CHAPTER 01:THE RISE OF CAPITALISM IN EUROPE

The Meaning of Capitalism

- Capitalism is an economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state.

- Capitalism is an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market

- Capitalism is an economic system in which private individuals or businesses own capital goods. 

- Capitalism is an economic system in which investment in and ownership of the means of production, distribution, and exchange of wealth is made and maintained chiefly by private individuals or corporations, especially as contrasted to cooperatively or state-owned means of wealth.

Characteristics of Capitalism

1. A Two-Class System

Historically, capitalist society was characterized by the split between two classes of individuals - the capitalist class, which owns the means for producing and distributing goods (the owners) and the working class, who sell their labor to the capitalist class in exchange for wages. The economy is run by the individuals (or corporations) who own and operate companies and make decisions as to the use of resources. But there exists a “division of labor” which allows for specialization, typically occurring through education and training, further breaking down the two-class system into sub-classes (e.g., the middle class). 

2.Profit Motive

Companies exist to make a profit. The motive for all companies is to make and sell goods and services only for profits. Companies do not exist solely to satisfy people's needs. Even though some goods or services may satisfy needs, they will only be available if people have the resources to pay for them.

3.Minimal Government Intervention

Capitalist societies believe markets should be left alone to operate without government intervention. However, a completely government-free capitalist society exists in theory, only. Even in the United States, the poster child for capitalism, the government regulates certain industries, such as the Dodd-Frank Act for financial institutions. By contrast, a purely capitalist society would allow the markets to set prices based on demand and supply for the purpose of making profits. 

4.Competition

True capitalism needs a competitive market. Without competition, monopolies exist, and instead of the market setting the prices, the seller is the price setter, which is against the conditions of capitalism. 

5.Willingness to Change

The last characteristic of capitalism is the ability to adapt and change. Technology has been a game-changer in every society, and the willingness to allow change and adaptability of societies to improve inefficiencies within economic structures is a true characteristic of capitalism. 

6. Property Rights

Land ownership and property ownership -- two key individual rights -- enable private businesses to operate freely without leasing land or property from the government. The government doesn't have the authority to seize control or manage business operations, unless the company engages in illegal activity. In the United States, tax laws require business owners to pay taxes on their real estate, equipment, inventory and profit after deducting a variety of operating expenses and depreciating the value of durable, long-lasting tools and equipment.

7. Technological Advancement

Capitalists support technological advancement because it increases productivity, encourages modernization and leads to increased revenue, according to "The Challenge of Global Capitalism" by Robert Gilpin. They also understand that there are growing pains associated with progress, such as initial implementation costs, learning curves, increased training demands and the need for more highly skilled and educated workers.

Stages of Capitalism

i)Mercantilism – This is the earliest stage of capitalism which involved overseas trade system. The era of mercantilism was featured by external movement of merchants to various parts of the World for accumulating gold and silver. Mercantilism existed from the 15^th to the 18^th century, specifically 1450 to 1750

ii)Competitive Capitalism – This is the second stage of capitalism in which Europe was stepping towards industrial expansion. The stage is also referred to as industrial capitalism because there was competition in industrial production among the capitalist nations. The stage existed from 1750 to 1850

iii) Monopoly Capitalism – This is the third stage in development of capitalism in which the capitalist powers move beyond their borders to weaker nations. During this period, the capitalist nations happened to divide the World into spheres of interests, the colonization of Asia and Africa took place during this stage of capitalism. The stage existed from 1870’s to 1940

TRANSITION FROM FEUDALISM TO AGRARIAN REVOLUTION

Feudalism is a term delivered from the latin word “feudum” meaning fief or an estate of land held on behalf of a lord and in return the holder of the land offered military service and other services to the lord. Thus, a feudal society is the one in which the basic social and political structure are determined by a practice of fief holding. In other words, feudalism is based on holding of land for renting.

