This article and the presentation, which you can find at the end of the article, are the results of the home assignment of three students for the Global Business class at EF New York 2016-2017.
Merchant Capitalism
The underlying theme of capitalism is the use of wealth to create more wealth. Capitalistic ideas appeared in the Middle Ages as a merchant capitalism (16th to 18th centuries). The simplest form of this is lending money at interest. At a more sophisticated level capitalism involves investing money in a project in return for a share of the profit. It began to develop into its modern form during the Early Modern period in the Protestant countries of North-Western Europe. Traders in Amsterdam and London created the first chartered joint-stock companies driving up commerce and trade, and the first stock exchanges and banking and insurance institutions were established.
Industrial Capitalism
In the mid-18th century, a new group of economic theorists, led by David Hume and Adam Smith, challenged fundamental mercantilist doctrines such as the belief that the world's wealth remained constant and that a state could only increase its wealth at the expense of another state. During the Industrial Revolution, industrialists replaced merchants as a dominant factor in the capitalist system. Also during this period, the surplus generated by the rise of commercial agriculture encouraged increased mechanization of agriculture. Industrial capitalism marked the development of the factory system of manufacturing, characterized by a complex division of labor between and within work process and the routine of work tasks; and finally established the global domination of the capitalist mode of production. In the 19th century, Richard Cobden and John Bright, who based their beliefs on the Manchester School, initiated a movement to lower tariffs. In the 1840s, Britain adopted a less protectionist policy, with the repeal of the Corn Laws and the Navigation Acts. Britain reduced tariffs and quotas, in line with David Ricardo's advocacy for free trade.
(In economics, protectionism is the economic policy of restraining trade between states (countries) through methods such as tariffs on imported goods, restrictive quotas, and a variety of other government regulations.)
Modern Capitalism
In the 20th century, capitalism overcame a challenge by centrally-planned economies and is now the encompassing system worldwide, with the mixed economy being its dominant form in the industrialized Western world. In this period, the global financial system was mainly tied to the gold standard. The United Kingdom first formally adopted this standard in 1821. Soon to follow were Canada in 1853, Newfoundland in 1865, the United States and Germany (de jure) in 1873. New technologies, such as the telegraph, the transatlantic cable, the radiotelephone, the steamship, and railway allowed goods and information to move around the world to an unprecedented degree. In the period following the global depression of the 1930s, the state played an increasingly prominent role in the capitalistic system throughout much of the world. The postwar boom ended in the late 1960s and early 1970s, and the situation was worsened by the rise of stagflation. Monetarism, a modification of Keynesianism that is more compatible with laissez-faire, gained increasing prominence in the capitalist world, especially under the leadership of Ronald Reagan in the US and Margaret Thatcher in the UK in the 1980s. Public and political interest began shifting away from the so-called collectivist concerns of Keynes's managed capitalism to a focus on individual choice, called "re-marketized capitalism".
Presentation link: google slides
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