reading 6 (week 3)

Question 1

capitalism - the concept

Answer 1

• emerged as a term of critique + used this way for decades (-> polemical concept)
  criticized the class society
• concept (re)gained popularity after 2008 financial crisis
• concept emerged out of a critical spirit and from a comparative perspective

Question 2

capitalism - the history of the concept

Answer 2

capital/capitalism (in historical order)

• money
• assets consisting of money, monetary values, commercial paper, commodities, and manufacturing plant (always in regard to the profit that it should yield)
• 17th century ‘capitalist’: capital-rich man that has cash monies and great wealth and can live from his interest and rents (merchants, bankers, pensioners = persons who could lend money)
• late 18th century: class of wage masters who did not live off wages or rents but from profits (imbuing class society)
• 19th century (Louis Blanc): appropriation of capital by some to the exclusion of others
• 19th century (French dictionary): neologism: power of capital or capitalist
• 1922 British encyclopaedia: a system in which the mans of production were owned by private proprietors

!!Marx rarely used ‘‘capitalism’’, rather he used ‘‘capitalist mode of production’’
Karl Rodbertus asserted ‘‘capitalism has become a social system”

Question 3

(1870 definition capitalism Albert Schaffle)

Answer 3

*he advocated state-sponsored reforms in order to mitigate the conflict between wage labor and capital

capitalism =
national and international ‘‘organism’’ of production under the leadership of ‘‘entrepreneurial’’ capitalists competing for the highest profits

Question 4

characteristics of the concept of capitalism as it emerged in the period leading up to WW1

Answer 4

• individualized property rights
• commodification on markets for goods, labor, land and capital
• price mechanism and competition
• investment, capital, and profit
• distinction between power-holding proprietors and dependent propertyless wage workers
• tensions between capital and labor
• rising inequality
• factory system and industrialized production

Question 5

dual function of the term capitalism

Answer 5

• critical outlook on the present of that time
• scholarly analysis

this dual function makes it suspicious to some: both functions can but don’t need to stand in each other’s way

Question 6

capitalism until around 1500

Answer 6

primarily merchant capitalism
-> impact on econ. + soc. overall rather limited

Question 7

expansion of capitalism early modern era

Answer 7

since 1500 the concept expanded spatially into the newly established world-trading system + crossed new frontiers into the sphere of production + became important for society as a whole (esp. in England + the Netherlands

how it was evaluated by the public changed

Europe became the leading region in the history of capitalism

Question 8

what was all contingent with each other?

Answer 8

• rise of capitalism
• development of powerful territorial states
• expansion of Europe that led to colonialism

Question 9

Business and Violence: Colonialism and World Trade

Answer 9

Marx: capitalism came in the world soaked in blood and filth (= part true: age of discovery was age of subjugation, violent and commercial)

16th century = crown capitalism
17thcentury = merchant capitalism of the Dutch (contended with the French and English for influence in North America and Africa, England won)

gap between Western Europe and the rest of the continent became deeper + western Europe came to control 35% of the worlds’ territory

irritating amalgamation of trade and warffare, aggressive jumble of lust for power, capitlaist dynamism, lawless violence

Question 10

driving forces behind European expansion

Answer 10

• claims of territorial states in the midst of consolidating their power
• Christian missionary role (mostly acted as legitimization)
• economic interests

*conquistadors etc. were mostly acting independently, combining the military with the commercial

Question 11

triangular trade

Answer 11

Europe -> AFrican West Coast = products for mass consumption (textile, metal utensils, weapons)
African West Coast -> America = slaves (=cheap labour)
America-> Europe = sugar tobacco, cotton, other American export goods

*trade relations/centers also changed within Europe: center moved more and more to the West, with exports being transported from Eastern Europe

Question 12

Joint-Stock Company and Finance Capitalism

Answer 12

merchant capitalism + expanding colonialism -> organizational innovations

• 1602 United East India Company (VOC) = a monopoly with extensive quasi-governmental powers (formed to prevent internal competition)
• new institutions and practices of finance capitalism (e.g. stock exchange trading in securities), increasing role of banks (openly or concealingly taking deposits with interest)
  *largest fortunes were made in financial transactions, not by trading goods
• more and more small and large investors + speculations about value of capital (-> huge bubble English South Sea Company, bubble burst -> share prices free fell ->