A feudal mode of production, therefore, was based on lord’s ownership of the land as well as incomplete or partial ownership of the peasants and serfs living on the land. The dependent serfs farmed and ran small economies on the land belonging to the feudal lords. Moreover, the relationship between the land lord and his tenants (serfs) was not only an economic one but also social one. The tenant was a vassal of the lord, that is her or she was bound to the lord by special oath of loyalty.

The Basic Features of Feudalism

i. There was bounded relationship between the lords and tenants. The lord normally exercised right of jurisdiction in the land which he held as a fief. The landlord was a governor of the fief.

ii. There was antagonistic classes of lords and the serfs. The function was mainly due to exploitative tendencies of the lords. The lords exploited the serfs.

iii. Under feudalism the two dominant classes were feudal lords and tenants. Tenants were attached to the soils for the production of substance as well as surplus. The surplus was consumed mainly by the landlords.

iv. Production was for subsistence i.e. serfs producers mainly for food and less for exchange.

v. Feudalism in Europe went hand with the building of armies. The armies and other willing class –kings and nobles supported themselves from the produce of their estates. Serfs were the producer in the lords or willing class estates.

vi. In feudalism the feudal activities were basically agrarian (for food production) although few industries existed, many people were attached to the soil, that is cultivating the soil to earn a living.

AGRARIAN REVOLUTION IN BRITAIN

Agrarian revolution refers to the rapid changes which occurred in agriculture sector. The changes were accompanied by the application of science and technology. In Britain, agriculture revolution happened between the 16^th Century and 18^th Century.

Before the agrarian revolution in Britain, agricultural production was very low. The low productions of agricultural produce were party caused by the land tenure. Land was divided, owned and worked by serfs or peasants. Most of the land was also left fallow ie the large part of the land was not under farming. In addition to low production in agricultural the majority of population in pre-agranal revolution. britian engaged themselves in agriculture. It is estimated that eight percent of Britian’s population were working on the land. Generally, there was low production in agricultural sector before the agrarian revolution. However, there was an increment in agricultural production because changes which constituted agranian revolution.

This is the drastic change in agricultural production through better technique, methods and land tenure. It started in 1450 -1750 but reached maturity in 1801. Agranian revolution started in Netherland-Holland and later English.

Causes of Agrarian Revolution

The changes in agricultural production were caused mainly by two factors:

i. The first cause was the rapid increase of population. The large population necessitated the changes in the methods on producing crops and animals so as to cope with the high demand of force from the populate. The population of Europe as a world and Britian in particular was steadily increasing between 15^th and 18^th centuries, For example the population of Europe rose from sixty –nine million people to 188million people between 15^th and 18^th centuries. This increase of population mainly happened in the cities and towns.

ii. The second factor was high demand of wool. The high demand of wool led to sheep commercial farming. The commercial sheep farming in the 16^th century due to the demand of wool clothes.

Changes that took place during Agrarian Revolution

The agrarian revolution in Britian entailed the following changes:

Crop rotation. Unlike the pre-agranian revolution times, farmers of 16 th and 18 th centuries Britian started to practice crop rotation. They rotated cereal crops with legumes and fodder crops. Legumes crop-peas, beans and clovers-restored nitrogen in the soil. Nitrogen makes soil fertile. One example of farmer who in 1730 grew fodder crops in rotation with other crops was lord Town shed. The second change was the introduction of new crops in Britian crops such as maize, sweat potatoes and fodder crops were introduced in England from the Americans. The introduction fodder crops led to the constant supply of meat throughout the year because the presence of fodder crops made it possible to make bay for use during writer. This was sharp departure from the pre-agrarian revolution error when all the cattle and other animals were slaughetered during writer for lack of feed. The use of improved farm instrument. Examples of instruments which were used included iron plough and Jethro Tull’s seed drill. Extensive use of time to neutralize soil acidity. In addition to liming, farmers applied fertilizers in their farms.

