Western Europe is the first civilization in which new bourgeois relations arose, gained strength and ultimately won, that is, another formational shift took place - from feudalism to capitalism. They first appeared in large trading cities of Italy (such as Florence, Genoa) at the end of the 14th century, in the 15th-16th centuries. spread to many countries of Western Europe: Germany, France, England, Spain and Portugal. Over time, this process covered most of the world, but “being drawn in” into it took place in the context of the growing Europeanization of the world and the strengthening of ties and economic dependence of countries on each other.

Capitalism in the city and in the countryside

The centers of development of bourgeois relations were cities. A new layer of people was emerging there, consisting mainly of merchants, moneylenders and guild foremen. All of them had capital (the fastest way to their acquisition was through trade and usury operations), which were not hidden in chests, but invested in production. Moreover, production is a new type, more efficient, giving high profits. During this era, the workshop began to be replaced by manufactory - large-scale production, based, unlike the workshop, on the internal division of labor and hired labor. Manufactories were serviced with the help of hired labor; it was headed by an entrepreneur who owned the means of production and organized the production process. There were two forms of manufacturing: centralized (a merchant-entrepreneur himself created a workshop, a shipyard or a mine, and purchased raw materials, supplies, and equipment himself) and a much more widespread - dispersed (the entrepreneur distributed raw materials to home-based artisans and received from them finished goods or semi-finished products). The countryside, the main stronghold of feudalism, was drawn into bourgeois relations much more slowly than the city. Farms were formed there, with hired labor from peasants who had lost their land, that is, who had ceased to be peasants in the full sense of the word.

This process of de-peasantization went through various intermediate forms, as a rule, through the transition to rent, which meant the abolition of fixed payments and rights to hereditary holding. In the village, the role of entrepreneurs could be rich peasants, merchants, or sometimes the feudal lords themselves; this happened, for example, in England, where new nobles (gentry) drove peasants off the land and turned it into pastures for sheep, selling wool. But, as a rule, landowners preferred to maintain the old order. The rate of development of capitalism depended on the speed of penetration of bourgeois relations into the countryside, which was much more conservative than the city, but produced the bulk of production. The process progressed most rapidly in England and the Northern Netherlands, where the rapid flourishing of manufacturing coincided with the bourgeoisification of the countryside. In that era, a new “hero of the time” appeared, an enterprising, energetic person capable of withstanding fierce competition and creating capital literally out of nothing. The development of capitalism was accompanied by technical progress, the destruction of traditional corporate ties, and the formation of common markets - national and pan-European. But in the XV-XVI centuries. Even in those countries where bourgeois relations successfully developed, the new way of life still existed in the “context” of feudal relations, which were still quite strong and did not want to give up their place voluntarily. The base of capitalism was weak, so there was room for movement back, which is what happened in a number of European countries. These included Italy, Spain, Portugal, and Germany.

Monologue of power

During the transition era, the balance of power between government and society changed dramatically. Their dialogue began to give way to the dictates of the king. Royal power achieves maximum centralization and independence in relation to society. A huge bureaucratic apparatus is created (especially in France), a permanent army in public service. The king himself makes laws and manages finances at his own discretion. Estate assemblies either cease to be convened at all, or become completely dependent on the authorities. This type of monarchy is called absolute. Its appearance was possible only in a special situation, when the bourgeoisie, separated from the urban class, entered into competition with the nobility. This increased the maneuverability of power and expanded the space of its freedom. In addition, the formation of a single internal market required centralization and the elimination of feudal unrest. As a rule, monarchs sought to maintain a certain balance of power in society, maneuvering between opposing social strata, but at the same time remaining a form of power for the nobility. The prosperity of the country and the longevity of the monarchy itself often depended on the chosen tactics. Thus, in France, Henry IV (1589-1610), on the one hand, sought to support the impoverished peasantry (lowered taxes, freed them from arrears, prohibited the sale of livestock and tools for debts), on the other hand, he encouraged the creation of manufactories and trade.

The policy of improving the country's economy and maintaining the balance of power continued under Cardinal Richelieu (he actually ruled the country from 1624 to 1642). The absolute monarchy in England found itself in a more difficult situation, where the involvement of the countryside in bourgeois relations was especially violent and led to great upheavals. In this situation, the Tudors supported new processes (gave benefits to merchants, encouraged colonial conquests, and laws against vagrants ensured the cheapness of hired labor), but at the same time tried to stop them. While protecting the workshops, they slowed down the growth of manufactories, prohibited fencing, which damaged agriculture and undermined social stability in the country. As a result, the state’s desire to regulate the economy quite quickly ended in a crisis of power and revolution. Another example is given to us by Spain, where the absolute monarchy remained extremely conservative, did not support crafts and trade, but, on the contrary, strangled the cities with taxes, focusing mainly on the nobility. As a result, the manufactories that had already appeared in Spain withered, trade declined, the economy declined, and Spain, despite the huge influx of gold from the colonies, turned into one of the most backward countries in Europe.

