ABSTRACT
This chapter explains how capitalism developed out of earlier societies in a way that made inequality and cyclical instability an essential part of it. The present problems of inequality and unemployment take place under the economic system called capitalism. There are four aspects of society that can be used to describe how it changes and evolves: economic, political, technological, and ideological. Slavery exhausted the land because it could utilize only the simplest techniques and the same type of crop in most of the plantations. The problems of Western European feudalism included both natural and man-made ones. There continued to be a high level of inequality under feudalism, although serfs had somewhat greater rights than slaves. Use of market exchange, money, and the profit motive for production and hiring are the preconditions for the modern business cycle. These three preconditions explain why the cycle of boom and bust does not occur before capitalism, but does occur in capitalist system.
