Growth of capitalism in the twentieth
century world
1.
What is capitalism?
Capitalism is
an economic system based on the private ownership of
the means of production and their operation for profit.
The Central characteristics of capitalism include capital accumulation, competitive
markets, a price system, private property and the recognition
of property rights, voluntary exchange and wage labour.
2.
How does it function?
In a capitalist economy, the investment and
decision making are being done by the owner of the property or wealth and the
prices and distribution of goods and services are mainly determined by the
competition of goods and services in the market.
3.
Forms of capitalism
Historians and economists have recognised
various forms of capitalism. They
are
laissez-faire or free-market capitalism,
state capitalism and
welfare capitalism.
Different forms of capitalism feature varying degrees
of free markets, public ownership, obstacles to free competition
and state-sanctioned social policies.
4.
Varies of capitalism
— Agrarian capitalism, sometimes known as market feudalism. This was a transitional form
between feudalism and capitalism, whereby market relations replaced some but
not all feudal relations in a society.
— Mercantilism, usually in historic
context, is the use of a variety of economic policies that aim to protect
domestic trade from foreign competition, commonly by raising tariffs on
imported goods and giving subsidies to domestic producers.
— Industrial capitalism, characterized
by its use of heavy machinery and a much more pronounced division of labor.
— Monopoly capitalism, marked by the
rise of monopolies and trusts dominating industry and other aspects of society.
Often used to describe the economy of the late 19th and early 20th century.
5.
Many more
— Colonialism, where governments sought to colonize other areas to improve
access to markets and raw materials and assist state-owned capitalist firms.
— Welfare capitalism, the
implementation of laws and government funded social programs, such as minimum
wage and universal healthcare, with the aim of creating a social safety net.
The heyday of welfare capitalism (in advanced economies) is widely set to
be from 1945 to 1973 as major social safety nets were put in place in most advanced capitalist
economies.
— Mass production, post-World War II,
saw the rising power of major corporations and a focus on mass production, mass
consumption and (ideally) mass employment. This stage sees the rise of
advertising as a way to promote mass consumption and often sees significant
economic planning taking place within firms.
— State capitalism, where the state
intervened to prevent economic instability, including partially or fully
nationalizing certain industries. Some economists also include the economies of
the Soviet Union and the Eastern Bloc in this category.
6.
Contd
— Corporatism, where government, business and labor collude to make major
national decisions. Notable for being an economic model of fascism, it can
overlap with, but is still significantly different from state capitalism.
— Financial capitalism,
where financial parts of the economy (like the finance, insurance, or
real estate sectors) predominate in an economy. Profit becomes more derived
from ownership of an asset, credit, rents and earning interest, rather than
productive processes.
— Stakeholder capitalism is a
theoretical system in which corporations are oriented to serve the interests of
all their stakeholders. Among the key stakeholders are shareholders, employees,
customers, suppliers, environment, and local communities
7.
The origin of capitalism
— The word capitalism has come from the word
Capital which dates back to 17th century.
— David
Ricardo refer to capitalism in his book Principles of Political Economy and
Taxation (1817)
— Pierre-Joseph Proudhon used
the term in his first work, What is Property? (1840), to refer
to the owners of capital.
— Benjamin Disraeli used the term in
his 1845 work Sybil.
8.
Use of the term capitalism in the modern sense
— The initial use of the term "capitalism" in its modern sense
is attributed to Louis Blanc in 1850 ("What I call 'capitalism'
that is to say the appropriation of capital by some to the exclusion of
others")
— Pierre-Joseph Proudhon in 1861said
("Economic and social regime in which capital, the source of income, does
not generally belong to those who make it work through their labour")
— Karl
Marx and Federich Engles refer to the “capitalistic” system in theory of
Surplus Value and Capital Volume I.
9.
Thoughts on Capitalism
— The processes by which capitalism emerged, evolved, and spread are the
subject of extensive research and debate among historians.
— The historiography of capitalism can
be divided into two broad schools. One is associated with economic
liberalism, with the 18th-century economist Adam Smith as a
foundational figure.
— The other is associated
with Marxism of Karl Marx. Marxists view capitalism as a historically
unusual system of relationships between classes, which could be replaced by
other economic systems that would serve human well-being better. They see
capitalism as originating in more powerful people taking control of the means
of production, and compelling others to sell their labour as a commodity. For
these reasons, much of the work on the history of capitalism has been broadly
Marxist.
10.
Capitalism before the 20th Century
— According to some historians like Jason Hickel (The divide: a brief
guide to global inequality and its solutions,2017) the modern capitalist
system originated in the "crisis of the Late Middle Ages", a conflict
between the land-owning aristocracy and the agricultural producers,
or serfs. Manorial arrangements inhibited the development of
capitalism in a number of ways. Serfs had obligations to produce for lords and
therefore had no interest in technological innovation; they also had no
interest in cooperating with one another because they produced to sustain their
own families.
11.