Conditions for the emergence of capitalism

Why did bourgeois relations spontaneously arise in Europe? After all, in other civilizations there were opportunities for the emergence of capitalism, for example in China, and especially in Japan. Although science has not yet given comprehensive answers to these questions, it is still possible to identify some special features of the Western European version of civilizational development, which opened the way for the “European miracle.” Western Europe was a direct heir to the Greco-Roman world, a world with an unusually high level of development of commodity-money relations for antiquity, with the right to unregulated property, and with an orientation towards an active creative personality. The emergence of capitalism would have been impossible without urban communal movements. In the city, which was winning self-government and independence from the state, a layer of people was formed with free capital, which gave birth to the future bourgeoisie. The formation of active classes defending their rights forced the state to cooperate with them. Naturally, the possibilities of putting pressure on society and on economic processes remained (and were used), but they were still limited. The position of the church in relation to economic issues and commerce was also important. Already from the 13th century. it softens its doctrines regarding those activities traditionally considered “unclean.” While condemning usury, the church did not condemn bills of exchange, pledges, or investments. This led to the fact that trade in the public consciousness gradually received “citizenship rights”, and after the Reformation it began to be considered a very worthy occupation.



The 15th-18th centuries are characterized by several stages of development of capitalism: commercial capitalism and manufacturing capitalism. The main forms of organization of production were capitalist simple cooperation (CPC) and capitalist complex cooperation (manufacture). Capitalist simple cooperation (CSC) is a unity of joint action and a form of association. This is the cooperation of homogeneous (identical) concrete labor. It can take various forms:

1) purchase of finished products by a merchant;

2) advances or loans for certain works, the merchant in this case acts as a moneylender;

3) distribution system, the merchant - moneylender - entrepreneur controls almost the entire production process of pseudo-independent home-based artisans.

Fernand Braudel combines the second and third forms, calling such production “homework.” Homework is a form of production in which the merchant acts as an employer. Simple cooperation appeared long before capitalism, but only capitalist freedom - personal and material freedom - made the CCP a ubiquitous phenomenon. Researchers find homework in the 13th century and in the 18th century, but its peak occurred in the 16th century. Let's give the source. The traveler writes about the Swabian villages of the early 18th century: “It was summer, all the women came out of their houses and sat on the threshold of their homes. And each...was hard at work: spinning lace, black or white, or “blond”, in which linen, gold and silk threads were intertwined. At the end of the week, the lacemaker will take the fruits of her labor either to a neighboring market, or, most often, to a buyer who advanced her with raw materials, designs brought from Holland, and who retained her products. Then she will buy vegetable oil, some meat, rice for the Sunday feast.” It turns out that the famous Dutch lace was made in Swabian villages, the traveler was surprised.

The second stage of development of capitalism is the manufacturing stage. Marx believes that from the middle of the 16th century to the last third of the 18th century there was a manufacturing period of capitalism in Western Europe. Manufacture is a relatively large capitalist enterprise based on the division of wage labor and craft technology. It arose in the XV-XVI centuries. and at the end of the 18th century it was replaced by machine production. The owners of the manufactories were merchants, wealthy artisans, and hired workers or pseudo-independent small artisans worked for them. The main types were dispersed, mixed and centralized manufactories. The basis for their development could not be the guild craft with its police and prohibitive statutes. Therefore, the first manufactories appeared in rural areas based on crafts. Manufacture emerged from simple cooperation. Initially, the merchant-entrepreneur was engaged in the purchase and sale of finished products of independent rural artisans (for example, fabrics, cloth). Then he began to bring raw materials to the artisans, and later more advanced machines. Thus, he cut off the artisan from the market for finished products, from the market for raw materials, and, by providing him with machines, he actually subjugated all production to himself. Former independent artisans turned into hired workers receiving wages. The only thing left in their property is their home workshop. This form of organization of production is dispersed manufacture. Gradually, an entrepreneur could isolate one or several operations and concentrate them in a separate workshop under one roof (for example: the process of dyeing fabrics - a dyehouse). This is how mixed manufactories appeared. The third type is centralized enterprises, the entrepreneur created them himself: he built a large workshop, bought equipment, raw materials, hired workers, i.e. controlled the entire production process. Centralized manufacture was of two varieties: heterogeneous and organic. Heterogeneous manufactory is the union in one workshop of workers of various specialties, interconnected by the sequential execution of all operations for the manufacture of a relatively complex product. For example, a cloth factory, in addition to weavers, felters, spinners, dyers, etc. work here.

