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Historical Context of Capitalism

Historical Context of Capitalism

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Historical Context of Capitalism

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  1. Historical Context of Capitalism Emergence and Nature of Capitalism

  2. Learning Objectives • Where does Capitalism Come From • What is Capitalism • What are its Impacts Additional Background Video (viewed first 15 minutes) THE WESTERN TRADITION 30. The Rise of the Trading Cities: Amid religious wars, a few cities learned that tolerance increased their prosperity Capitalism

  3. Capitalism: Major Sections Geographic Early Beginnings Characteristics Class Relations Finance Territorial & Geographic Changes Long Distance Trade New Ideologies Perceptions of Change Emergence of the Nation State Capitalism

  4. Early Beginnings • Profit Maximizing Emerges • Rise of the Urban Merchant Class • New class emerges from Serfs • Not tied to the Land • Society no longer based on personal relationships Capitalism

  5. Geographic Early Beginnings (“original globalization”) • Profit Maximizing Emerges • Trading Networks create untold wealth • Spatial Patterns • Northern Italy – Southern Terminus of European Trade • Taps into Mediterranean Sea and world beyond • Related to ancient Lotharangia • Key southern city initially Venice • Hanseatic League – part of Northern Terminus creates integrated economy around Baltic and into North Sea • Key northern city becomes Amsterdam Capitalism

  6. The trading “spinal cord” of early 16th century Europe Based on this ancient Kingdom Eugene Weber Capitalism

  7. Note how 20th century wars still focus on this geographic alignment this trade “incubator” Capitalism

  8. “Western Front” in two World Wars Capitalism

  9. Characteristics • Markets – Means of distributing scarce resources • Leaves behind State controls and Land based economy • Commodities now free to change hands • As a “New” Institution • Becomes the most important • Threatens the old (Feudal) order Capitalism

  10. Characteristics • Private Property • Title and ownership no longer solely through the crown/State • But property rights guaranteed by the State • Picture is an example of the enclosure of Feudal estates & commons Capitalism

  11. Characteristics • Profit • Drives all activity • No longer is “idleness” sought after • Hard work and accumulation of goods on this earth is GOOD! • “It’s glorious to get rich” • Deng-Tsao Ping • Modern day rendition of the Protestant Ethic Capitalism

  12. Characteristics • Progress • Competition becomes a virtue • Change and efficiency become watchwords • New Virtues are • Innovation • Change • Risk Taking Grist mill Capitalism

  13. Class Relations • Wealth based not Tradition based • More fluid • Aristocracy gives way to Meritocracy • Merchants ascendant class • Bourgeoisie • Can challenge Church and State (might this reflect present day Russia or even China???) • Labor becomes a commodity • Emergence of wage-labor • Rising of working class -- Proletariat Capitalism

  14. Finance • Money replaces land as ultimate measure of wealth • Cash transactions replace barter • Commoditization of Land, Labor, Time—Transportation • Alienation of society • Blood is thicker then water • But cash preferable to blood Capitalism

  15. Finance • Velocity & Accumulation of Capital • More is always better • Capital must always be invested • Competition requires continuous “destructive construction” Capitalism

  16. Territorial & Geographic Changes Rust Belt • Emergence of “Uneven Spatial Development” • Currently seen in variation of Coastal & Inland China • Rust Belt/Sun Belt in US • Core & Periphery in North-South Debate • Occurs at all levels • In cities – “wrong side of tracks” • In and between states, countries, trade blocs Capitalism Sun Belt

  17. China asexample Capitalism

  18. Vasco da Gama in India Long Distance Trade (“Modern Globalization Begins”) • Feudal Age: Trade was peripheral to system • Mainly for aristocrats based on luxury items • In Capitalism: Trade is central • Trade everything – luxuries to necessities • Transportation development central to process • Occurs at all scales Capitalism

  19. Long Distance Trade Spice Trade Routes • Trade thrives on differences • Resources are spatially dispersed and scarce • Trade shapes differences • Places seek competitive advantage • Consumers are ultimate winners in expanding trade • More choice • Lower price Portuguese Trader Capitalism

  20. New Ideologies • Capitalism effects perception of World (and Heaven) • Creates its own “Reality” (paradigm???) • Mixes economics, politics, culture, geographic relationships • Protestant Ethic emerges • Man’s role in creating his own world recognized Adam Smith Capitalism

  21. Perceptions of the Change Capitalism Almighty “dollar” Divine right of Kings

  22. “Society in the late Middle Ages was increasingly challenged by the emerging forces of mercantilism and commercial capitalism. The authority of the church was being eroded, and its abuse of privilege and power was a focus of much discontent. For many it seemed that the church had departed from the early spirit and ideals of Christianity”. Capitalism

