Throughout nineteenth-century Europe, industrialization and urbanization occurred rapidly and in tandem with wrenching socio-political transformation. Within several generations the continent experienced the disappearance of cottage craft industries and explosive demographic growth. Peasants fled their overcrowded farming villages for the shanty towns and tenements of big cities that were bursting at the seams but offered employment in factories, workshops, and retail stores. In the nineteenth century, that could seem a mixed blessing because of the lack of sanitation, the ubiquity of vermin, and the pollution: the inhabitants of Hamburg, Germany, saw “everything as if through a veil, for the smoke from a thousand chimneys spread over everything like a drifting mist.” To go from being a mainly farming society to a mainly industrial and urban one was a jarring shift in the extreme. Polarities of wealth were severe in the new metropolises, and, for many societies undergoing industrialization for the first time, for at least a generation the wages and living standard of workers were as likely to decline as improve. This is the general context in which the word “capitalism” emerged.

Unlike the word “capital,” which dates to ancient Rome, and “capitalist,” which was coined in mid-seventeenth-century Holland and Germany, “capitalism” is of relatively recent vintage. Before the mid-nineteenth century it appeared scattershot in the European and American press. Its consistent usage commenced in 1850, beginning with this passage by French socialist Louis Blanc in the ninth edition of his book The Organization of Labor: “What I would call capitalism … [is] the appropriation of capital by the few, to the exclusion of the many.” “Capitalism,” he continues, is “the mortal enemy” of those who would make capital – “the hen that lays the golden egg” – accessible to the masses. Later that same year, the anarchist-socialist Pierre-Joseph Proudhon mentioned the word in his personal correspondence, and in 1857 it made its appearance in one of his pamphlets. It makes sense that the word would have arisen in France in that time period: “socialism,” “communism,” and “liberalism” were coined there earlier in the century; adding “ism” to French words had become a natural linguistic reflex in the highly politicized atmosphere of class tensions and ideological conflict following the revolutions of 1789, 1830, and now 1848.