Organic manufacturing unites workers of the same specialty in one workshop with the subsequent division of homogeneous work into more detailed operations assigned to individual workers. An example would be a dye shop. Organic centralized manufactory was more progressive than heterogeneous one, because it gave higher labor productivity, high quality due to the disaggregation of production and, therefore, higher profits. Indeed, in organic manufacturing, the division of labor reaches its limit, each worker performs one or two operations, thanks to which he becomes a virtuoso of his craft, and his tools acquire such a degree of specialization that this closely leads to the creation of machines and mechanisms. True, in the XVI-XVII centuries. There were still not very many manufactures. Karl Marx believed that “manufacture stood out as an architectural decoration on an economic edifice, the broad basis of which was urban crafts and rural side industries.” (Marx K. Capital. – T. 23, p. 381).

That is, the manufacture existed in a feudal environment and was often persecuted both by the guilds and by the state. An example is 16th century Spain.

The development of capitalism in agriculture went in parallel with the emergence of manufactories. It is convenient to trace this in the history of the 16th century. Having driven the peasants off the land, the landlords concentrated vast land holdings in their hands. They leased part of the land to peasants or wealthy townspeople.

1. The original form of such rent was sharecropping.

Researchers find it in England, France, Italy, Germany, Russia! Sharecropping is a type of lease (letting for temporary use) of land in which the landowner is paid rent in the form of a certain share of the harvest (half, third, tithe, etc.). It happened differently in life: sometimes the land owner gave the tenant land, seeds, and equipment. Sometimes the sharecropper himself, wholly or partially provided his farm with seeds, as well as live or dead implements. The tenant did not always cultivate the land on his own; he could resort to hired labor - renting out part of the land to a subtenant. In the fall, the sharecropper gave part of the harvest to the owner of the land, sold part of it, and kept part for himself for food and sowing. Rent under sharecropping was semi-feudal in nature.

In England, sharecropping is gradually giving way to a purely capitalist form of entrepreneurship - farming. The farmer rented a large plot of land from the landlord and paid a fixed fee for it. He himself bought the seeds, equipment, and paid the labor of hired workers himself. Naturally, only a wealthy person could run such a household. In the future, he could buy the land from the landlord and become its owner. This is how a large capitalist economy was created. And again we will make a reservation - there were very few such farms in the 16th century, the new lived everywhere next to the old - the feudal nobility, dependent peasants were everywhere. Already in France the development of capitalism in agriculture was slower than in England. In countries such as Germany, the Czech Republic, Italy, and Spain, the overall historical development turned out to be inhibited and took the path of regression. Here the feudal nobility was so powerful that it was able, with the help of the state, to destroy elements of progress in industry and agriculture. In these countries in the middle of the 16th century. the process of refeudalization began.

In countries with the irreversible development of capitalism, technical and economic progress has given rise to new classes and a new image of the state.

Why did capitalism appear not in the East, not in China, but in Europe? Scientists do not know the answer to this question. But we can assume the following.

What is capitalism? This is primarily a redistribution of wealth in favor of the more successful. Well, for example, there is a certain society, and some product is produced in it, for example beer, as Oleg Grigoriev describes it. And then one of the companies begins to produce beer in more convenient packaging, for example, it invented a bottle, and everyone only drank from a keg in a pub.

What do we get next? They both drank beer and still drink it, they don’t drink it any more or less. But one of the firms begins to capture the market, and other firms begin to go bankrupt. That is, someone is getting richer, and someone is getting poorer. But the wealth of the state as a whole does not change from this, money just flows to some, while others become poor and lose their jobs.

The Chinese emperor looked at this process in his country, for example, somewhere in the 1st century AD and thought, why do I need this? Will I have poor citizens wandering around the country who have gone bankrupt and rich citizens will appear who will profit from them? But the wealth of the state as a whole will not change, the money will simply be redistributed. Taxes will not increase, there will be no more money, but you will simply have to pay benefits to the poor and put pressure on the rich so that they do not become impudent.

