Historical Context of Capitalism Emergence and Nature of Capitalism

Historical Context of Historical Context of CapitalismCapitalism

Emergence and Nature of Emergence and Nature of CapitalismCapitalism

http://www.osterraederlauf.com/luegde/modern-history.htmlhttp://www.google.com/imgres?imgurl=http://www.osterraederlauf.com/luegde/images/peace.jpg&imgrefurl=http://www.osterraederlauf.com/luegde/modernhistory.html&h=251&w=374&sz=30&tbnid=cVOQoCOjyHAJ:&tbnh=79&tbnw=117&start=3&prev=/images%3Fq%3D%2B%2522peace%2Bof%2Bwestphalia%2522%26svnum%3D10%26hl%3Den%26lr%3D%26sa%3DG

CapitalismCapitalism 22

Learning ObjectivesLearning Objectives

Where does Capitalism Come FromWhere does Capitalism Come From What is CapitalismWhat is Capitalism What are its ImpactsWhat are its Impacts

Additional Background Video (viewed first 15 minutes)

THE WESTERN TRADITION

30. The Rise of the Trading Cities: Amid religious wars, a few cities learned that tolerance increased their prosperity http://www.learner.org/resources/series58.html?pop=yes&vodid=120661&pid=848#

Capitalism: Major SectionsCapitalism: Major Sections Geographic Early BeginningsGeographic Early Beginnings CharacteristicsCharacteristics Class RelationsClass Relations FinanceFinance Territorial & Geographic ChangesTerritorial & Geographic Changes Long Distance TradeLong Distance Trade New IdeologiesNew Ideologies Perceptions of ChangePerceptions of Change Emergence of the Nation StateEmergence of the Nation State



Early BeginningsEarly Beginnings

Profit Maximizing EmergesProfit Maximizing Emerges– Rise of the Urban Merchant ClassRise of the Urban Merchant Class

New class emerges from SerfsNew class emerges from SerfsNot tied to the LandNot tied to the LandSociety no longer based on personal Society no longer based on personal

relationshipsrelationships

http://www.medieval-spell.com/Medieval-Merchants.html


Geographic Early Beginnings Geographic Early Beginnings (“original globalization”)(“original globalization”)

Profit Maximizing EmergesProfit Maximizing Emerges– Trading Networks create untold Trading Networks create untold

wealthwealth Spatial PatternsSpatial Patterns

– Northern Italy – Southern Northern Italy – Southern Terminus of European TradeTerminus of European Trade

Taps into Mediterranean Taps into Mediterranean Sea and world beyondSea and world beyond

Related to ancient Related to ancient LotharangiaLotharangia

Key southern city initially Key southern city initially VeniceVenice

Hanseatic League – part of Hanseatic League – part of Northern Terminus creates Northern Terminus creates integrated economy integrated economy around Baltic and into around Baltic and into North SeaNorth Sea

Key northern city becomes Key northern city becomes AmsterdamAmsterdam


The trading “spinal cord” of early 16th century Europe Based on this ancient Kingdom

Eugene Weber

http://www.uncp.edu/home/rwb/lecture_mid_civ.htm


Note how 20th century wars still focus on this geographic alignment this trade “incubator”


“Western Front” in two World Wars


CharacteristicsCharacteristics

MarketsMarkets – Means of distributing – Means of distributing scarce resourcesscarce resources– Leaves behind State controls and Land Leaves behind State controls and Land

based economybased economy– Commodities now free to change handsCommodities now free to change hands– As a “New” InstitutionAs a “New” Institution

Becomes Becomes thethe most most importantimportant

Threatens the old (Feudal)Threatens the old (Feudal) order order

http://www.ub.uit.no/northernlights/eng/whitesea02.htm



Private PropertyPrivate Property– Title and ownership no longer solely Title and ownership no longer solely

through the crown/Statethrough the crown/State– But property rights guaranteed by the But property rights guaranteed by the

State State

– Picture is an example of the enclosure of Picture is an example of the enclosure of Feudal estates & commonsFeudal estates & commons

http://www.peakdistrict-nationalpark.info/_images/_pictures/tl48.jpg



ProfitProfit– Drives all activityDrives all activity– No longer is “idleness” sought afterNo longer is “idleness” sought after– Hard work and accumulation of goods Hard work and accumulation of goods

on this earth is GOOD!on this earth is GOOD!““It’s glorious to get rich”It’s glorious to get rich”

– Deng-Tsao PingDeng-Tsao Ping Modern day rendition of the Protestant EthicModern day rendition of the Protestant Ethic



ProgressProgress– Competition becomes a virtueCompetition becomes a virtue– Change and efficiency become Change and efficiency become

watchwordswatchwords– New Virtues areNew Virtues are

InnovationInnovationChangeChangeRisk TakingRisk Taking

Grist mill http://www.theponderosalodge.com/images/Grist_Mill_Summer.JPG


Class RelationsClass Relations Wealth based not Tradition basedWealth based not Tradition based

– More fluidMore fluid– Aristocracy gives way to MeritocracyAristocracy gives way to Meritocracy

Merchants ascendant classMerchants ascendant class– BourgeoisieBourgeoisie– Can challenge Church and State Can challenge Church and State (might this reflect(might this reflect

present day Russia or even China???) present day Russia or even China???)

