Capitalism Research

Document Type:Thesis

Subject Area:History

Document 1

A simple form of this could be the lending of money to gain interest. A more advanced form of capitalism involves the investment of money in a project while expecting returns in terms of profit1. Even though trade has been happening for a long period in the history of human beings, it cannot be referred to as capitalism. Records have it that the earliest activities of long-distance merchants were from the Roman Empire. They managed to develop advanced methods of commerce. This paved way for the establishment of a global empire in the 19th century3. Under the merchant capitalism, the European merchants, with the support of the state controls, monopolies and subsidies managed to make most of their profits from the selling and purchase of goods.

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These merchants were risking their wealth in the unpredictable adventures and thus needed a very special kind of support. The government had to support and also encourage their endeavors so as to promote trade and grow the economy. One of the key tenets of the merchant capitalism theory was the Bullionism a doctrine in Europe that stressed on the importance of accumulation of the precious metals4. They were also not allowed to trade with the foreign powers. London Coffee houses and Capitalism In 1652, a coffee house was for the first time opened in London. Most of England’s business was now being conducted from the joints where the merchants could come together and strike their deals over a cup of coffee.

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These comprised ship owners and captains who discussed the terms with the men who were ready to gamble on the success of the voyages to come. This comprised the insuring of the voyage against any disasters in the return of a premium5. This was different compared to the past when they majorly produced subsistence crops on a feudal manor. It was due to the surplus that was generated from the commercial agriculture that encouraged the rise in the mechanization of agriculture7. The combined gains of the capitalist production, from both manufacturing and agriculture, let to an unprecedented and sustained increase in capital at the cross of the 19th century. This whole process was referred to as the Industrial Revolution. Banking Growth The industrial expansion in Europe led to the increase of finance and credit.

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They highly profited from England’s dominance in the seaborne shipping. They greatly benefited from England's dominance in shipping. There were two immigrant families, Baring and Rothschild, who established commercial banking in England in the 18th century. In the end, they accumulated assets and assets in the global banking sector. Global Banking During this period, the financial system was majorly tied to the gold standard. In the early parts of the 20th century, there were various challenges to capitalism that occurred. The rise of communism was one of the major threats. The first communist state in the world was established by The Russian Revolution in 1917. This in a way challenged the position of capitalism which had been the main solution to the world economic problems.

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Ten years later, the 1929 Great Depression created a new challenge to the capitalist system. At the beginning of the 21st century, capitalism was seen to be the most pervasive economic system in the whole world. In most of the emerging markets, the influence by the financial and banking capital have greatly shaped the development strategies that are taking place. Even though capitalism is dominant worldwide, it also faces criticism at almost all levels as it is the most viable system that can be used to address the world issues. The intervention of states in the global markets after the 2007-2010 financial crisis was seen by many as a signal of the approaching crisis for the free-market capitalism. In the year 2008, the turmoil in the financial markets and banking system reached a very critical stage.

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