And the Chinese Emperor, and other Eastern dictators who had Empires - maybe the Persian, maybe the Indian, maybe the Golden Horde, maybe some other... The Eastern monarchs thought, no, we don’t need this, let everyone work, it’s better to have employment than redistribution of wealth.

Exactly the same problem faced European kings. Should we support innovation or not? They do not make the state richer, they simply redistribute wealth among people. And there are no more taxes. People don’t drink beer anymore, even if it’s from a bottle or a barrel, their stomach hasn’t changed.

But since the states in the East were large, and in Europe small, it was more expensive to fight between the eastern empires for markets for beer bottles, but to fight in Europe with the baron of a neighboring principality was quite possible, it was not the end of the world. And so the European kings, dukes and barons entered the soil of social Darwinism - let the fittest survive and woe to the vagabonds whom no one supported - they were taken into the army or sent to the colonies.

In order to justify this decision, they began to reform the church. All sorts of movements appeared in Catholicism, which argued that it is not necessary to help the weak and love everyone, but, on the contrary, it is necessary to get rich and not care about others. Now it has degenerated into liberalism.

And so in Europe the strong began to devour the weak and the era of European wars began. Powerful states were formed, which began to clash with each other, until the strongest were formed, which clashed in 1-2 world wars.

There have been no wars in the East all this time, with the exception of Japan and its aggressive policy. But Westernization took place in Japan.

P.S.Moscow. January 18. INTERFAX.RU - The well-being of the richest 1% of people in the world, which is about 73 million people, is equal to the well-being of the rest of humanity combined, the BBC reports, citing the charity Oxfam.

Conditions for the emergence of capitalism in Europe.

Why did bourgeois relations spontaneously arise in Europe? After all, there were opportunities for the emergence of capitalism in other countries, for example, in China and especially in Japan. And although today science has not yet given comprehensive answers to these questions, it is still possible to identify some special features of the Western European version of civilizational development.

Firstly, Western Europe was a direct heir to the Greco-Roman world, a world with an unusually high level of development of commodity-money relations for antiquity, with the right to unregulated property, and with an orientation towards an active creative personality.

Secondly, the emergence of capitalism would have been impossible without urban communal movements. In the city, which won self-government and independence from state power, a layer of people (the third estate) was formed, with free capital, which gave birth to the future bourgeoisie.

Thirdly, the formation of active classes defending their rights forced the state to cooperate with them. Naturally, the possibilities of putting pressure on society and on economic processes remained (and were used), but they were still limited.

Finally, the position of the church in relation to economic issues and commerce was also important. But already from the 13th century. it softens its doctrines regarding those activities traditionally considered “unclean.” While condemning usury, the church did not condemn bills of exchange, pledges, or investments. This led to the fact that trade gradually received “citizenship rights” in the public consciousness, and after the Renaissance and Reformation (the Renaissance) it began to be considered a very worthy occupation.

Regions of pan-European interaction.

Western Europe is the first civilization among the countries of the world in which new bourgeois relations arose, gained strength, strengthened and, in the end, won, i.e. a formational shift took place from feudalism to capitalism.

For the first time, bourgeois relations appeared in the large trading cities of Italy (such as Florence, Genoa) at the end of the 14th century, but then socio-economic regression occurred there, i.e. moving backwards, changing for the worse.

In the XV-XVI centuries. bourgeois relations spread to many countries of Western Europe. Starting from Holland and England, they moved to Florence, and then to Spain, Portugal, and Germany. Over time, this process covered most of the world, but “being drawn in” into it took place in the context of the growing Europeanization of the world and the strengthening of ties and economic dependence on each other.

In economic terms, 4 regions are clearly distinguished in Europe, each of which finds itself in a specific socio-economic situation within the framework of the system of pan-European interaction:

a region in which the early capitalist structure dominated, which most fully expressed the essence of the actual manufacturing phase of social production (England, Holland);

a region where this phase of social production was embodied only in a way of life that remained subordinate to the dominant feudal structure of production (France, Sweden, a number of regions of Germany);

region in which in the seventeenth century. There was a socio-economic regression compared to the 16th century. (Spain, Portugal, Northern Italy, Southwestern Germany);

a region in which serfdom was strengthened (Czech Republic, Hungary, Poland, the Baltic states, Russia).

Economy of Western Europe XVI-XVIII centuries. was predominantly agricultural in nature. Agriculture was the sphere of material production where the traditions of the previous period (the Middle Ages) were the most stable.

