Capitalism Essay, Research Paper

Capitalism is can be simply defined as an economic system, marked by open competition in a free market, in which the means of production and distribution are privately or corporately owned and development is proportionate to increasing accumulation and reinvestment of profits. However, capitalism tends to incorporate a certain “way of thinking”, driven by greed, the search for ever-increasing profits, worldwide expansion, and internal development. Starting from the earliest origins of capitalism, only societies with the capabilities and the appropriate mindset could flourish amidst this period of economic, social, and religious dispersion.

The earliest form of capitalism is seen in feudalism, the political and economic system based on the relation of lord to vassal held on conditions of homage and service. Feudalism was characterized by a surplus of agriculture and monopolistic rights, as only the members of town guilds could practice certain trades. Essentially, monopolistic redistribution of the product of society has been the essence of capitalism from the beginning, which originated from Feudalism.

The earliest establishment of capitalism originated in Rome through mercantilism. Mercantilism involves the distribution of goods in order to realize a profit, which is the fundamental goal of capitalism. Goods were bought at one site for a certain price and then moved to another site and sold at a higher price. As the Roman Empire expanded, mercantilism correspondingly expanded. But the fall of the Roman Empire caused European economies do eventually lose its focus of mercantilism and localize their economies. However, these mercantilist ideas gradually evolved into capitalism in the era after the fall of Rome. The absence of empires created the social space for capitalism. Capitalism was similar to mercantilism in its large-scale search for profit by acquiring goods at lower prices than one sells them.

However, capitalism evolved into a complex European system that soon spread around the globe and involved many aspects: the accumulation of capital, increased productivity, wage labor, mass-trade in necessities, individualist thinking, and the large-scale goal to produce wealth and develop the national economy. “The uniqueness of this system was not that it used money, but rather that it used it for the first time in history as capital to make profit.”(Stav. 35).

Capitalism first arose in Western Europe. Many factors led to the rise of capitalism. Technological advancements led to demographic and economic advancements. Christianity’s humanitarian ethics promoted manual labor, which helped provide the necessary productivity for a surplus. A dramatic population increase struck many areas, particularly western European, between the 10th and 14th centuries. This population increase demanded a greater food supply, bigger towns, and more necessities. Cities grew and banded together; subsequently merchants gained power and formed guilds.

The Industrial Revolution, a spark of technological advancements to benefit industrial production, communication, and transportation, was the single most important cause of the West’s transformation and expansion in the nineteenth century. “The Industrial Revolution provided economic incentive for opening up continents and exploiting their natural and human resources.”(Stav.173). England was the first country to industrialize. This was due to England’s abundant labor supply, secularization of technology and religion, strong domestic and overseas markets, large supply of capital, sound banking system, good transportation, rich coal deposits, stable government, politically supported merchant class, and array of inventions that transformed a number of industries.

England was easily suited to incorporate capitalism and spark its own industrial revolution. Other nations, such as China, did possess large economies and a flourishing merchant class, but they did not have the mindset for capitalism to arise. China was self-sufficient at the same time period that England became industrialized. China was not dependent on any other nation for necessities. Rather, China was a rich, stable nation that was fully convinced of its own power. However, China was not secularized and did feel a need for international expansion or profit, therefore they did not adapt a capitalist mindset. Chinese merchants were forbidden to go abroad, and foreign merchants were forbidden to sell goods in China. Chinese emperors were not impressed by European technology, and all profits obtained by the Chinese transformed into luxuries for the emperors.

Capitalism turned into a world-dominating power. Western Europeans spread and sometimes imposed their economic, religious, political, and social views on inferior nations. England became the “workshop of the world” and sought to transform the world into its personal market for manufactured goods. England proceeded to use third world nations for their raw materials and human resources, and turned towards creating new colonies rather then building their own empire.

The Second Industrial Revolution was a flourish of new technology and application of new sources of power. England, whose capital was invested into older machinery, became less efficient. Subsequently, England lost its sea power to the Germans in World War I. Companies became as big as countries in terms of net income in smaller nations. Oligopolies and monopolies thrived and controlled vital markets. “This Second Industrial Revolution promoted the shift from competitive to monopoly capitalism.”(Stav. 258). Developments achieved in the Second Industrial Revolution were responsible for the shift from waning colonialism to a worldwide scramble for colonies.

In addition to England, capitalism erupted in the United States and numerous nations in Europe. Capitalism’s aggressive nature enabled it to spread over the glove, influencing the formation of first, second, and third world nations. These third world nations became the markets and suppliers of raw materials for the mother nations, as the capitalist nations used profit as capital rather than consumption.