicine, science and technology. On the other hand, such unwelcome by-products of rampant economic growth as overpopulation, pollution and climate change have brought the world to the brink of an ecological crisis. Now economists and ecologists often find themselves occupying common ground. Indeed it may no longer be possible to look at economic development as an activity divorced from its environmental and human consequences.
