Capitalism

Capitalism

Capitalism is a difficult, problematic term; it applies to a diversity of phenomenon spread across disparate historical cultures with substantially variable world views. However, the term is an Enlightenment European term used to describe European practices; so the term "capitalism" means more than just a body of social practices easily applied across geographical and historical distances, it is also a "way of thinking," and as a way of thinking does not necessarily apply to earlier European origins of capitalism or to capitalism as practiced in other cultures.

The earliest forms of capitalismÐ'--which we call "mercantilism"Ð'--originate in Rome, the Middle East, and the early Middle Ages. Mercantilism might be roughly defined as the distribution of goods in order to realize a profit. Goods are bought at one site for a certain price and moved to another site and sold at a higher price. As the Roman empire expanded, mercantilism correspondingly expanded. But the contraction of the Roman empire from the fifth century onwards also contracted mercantilism until, by the 700's, it was not a substantial aspect of European culture, that is, European economies tended to localize. Arabic cultures, on the other hand, had a long history of mercantilism, living as they did on the trade routes between three great empires: Egypt, Persia, and later Byzantium. As Islam from the seventh century A.D. onwards spread like wildfire across Northern Africa, Spain, the Middle East and Asia, Arabic mercantilism assumed an unprecedented global character. The medieval Europeans essentially learned mercantilism from their Islamic neighbors, evidenced in large part by the number of economic terms in European languages that are derived from Arabic, such as tariff and traffic. From the 1300's, Europeans would begin expanding their mercantile practices, resulting in a social mobility hitherto unseen in European culture as well as pushing Europeans, as it did the Muslims, to explore distant parts of the globe. The voyages of discovery were entirely driven by mercantile ambitions.

As time went on in Europe, mercantilism gradually evolved into economic practices that would eventually be called capitalism. Capitalism is based on the same principle as mercantilism: the large-scale realization of a profit by acquiring goods for lower prices than one sells them. But capitalism as a practice is characterized by the following:

The European Enlightenment

Adam Smith, The Wealth of Nations

The accumulation of the means of production (materials, land, tools) as property into a few hands; this accumulated property is called "capital" and the property-owners of these means of production are called "capitalists."

Productive laborÐ'--the human work necessary to produce goods and distribute themÐ'--takes the form of wage labor. That is, humans work for wages rather than for product. One of the aspects of wage labor is that the laborer tends not to be invested in the product. Labor also becomes "efficient," that is, it becomes defined by its "productivity"; capitalism increases individual productivity through "the division of labor," which divides productive labor into its smallest components. The result of the division of labor is to lower the value (in terms of skill and wages) of the individual worker; this would create immense social problems in Europe and America in the nineteenth and twentieth centuries.

The means of production and labor is manipulated by the capitalist using rational calculation in order to realize a profit. So that capitalism as an economic activity is fundamentally teleological.

General Glossary

Economics

Modernity

Teleology

Enlightenment Glossary

Classical Mechanics

Progress

As a way of thinking, capitalism involves the following:

Capitalism as a way of thinking is fundamentally individualistic, that is, that the individual is the center of capitalist endeavor. This idea draws on all the Enlightenment concepts of individuality: