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The three booming decades that followed the Second World War, according to political economist Clara E. Mattei, were an anomaly in the history of contemporary capitalism. She writes that austerity did not originate with the emergence of the neoliberal era starting in the 1970s, but "has been the mainstay of capitalism." [41]
Marx and Engels predicted in 1848 that capitalism would spread to the entire world. By the end of the twentieth century, that prediction was confirmed: capitalism had indeed become global, but only after a tortuous and violent course of institutional change in many parts of the world. This paper provides a brief
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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
Nov 28, 2020 · Capitalism In Global History. This virtual issue affirms the relevance of global history to the history of capitalism, and the relevance of capitalism to global history. Neither proposition is self-evident. ‘Global history’ emerged in the early 1990s, in the wake of the demise of the Soviet Union and an apparently triumphant New World Order ...
- Andrew David Edwards, Peter Hill, Juan Neves-Sarriegui
- 2020
At a basic level, the timeline reveals that capitalism has a beginning—as opposed to being natural or inherently good—and thus can have an end, but capitalism has become hegemonic over the past couple hundred years, moving through different phases (including neoliberalism), shaping social relationships, impacting the environment and maintaining itself via capture of government institutions ...
Jul 3, 2019 · The foundation of today’s global capitalism was laid, in the aftermath of World War II, at the Bretton Woods Conference, which took place at the Mount Washington Hotel in Bretton Woods, New Hampshire in 1944. The conference was attended by delegates from all Allied nations, and its goal was to create a new internationally integrated system of trade and finance that would foster the ...
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A Comeback for Capitalism. In one of his articles, Fred Block has traced. the history of the term "capitalism" and. found some interesting facts (Block 2000). While the term became popular early with opponents of capitalism and also radical aca-demics, people in the business world saw it as tainted and did not like to use it. In the. 1970s ...
