Historical Context of
Capitalism
Emergence and Nature of
Capitalism
http://www.osterraederlauf.com/luegde/modern-history.html
http://www.google.com/imgres?imgurl=http://www.osterraederlauf.com/luegde/images/peace.jpg&imgrefurl=http://www.osterraederlauf.com/luegde/modernhistory.html&h=251&w=374&sz=30&tbnid=cVOQoCOjyHAJ:&t
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Learning Objectives
 Where
does Capitalism Come From
 What is Capitalism
 What are its Impacts
Additional Background Video (viewed first 15 minutes)
THE WESTERN TRADITION
30. The Rise of the Trading Cities:
Amid religious wars, a few cities learned that tolerance increased
their prosperity
http://www.learner.org/resources/series58.html?pop=yes&vodid=120661&pid=848#
Capitalism
2
Capitalism: Major Sections
Geographic Early Beginnings
 Characteristics
 Class Relations
 Finance
 Territorial & Geographic Changes
 Long Distance Trade
 New Ideologies
 Perceptions of Change
 Emergence of the Nation State

Capitalism
3
Early Beginnings
 Profit
Maximizing Emerges
– Rise of the Urban Merchant Class
 New
class emerges from Serfs
 Not tied to the Land
 Society no longer based on personal
relationships
http://www.medieval-spell.com/Medieval-Merchants.html
Capitalism
4
Geographic Early Beginnings
(“original globalization”)

Profit Maximizing Emerges
– Trading Networks create
untold wealth

Spatial Patterns
– Northern Italy – Southern
Terminus of European Trade
 Taps into Mediterranean
Sea and world beyond
 Related to ancient
Lotharangia
 Key southern city
initially Venice
 Hanseatic League – part
of Northern Terminus
creates integrated
economy around Baltic
and into North Sea
 Key northern city
becomes Amsterdam
Capitalism
5
The trading
“spinal cord” of
early 16th
century Europe
Based on this
ancient Kingdom
Eugene Weber
Capitalism
http://www.uncp.edu/home/rwb/lecture_
mid_civ.htm
6
Note how 20th century wars still focus on this
geographic alignment this trade “incubator”
Capitalism
7
“Western
Front” in
two World
Wars
Capitalism
8
Characteristics
 Markets
– Means of distributing
scarce resources
– Leaves behind State controls and Land
based economy
– Commodities now free to change hands
– As a “New” Institution
 Becomes
the most
important
 Threatens the old (Feudal)
order
Capitalism
9
http://www.ub.uit.no/northernlights/eng/whitesea02.htm
Characteristics
 Private
Property
– Title and ownership no longer solely
through the crown/State
– But property rights guaranteed by the
State
– Picture is an example of the enclosure
of Feudal estates & commons
http://www.peakdistrict-nationalpark.info/_images/_pictures/tl48.jpg
Capitalism
10
Characteristics
 Profit
– Drives all activity
– No longer is “idleness” sought after
– Hard work and accumulation of goods
on this earth is GOOD!
 “It’s
glorious to get rich”
– Deng-Tsao Ping
 Modern day rendition of the Protestant Ethic
Capitalism
11
Characteristics
 Progress
– Competition becomes a virtue
– Change and efficiency become
watchwords
– New Virtues are
 Innovation
 Change
 Risk
Taking
Grist mill
http://www.theponderosalodge.com/images/Grist_Mill_Summer.JPG
Capitalism
12
Class Relations

Wealth based not Tradition based
– More fluid
– Aristocracy gives way to Meritocracy

Merchants ascendant class
– Bourgeoisie
– Can challenge Church and State
http://pwbeat.publishersweekly.com/blog/wpcontent/2007/09/HOH005_L.jpg
(might this reflect
present day Russia or even China???)

