Understanding the Capitalist Mode of Production is crucial to an understanding of both Modernisation Theory and Dependency Theory – I thought the passage below did a nice job of summarizing what the ‘capitalist mode of production’ is.
A a special treat for my American readers, I have used the correct, British spelling of ‘labour’.
‘Today we think of Capitalism as the normal way of organising economic activity and tend to take it for granted, but it is a very different mode of production to previous feudal economies and hunter gatherer livelihoods…
Capitalism is based on private ownership of enterprises such as factories, plantations, mines, offices or shops and the operation of these assets for profit. Other elements of the means of production such as labour, land, technology and capital are also privately owned and can be bought and sold.
Labour is the most important input for production. Under capitalism, labour, the work of men and women, has become a special type of commodity which is sold in the marketplace. Capitalists use their money to buy labour and combine this commodity with other inputs, such as land, raw materials etc. to produce new goods and services. In profitable businesses, the economic value of these new goods and services are greater than the other inputs required to produce them.
Workers’ labour generates a surplus value greater than the workers’ wages. When the capitalist sells the finished commodities on the market they extract surplus value from the labour of the workers by paying them less than the value of the work they have completed. Capitalists are able to profit from the labour of others because they control the means of production.
The capitalist mode of production was different to earlier feudalism because of the role for waged labour and the importance of capital and markets for acquiring wealth. The important transition which lead to the expansion of capitalism around the globe through colonialism was the concentration of capitalist power through the fusion of state authority and capital.”
Source – Brooks, Andrew (2017) The End of Development