Land reclamation. In order to get more arable land big farmers embarked on draining swam ply land, for example: King Charles I of England financed a Dutch expert Cornelius Vermigden to drain Yorkshire and Cambridge shire. Irrigation also practiced during the agricultural revolution. Another aspect of the agrarian revolution was the improvement in animal breeding. Better horses, cattle and sheep were raised. It was during the agrarian revolution that farmers kept animals for multipurpose. For example, a farmer in Leicester called Bake well produced a large quantities of beef and mutton to feed millions of people. The agrarian revolution involved the evection of serfs and peasants from the land for pasture i.e. Enclosure of the land.

How Agrarian Revolution led to the Capitalism in Europe

The agrarian revolution had a number of contributions to the rise capitalism in Europe:

Increase of supply of food to the growing population in cities including workers in the factories. The agrarian revolution especially the enclosing of land released to the growing workers in the The agrarian revolution especially the enclosing of land released or supplied cheap labours to industries. Many serfs and peasants who were evicted from the land for commercial sheep farming (enclosure) were employed in factories in towns and cities.

The agricultural changes also provided market to the industrial manufactured items. In other words, agricultural entrepreneur bought industrial goods needed in agricultural sector. The change in agriculture supplied raw material needed in industries. One important raw material the agrarian revolution provided to textile industries was wool. Farmers kept sheep commercially for selling wool-wool come from sheep-to industries. In industries the farmers accumulated capital which they invested in industries and trade. The agricultural revolution also marked the end of small scale or peasant production. The peasant production was replaced by the capitalist farmers.

ENCLOSURE SYSTEM

This means consolidation of scattered enable land and common land into a simple compact area of land that is fenced.

Different Process of Enclousure System

I. Enclosure of common land. This was the enclosure of waste land, the process of enclosure of waste land and common land was carried out in 16^th and 17^th centuries. Sometimes it was an agreement between villages.

II. Enclosure of landlords between 1475 –1570. This was the period when there was an increase of wool demand due to the expansion of wool.

III. Enclosure of land into strips. This was done by purchasing land from the farmers or owners.

Impacts of the Introduction of the Enclosure System in Britain

i. Freeing of labours from land. Labours were free to sell their labour under their own discretions.

ii. Migration of people.

iii. Peasants were deprived of the right to own land (common land)

iv. Labours were turned to commodities.

v. Rise of unemployment due to emergence of landless people

vi. Made capitalist to own both rural and urban economy (industries and agriculture)

vii. Led to the rise of proletariats.

RISE OF MERCHANTILISM

Merchantilism

It refers to large scale trade or commercial trade conducted through overseas.

Mercantilism: Is the first stage of capitalism that appeared during 15^th C where by trade and commerce was conducted by European countries with the continent of Africa, Asia and America through overseas trade and also silver (precious metal) were used as the coin. Is the period during which feudalism collapsed (demised) as the result of long distance trade conducted between Western Europe countries and other continents in the 15^th C.

OR

Is the first stage of capitalism where by its economic system was based on trade and commerce conducted through over seas trade during 15^th C-18^th C and during this trade a country attracted itself to the use of precious metals (gold and silver) in European transaction.

The Main Features/Characteristics of Merchantilism

1. National Unification

Is the unifying of small states to form one strong state for expansion of internal market, removal of trade barriers and the use of raw materials and other sources available in the same nation. Therefore during the period of merchantilism many European countries were undergoing national unification so as to become one strong state and be in position to compete with other nations. E.g. England,Wales and Scotland joined to form United Kingdom (Great Britain).

2. Bullionism

During this period there was adaptation and application of gold and silver as the medium of exchange because gold and silver were used as coins in European transaction; hence European merchants struggled more and more to get gold and silver from different parts of the world like Zimbabwe, Ghana.etc.

3. Protectionism

During merchantilism European countries protected trade where by each country protected her internal market and natural resources available in a country. This was done in order to protect the interest of trade by not allowing other European countries to compete with them. E.g. United Kingdom protected internal market by acting navigation acts and impose trade barriers such as custom duties and tariff.

