History of capitalism

[2] According to some historians,[3] the modern capitalist system originated in the "crisis of the Late Middle Ages", a conflict between the land-owning aristocracy and the agricultural producers, or serfs.

In response, feudal lords sought to expand agricultural production by extending their domains through warfare; therefore they demanded more tribute from their serfs to pay for military expenses.

An important aspect of this process of change was the enclosure[9] of the common land previously held in the open field system where peasants had traditional rights, such as mowing meadows for hay and grazing livestock.

[12] Other scholars[13] argue that the better-off members of the European peasantry encouraged and participated actively in enclosure, seeking to end the perpetual poverty of subsistence farming.

An early emergence of commerce occurred on monastic estates in Italy and France, but in particular in the independent Italian city-states during the late Middle Ages, such as Florence, Genoa and Venice.

An early statement on national balance of trade appeared in Discourse of the Common Weal of this Realm of England, 1549: "We must always take heed that we buy no more from strangers than we sell them, for so should we impoverish ourselves and enrich them.

"[23][full citation needed] The period featured various but often disjointed efforts by the court of Queen Elizabeth to develop a naval and merchant fleet capable of challenging the Spanish stranglehold on trade and of expanding the growth of bullion at home.

In the words of Francis Bacon, the purpose of mercantilism was "the opening and well-balancing of trade; the cherishing of manufacturers; the banishing of idleness; the repressing of waste and excess by sumptuary laws; the improvement and husbanding of the soil; the regulation of prices..."[25] Similar practices of economic regimentation had begun earlier in medieval towns.

It was an offshoot of the earlier Company of Merchant Adventurers to New Lands, founded in 1551 by Richard Chancellor, Sebastian Cabot and Sir Hugh Willoughby to locate the Northeast Passage to China to allow trade.

[20] During the resulting Industrial Revolution, the industrialist replaced the merchant as a dominant actor in the capitalist system, which led to the decline of the traditional handicraft skills of artisans, guilds, and journeymen.

Also during this period, capitalism transformed relations between the British landowning gentry and peasants, giving rise to the production of cash crops for the market rather than for subsistence on a feudal manor.

Harvey (2019) wrote that "A flagship of the industrial revolution, the Lancashire mills and their 465,000 textile workers, was entirely reliant [in the 1860s] on the labour of three million cotton slaves in the American Deep South.

The poet George Gordon Byron wrote in 1823: "Who makes politics run glibber all?/ The shade of Bonaparte's noble daring?/ Jew Rothschild and his fellow-Christian, Baring."

Within a few decades, however, a new sort of banking had emerged, owned by anonymous stockholders, run by professional managers, and the recipient of the deposits of a growing body of small middle-class savers.

At the height of the First French Empire, Napoleon sought to introduce a "continental system" that would render Europe economically autonomous, thereby emasculating British trade and commerce.

[citation needed] In 1817, David Ricardo, James Mill and Robert Torrens, in the famous theory of comparative advantage, argued that free trade would benefit the industrially weak as well as the strong.

In Principles of Political Economy and Taxation, Ricardo advanced the doctrine still considered the most counterintuitive in economics: By the mid 19th century, Britain was firmly wedded to the notion of free trade, and the first era of globalization began.

In line with the teachings of the classical political economists, led by Adam Smith and David Ricardo, Britain embraced liberalism, encouraging competition and the development of a market economy.

Industrialization allowed cheap production of household items using economies of scale,[citation needed] while rapid population growth created sustained demand for commodities.

What an extraordinary episode in the economic progress of man was that age which came to an end in August 1914.The global financial system was mainly tied to the gold standard during this period.

[36] The eruption of civil war in the United States in 1861 and the blockade of its ports to international commerce meant that the main supply of cotton for the Lancashire looms was cut off.

The textile industries shifted to reliance upon cotton from Africa and Asia during the course of the U.S. civil war, and this created pressure for an Anglo-French controlled canal through the Suez peninsula.

The Russian revolution in 1917 established the first state with a ruling communist party in the world; a decade later, the Great Depression triggered increasing criticism of the existing capitalist system.

Keynesian economics became a widely accepted method of government regulation and countries such as the United Kingdom experimented with mixed economies in which the state owned and operated certain major industries.

[39] The "stagflation" of the 1970s led many economic commentators and politicians to embrace market-oriented policy prescriptions inspired by the laissez-faire capitalism and classical liberalism of the nineteenth century, particularly under the influence of Friedrich Hayek and Milton Friedman.

Market-oriented solutions gained increasing support in the Western world, especially under the leadership of Ronald Reagan in the United States and Margaret Thatcher in the UK in the 1980s.

[47] Some scholars, including Stephen Hawking[48] and researchers for the International Monetary Fund,[49][50] contend that globalization and neoliberal economic policies are not ameliorating inequality and poverty but exacerbating it,[51][52][53] and are creating new forms of contemporary slavery.

[62][63] Economist Radhika Desai, while concurring that 1914 was the peak of the capitalist system, argues that the neoliberal reforms that were intended to restore capitalism to its primacy have instead bequeathed to the world increased inequalities, divided societies, economic crises and misery and a lack of meaningful politics, along with sluggish growth which demonstrates that, according to Desai, the system is "losing ground in terms of economic weight and world influence" with "the balance of international power .

"[64] Gerstle argues that in the twilight of the neoliberal period "political disorder and dysfunction reign" and posits that the most important question for the United States and the world is what comes next.

Various thinkers have also explored what kind of economic system might replace capitalism, such as Bob Avakian, Jason Hickel, Paul Mason, Richard D. Wolff and contributors to the "Scientists' warning on affluence".