Capitalism

Capitalism began in north-west Europe and involved outward expansion.
Gradually encompassed more geographical areas in a network of material exchanges.
Developed into a world market and an international division of labor by the late 19th century.

By the end of the 19th century, a single capitalist world economy was formed, covering most of the globe.
19th century notable for rapid growth in world trade, surpassing world production by 11 times in each decade.
- In 1913, approximately 33% of world production was trading across national borders.
- The so-called Third World (South America, Africa, and Asia excluding Japan) participated significantly in the international market, capturing about 50% of world trade in 1913 compared to 22% today.

Defined as:
- Production of goods and services for sale in a profit-driven market.
Immanuel Wallerstein's concept of the international division of labor as linked to capitalism:
- Prices determined by supply and demand through the 'invisible hand'.
- Human activities coordinated across national frontiers, benefiting some at the cost of others.

Capitalist coordination is neither natural nor equitable; it is politically influenced.
- The 'invisible hand' of the market guided by power relations and politics.
- Leads to inequality: wealth centralizes for some while causing poverty for many.
Marx's contribution to understanding how market equality fosters inequality.
- The international division defined by Wallerstein showcases the central-periphery exploitation.

Dialectics analyzes systemic contradictions leading to conflicts until adjustments are made.
Resilience of the capitalist system in adapting to changes through its own rules.

Writers on world-systems propose a periodization reflecting core and periphery dynamics:
1. Mercantilist Pre-competitive Stage (1500-1800)
2. Competitive Capitalist Stage (1800-1880)
3. Monopoly/Imperialist Stage (1880-1960)
4. Late Monopoly Capitalist/Imperialist Stage (Post-1968)
Each period sees specific functions from the periphery, evolving through previous contradictions.

Mercantile Phase (1500-1800):
- Economic surplus extracted through looting disguised as trade.
- Economic surplus defined as investible surplus, contributing to the European industrial revolution.
Colonial Period (1800-1950):
- Economic surplus transferred through unequal trade terms in the colonially imposed international division of labor.
Neo-Colonial Period (1950-1970):
- Economic surplus obtained through 'developmentalism' and technological rents.
Post-Imperialism (1970 - present):
- Economic surplus transferred through debt peonage.

From 1500 to 1800, European merchants actively sought gold, spices, slaves, and trade route conquests.
Paul Baran noted that these relationships amounted to plundering disguised as trade.
The economic surplus transferred to Europe impeded the internal development of the trading territories.
- Walter Rodney discussed the regressive impacts of European engagement on Africa.

Post-1800, Europe pursued mass industrialization, requiring secure markets and raw materials.
Colonialism increasingly relied on direct control and administration for organizing production and infrastructure.
- Between 1800 and 1878, European rule expanded to cover 67% of the Earth's land surface.
- By 1913, European colonial powers were responsible for 85% of all international lending.

The period from 1875 to 1914 saw unprecedented international capital flows and the construction of colonial infrastructure.
- Investments helped build railways, ports, and mines in Asia, Africa, and South America.
- British capital investments in transport and social overheads enabled wealth post-empire.

Nationalistic arguments framed colonialism as essential for trade and national security.
Figures like Cecil Rhodes expressed the need for territorial expansion for survival and prosperity.
The idea of 'civilizing' colonized peoples framed colonialism as a benevolent mission.
- This was often articulated as the 'White Man's Burden', compelling colonizer intervention based on perceived superiority.
- Promised benefits included law, order, justice, and education for colonized populations.

Marxist theories began by examining capitalism in core nations and developed by writers like Lenin.
- J.A. Hobson, a liberal economist, theorized that capitalism's tendency to save and invest impacts imperialism, leading to over-production and under-consumption crises.
- Suggests a diversion of capital from home investments to overseas ventures.

Decline of Profit Rate:
- The tendency of profit rates to decline due to increased fixed capital relative to workers and rising productivity.
- Results in overproduction crises, pushing capitalists to seek foreign investments.

Classical Marxists argue that imperialism is a necessary part of capitalist development, asserting that monopolization occurs out of capitalist competition.
Marx's laws of motion indicate an inevitable shift to monopoly capitalism through concentration and centralization of capital.
- Concentration: Increased capital in larger enterprises.
- Centralization: Merging of enterprises under unified control.

The contradictions of capitalism drive its evolution, leading to imperialism as both a response to and a contributor to capitalist crises.
These themes indicate ongoing structural inequalities where core nations maintain dominance over peripheries.

Post-war scholarship critique addressed why European powers converted influence into formal empire, suggesting political rather than strictly economic motivations.
Arguments posit that economic interests often served as pretexts for colonial expansion:
- Decisions to annex lands often arose in response to local geopolitical tensions rather than direct economic motives.

Economic historians emphasize that direct trade with colonies was a minor part of overall trade.
Claims of imperialist wealth substantially benefitting the colonizing nations are challenged by data indicating limited engagement with colonial economies.
A broader view considers colonial legacy and its continuing impact on global trade dynamics and systemic inequalities.