  23. New Ideologies • Protestantism • Focuses on individuals direct relationship with his creator • Intermediaries not necessary Capitalism

  24. New Ideologies • Protestant Ethic Emerges Emphasizing • Delayed Gratification • Savings • Material Success • Sign of God’s grace • Not only the “poor inherit heaven” • Can enjoy life and the afterlife • Work becomes a Moral Obligation Max Weber Capitalism

  25. New Ideologies • Nature is demystified - controlled • Culture becomes secularized • Watchwords • Secularism • Individualism • Rationality • Progress • Democracy (new values?) Grand Coulee Dam Capitalism

  26. Nation-State Emerges • A new Geography • Political Organization based on common: • Language, culture, history, territory, identity… • Peace of Westphalia 1648 Otto von Bismarck Louis XIV Capitalism Signing the Peace Treaty of Westphalia

  27. Nation-States Emerge • Peace of Westphalia, 1648 recognizes the Nation-State as primary unit of international laws and relations Capitalism

  28. Nation-State Emerges • Capitalism instrumental in creating both Markets and Nation-States • State’s new duty is to set rules that cause Markets to Thrive Capitalism

  29. Summary • Geographically where does capitalism come from • Urban Centers and new urban class • Northern Italy (Mediterranean Sea) • Lowlands, Hanseatic League… (North Sea & Baltic Sea) Capitalism

  30. Iranian Protestant Reformation? AGHAJARI'S TRIAL IS PROSECUTION OF SHI'A SEMI-PROTESTANTISM! The attacks on Hashem Aghajari, the high ranking member of mojAhedine enghelAbe eslAmi (MEE), may seem like another factional fight in the Islamic Republic of Iran.  Iranian secular opposition has not seen that much significance in the arrest and trial of Aghajari, even though some members of Iranian clergy have gone as far as calling Aghajari the Salman Rushdie of Iran, and Ayatollah Meshkini, the main thinker of Islamic Republic, has called for death penalty against Aghajari.  The allegations against Aghajari seem so irrelevant to the nonreligious mind that many wonder why he is even arrested by IRI.  Even outside Iran, people closely follow the actions of Ayatollah Montazeri and Taheri, but do not see much to ponder on in the case of Aghajari, whereas in reality, both Montazeri and Taheri are trying to save the Shi'a clergy from its collapse, following the identification of Shi'a clergy with the Islamic Republic, but Aghajari's issue is not about saving the Shi'a clergy! The prosecution of Aghajari is one of the most important events in the history of Shiism in Iran.  It is as important as the Baha'i and Khomeini movements of the past.  If Baha'i movement wanted to make prophets and Christ out of the Shi'a clergy, and if Khomeini movement wanted to raise the status of Shi'a clergy to that of Imams and the Pope, Aghajari's call is to bring down the clergy, from the heavens back to Earth, to the level of a layman.  In a way, what Aghajari is stating is very similar to what Luther called for, in the 15th Century Europe, with regards to the Catholic Church, when he questioned the need for Catholic clergy as the intermediary of people and God, and spoke for direct contact of the individuals with the Christian God, which basically equated the clergy with the layman. Capitalism

  31. Whither Capitalism??? A special report on the future of finance: Greed--and fear Economist, The (London, England) - Saturday, January 24, 2009 The golden age of finance collapsed under its own contradictions. Edward Carr asks why it went wrong and what to do next THE monument to Soviet central planning was supposed to have been a heap of surplus left boots without any right ones to match them. The great bull market of the past quarter century is commemorated by millions of empty houses without anyone to buy them. Gosplan drafted workers into grim factories even if their talents would have been better suited elsewhere. Finance beguiled the bright and ambitious and put them to work in the trading rooms of Wall Street and the City of London. Much of their effort was wasted. You can only guess at what else they might have achieved. Capitalism

  32. Summers cautions on modest US recoveryBy Sean O'Grady in Davos, Monday, 1 February 2010, The Independent A clear warning about the true health of the US economy and the state of US-Chinese economic relations has been issued by Larry Summers, President Obama's leading economic adviser. Speaking at the World Economic Forum in Davos, Mr Summers was cautious on last week's apparently strong US growth figures. "What we are seeing is a statistical recovery and a human recession," he said. "My judgment ... will be that GDP growth will continue at a moderate rate at least for the next several quarters. What is disturbing is the level of unemployment. This is not just a cyclical phenomenon but also a structural… phenomenon.“ Capitalism

  33. Summary • What are its characteristics • Profit Maximizing • Market Economy • Private Property • Progress and Change • New Class Relations • Financial Industry Capitalism

  34. Summary • What are its impacts and/or consequences including geographic • Uneven Spatial Development • Expansion of Long Distance Trade • Emergence of new Ideologies • Emergence of the Nation-State Capitalism