Labor becomes a commodityLabor becomes a commodity– Emergence of wage-laborEmergence of wage-labor– Rising of working class -- ProletariatRising of working class -- Proletariat

http://pwbeat.publishersweekly.com/blog/wp-content/2007/09/HOH005_L.jpg


FinanceFinance

Money replaces land as ultimate Money replaces land as ultimate measure of wealthmeasure of wealth

Cash transactions replace barterCash transactions replace barter Commoditization of Land, Labor, Commoditization of Land, Labor,

Time—TransportationTime—Transportation Alienation of societyAlienation of society

– Blood Blood isis thicker then water thicker then water– But cash preferable to bloodBut cash preferable to blood


FinanceFinance

Velocity & Accumulation of CapitalVelocity & Accumulation of Capital– More is always betterMore is always better– Capital must always be investedCapital must always be invested– Competition requires continuous Competition requires continuous

“destructive construction”“destructive construction”

http://acas.com/images/investor_relations/dividend_slide.gif


Territorial & Geographic ChangesTerritorial & Geographic Changes

Emergence of “Uneven Spatial Emergence of “Uneven Spatial Development”Development”– Currently seen in variation of Coastal & Currently seen in variation of Coastal &

Inland ChinaInland China– Rust Belt/Sun Belt in USRust Belt/Sun Belt in US– Core & Periphery in North-South DebateCore & Periphery in North-South Debate

Occurs at all levelsOccurs at all levels– In cities – “wrong side of tracks”In cities – “wrong side of tracks”– In and between states, countries, trade In and between states, countries, trade

blocsblocs

Rust Belt http://content.answers.com/main/content/wp/en/4/42/Rust-belt-map.jpg

Sun Belt


China asexample


Long Distance TradeLong Distance Trade

(“Modern Globalization Begins”)(“Modern Globalization Begins”)

Feudal Age: Trade was Feudal Age: Trade was peripheral to systemperipheral to system– Mainly for aristocrats based on luxury Mainly for aristocrats based on luxury

itemsitems In Capitalism: Trade is centralIn Capitalism: Trade is central

– Trade everything – luxuries to Trade everything – luxuries to necessitiesnecessities

– Transportation development central to Transportation development central to processprocess

– Occurs at all scalesOccurs at all scales

Vasco da Gama in India

Trade thrives on differencesTrade thrives on differences– Resources are spatially dispersedResources are spatially dispersed

and scarce and scarce Trade shapes differencesTrade shapes differences

– Places seek competitive advantagePlaces seek competitive advantage Consumers are ultimate winnersConsumers are ultimate winners

in expanding trade in expanding trade– More choiceMore choice– Lower priceLower price


Long Distance TradeLong Distance TradeSpice Trade Routes

Portuguese Trader


New IdeologiesNew Ideologies

Capitalism effects Capitalism effects perception of World (and Heaven)perception of World (and Heaven)– Creates its own “Reality” Creates its own “Reality” (paradigm???)(paradigm???)

– Mixes economics, politics, culture, Mixes economics, politics, culture, geographic relationshipsgeographic relationships

– Protestant Ethic emergesProtestant Ethic emerges Man’s role in creating his own world Man’s role in creating his own world

recognizedrecognized

Adam Smith


Perceptions of the ChangePerceptions of the Change

Almighty “dollar” Divine right of Kings


“Society in the late Middle Ages was increasingly challenged by the emerging forces of mercantilism and commercial capitalism. The authority of the church was being eroded, and its abuse of privilege and power was a focus of much discontent. For many it seemed that the church had departed from the early spirit and ideals of Christianity”. http://www.osterraederlauf.com/luegde/modern-history.html



ProtestantismProtestantism– Focuses on Focuses on

individuals direct individuals direct relationship with relationship with his creatorhis creator

– Intermediaries not Intermediaries not necessarynecessary



Protestant EthicProtestant Ethic Emerges Emerges EmphasizingEmphasizing

1.1. Delayed GratificationDelayed Gratification

2.2. SavingsSavings

3.3. Material SuccessMaterial Success– Sign of God’s graceSign of God’s grace– Not only the “poor inherit heaven”Not only the “poor inherit heaven”– Can enjoy life and the afterlifeCan enjoy life and the afterlife

– Work becomes a Moral ObligationWork becomes a Moral Obligation

Max Weber



Nature is demystified - controlledNature is demystified - controlled Culture becomes secularizedCulture becomes secularized

– WatchwordsWatchwords SecularismSecularism IndividualismIndividualism RationalityRationality ProgressProgress DemocracyDemocracy(new values?)(new values?)