Manual labor dominated. And against the background of this, capitalism appears and grows. Social factors of bourgeois development are accumulating - class and professional stratification in society, the rapprochement of the commercial and entrepreneurial bourgeoisie, the growth of the third estate.

Representatives of the rising bourgeois class were characterized by courage, energy, enterprise, assertiveness, and the ability to take risks. No wonder the era of the XVI-XVIII centuries. This is the time of great adventurers. The bourgeoisie is selfish and calculating. Profit and gain are the main incentives for its activities.

The emergence of manufactories.

The formation of modern civilization was a rather complex and lengthy process, which underwent various transformations as it developed. This is a long historical period - from about the 15th century. to the present time, and in some countries this period has not yet ended.

The modernization process, i.e. The transition from feudalism to capitalism goes through various phases of development: early industrial (XIV-XV centuries), middle industrial (XVI-XVIII centuries), late industrial (XIX centuries) and post-industrial (XX centuries).

At the early industrial stage of development of the bourgeoisie, a long, gradual formation of new social institutions and elements of the bourgeois formation takes place, initial capital is accumulated, and manufactories (handmade production) appear - the first signs of capitalism.

Cities were the center of development of bourgeois relations. A new layer of people (the third estate) was emerging there, consisting mainly of merchants, moneylenders and guild foremen. All of them had capital, the shortest way to acquiring which was through trade and usury operations. These capitals were not hidden in chests, but were invested in production. Moreover, into a new type of production, more efficient, giving high profits.

During this era, manufacturing began to replace the craft workshop. Manufacture is a large capitalist enterprise, based, in contrast to the workshop, on the internal division of labor and hired force. Manufactories were serviced with the help of hired labor; it was headed by an entrepreneur who owned capital and the means of production. Manufactures, the primary forms of capitalist enterprise, appeared already in the 14th-15th centuries.

There were two forms of manufacture: centralized (a merchant or entrepreneur himself created a workshop, a shipyard or a mine, and acquired raw materials, materials, equipment himself) and much more widespread - dispersed manufacture (the entrepreneur distributed raw materials to home-based artisans and received from them finished goods or semi-finished products).

The emergence of manufacture meant a significant increase in the productive forces of society. Its technical basis was still the use of the same tools as in handicraft production.

Later, manufactories began to use technical devices that were more or less complex for those times to use water and wind energy. Shafts, gears, gears, millstones, etc., driven by a water-filled wheel, were used in flour-grinding and grain milling, for making paper, in sawmilling, in the production of gunpowder, for drawing wire, cutting iron, driving a hammer, etc.

In the manufacturing era, profound changes occur in the economic life of society, a catastrophic breakdown of the old economic way of life, the old picture of the world.

The main advantage of manufactory was that it was a large-scale production and created opportunities for narrow specialization of labor operations as a result of the technical division of labor. This helped to increase the output of hired workers several times compared to a craft workshop, where all operations were performed primarily by one master.

But until machines were invented, capitalist production was doomed to remain only a structure in the feudal economic system.

Farms.

The countryside, the main stronghold of feudalism, was drawn into bourgeois relations much more slowly than the city. Farms were formed there, with hired labor from peasants who had lost their land as a result of transformations, i.e. who ceased to be peasants in the full sense of the word. This process of de-peasantization went through various intermediate forms, as a rule, through the transition to rent, which meant the abolition of fixed payments and rights to hereditary holding of land.

In the village, rich peasants, merchants, or sometimes the feudal lords themselves could act as entrepreneurs. This happened, for example, in England, where the process of so-called enclosures was underway, i.e. the forced removal of peasants from the land in order to turn it into pasture for sheep, the wool of which was sold.

The rate of development of capitalism depended on the speed of penetration of bourgeois relations into the countryside, which was much more conservative than the city, but produced the bulk of production. This process proceeded most rapidly in England and the Northern Netherlands, where the rapid flourishing of manufacturing coincided with the bourgeoisification of the countryside.

In England and Holland in the 16th-17th centuries. an intensive bourgeois restructuring of agriculture took place; large capitalist leases were approved while preserving the noble land ownership of landlords (landowners). These countries have already seen the introduction into practice of new types of agricultural tools (light plow, harrow, seeder, thresher, etc.)

The bourgeois progress of agriculture provided raw materials and an influx of labor into industry, because peasants, left without land and unable to find work in the village, went to the city.

The development of capitalism was accompanied by technical progress, the destruction of traditional corporate ties, and the formation of common markets - national and pan-European.

In this era, a new “hero of the time” appeared, an enterprising, energetic person who was able to withstand competition and create capital literally out of nothing.

