What historical and material factors led to rise Capitalism?
The transition from feudalism to mercantilism which became a precursor to our current system of capitalism did not come overnight. It was a gradual transition in one sense, and in another sense it was inevitable based on the changes in production and the relationship between human beings and the way they acquired their sustenance. It also was coming to fruition before Adam Smith laid out the foundational background in understanding what exactly this system was. Previously, governments controlled economic routes and resources by themselves, but with the rise of mercantilism, investors started getting privileges sanctified by the state to certain individuals to take control. This transition changed the dynamics and structure of the society because now people were put against each other in the fight to make money, and influence the state themselves! While in theory, capitalism was supposed to be the free exchange of goods and services we can see from before the 20th century, this was not the case in terms of governments giving protectionist power to certain industries. Technology played a role in allowing machines and technology that created the system of production we see today. These machines separated the worker from their true control of the means of production and encouraged capitalists to use “free labor”.
The material factors that led rise capitalism
Trade routes also were deregulated as governments did not that much power to control and restrict trade. Also inventions like the American clipper ship and the steamship allowed easier travel. (Robbins,79) It also became what it was because of the increase in the supply of capital and efficient trade; this created the capital that entrepreneurs could use. Also to be noted is that what may have not led to the rise of capitalism itself but the speed at which grew is the newly created credit system where people can loan out sums of money on interest and attempt to grow their existing capital. Some economists call this fictitious capital. Through the industrial revolution, many who would work in farms moved to the big city to sell their labor for wages.
While some pre-capitalist societies would seize the surplus of what was being produced, in the new economic system, capitalists get it from buying peoples capacities to work. This is a fundamental component of capitalism that became commonplace after most people moved from farming to provide for their own needs, to working in big factories and trying to sell a portion of the value they create working in order to survive. This was almost inevitable considering farmers who only own a few acres and use their hands to grow eventually could not compete with large companies that had better technology and mass labor power.
Social Trends in relation to Capitalisms rise
Some, like Max Weber argue that capitalisms ideology may have gained traction through the Protestant Faith (Robinson, 75), from people who tried figuring out if God was on their side through the progress of their investments. Others would argue that this only fused both religious and economic ideology to justify the accumulation of wealth, the degree in which this played in codifying the market as the only just and acceptable ideology is arguable.
In some systems, the merchant class was second to the government, who could control the market any way they chose, but the rise of capitalism simultaneously came when the merchant class became the most powerful (Robbins, 76), eventually leading the merchants to have the ability to control the government themselves.
An argument that is sometimes made is that through the enslavement of many, much wealth was created which allowed for investments and the capital for capitalism. When direct slavery was no longer needed in the new economic paradigm, it merely transitioned into a new more advanced form of slavery, wage slavery.
Theory of capital expansion
Another phenomenon that expanded capitalism in non-capitalist areas was briefly explained by Marx, but expanded and critiqued by Rosa Luxemburg. Luxemburg mentioned that non –capitalist social environments absorbed the domination of capital from capitalist societies, which transformed them and forced them to take part of trading. She said it was inevitable that capitalism would expand to non-capitalist sectors and transform their peasants or landlords into capitalists and proletariat. In this sense she even went further than Marx in understanding how much influence capitalist societies had in other societies in the world. We can see this in the way nations would extract cheap labor and resources from colonies they had control over or economically dominated. Peasants end up becoming factory workers as their old means of sustenance are made obsolete through the penetration of capitalist influence and investment.
We can see that through the rise of mercantilism, a new system emerged where private individuals or groups could purchase land, and eventually get people to work for them while giving away a percentage of what value they produced. This fundamentally changed where value came from and class status. Those who could hire others and buy technology to make workers create more value in less time (and become more and more detached from their labor) prospered and controlled production and eventually government, while those who worked merely did what they could to survive. This coupled with the expansion of trade liberty given to investors, who were able to start their companies and compete and dominate each other, formulated the new system.