The word, Capitalism was first invented by the English novelist, William Makepeace Thackery

Exchange Pre-Dates Capitalism from Adam Smith's Lost Legacy by Gavin Kennedy

Adam Smith did not write about what became capitalism in the mid-19th century (when the word was first invented in English by an English novelist, William Makepeace Thackery (The Newcomes, 1854).

Smith wrote about small scale merchants and manufacturers, and local town markets where produce was sold from near and far but definitely not in ‘big boxes’. Most business was small scale, funded by scrimped savings from past incomes, occasional inheritance, and modest borrowing. They were single owners or small co-partneries, in which the owners pledged all their assets in cases of bankruptcy – their liabilities were unlimited and extended to their entire fortunes.

There were a few larger-scale enterprises in coal mining, potteries, engineering works and shipping, but for the most part capital-stock was scarce, risky and carefully managed. By the end of the 18th century and through the 19th century, larger amounts of capital became available, associated with the entrepreneurial innovators, as a separate capital-owning stratum slowly emerged, eventually able to amass large capitals. New organizational forms appeared, re-modelled from the large chartered monopoly trading companies which had been formed to serve overseas trade and colonies, but without the trappings of monopoly powers and closely linked to civil projects and technological innovations.

The famous ‘butcher, brewer, and baker’ example long pre-dated 19th century capitalism. It was linked to the pre-historic propensity to ‘truck, barter, and exchange’, which Adam Smith regarded was the core principle of human behaviour in the simplest of market-place transactions. Fittingly, it appears in Book I of Wealth Of Nations as a necessary consequence of the division of labour and specialisation.