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Understanding Capitalism: From origin to till date
When we try to understand the history of something, we must connect it from its origin to the present time. Today let's try to understand the evolution of capitalism.
Capitalism promised that it will bring widespread prosperity. It will provide better good and services qualities but as we see them today's world, the proxy wars going around, trade wars, climate change, terrorism, corruption, etc makes us question ourselves, "WHAT WAS THIS CAPITALISM FOR?".
Capitalism in a simple word is the economic structure of western modernization. Its emphasis on profit. Capitalism sees goods and services, not on intrinsic fundamentals or qualities or values but sees based on market value. If demand is null, for capitalism it is not of use, if there is certain demand then it is a successful outcome.
Capitalism is a broad concept, it not only encompasses the economic structure but also a political structure and also the social relations of the society on which it leans for the fulfilment of its interest.
At the beginning of markets, there were trades, exchange of goods, but when the market began to search for profit that was the time when capitalism planted its seeds.
On 29th May 1453, the Byzantine empire capital was captured by the Ottoman Empire.
After the rise of the Ottoman Empire, that cut off the route between Europe and Asia. As Europe was small land with limited resources but there were some feudal who were passionate about luxurious goods. And at that era, suppliers of their demand was India and China. Now, the land route was disrupted. And the alternative way was only through water. This, the search of India began through the sea voyage.
In 1492, October 12, America was discovered by the Italian explorer Christopher Columbus. This discovery brought America to the limelight. Precious metals, gold, silvers were found on new land. North America was the source of gold where Latin America was the source of silver.
As there were precious metals to be mined in the new world, people started to seek slaves to work for them.
In 1526, the first slave trade was done by the Portuguese and others followed. It was like taking a ship from Europe to make a sail to Africa do slave trade there, take the slave to newly discovered land mine precious metals and return. It was the triangle trade.
Some economists claim that capitalism started when the gold and silver from America entered Europe.
With the goods brought to Europe, a route to India was discovered and it was brought to India and China. This is how global trade began.
Due to the birth of capitalism, there was an increase in the flow of money in markets that created a rise in prices and people experienced inflation. These were observed globally.
Economic structure: Many companies, joint-stock were established for-profit motive e.g. east India company. In which profits were distributed through shares. The government provided them with a monopoly in business. There was an increase in trades globally.
Political structure: there were three. Classes. They were: lords, priest and command. Now a new class emerged as a middle class (business persons) that supported the monarchy. And the monarchy gained power. That was a great support to monarchy fighting against feudal.
Social relations: As feudal was power before and they emphasis of blood lineage. Now due to the rise of a new class, they established a system of competency.
In this era, goods were collected from one place and take to another place and sold them there.
Economic structure: Before was traditional economics where the market economy was taken as a limited one. This if two companies, X and Y want to take profit at the same time it is not possible, one has to go negative to make the other positive. But new economist like Adamsmith came and gave a new concept on economics that is called classical economies. Which emphasis on free trade everything governed by the market law.
Political structure: As a middle class (business class people) and monarchy were rising against the old concepts that are against the feudal lords and church (priest). They were successful in suppressing them. Now, middle-class people start to ask for a share in power and demanded a station be ruled by a body legislature and monarchy to be constitutional I
Social relation: society was more focused on individual freedom i.e individualism.
In this phase, the American independent revolution and the French revolution happened to preserve the motto of political structure. This there was a rise in the concept of liberalism. The economy was capitalism and social was individualism.
French and American revolution established liberalism which stands on liberty, equality and fraternity. Liberalism, capitalism and individualism is the view of the world from the eye of middle-class people.
As goods were only transported from one place to another. Countries started to capture others and make their colony for the resources. And as time passed away their accumulated goods were not able to fulfil the demand chain thus in Britain accidentally started to produce goods that were followed by others which triggered the establishment of industrialism capitalism.
This phase is the age of the factory for mass production.
As people were talking about individualism in Europe, talking about human rights in Europe and in the meantime, they were involved with the slave trade.
Middle-class people want the power to be limited to them, they want to share power with the monarch but they don't want the power to go below them to commands.
This was a dichotomy seen with capitalism.
Economic structure: As per classical economics, there will be a balance between producer, consumer and worker. The market will flow with their balance in interest but now with industrialisation, mechanization of production (replacement of workers by machines)disrupted the balance, there started exploitation. This is why socialism and marxism concept came to play. Labour consciousness, labour union, trade unions raised.
Political structure: At that times, the monarch used to start as the symbol of nationalism. But in this era, middle-class people spread the slogan of common nationality. All's nationality.
Social structure: Now, at this point, the lower class people (workers ) gave some rights that are an extension of the franchise. They were also made to felt they lost some stake in national power.
In the industrial phase, as we see to increase the production many different ways were applied, stream engine to combustion engines, cycle to rickets. This made the huge accumulation of capitals.
And due to labour rights, labours demanded more wages, goes to strick there was always issues about with labours this always increased in production cost.
And competition increased a lot in the market.
These were the reason why financial capitalism was born. In financial capitalism, production was not emphasised much. In this era, finance is used to gain finance. This investment concept aroused worldwide. These institutions, banks, real state companies came to play in markets.
Economic structure: there appeared a middle man in every sector. Now when someone produces some goods there is the middle man to take it to the consumers. The real economy of the market got into the shadow of these middle factors. There is gal between finance and the real economy. Betting on goods also started.
Political structure: financial institutions are also taken as partners in governance. Monarch remained constitutional. The establishment of global, regional organizations, common world concept arose, globalization, world trade organization were established. Financial institutions started to influence the n world economy.
Social structure: common world concept developed. One village-worldly concept raised.
This is all about the evolution of capitalism.
Capitalism talks about the profit and profit was successful in giving mankind a quality of life. It increased life expectancy and its greatest success comes with the creation of the global network, strengthening peoples connectivity with modern technology can't be denied.
On the other hand, it gave the world a world war which raised because of the rivalry in industrial power where world war was fought for the balancing of these powers. Economic depression, bubbles in markets are due to the gap between the real economy and finance. And climate change is also an outcome of capitalism where capitalism gave mass production with the exploitation of natural resources which is the reason for it.
And importantly, the covid is also due to the open markets which is the result of capitalism.
Is capitalism the worst concept for mankind or is benediction depends upon which side we stand on?
In my opinion, capitalism may have many merits but I feel it has destroyed the morality, rationality and accountability of humans beings. Hope in near future, we see some economist coming with the alternative concept of capitalism.