Is Capitalism New?
Nov 28th, 2007 by Micah Tillman | 4 Comments |
I keep encountering very intelligent people who claim that Capitalism is a recent phenomenon. Which I find interesting.
How is it possible that people only recently (let’s say, since the founding of America) noticed that money was attractive, and became tempted to build their lives around it?
(After all: “Capitalism” = “Capital-ism,” “Money-ism.” Right? Like “progressivism” and “conservatism” are the worldviews that say progress and conservation are the most important things. Supposedly.)
Isn’t there some verse in the Bible about the “love of money?” The Bible was finished by 90 A.D. . . . And what is Ecclesiastes about? That’s from the OT, which was finished around 400 B.C.
So I thought I’d put it to you all: What is capitalism and is it new?
The word capital, meaning “private property,” dates from 1630. The term capitalist, meaning “one who owns private property,” was first recorded in 1791. “The term capitalism, meaning “the condition of having private property,” was first recored in 1854. The word capitalism, meaning “an economic system,” is from 1877.
SOURCE: http://www.etymologyonline.com
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I know that you weren’t asking whether the word itself was new, but I found these dates interesting.
Capitalism certainly existed among ancient nomadic herdsmen. Think about our discussion of the Tuareg people.
Maybe the aspects of capitalism that are new are the aspects that differentiate it from a command economy… The idea that Adam Smith’s invisiable hands ought to direct production and prices rather than a king, chief, etc.
Capital, economically speaking, does not merely mean money. Capital is one of the four basic economic inputs along with labor, land, and enterprise. So a shovel is capital, a machine on an assembly line is capital, and of course money is also capital.
If we use Jeff’s definition of capitalism (a perfectly good one), then in some sense capitalism has been around for forever, but it was very rarely the dominant economic system. Most governments could arbitrarily seize private wealth whenever they wished, giving no one any real incentive to make a profit and making it difficult for capitalism to flourish even where it was allowed. It was usually best to do just enough to get by and keep your head down. This is where Adam Smith’s analysis is so crucial. By acting purely for one’s own benefit, one does a huge amount of social good. As he put it, “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own self-interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.”
Perhaps the most notable capitalists during this time were (you guessed it) the Jews. Jews, being almost universally despised, were barred from practicing most trades by the guilds. However, most Christians were barred from charging interest (usury was against Church law), so the Jews were often accepted as moneylenders (a necessary evil, as it were). They also thrived as middleman minorities. This made them even more despised for a couple of reasons. 1) Despite huge barriers placed in their way at every opportunity, the Jews were nonetheless notably successful almost everywhere they went. Obviously, this infuriated the people who wanted to keep them poor and miserable. 2) Middleman minorities and moneylenders were considered to be wasteful drains on an economy. What does a middleman do except buy from one person and sell to another person at a profit? To the medieval mind, they were creating no value and producing nothing. Point 2, needless to say, is ridiculously false. If it were possible for both producer and consumer to get a better deal by “cutting out the middleman,” then why didn’t they do so? Simple answer: because it wasn’t actually more profitable. The middleman minority was (and is) a vital cog in the economy, determining what goods people want and how much of each, the best price and method to acquire them, setting up a convenient market for producers and consumers to find each other, etc. They benefited both producers and consumers and took a profit for their trouble (and risk — if they bought something at too high a price, they could be obliged to resell it at a loss). Moneylending, of course, is also vital to an economy — access to credit enables the creation of new businesses.
Capitalism, as an enshrined governmentally recognized economic system, is a fairly recent invention, certainly no earlier than the 16th century. The Dutch of the early 17th century are occasionally recognized as the first capitalist society. Britain was already making some progress towards it and John Locke would have a major influence on it a bit later. It may, of course, be only a coincidence that the adoption of capitalism in Western countries led to an explosion in Western productivity and wealth.