!trade enterprises had already existed 16th century, but became public/bigger

Question 13

VOC

Answer 13

• 1602
• United East India Company
• joint-stock public corporation/company, with shareholders with limited liability
• shareholders changed (stock markets made belonging to an enterprise tradable)
• management was done by directors = vertical integrated organization with many branch offices out of Amsterdam
• operated to purchase, transport, and sell a variety of goods + became a manufacturing company
• fluid transition capitalist business and waging war
• all sorts of small and large investors/shareholders

seems modern, what’s distinct is: monopoly with extensive quasi-governmental powers (States-General gave VOC right to operate all Dutch trading east of the Cape of Good Hope + authorization to wage war, conclude treaties, take posession of land, and build fortresses)

!!fit with the political needs of the era: the VOC was formed to prevent competition among Dutch traders and to compete better with other states

Question 14

rise of the banks

Answer 14

• new institutions and practices of finance capitalism
• largest fortunes were made in financial transactions, not by trading goods
• more and more small and large investors + speculations about value of capital (-> huge bubble English South Sea Company, bubble burst)
• consequences of crises remained quite limited
• city govs wanted/requested the financial services of banks (they required more funding, wanted to make it through services of banks + collected tariffs and taxes)
• governments were often indebted to capitalists + compeled debt relief by offering privileges
• the Netherlands and England’s government succeeded in consolidating their public debt -> growing creditworthiness

stock market + speculation -> classes of society were introduced to hopes, gains, losses, disappointments of capital

Question 15

most important arenas in which capitalism rearranged the sphere of production even prior to industrialization

Answer 15

• plantation labor (plantations = large agricultural concerns specialized in producing high-quality staple commodities for export) = using slaves (slavery already existed, but became more brutal and bigger scope)
• agriculture
• mining
• proto-industrial manufacture

Question 16

capitalism as doubly free wage labor

Answer 16

labor free of

• noneconomic compulsion
• means of production

recruited and paid on a conctractual basis, paid within the framework of an exchange relationship of labor power against wages

!!triumph of capitalism came first with a massive increase in unfree labor!! = scarcity and insufficient suitability of native workers on plantations -> slave trade

Question 17

(indentured servants)

Answer 17

unfree workers

• got free trans-Atlantic crossing from Europe
• obligated to perform labor service for 5-10 years

Question 18

2 things that should be emphasized about te plantation economy

Answer 18

• it demonstrated how capitalism on the rise can reshape the sphere of production without consistently implementing its most important principles (exchange and commodity)
• relationship between slaveholder and slave was a relationship of extreme inequality between owner and property

under some conditions capitalism can work in different ways of organizing and exploiting work: e.g. homogenous staple commodities requiring unskilled work, poorly developed labor market, cultural and racial differences capitalists and workers

Question 19

efficiency of the slave economy

Answer 19

remained limited: slaves kept their output deliberately low due to lack of motivation and latent resistance

!it is unlikely that a more diverse agriculture + business based on diversified skills + later industrialization would have been possible in the long run on the basis of slave labor

*slavery remained profitable in 19th century + its abandoning had to do with political pressure rather than due to its economic inferiority

Question 20

northwestern Europe historic breakthrough to accelerated, ever-renewing, and self-driven growth

Answer 20

• Great divergence can be explained through looking at connections between econ, society, state and culture
• Intra-European comparison reveals that the lead England and, with some qualifications, the Netherlands enjoyed in the late 18th century was the result of long-term processes that extended across centuries / it is crucial to look at slow changes across a long time frame
• governments, colonization and proto-industrialization play an active role in the Great divergence: these factors were absent in China or appeared in a different form

Question 21

locating capitalism

Answer 21

around 1800, capitalism was a European phenomenon, fully expressed only in Northwestern Europe, however much it had been simultaneously facilitated and codetermined by global linkages