Alas, the delicious charade of the title (its
allusion to the historically famous and supremely consequential History Of
The VKPb: A Short Course) will be lost on practically anybody who reads
these lines, so what? At least, I have amused myself and a few other fossils of
my ebbing generation…
This entry may be rightfully classified as a
reader-edificational piece. But there is definitely more to it than can be squeezed
into that definition. It is also part of a triptych, to be read in conjunction
with my other two already posted entries:
2. History Of Socialism: No Corpus Delecti?
Posted on March 30th, 2012.
3. History Of Communism: The Life Of A Specter.
Posted on March 31st, 2012.
***
History of capitalism virtually begins with
the prehistoric times, as a history of private ownership. Whether such a broad
brush is justified or not is a moot matter. After all, capitalism, both
good and bad, is always in the eye of the beholder.
Private ownership of
some means of production has existed since the invention of agriculture.
However, in feudal society much of this property was considered inalienable,
thus capital markets were not established. (The last sentence, from Wikipedia,
is practically nonsensical, considering the general capitalistic attitude
toward all private property. In fact, it used to be much easier for the monarch
in feudal times to dispossess a vassal of any or all of his possessions than
for one capitalist to dispossess another. But, in so far as property transfer
is concerned, a liege could not pass his property to another, because it was
not his to begin with, but effectively belonged to the sovereign who on the
other hand would have no qualms whatsoever to have such property change hands
five times a day, if he wished so.)
Some writers see
medieval guilds as forerunners of modern capitalist concerns (especially
through the use of apprentices as a kind of paid laborer); but economic
activity was bound by customs and controls, which, along with the rule of the
aristocracy that would expropriate wealth via arbitrary fines, taxes and
enforced loans, meant that profits were hard to accumulate. By the 18th
century, though, such barriers to profit were overcome, and capitalism became
the leading economic system in much of the world. (Which only proves
that modern Western economies imposing high taxes and tariffs are either not
capitalist or that capitalism has a different meaning in reality than in its
attempted definitions.)
In the period between
the late 15th century and the late 18th century the institution of private
property was brought into existence in the full legal meaning of the term.
Notable contribution to the theory of property is found in the works of John
Locke, who argued that the right to private property is one of natural
rights. (In fact, Locke argued in his 1690 Treatises on
Government that “the reason why men enter into
society is the preservation of his property.” How different that society
must have been from the Demosthenes ideal, as he unequivocally declares that “the property of the lazy and shiftless belongs to those who
are willing to face labor and danger.” Demosthenes, First Philippic.)
The
earliest stage of modern capitalism arising between the 16th and 18th centuries
is known as merchant capitalism and mercantilism. (For more on
mercantilism see my Ethics Of Commerce entry.)
Mercantilism declined in Britain in mid-eighteenth century when a new
group of economists led by Adam Smith challenged the basic mercantilist
doctrine that the amount of the world’s wealth remained constant and that the
state could only increase its wealth at the expense of another state. However
in less developed economies, such as Prussia and Russia, mercantilism still
continued to find favor. (I’ll need to examine
this claim regarding Russian mercantilism in other sources and either write a
substantial commentary or drop the subject altogether. As of now, there is
nothing particularly interesting in this narrative, but I will keep it here
just in case, until the question is resolved either way.)
The mid-eighteenth
century gave rise to industrial capitalism, made possible by the
accumulation of vast amounts of capital under the merchant phase of capitalism
and its investment in machinery. It marked the development of the factory
system of manufacturing, characterized by a complex division of labor between
and within work process and the routinization of work tasks; and finally
established the global domination of the capitalist mode of production.
The rise of
industrial capitalism was also associated with the end of mercantilism. Mid- to
late-nineteenth-century Britain is widely regarded as a classic case of laissez-faire
capitalism supplanting mercantilism in the 1840s. Following Smith and
Ricardo, Britain embraced liberalism, promoting competition and market economy.
So far, so good.
Industrial capitalism, related to the Industrial Revolution as a chicken to an
egg, must have been an all-right thing. The trouble with capitalism was not
what they did with the machines, but what they did with the money. Noam
Chomsky, although referring to a much later event, puts his finger on the right
spot, when he finds the origin of today’s catastrophic degeneration of
the international capitalist system in the murky waters of financial
machinations getting out of the Bretton-Woods control. So, here we are,
say welcome to the gravedigger of all capitalism, the wonderful Mr. Hyde,
or, officially, finance capitalism.
Finance capitalism
and monopoly capitalism. In the late 19th
century, control and direction of large areas of industry came into the hands
of financiers. This period is defined as “finance capitalism,”
characterized by a subordination of production to accumulation of money profits
in a financial system. Major features of capitalism in this period include the
establishment of huge industrial cartels or monopolies; the ownership and
management of industry by financiers divorced from production processes, and
the development of a complex system of banking, an equity market, and corporate
holdings of capital through stock ownership. Increasingly, large industries and
land became the subject of profit and loss by financial speculators.
Late 19th
and early 20th century capitalism is also described as an era of “monopoly
capitalism,” marked by the shift from laissez-faire to capital
concentration into large monopolistic or oligopolistic holdings by banks and
financiers, and marked by the growth of large corporations and a division of
labor, separating shareholders, owners, and managers.
By the last quarter
of the 19th century, the emergence of large industrial trusts had
provoked legislation in the United States to reduce the monopolistic tendencies
of the period. The federal government was playing a gradually larger role in
passing antitrust laws and regulation of industrial standards for key
industries of special public concern. By the end of the 19th century, economic
depressions and boom and bust business cycles had become a recurring
problem. In particular the Long Depression of the 1870’s and 1880’s and
the Great Depression of the 1930’s affected almost the entire capitalist
world, and generated discussion about capitalism’s long-term survival
prospects. During 1930’s Marxist commentators often raised the possibility of
capitalism’s decline or demise, often in contrast to the ability of the Soviet
Union to avoid suffering the effects of the global depression. (Aha! It was the bagman unchained who had caused the
depressions, and forced the hand of the government, whose interference was to
defeat the capitalist dream.)
Capitalism after
the Great Depression. The economic recovery
of world’ s leading capitalist economies in the wake of the Great Depression
and World War Two, accompanied by rapid growth, eased the doomsday
talk, as far as the future survival of capitalism was concerned. (Yes, and here is the catch:)
In the period
following the global depression of the 1930’s, the state played an increasingly
prominent role in the capitalist system throughout much of the world. In 1929,
for example, total government expenditures in the United States, federal, state
and local, amounted to less than one-tenth of GNP; from the 1970’s they
amounted to around one-third. Similar increases were seen in all industrialized
capitalist economies, some of which, such as in France, have reached even
higher ratios of government expenditures to GNP than the United States. These
economies have since been widely described as mixed economies.
In other
words, capitalism as-such ceased to exist at that time, validating Chomsky’s
assertion that there’s nothing remotely like
capitalism in existence, that, to the extent there ever was, it had disappeared by the
1920s or ’30s.
Which in my book brings the
history of capitalism to an end, and this short course with it.
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