BUT in the XVI-XVII centuries. Even in those countries where bourgeois relations successfully developed, the new way of life still existed in the “context” of feudal relations, which were still quite strong and did not want to voluntarily give up their place.

Capitalism is only one of the socio-economic formations that existed in the world. The history of its formation is associated with such phenomena as colonial expansion and the exploitation of workers, for whom an 80-hour work week became the norm. T&P publishes an excerpt from Cambridge economist Ha-Joon Chang's How Does the Economy Work? , which was recently published by the publishing house "MYTH".

The economy of Western Europe is indeed
grew slowly...

Capitalism originates in Western Europe, particularly in Great Britain and the Low Countries (which today includes Belgium, the Netherlands and Luxembourg), in the 16th and 17th centuries. Why it originated there and not, say, in China or India, which were then comparable to Western Europe in terms of economic development, is the subject of intense and lengthy debate. Everything from the Chinese elite's disdain for practical pursuits (such as trade and industry) to a map of Britain's coalfields to the discovery of America has been suggested as an explanation. Let's not dwell on this debate for too long. Let us take it for granted that capitalism began to develop in Western Europe.

Before its advent, Western European societies, like all others in the pre-capitalist era, changed very slowly. People were largely organized around agriculture, which used essentially the same technologies for many centuries, with a limited degree of commerce and craft production.

Between the 10th and 15th centuries, that is, during the Middle Ages, per capita income increased by 0.12 percent per year. Consequently, income in 1500 was only 82 percent higher than in 1000. By comparison, that's what China, with its 11 percent annual growth rate, achieved in the six years between 2002 and 2008. It follows that, from the point of view of material progress, one year in China today is equivalent to 83 years in medieval Western Europe (during this time three people could be born and die - in the Middle Ages, the average life expectancy was only 24 years).

...but still faster than the economy
any other country in the world

Despite the above, economic growth in Western Europe was still much faster than in Asia and Eastern Europe (including Russia), which was estimated to grow three times slower (0.04 percent). This means that over 500 years, local incomes increased by only 22 percent. If Western Europe moved like a turtle, then other countries were more like snails.

Capitalism emerged "in slow motion"

Capitalism appeared in the 16th century. But its spread was so slow that it is impossible to accurately determine the exact date of its birth. Between 1500 and 1820, the growth rate of per capita income in Western Europe was still 0.14 percent—essentially the same as during the Middle Ages (0.12 percent). In Great Britain and the Netherlands, growth in this indicator accelerated at the end of the 18th century, especially in the cotton textile and ferrous metals sectors. As a result, from 1500 to 1820, Great Britain and the Netherlands achieved per capita economic growth rates of 0.27 and 0.28 percent, respectively. And although by modern standards these figures are very small, they were twice the Western European average. This led to a number of changes.

The beginning of colonial expansion

From the beginning of the 15th century, the countries of Western Europe began to expand rapidly. Referred to for propriety as the Age of Discovery, this expansion included the expropriation of lands and resources and the enslavement of indigenous populations through the establishment of a colonial regime.

Beginning with Portugal in Asia, and Spain in the Americas, from the end of the 15th century, Western European peoples began to ruthlessly seize new lands. By the mid-18th century, North America was divided between England, France and Spain. Most of the countries in South America were ruled by Spain and Portugal until the 1810s and 1820s. Parts of India were ruled by the British (mainly Bengal and Bihar), the French (southeast coast) and the Portuguese (various coastal areas, particularly Goa). Around this time, the settlement of Australia began (the first penal colony appeared there in 1788). Africa at that time was not “developed” so well; there were only small settlements of the Portuguese (the previously uninhabited islands of Cape Verde, Sao Tome and Principe) and the Dutch (Cape Town, founded in the 17th century).

Francis Hayman. Robert Clive meets Mir Jafar after the Battle of Plassey. 1757

Colonialism was based on capitalist principles. It is symbolic that until 1858, British rule in India was exercised by a corporation (the East India Company) and not by the government. These colonies brought new resources to Europe. At first, expansion was motivated by the search for precious metals for use as money (gold and silver), as well as spices (especially black pepper). Over time, plantations were established in the new colonies - especially in the United States, Brazil and the Caribbean - using slave labor, mainly taken from Africa. Plantations were established to grow and supply new crops to Europe, such as cane sugar, rubber, cotton and tobacco. It is impossible to imagine a time when Britain did not have traditional chips, Italy did not have tomatoes and polenta (made from corn), and India, Thailand and Korea did not know what chilli was.