Grand Coulee Dam


Nation-State Nation-State EmergesEmerges

A new GeographyA new Geography Political Organization Political Organization

based on common:based on common:– Language, culture, history, Language, culture, history,

territory, identity…territory, identity…– Peace of Westphalia 1648Peace of Westphalia 1648

Louis XIV

Otto von Bismarck

Signing the Peace Treaty of Westphalia


Nation-States EmergeNation-States Emerge

Peace of Peace of Westphalia, 1648 Westphalia, 1648 recognizes the recognizes the Nation-State as Nation-State as primary unit of primary unit of international laws international laws and relationsand relations

http://content.answers.com/main/content/wp/en-commons/thumb/e/e2/300px-Europe_map_1648.PNG

http://www.geocities.com/Athens/Sparta/5414/Europe_1648_Westphal_1884.jpg


Nation-State EmergesNation-State Emerges

Capitalism Capitalism instrumental in instrumental in creating both creating both Markets and Markets and Nation-StatesNation-States

State’s new duty is State’s new duty is to set rules that to set rules that cause Markets to cause Markets to ThriveThrive


SummarySummary Geographically where does capitalism Geographically where does capitalism

come fromcome from– Urban Centers and new urban classUrban Centers and new urban class– Northern Italy (Mediterranean Sea)Northern Italy (Mediterranean Sea)– Lowlands, Hanseatic League… (North Sea Lowlands, Hanseatic League… (North Sea

& Baltic Sea)& Baltic Sea)

Iranian Protestant Reformation?Iranian Protestant Reformation? AGHAJARI'S TRIAL IS PROSECUTION OF SHI'A SEMI-PROTESTANTISM!AGHAJARI'S TRIAL IS PROSECUTION OF SHI'A SEMI-PROTESTANTISM!

http://www.ghandchi.com/159-Aghajari.htmhttp://www.ghandchi.com/159-Aghajari.htm

The attacks on Hashem Aghajari, the high ranking member of mojAhedine enghelAbe eslAmi (MEE), may seem The attacks on Hashem Aghajari, the high ranking member of mojAhedine enghelAbe eslAmi (MEE), may seem like another factional fight in the Islamic Republic of Iran. Iranian secular opposition has not seen that like another factional fight in the Islamic Republic of Iran. Iranian secular opposition has not seen that much significance in the arrest and trial of Aghajari, even though some members of Iranian clergy have much significance in the arrest and trial of Aghajari, even though some members of Iranian clergy have gone as far as calling Aghajari the Salman Rushdie of Iran, and Ayatollah Meshkini, the main thinker of gone as far as calling Aghajari the Salman Rushdie of Iran, and Ayatollah Meshkini, the main thinker of Islamic Republic, has called for death penalty against Aghajari. Islamic Republic, has called for death penalty against Aghajari.

The allegations against Aghajari seem so irrelevant to the nonreligious mind that many wonder why he is even The allegations against Aghajari seem so irrelevant to the nonreligious mind that many wonder why he is even arrested by IRI. Even outside Iran, people closely follow the actions of Ayatollah Montazeri and Taheri, but arrested by IRI. Even outside Iran, people closely follow the actions of Ayatollah Montazeri and Taheri, but do not see much to ponder on in the case of Aghajari, whereas in reality, both Montazeri and Taheri are do not see much to ponder on in the case of Aghajari, whereas in reality, both Montazeri and Taheri are trying to save the Shi'a clergy from its collapse, following the identification of Shi'a clergy with the Islamic trying to save the Shi'a clergy from its collapse, following the identification of Shi'a clergy with the Islamic Republic, but Aghajari's issue is not about saving the Shi'a clergy!Republic, but Aghajari's issue is not about saving the Shi'a clergy!

The prosecution of Aghajari is one of the most important events in the history of Shiism in Iran. It is as The prosecution of Aghajari is one of the most important events in the history of Shiism in Iran. It is as important as the Baha'i and Khomeini movements of the past. If Baha'i movement wanted to make important as the Baha'i and Khomeini movements of the past. If Baha'i movement wanted to make prophets and Christ out of the Shi'a clergy, and if Khomeini movement wanted to raise the status of Shi'a prophets and Christ out of the Shi'a clergy, and if Khomeini movement wanted to raise the status of Shi'a clergy to that of Imams and the Pope, Aghajari's call is to bring down the clergy, from the heavens back to clergy to that of Imams and the Pope, Aghajari's call is to bring down the clergy, from the heavens back to Earth, to the level of a layman. Earth, to the level of a layman.