4. National rivalry and militarism.

During the period, merchantilism in many European countries intensified their enemity among themselves which brought constant military confrontation. E.g. Britain fought many wars with French, Spain with Portugal for economic interests. Example Britain decided to undergo navy forces during the rule of Tudor monarchy in order to piracy the wealth of other European merchants for development of capitalism in Britain.

5. Colonialism

During this period many European countries began to look for other economic interests in other countries in different parts of the world. The Aim was to colonize countries for economic interests such as raw materials, labour, market and areas for investments. Example The Dutch at the cape of South Africa 1652 where they wanted to control and unite South Africa, Spanish and Portugal wanted to control Australia and Canada.

6. Banking sector/financial institutions

These financial institutions provided loans and credit to the European merchants in order to continue conducting overseas trade and development of science and technology especially marine technology, ship building, compass direction, compass bearing, etc. These institutions were Barclays bank and house of Lloyds.

Factors/Forces/Causes of the Rise of Merchantalism

There were various factors that led to the rise of merchantalism they are as follows;

1. Internal trade (inter trade and craft). The Development of guilds and craftsmen during the period of collapse of European feudalism led to the rise of merchantalism because commodities produced by craftsmen and people who were involved in guilds which accelerated the internal trade example ornaments, plates, mirrors, were later on exported to other parts of the world particularly in Africa, hence the rise of mercantilism.

2. Periodic exhibition among European nations. This promoted the existence of overseas trade among European countries, Africa, Asia and America because the new commodities which were exhibited and new technology acted as the acceleration of merchantilism because merchants and other people of different parts of the world were interested to use the commodities that were exhibited.

3. The development of marine technology with compass direction and compass bearing. During the 15th century, Europe witnessed rapid changes in scientific curiosity and inquiry. That was a century in which the scientific revolution took firm roots. Meanwhile marine technology among the European nations enabled the merchants to sail even deep sea. The nations and merchants also constructed large ships which could carry bulky materials such as cotton, tobacco and minerals. Merchants benefited greatly from the marine technology as they could sail to various parts of the world.

4. Development of financial institutions and insurance company. These provided loans; credit and services to European merchants in order to continue involving in trading activities; so the role played by these institutions accumulated more wealth which they used on investment of economic sector hence the rise of merchantalism.

5. The Rise of strong states and political revolution; this provided security among merchants. Example; British after the revolution which removed King Charles I & II from power gave rise of Tudor monarchy. Example The rise of King Henry the navigator facilitated the rise of merchantalism like loans and credit and in France after king Louis was removed from power, French managed to get involved in merchant trade.

6. The role played by enclosure system; This was brought by agrarian revolution, it played a great and important role towards the development of merchantalism because the large scale plantations were established and increase an output of agricultural industrial raw materials like wool, wheat flour, and these agricultural raw materials increased manufactured goods in industries which were needed by European merchants for their own use.

7. Geographical discovery of the new world by Christopher Columbus on 24.10, 1492; led to establishment of plantation and mines in America, Canada, Peru, Colombia, etc.So the establishment of these needed slave labour from Africa after the failure of the red Indians and expressiveness of European criminals and prisoners, hence this led to the establishment of merchantalism because Europeans were in need of raw materials.

8. Profitability of unequal exchange; during this period European got more wealth by using illegal ways like piracy, kidnapping etc. but also they used to sell in Africa commodities of low value and things which were unsellable in Europe, things such as mirror, while they obtained things of high value from African continent like Ivory. So this led to the rise and development of merchantalism.

9. Crusade war; this was a religious war between European (Christians) vs. Arabs (Muslims) in the Middle East near Turkey to control trade and capture the whole city. This made the way to become insecure for European traders but also Arabs controlled the trade routes whereby they increased tariffs to European traders. This forced Europeans to the alternative way to reach India (Asia) and Africa for conducting trade. Hence development and the rise of merchantilism.