Colonialism leaves deep scars

There has been debate for many years about whether capitalism would have developed in the 16th to 18th centuries without colonial resources: the precious metals used as money, new foods such as potatoes and sugar, and raw materials for industrial production such as cotton. Although there is no doubt that the colonialists benefited greatly from their sale, it is likely that capitalism in European countries would have developed without them. That being said, colonialism undoubtedly devastated colonized societies.

The indigenous population was exterminated or brought to the brink of extinction, and their land with all its resources was taken away. The marginalization of indigenous peoples has been so profound that Evo Morales, the current president of Bolivia, elected in 2006, is only the second indigenous head of state in the Americas to rise to power since Europeans arrived there in 1492. (The first was Benito Juarez, President of Mexico from 1858–1872).

Many Africans - an estimated 12 million - were captured as slaves and transported to Europe and the Arab countries. Not only was this a tragedy for those who lost their freedom (even if they managed to survive the difficult journey), but it also depleted many African societies and destroyed their social fabric. The territories acquired arbitrary borders - this fact influences the domestic and international politics of a number of countries to this day. The fact that so many interstate borders in Africa are straight lines illustrates this, since natural borders are never straight, but usually follow rivers, mountain ranges and other geographical features.

Colonialism often involved the deliberate termination of existing productive activities in economically developed regions. For example, in 1700, Britain banned the import of Indian calico (we mentioned this in Chapter 2) to promote its own production, thereby dealing a severe blow to the Indian cotton industry. This industry was completely destroyed in the mid-19th century by the flow of imported fabrics, which at that time were already produced in Britain by mechanization. As a colony, India could not apply tariffs or other policies to protect its manufacturers from British imports. In 1835, Lord Bentinck, Governor General of the East India Company, famously said: “The plains of India are white with the bones of weavers.”

Start of the Industrial Revolution

Capitalism really took off around 1820 throughout Western Europe and later in the European colonies in North America and Oceania. The acceleration in economic growth was so dramatic that the next half century after 1820 came to be called the Industrial Revolution. Over these fifty years, per capita income in Western Europe grew by 1 percent, which is very little by modern standards (Japan saw such an increase in income during the so-called lost decade of the 1990s), and compared with a growth rate of 0. 14 percent, observed between 1500 and 1820, was true turbojet acceleration.

80-hour work week: suffering for some
people have only become stronger

However, this acceleration in per capita income growth was initially accompanied by a decline in living standards for many. Many people whose skills had become obsolete - such as textile artisans - lost their jobs because they were replaced by machines operated by cheaper, unskilled workers, many of whom were children. Some cars were even designed for the height of a child. People who were employed in factories or small workshops that supplied raw materials for them worked very hard: 70–80 hours a week was considered the norm, some worked more than 100 hours a week, and usually only half a day on Sunday was allocated for rest.

Working conditions were extremely dangerous. Many English cotton industry workers died from lung diseases due to the dust generated during the production process. The urban working class lived very crampedly, sometimes 15–20 people crammed into a room. It was considered quite normal for hundreds of people to use one toilet. People were dying like flies. In poor areas of Manchester, life expectancy was 17 years, 30 percent lower than in the whole of Great Britain before the Norman Conquest in 1066 (then life expectancy was 24 years).

The Myth of Free Markets and Free Trade:
how capitalism actually developed

The development of capitalism in Western European countries and their colonies in the 19th century is often associated with the spread of free trade and free markets. It is generally accepted that the governments of these states did not tax or restrict international trade in any way (called free trade) and did not interfere at all with the functioning of the market (free market). This state of affairs led to the fact that these countries managed to develop capitalism. It is also generally accepted that the UK and the US led other countries because they were the first to embrace free markets and free trade.

Free trade spreads mainly through means that are far from free

Although free trade did not cause the rise of capitalism, it did spread throughout the 19th century. Part of it emerged in the heart of the capitalist world in the 1860s, when Britain accepted the principle and signed bilateral free trade agreements (FTAs), in which both sides abolished import restrictions and customs duties on exports for each other, with a number of countries Western Europe. However, it has spread most strongly on the peripheries of capitalism - in the countries of Latin America and Asia, and as a result of what no one usually associates with the word “free” - the use of force, or at least the threat of its use.