SYSTEM OF ENCLOSURE
— England in the 16th century was a centralized state. This centralization
was strengthened by a good system of roads and a disproportionately large
capital city, London. The capital acted as a central market for the
entire country, creating a large internal market for goods, in contrast to the
fragmented feudal holdings that prevailed in most parts of the Continent. (Ellen
Meikisins Wood, The Origin of Capitalism: A Longer View, 2nd edn
(London: Verso, 2002),
12.
Modern capitalism
— Modern capitalism fully emerged in the early modern
period between the 16th and 18th centuries, with the establishment
of mercantilism or merchant capitalism.
— Under mercantilism, European
merchants, backed by state controls, subsidies, and monopolies, made most
of their profits from buying and selling goods. In the words of Francis
Bacon, the purpose of mercantilism was "the opening and well-balancing of
trade; the cherishing of manufacturers; the banishing of idleness; the
repressing of waste and excess by sumptuary laws; the improvement and
husbanding of the soil; the regulation of prices.
13.
Industrial capitalism
— Mercantilism declined in Great Britain in the mid-18th
century, when a new group of economic theorists, led by Adam Smith,
challenged fundamental mercantilist doctrines, such as that the world's wealth
remained constant and that a state could only increase its wealth at the
expense of another state.
— Industrial capitalism, which Marx
dated from the last third of the 18th century, marked the development of the
factory system of manufacturing, characterized by a complex division of
labor between and within work processes and the routine work tasks.
Industrial capitalism finally established the global domination of the
capitalist mode of production.
14.
Industrial Revolution
— The productivity gains of capitalist production began a sustained and
unprecedented increase at the turn of the 19th century, in a process commonly
referred to as the Industrial Revolution.
— The growth of Britain's industry
stimulated a growth in its system of finance and credit.
15.
Free trade and globalization
In 1817, David Ricardo, James
Mill and Robert Torrens, in the famous theory of comparative
advantage, argued that free trade would benefit the industrially weak as well
as the strong.
By the mid 19th century, Britain was firmly wedded to the notion
of free trade, and the first era of globalization began.
16.
20th century Capitalism
— Several major challenges to capitalism appeared in the early part of the
20th century. The Russian revolution in 1917 established the first
socialist state in the world; a decade later, the Great
Depression triggered increasing criticism of the existing capitalist
system.
— One response to this crisis was a
turn to fascism, an ideology that advocated state capitalism.
17.
Keynesian Economy
— Keynesian economics became a widely accepted method of government
regulation and countries such as the United Kingdom and India experimented with mixed
economies in which the state owned and operated certain major industries.
18.
What is Keynesian theory?
— British economist John Maynard Keynes spearheaded a revolution in
economic thinking that overturned the then-prevailing idea that free markets
would automatically provide full employment—that is, that everyone who wanted a
job would have one as long as workers were flexible in their wage demands .
— The main plank of Keynes’s theory,
which has come to bear his name, is the assertion that aggregate
demand—measured as the sum of spending by households, businesses, and the
government—is the most important driving force in an economy.
— Keynes further asserted that free
markets have no self-balancing mechanisms that lead to full employment.
— Keynesian economists justify
government intervention through public policies that aim to achieve full
employment and price stability.
19.
Liberal Economy
— The state also expanded in the US; in 1929, total government
expenditures amounted to less than one-tenth of GNP; from the 1970s they
amounted to around one-third. Similar increases were seen in all
industrialized capitalist economies, some of which, such as France, have
reached even higher ratios of government expenditures to GNP than the United
States broad array of new analytical tools in the social
sciences were developed to explain the social and economic trends of the
period, including the concepts of post-industrial society and
the welfare state.
20.
POST OIL-CRISIS
— The "stagflation" of the 1970s led many economic commentators
and politicians to embrace market-oriented policy prescriptions
inspired by the laissez-faire capitalism and classical liberalism of
the 19th century, particularly under the influence of Friedrich
Hayek and Milton Friedman.
— Public and political interest began
shifting away from the so-called collectivist concerns of Keynes's
managed capitalism to a focus on individual choice, called "remarketized
capitalism".In the eyes of many economic and political commentators, the
collapse of the Soviet Union brought further evidence of the
superiority of market capitalism over planned economy
21.
GLOBALIZATION
— With globalization there is an increase in the mobility of people and capital since the
last quarter of the 20th century, leading to the adaptation of the
globalization models in non-capitalist states. By the end of the 20th century, capitalism had become
the pervasive economic system worldwide. The collapse of the Soviet
bloc in 1991 significantly reduced the influence of Socialism as an
alternative economic system. Socialist movements continue to be influential in
some parts of the world, most notably Latin-American Bolivarianism, with
some having ties to more traditional anti-capitalist movements, such as
Bolivarian Venezuela’s ties to communist Cuba.
22.
Historian Eric Hobsbawm
— The Age of Capital: 1848–1875 is a book by Eric Hobsbawm, first
published in 1975.
— James Fulcher :Capitalism (New York:
Oxford University Press, 2004) 19
— Degen, Robert A.
(2011-12-31):The Triumph of Capitalism
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