Impacts of Merchantalism in Europe and Africa

Western Europe and Africa had a relationship which ensured the transfer of wealth from Africa to Europe. According to W.Rodney on his book “How Europe under-developed Africa” 1972 argued that; over that period Africa helped to develop Western Europe and at the same time Europe under-developed Africa. Trade helped Europe to get numerous developments also the North America benefited from this merchantalism while Africa did not benefit.

Impacts of Merchantalism in Europe

1. Gold and silver accumulated during this period played a very important role in expanding capitalist capital in the economy of Western Europe because it was gold and silver that determined the value of capitalist to develop in terms of money.

2. These trades speed up the European technological development. Example the Trade helped the Europeans in the development of ship building from the 15 th C-19 th C where by sea going vessels of different sizes were designed for slave trade and carrying raw materials from America to Europe and later carry commodities to other parts of the world where markets were available.

3. Merchantalism led to the rise of Sea ports town like Liverpool, Bristol, etc. in these sea ports towns there was a development of manufacturing centers like Ian Cashing which depended on the growth of the port of river.

4. Speed up the development of industrial sector; industries such as textile industries, flour milling, ship industry etc. With development of industries in Europe, it helped European countries to develop as far as capitalism was concerned.

5. The Capital derived from merchantalism helped to a great deal to strengthen transitional links within Western European economy. Example sugar from Caribbean islands was exported from England to France and other parts of the European continent.

6. Merchantalism continued to be source for capital accumulation by European merchants whereby the capital was to be invested in investments such as banks, industries, transport and communication for European development hence capital accumulation was possible due to much exploitation of African resources during merchantalism.

Impacts of Merchantalism in Africa

Africa at large extent was in a negative during this oversea trade because the trade made Africa to be underdeveloped and stagnant all the time, hence the following are the impacts:-

1. Merchantalism led to the rise and fall of some African states. These states grew strong during Trans- Saharan trade like Songhai, Mali, Ghana, Benin but they collapsed because its wealth was destroyed after the establishment of triangular slave trade, but some other states grew strongly after the establishment of merchantalism because its wealth depended on this trade. Example; Dahomey state.

2. Merchantalism led to the rise of state of fear and insecurity among Africans especially in West Africa This was because during merchantalism African leaders were helping the European merchants to capture their fellow Africans and sell to the Europeans, these people were taken as slaves and shipped to the mines and plantations in America. Also the introduction of guns brought political instability among Africans who were fighting among themselves for European interests.

3. Merchantilism led the destruction of African trade which was established among Africans for their own interests by merchantilism. Example, Long Distance Trade conducted from one region to another region, Trans-Saharan trade which was conducted between West Africa and North Africa. This was due to European merchants who changed the outlook of the trade from not benefiting Africans to benefiting Europeans.

4. Merchantalism led to introduction of unequal exchange which was unequal trade whereby during the trade between Africa and European merchants; Europeans benefited due to the value of commodities and raw materials taken from Africa like rhinoceros horns, tortoise shell, coconut oil, ivory, slaves while in exchange Europeans brought to Africa things which were used and could not be sold in Europe. Things such as daggers, empty bottles, ornament, cigarettes, Portuguese wine.etc.

5. Merchantalism led to stagnation of African science and technology especially African local industries and productive forces but also the action of taking Africans as slaves killed science and technology.

6. Merchantalism led to the decline of African agricultural production because in most cases Africans were in state of fear and insecurity and political instability, hence they could not settle together to involve in agricultural production, in Africa led to famine and hunger.

7. Merchantalism led to introduction of slave trade which led to depopulation of African continent because many African young men and energetic were taken as a slaves to offer their labour power in mines and plantations in America.

8. Merchantalism led to the destruction of African culture because during this period Europeans introduced their culture like eating style, dancing style, marriage etc. which all of them meant to kill African culture because Africans ignored their own culture and started to follow European culture.