Colonization was the most obvious way to spread “unfree free trade,” but even those many countries that were lucky enough not to become colonies had to accept it too. Using “gunboat diplomacy” methods, they were forced to sign unequal treaties that deprived them, among other things, of tariff autonomy (the right to set their own tariffs). They were allowed to use only a low flat tariff rate (3–5 percent)—enough to raise some government revenues, but too low to protect fledgling industries. The most shameful of these facts is the Treaty of Nanjing, which China had to sign in 1842 after defeat in the First Opium War. But unequal treaties also began to be signed with Latin American countries until they gained independence in the 1810s and 1820s. Between 1820 and 1850, a number of other states were also forced to sign similar treaties: the Ottoman Empire (predecessor of Turkey), Persia (today's Iran), Siam (today's Thailand) and even Japan. Latin American unequal treaties expired in the 1870s and 1880s, while treaties with Asian countries continued into the 20th century.

This statement is too far from the truth. The government played a leading role in the initial stage of the development of capitalism both in Great Britain and in the United States and other countries of Western Europe.

The inability to protect and defend their fledgling industries, whether as a result of direct colonial rule or unequal treaties, contributed significantly to the economic regression of Asian and Latin American countries during this period: they experienced negative growth in per capita income (at a rate of -0.1 and - 0.04 percent per year respectively).

Capitalism shifts into higher gear: the beginning of mass production

The development of capitalism began to accelerate around 1870. Between 1860 and 1910, clusters of new technological innovations emerged, resulting in the rise of so-called heavy and chemical industries: electrical equipment, internal combustion engines, synthetic dyes, artificial fertilizers, and other products. Unlike the technologies of the Industrial Revolution, which were conceived by practical men with good intuition, new technologies were developed through the systematic application of scientific and engineering principles. Thus, any invention could be reproduced and improved very quickly.

In addition, the organization of the production process in many industries was revolutionized by the invention of the mass production system. Thanks to the introduction of a moving assembly line (conveyor belt) and interchangeable parts, costs dropped dramatically. In our time, this is the main (almost universally used) system, despite frequent statements about its demise that have been heard since 1908.

New economic institutions emerged to manage the growing scale of production

At its peak, capitalism acquired the basic institutional structure that still exists today; it includes limited liability companies, bankruptcy laws, central banking, the social security system, labor laws and much more. These institutional shifts occurred largely due to changes in underlying technologies and policies.

Due to the growing need for large-scale investments, the principle of limited liability, which was previously applied only to privileged companies, has become widespread. Consequently, it could now be used by any company that met certain minimum conditions. With access to an unprecedented scale of investment, limited liability companies became the most powerful vehicle for the development of capitalism. Karl Marx, who recognized their enormous potential before any ardent supporter of capitalism, called them “capitalist production in its highest development.”

Before the British reform of 1849, the essence of bankruptcy law was to punish the insolvent businessman with, at worst, a debtor's prison. New laws introduced in the second half of the 19th century gave failed entrepreneurs a second chance by allowing them to avoid paying interest to creditors while reorganizing their business (under Chapter 11 of the US Federal Bankruptcy Act, introduced in 1898) and forcing the latter to write off some of their debts. Now running a business is not so risky.

The Rhodes ColossusStriding from Cape Town to Cairo, 1892

As the size of companies increased, banks also began to grow larger. At that time, there was a danger that the failure of one bank could destabilize the entire financial system, so to combat this problem, central banks were created to act as lender of last resort - and the Bank of England became the first in 1844.

Due to widespread socialist agitation and increasing pressure on the government from reformists regarding the condition of the working class, a number of social security and labor laws were introduced starting in the 1870s: accident insurance, health insurance, old-age pensions and insurance were introduced. case of unemployment. Many countries have banned the work of young children (usually under the age of 10–12 years) and limited the number of working hours for older children (initially to only 12 hours). New laws also regulated the conditions and hours of work for women. Unfortunately, this was not done out of chivalrous motives, but because of an arrogant attitude towards the weaker sex. It was believed that, unlike men, women lacked mental abilities, so they could sign unfavorable employment contracts - in other words, women needed to be protected from themselves. These welfare and labor laws smoothed out the rough edges of capitalism and made life better for many poor people—even if just a little at first.

Institutional changes contributed to economic growth. Limited liability companies and debtor-friendly bankruptcy laws have reduced the risk associated with business activity, thereby encouraging wealth creation. The central bank, on the one hand, and social security and labor laws, on the other, also contributed to growth by increasing economic and political stability, respectively, which allowed for greater investment and hence a further acceleration of economic recovery. The growth rate of per capita income in Western Europe rose from 1 percent per year during the peak period 1820–1870 to 1.3 percent during 1870–1913.