Chapter 2 The Historical Development of Capitalism • • • • • Feudalism and the Birth of Capitalism The Emergence and Nature of Capitalism The Industrial Revolution Colonialism: Capitalism on.
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Chapter 2 The Historical Development of Capitalism • • • • • Feudalism and the Birth of Capitalism The Emergence and Nature of Capitalism The Industrial Revolution Colonialism: Capitalism on a World Scale Summary The Importance of Historical Processes • The present economic landscape can only be understood as the result of an historical process • Decisions to site production facilities “yesterday” produce the spatial pattern that is the foundation for trade and patterns of consumption today • We can visualize these processes at various geographic scales Feudalism and the Birth of Capitalism • From hunting & gathering to domesticated agriculture (animals and crops) • Slave-based empires (e.g. Roman) and their feudal successors (ca. 5th Century) • Feudalism dominated economic and social relations in Europe to ca. 15th century • Settlement in North America did not succeed feudalism, but was capitalist in character from the outset Characteristics of Feudalism • Tradition shaped life and work • In Europe the church was the dominant political and ideological institution • Aristocratic land-owners formed the ruling class, who extracted rents from tenant farmers (often serfs) in low productivity agriculture • Feudal cities – often fortified – with guilds – markets, where universities were established • A hierarchy of feudal towns, mostly small trading centers, with negligible interregional trade Serfs working on their “lords” farm, not earning wages, but paying a large share of their output as “rent” in return for the right to keep some output for their own consumption Carcassonne France—a classic example of feudal urbanization Feudal Regions & The Beginnings of Trade Agricultural innovations, bubonic plague, the European Renaissance Characteristics of Early Capitalism • Markets: buyers and sellers of goods & services at agreed upon prices • Market types: perfect competition – perfect monopoly – oligopoly (and other types) • The profit incentive = revenue – cost > 0 • Dynamic behavior of buyers and sellers, including incentives from innovation in products and production processes • Class relations -- merchants & burghers vs. the old aristocracy-- Unlike feudal Europe, workers under capitalism must sell their labor power to survive. Thus the process of commodification extended to include labor—as well as to most goods and services The Emergence and Nature of Capitalism – rise of trade-based city states – links to old trade routes to the Far East and in Europe Alternative Models of Competition Barriers to Entry - High One Buyer One Seller A Few Sellers Limited Quantity of Sellers Many Sellers Oligopsony Monopsony Many Buyers Monopoly Oligopoly Monopolistic Competition Perfect Competition Barriers to Entry - Low Attributes of Alternative Market Types Perfect Competition Homogeneoous products Each producer makes a small share of output No one seller influences Prices Entry to market is easy Flow of information is Perfect, eliminating excess profit Markets are fluid Monopoly Unique Product One producer makes all of the product Prices set to maximize profit High Barriers to Entry Monopolist is able to control the market Market is rigid “Pure” Monopoly Oligopoly Similar Products Several sellers divide the market Prices set through pricing strategies High Barriers to Entry Oligopolists engage in strategic behavior— competitive or collusive Market may be unstable, competitive strategies to create stability: product differentiation, advertising, industry agreements Early Capitalism, Continued • Finance: replacing barter with money, and institutions to handle and regulate money • Uneven development as an inevitable outcome, historically persistent, at scales ranging from local to global • Long-distance trade – fueled by transport innovation – allowing regional specialization based on principle of comparative advantage • Ideological change – printing/reading, religion, science, the Enlightenment – “a worldview that stressed secularism, individualism, rationality, progress, and democracy.” Guttenburg’s Printing Press Early Capitalism, Continued • Feudal empires (e.g. Holy Roman Empire, Figure 2.13) with multiple nation-states • Replaced feudal monarchies with nation-states (Fig. 2.14) • Nation states supporting development of capitalism through regulations, public investment and programs (e.g. education, defense, trade protectionism…). • BUT: these institutions do not preclude transnational capitalist development, evident in this era of globalization – Key quote page 35 Fig. 2.14: European Boundaries after the Treaty of Westphalia (1648) The Industrial Revolution • Industrialization as a process with multiple transformations in inputs, output, and technologies. Driven by: – Harnessing inanimate sources of energy (Figure 2.16), wood-coal-petroleum & gas – Technological innovation (Table 2.1) – Rising Productivity (Figure 2.17) • Spatial diffusion of the Industrial Revolution Watt’s steam engine – 1769 – a key driver of the Industrial Revolution Spread of the Industrial Revolution Production (Output) Versus Productivity (Output/Unit Input Which is graphed here? Global Diffusion of the Industrial Revolution Labor exploitation In the Industrial Revolution What about today in factories in the Third World? Cycles of Industrialization – Kondratiev Long Waves Consequences of the Industrial Revolution • Creation of an Industrial Working Class – Rise of organized labor • Urbanization – industry as “city forming” activity (? Right-hand tail of Fig. 2.24) • Population Effects: Malthus’ warning vs. productivity increases, health improvements, lowered birth rates • Growth of Global Markets & International Trade – transport improvement, international finance, timing of development The Case Study - Railroads • New speed & low cost to move people and commodities • Transformative impacts on spatial organization – Siberian railway, U.S. transcontinental railroads • The rise of gateway cities, such as Chicago, St. Louis. See: William Cronon, Nature’s Metropolis Colonialism • Colonialism: Capitalism on a World Scale – The exploitation of foreign resources by European industrializing nations – Simultaneous economic, political, and cultural impacts rife with conflicts with native groups – The unevenness of colonialism (Figure 2.26) • Transition of colonies to nations – different timing for the Americas vs. Asia & Africa – Figure 2.28, Figure 2.29, Figure 2.30, Figure 2.31 Waves of European Colonialism Napoleonic Wars, American Revolution, Latin American Independence Dominated by Spain & Portugal British & French dominated exploitation of Africa, Asia, and the Middle East Post WW-II Collapse Colonial Empires in 1914 Colonial Powers in S.E. Asia Bases of Colonial Power • Technological and military advantages coincident with the industrial revolution • Jared Diamond’s arguments re: geographical accidents, such as the impact of diseases on local populations, and the timing of technological achievements • Political strengths due to the Western legal and economic system & property rights • The Historiography of Conquest: note the cases are historically and geographically specific – Latin America, North America, Africa, The Arab World, South & East Asia, Southeast Asia, Oceania The Effects of Colonialism • Annihilation of Indigenous Peoples • Restructuring around primary economic sectors • Formation of dual societies • Polarized geographies (transport networks often reshaping seats of power) • Transplantation of the nation-state • Cultural Westernization Rail Lines from national export platforms to peripheral locations European Influences in North America ca. 1800 Slave Trade to the Americas The End of Colonialism • Early end in Latin America • Post World War I and II for much of the rest of the planet • Different trajectories to independence • But, even with independence, many regions in the global South remain dependent upon the global North for commodity markets, captured in the core-periphery model