Difference Between Capitalism and Feudalism

Since time immemorial, there have existed several different economies all over the world. An economic system is the one that defines the mechanism of production, distribution, and allocation of goods, resources, and services in a given society or a particular area.


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The different types of economic systems include the capitalist economic system, the socialist economic system, mixed economy, and communism.

The basic build-up of this system comprises of the factors concerned with what needs to be produced, how it has to be produced and in what amount, and who is going to receive the output.

National economies can widely differ concerning unemployment, taxation, economic growth, income inequality, etc. and heavily impact the structure of society.

Key Takeaway

  1. Capitalism is an economic system based on private ownership, free markets, and the pursuit of profit; feudalism was a social and economic system prevalent in medieval Europe based on a land ownership and obligations hierarchy.
  2. Capitalism encourages competition, innovation, and growth through investment and entrepreneurship; feudalism limited social mobility and relied on agricultural production and labor.
  3. Capitalism allows for individual freedoms and private enterprise, while feudalism involves obligations and duties based on birth and social status.


Capitalism vs Feudalism

The difference between capitalism and feudalism is that capitalism refers to the capitalist economic system and is characterized by private or corporate ownership of goods to earn a profit, whereas feudalism relates more with socialism or the social-economic system where the people are divided into two classes- the nobility, who owns the system, and the peasantry, who works for the nobility.

Capitalism vs Feudalism

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Comparison Table

Parameter of ComparisonCapitalismFeudalism
Type of economic systemCapitalist economic systemSocialist economic system
Aim/purposeProfit of the higher classes is the main purposeTo make wealth and distribute it equally among all people and run the kingdom efficiently
OwnershipOwned by the public or corporate sectorOwned by the nobility or government
HierarchyConsists of the lowermost worker class, the ones who enjoy the food, the killers, the foolers, and the topmost ruling classConsists mainly of the nobility (or government) and the peasantry. The peasants are at the base level, preceded by the knights and tenants, and the ruler at the topmost level  
Role of governmentThe government only monitors the processesThe government assumes coercivity
ProsInnovation is rewarded and better products receive higher pricesStability of the kingdom is maintained and since the nobility and the  peasantry are the only two classes, it promotes equality among the peasantry
ConsInequality among the classes leads to worsening of the conditions of lower classes Dependence of the economy on land and agriculture lead to its decline when the peasantry became self-sufficient
HistoryIt emerged during the early Renaissance and still exists today in its modern formIt was dominant in medieval Europe during the 8th century AD/CE, and its disadvantages led to its decline

What is Capitalism?

Capitalism is the capitalist economic system characterized by the private or corporate dominion of capital goods involving investments under the private decision and manufacture, distribution, and allocation of goods as determined by the needs of the free market.

A capitalist economy is primarily aimed at making a profit. The role of the government in such an economy is only to monitor the processes rather than assuming coercivity. The hierarchy of this system involves the workers at the base level who feed all the other higher levels.

The second level is dominated by the ones who eat the food (i.e. enjoy the benefits offered by the base class), preceded by the topmost class comprising of the ones who rule everyone else and receive most of the profit. This leads to the greatest disadvantage of capitalism, which is inequality.

In this way, only the topmost section of the capitalist pyramid is benefitted and progresses the most, whereas the base class, who works the hardest is more strongly drawn into the circle of poverty.

The term ‘capitalism’ gained popularity majorly due to Karl Marx, who stated the capitalists as those who owned the means of production (the private class) and employed other laborers in pursuit of their profit, in his work ‘Das Kapital’.

The advantages of capitalism, like rewarding innovation and receiving higher prices for better products are shaded by the harsh truth that the labor of those lower in the pyramid enriches those at the top.

Although it encourages people to compete against each other for a better position, it cannot provide enough space for everyone to reach the top o the pyramid, irrespective of the turmoil put into it.


What is Feudalism?

Feudalism is a type of socialist economic system that was dominant in medieval Europe roughly from the 8th to 15th century AD/CE. It mainly consisted of the classes, the royalty, the nobility, the knights, and the peasants.

The nobility held lands under the crown and leased it to the knights in exchange for military service and the peasants were obliged to live on the lands of the nobles and do them service. Unlike feudalism, every member of the society was involved with feudalism.

It kept peace and protection among the land as well as maintained the stability of the kingdom, although the royalty and the nobility liked and supported it while the serfs and slaves did not enjoy it.

The king was the one who had complete control over the feudal system, owned all the land, and made decisions related to it.

The barons, also called the nobles were powerful and wealthy people who chartered the land from the king and rented it out to the knights in exchange for the military service as demanded by the king. The lowest section of the society comprised of the vassals, serfs, slaves, or the peasantry.

These were the people who were under the protection of the barons and vowed them homage, fidelity, labor, and a part of their produce. With increased trade opportunities, the peasantry became self-sufficient and this ultimately led to the decline of the land and agriculture-dependent feudal system.


Main Differences Between Capitalism and Feudalism

  1. Capitalism refers to the capitalist economic system whereas feudalism comes under the socialist economic system.
  2. Unlike capitalism, everybody in society is involved with feudalism.
  3. The capital economy is owned and run by the private or corporate sector while the feudal system is owned by the nobility or the government.
  4. The government only monitors the processes in the case of capitalism but assumes the coercive power in the feudal system.
  5. The hierarchy of capitalism involves workers/laborers, the clergy, the bourgeoisie, and the ruling class whereas the feudal system consists of the peasantry, the military, the nobility, and the royalty.
  6. Capitalism originated in the Renaissance period and continues to date but feudalism prevailed from 8th to 15th century AD/CE.
  1. https://books.google.co.in/books?hl=en&lr=&id=DigOBiiCUgIC&oi=fnd&pg=PP2&dq=capitalism&ots=yXrsfpRdrj&sig=jqMBy81lAeXZbaoY3W3DUJ2VIUo&redir_esc=y#v=onepage&q=capitalism&f=false
  2. https://books.google.co.in/books?hl=en&lr=&id=DoRxep7E2jwC&oi=fnd&pg=PA1&dq=feudalism&ots=kdHsuHhyDJ&sig=2151dDdXCVeUi5nPuPlJie0nj68&redir_esc=y#v=onepage&q=feudalism&f=false
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