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Introduction
This paper looks at the history of capitalism. It starts with an introduction followed by description of ancient capitalism, especially from 1st to 3rd century. Medieval capitalism is also tackled from 14th to 16th century, where barter trade evolves to monetary system. History of Modern capitalism is finally discussed in the 19th century context.
Essay Body
Capitalism is a social and economic setup where the drivers of trade are controlled by the private sector. Ancient capitalism started when wealth became mobile. This was enhanced by the introduction of money as a medium of exchange. Money developed what can be termed as commercial and financial capitalism.
In ancient capitalism, Roman Empire currency was the one used in trading activities. There was a double currency of gold and silver coinage, gold currency or aureus which was superior to silver denars since many silver coins were equivalent to a single gold coin. During the 1st century, the double currency was stable and towards the end of 2nd century, the denars equivalent to gold started to rise. This made gold the main currency. The rise of denars escalated to an extent that it was scrapped from use as medium of exchange after a series of attempts to stabilize it.
The Roman Empire prospered economically through emergence of many large economic regions in the 1st century. During the 2nd century, these regions started becoming independent and by 3rd century, they became totally self-sufficient. The consequence of independence was a decline in land worth in the Empire.
Rome was the capital to the Roman Empire; it thus formed the trade world trade hub. Rome was well connected to all transport infrastructures since it wanted to be united and the dominant Empire. It became the economic custodian by establishing connection to the interior regions and opening up new trade routes. Long distant trade was as old as the empire; it had started out in Scotland, Germania, and Eastern Europe. Rome’s African region was divided into two; central and western Africa, eastern and northern Africa. Regions that were far from Rome like eastern Asia, brought their wares for trade using caravans. Long distance trade evolved from specialized traders to general traders. As result of long distances to Rome, some regions in the east established their independence. One such region had its centre at Palmyra in the 3rd century where confined trade thrived.
From 1st century, individual artisan shops were scattered all over the Roman Empire. During the 2nd century, artisans started streaming to the towns, and the empire started its own workshops for army supplies. Single artisans who had joined together to form companies started to receive unfair treatment from the authorities. These companies were compelled to make supplies to the government thereby, turning the economy to a synchronized one.
Agricultural development was also evident during ancient capitalism through surfacing of agricultural machinery and farm inputs in parts of west Asia and Africa. This induced supply contest to Rome’s agriculture. Despite towns enlarging to cities in the 2nd century, there was no much difference between the rural and urban areas. The rich farmers obtained land from the poor in exchange of protection from bandits and revenue collectors. Soon, the waged people shifted to the rural areas to get what was not found in towns. The movement led to shrinkage of trading activities and recommencement of barter trade in the 3rd century. This marked the end of ancient capitalism.
Medieval capitalism was marked by the shift from barter trade to monetary system, the desire to earn profit lead to this shift. Nobility also evolved to monetary terms as a result of endowment and capacity. From 14th to around 16th century long distance traders formed trading companies. These companies managed transportation business since they owned the means and the commercial centers.
Credit and rent were the new trading inventions that came up. The church evaded collecting interest for the credit advanced by collecting rent. Collection of rent facilitated lending out markets, land and mines. Financial institutions were founded by rich families and major trading companies “…Bardi and Strozzi families…” The trading banks founded small-scale industries where they employed laborers who assisted in the production of finished goods for sale.
The government started receiving rivalry from the trading companies, banks and industries. To counter this, it pushed for establishment of monopoly in mining, trade and financial sector. Apparently, in the 16th century, some trade alliances had developed great influence in the government activities. Some went to an extent of funding government war activities in order to gain some favors.
Agriculture thrived during medieval capitalism period as a result of rise in demand for industrial material input and foodstuff to feed the town dwellers. Agricultural products changed to specialized production and farming. Agricultural land ownership changed a system where one would own land through renting or leasing from the government.
During the medieval capitalism period, there were social, economic and religious crisis. As a result of increased trading profit, liquidity increased. This led to increase of cash in circulation thereby lowering the value of money. Wealth inequalities, diseases and industrial strife created social problems. From 13th to 16th century uprising, industrial and civil resistance marred economic and social sector.
Modern capitalism can be attributed to the works of Adam smith (1723-1790) who advocated for “Free competition and free trade will lead to social harmony and justice” He goes further to explain that government’s work is to provide enabling environment for liberated trade. Modern capitalism in the 19th century occurred out of European countries taking over in political and industrial revolutions. Industrial revolution arose from advancement in science and technology, innovations resulting to evolvement of industries from small scale to large scale manufacturing entities. Industries shifted from the traditional production methods to mechanized methods.
Political liberalization played a key role in development of Modern capitalism; there was the development of three organs of a government which enabled better government performance. Europe’s dominance in world politics in1880’s led to the scramble and partition of the world. Two colonies emerged; settlement colonies which were as a result of religion, overpopulation and political reasons, commercial colonization which were as beneficial to the trading companies and the government for commercial purposes.
During this period, capital investment increased as a result of brisk economic growth in European countries and emergence of new production, transport and energy technologies. Monopoly capitalization thrived greatly as a result of merger and consolidation of trading and production companies, as they manipulated the market by colluding in fixing prices. Financial capitalism also flourished with the increas0e in banks that provided credit for procurement of raw materials, stocks and capital in foreign markets.
Conclusion
Finally, Modern capitalism improved people’s living standards and quality of life. There was increased infrastructure, development in the colonized regions as well as economic activities. Trade and territorial agreements were arrived at in order to safeguard markets, though their collapse later led to the 2nd world war.
Reference
Aston, T. H. Landlords Peasants and Politics in Medieval England.
Past and Present Publications. Cambridge: Cambridge University Press. 2006.
Kinder, H., & Hilgemann, W. The Penguin Atlas of World History: From The French Revolution To The Present (Volume 2) Translated London: Penguin Books. 2003.
Love, J. R. Antiquity and capitalism: Max Weber and the sociological foundations of Roman civilization. New Yolk: Routledge press. 1991.
McCraw, T. K. Creating modern capitalism: how entrepreneurs, companies, and countries triumphed in three industrial revolutions. Allston: Harvard University Press. 1997.
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