In a way, what Aghajari is stating is very similar to what Luther called for, in the 15th Century Europe, with In a way, what Aghajari is stating is very similar to what Luther called for, in the 15th Century Europe, with regards to the Catholic Church, when he questioned the need for Catholic clergy as the intermediary of regards to the Catholic Church, when he questioned the need for Catholic clergy as the intermediary of people and God, and spoke for direct contact of the individuals with the Christian God, which basically people and God, and spoke for direct contact of the individuals with the Christian God, which basically equated the clergy with the layman.equated the clergy with the layman.


Whither Capitalism???Whither Capitalism??? A special report on the future of finance: Greed--and fearA special report on the future of finance: Greed--and fear Economist, The (London, England) - Saturday, January 24, 2009 Economist, The (London, England) - Saturday, January 24, 2009

The golden age of finance collapsed The golden age of finance collapsed under its own contradictions. under its own contradictions. Edward Carr asks why it went Edward Carr asks why it went wrong and what to do next wrong and what to do next THE monument to Soviet central planning was supposed to have been a heap of THE monument to Soviet central planning was supposed to have been a heap of surplus left boots without any right ones to match them. The great bull market of surplus left boots without any right ones to match them. The great bull market of the past quarter century is commemorated by millions of empty houses without the past quarter century is commemorated by millions of empty houses without anyone to buy them. Gosplan drafted workers into grim factories even if their anyone to buy them. Gosplan drafted workers into grim factories even if their talents would have been better suited elsewhere. Finance beguiled the bright talents would have been better suited elsewhere. Finance beguiled the bright and ambitious and put them to work in the trading rooms of Wall Street and the and ambitious and put them to work in the trading rooms of Wall Street and the City of London. Much of their effort was wasted. You can only guess at what else City of London. Much of their effort was wasted. You can only guess at what else they might have achieved. they might have achieved.


Summers cautions on modest US recoverySummers cautions on modest US recoveryBy Sean O'Grady in Davos, By Sean O'Grady in Davos, Monday, 1 February 2010, Monday, 1 February 2010, The IndependentThe Independent

A clear warning about the true health of the US economy and the state of US-Chinese A clear warning about the true health of the US economy and the state of US-Chinese economic relations has been issued by Larry Summers, President Obama's leading economic relations has been issued by Larry Summers, President Obama's leading economic adviser. economic adviser.

Speaking at the World Economic Forum in Davos, Speaking at the World Economic Forum in Davos, Mr Summers was cautious on last week's Mr Summers was cautious on last week's apparently strong US growth figures. "What we apparently strong US growth figures. "What we are seeing is a statistical recovery and are seeing is a statistical recovery and a human a human recessionrecession," he said. "My judgment ... will be that ," he said. "My judgment ... will be that GDP growth will continue at a moderate rate at GDP growth will continue at a moderate rate at least for the next several quarters. What is least for the next several quarters. What is disturbing is the level of unemploymentdisturbing is the level of unemployment. This is . This is not just a cyclical phenomenon but also a not just a cyclical phenomenon but also a structural… structural… phenomenon.“http://www.independent.co.uk/news/business/news/summers-cautions-on-modest-us-phenomenon.“http://www.independent.co.uk/news/business/news/summers-cautions-on-modest-us-

recovery-1885356.htmlrecovery-1885356.html



Capitalism without Freedom

http://www.economist.com/news/business-books-quarterly/21627564-private-companies-have-been-hugely-underestimated-china-unstated-capitalism

”The real issue is whether the Chinese government has created some new form of state-led capitalism. On closer inspection, its biggest contribution has been creating the space for private companies to do their thing.”


SummarySummary

What are its characteristicsWhat are its characteristics– Profit MaximizingProfit Maximizing– Market EconomyMarket Economy– Private PropertyPrivate Property– Progress and ChangeProgress and Change– New Class RelationsNew Class Relations– Financial IndustryFinancial Industry


SummarySummary

What are its impacts and/or What are its impacts and/or consequences including geographicconsequences including geographic– Uneven Spatial DevelopmentUneven Spatial Development– Expansion of Long Distance TradeExpansion of Long Distance Trade– Emergence of new IdeologiesEmergence of new Ideologies– Emergence of the Nation-StateEmergence of the Nation-State

Historical Context of Capitalism Emergence and Nature of Capitalism

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