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Key parameters of debate include: the extent to which capitalism is natural, versus the extent to which it arises from specific historical circumstances; whether its origins lie in towns and trade or in rural property relations; the role of class conflict; the role of the state; the extent to which capitalism is a distinctively European innovation; its relationship with European imperialism ...
- Overview
- History of capitalism
Also known as: free enterprise economy, free market economy, private enterprise economy
Written byRobert L. Heilbroner,
Robert L. Heilbroner
Norman Thomas Professor Emeritus of Economics, New School for Social Research, New York City. Author of The Worldly Philosophers; The Nature and Logic of Capitalism; and others.
Peter J. Boettke
Peter J. Boettke
Although the continuous development of capitalism as a system dates only from the 16th century, antecedents of capitalist institutions existed in the ancient world, and flourishing pockets of capitalism were present in Europe during the later Middle Ages. The development of capitalism was spearheaded by the growth of the English cloth industry during the 16th, 17th, and 18th centuries. The feature of this development that distinguished capitalism from previous systems was the use of accumulated capital to enlarge productive capacity rather than to invest in economically unproductive enterprises, such as pyramids and cathedrals. This characteristic was encouraged by several historical events.
In the ethic fostered by the Protestant Reformation of the 16th century, traditional disdain for acquisitive effort was diminished while hard work and frugality were given a stronger religious sanction. Economic inequality was justified on the grounds that the wealthy were more virtuous than the poor.
Another contributing factor was the increase in Europe’s supply of precious metals and the resulting inflation in prices. Wages did not rise as fast as prices in this period, and the main beneficiaries of the inflation were the capitalists. The early capitalists (1500–1750) also enjoyed the benefits of the rise of strong national states during the mercantilist era. The policies of national power followed by these states succeeded in providing the basic social conditions, such as uniform monetary systems and legal codes, necessary for economic development and eventually made possible the shift from public to private initiative.
Beginning in the 18th century in England, the focus of capitalist development shifted from commerce to industry. The steady capital accumulation of the preceding centuries was invested in the practical application of technical knowledge during the Industrial Revolution. The ideology of classical capitalism was expressed in An Inquiry into the Nature and Causes of the Wealth of Nations (1776), by the Scottish economist and philosopher Adam Smith, which recommended leaving economic decisions to the free play of self-regulating market forces. After the French Revolution and the Napoleonic Wars had swept the remnants of feudalism into oblivion, Smith’s policies were increasingly put into practice. The policies of 19th-century political liberalism included free trade, sound money (the gold standard), balanced budgets, and minimum levels of poor relief. The growth of industrial capitalism and the development of the factory system in the 19th century also created a vast new class of industrial workers whose generally miserable working and living conditions inspired the revolutionary philosophy of Karl Marx (see also Marxism). Marx’s prediction of the inevitable overthrow of capitalism in a proletarian-led class war proved shortsighted, however.
Adam Smith, paste medallion by James Tassie, 1787; in the Scottish National Portrait Gallery, Edinburgh.
Courtesy of the Scottish National Portrait Gallery, Edinburgh
Sep 11, 2017 · Footnote 4 In this essay, I put forward one possible understanding of capitalism and try to demonstrate what distinctive contributions the history of capitalism, thought of in this way, might offer to the even more important trend afoot: the broader, ongoing revival of historical interest in economic subjects, whether under the guise of the history of capitalism, business history, economic ...
- Jonathan Levy
- 2017
History's first example of a speculative run on the market is the famous Dutch tulip mania of 1633-7. The first tulips seen in northern Europe arrive in Antwerp in 1562 as a cargo of bulbs from Istanbul. Though native in many parts of the world (from Italy to Japan), these flowers strike a particular chord in the Netherlands.
A case in point is the most recent conception in The Cambridge History of Capitalism: ‘Capitalism, therefore, can be defined usefully as a complex and adaptive economic system operating within broader social, political, and cultural systems that are essentially supportive’ (Neal 2014: 4). 4 Since this definition does not identify the constituent elements of capitalism with clarity and ...
CAPITALISM Modern capitalism emerged as a social system in western Europe in the first half of the nineteenth century. The western European capitalist societies were distinguished by four features. On economic grounds they were the first societies in history in which economic activities were predominantly or-ganized via market exchange, based ...
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Oct 29, 2012 · Provide the basis for the rest of the course by examining the development of capitalism as it emerged in the first industrialised nation; Examine, via a history of its development, the basis on which capitalism operates; Look at the ways in which historical change comes about through the interaction of economic and social relations