Labor becomes a commodity
– Emergence of wage-labor
– Rising of working class -- Proletariat
Capitalism
13
Finance
 Money
replaces land as ultimate
measure of wealth
 Cash transactions replace barter
 Commoditization of Land, Labor,
Time—Transportation
 Alienation of society
– Blood is thicker then water
– But cash preferable to blood
Capitalism
14
Finance
 Velocity
& Accumulation of Capital
– More is always better
– Capital must always be invested
– Competition requires continuous
“destructive construction”
Capitalism
http://acas.com/images/investor_relati
ons/dividend_slide.gif
15
Territorial & Geographic Changes
Rust Belt
http://content.answers.com/main/content/wp/
en/4/42/Rust-belt-map.jpg
 Emergence
of “Uneven Spatial
Development”
– Currently seen in variation of Coastal &
Inland China
– Rust Belt/Sun Belt in US
– Core & Periphery in North-South Debate
 Occurs
at all levels
– In cities – “wrong side of tracks”
– In and between states, countries, trade
blocs
Sun Belt
Capitalism
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China as
example
Capitalism
17
Vasco da Gama in India
Long Distance Trade
(“Modern Globalization Begins”)
 Feudal
Age: Trade was
peripheral to system
– Mainly for aristocrats based on
luxury items
 In
Capitalism: Trade is central
– Trade everything – luxuries to
necessities
– Transportation development
central to process
– Occurs at all scales
Capitalism
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Spice Trade Routes
Long Distance Trade
Portuguese Trader
 Trade
thrives on differences
– Resources are spatially dispersed
and scarce
 Trade
shapes differences
– Places seek competitive advantage
 Consumers
are ultimate winners
in expanding trade
– More choice
– Lower price
Capitalism
19
New Ideologies
Adam Smith
 Capitalism
effects
perception of World (and Heaven)
– Creates its own “Reality” (paradigm???)
– Mixes economics, politics, culture,
geographic relationships
– Protestant Ethic emerges
 Man’s
role in creating his own world
recognized
Capitalism
20
Perceptions of the Change
Almighty “dollar”
Capitalism
Divine right of Kings
21
“Society in the late Middle Ages was increasingly
challenged by the emerging forces of
mercantilism and commercial capitalism. The
authority of the church was being eroded, and its
abuse of privilege and power was a focus of
much discontent. For many it seemed that the
church had departed from the early spirit and
ideals of Christianity”. http://www.osterraederlauf.com/luegde/modern-history.html
Capitalism
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New Ideologies
 Protestantism
– Focuses on
individuals direct
relationship with
his creator
– Intermediaries not
necessary
Capitalism
23
New Ideologies

Protestant Ethic Emerges
Emphasizing
Max Weber
1. Delayed Gratification
2. Savings
3. Material Success
–
–
–
–
Sign of God’s grace
Not only the “poor inherit heaven”
Can enjoy life and the afterlife
Work becomes a Moral Obligation
Capitalism
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New Ideologies


Nature is demystified - controlled
Culture becomes secularized
– Watchwords





Secularism
Individualism
Rationality
Progress
Democracy
Grand
Coulee Dam
(new values?)
Capitalism
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Nation-State
Emerges
A
new Geography
 Political Organization
based on common:
Otto von Bismarck
– Language, culture,
history, territory,
identity…
– Peace of Westphalia
1648
Signing the Peace Treaty of WestphaliaCapitalism
Louis XIV
26
Nation-States Emerge

Peace of
Westphalia, 1648
recognizes the
Nation-State as
primary unit of
international laws
and relations
http://content.answers.com/main/content/wp/encommons/thumb/e/e2/300px-Europe_map_1648.PNG
Capitalism
http://www.geocities.com/Athens/Sparta/5414/Europe_1648_Westphal_1884.jpg
27
Nation-State Emerges
Capitalism
instrumental in
creating both
Markets and
Nation-States
 State’s new duty is
to set rules that
cause Markets to
Thrive

Capitalism
28
Summary
 Geographically
come from
where does capitalism
– Urban Centers and new urban class
– Northern Italy (Mediterranean Sea)
– Lowlands, Hanseatic League… (North Sea
& Baltic Sea)
Capitalism
29
Iranian Protestant Reformation?
AGHAJARI'S TRIAL IS PROSECUTION OF SHI'A SEMI-PROTESTANTISM!
http://www.ghandchi.com/159-Aghajari.htm

The attacks on Hashem Aghajari, the high ranking member of mojAhedine enghelAbe eslAmi (MEE),
may seem like another factional fight in the Islamic Republic of Iran. Iranian secular opposition has
not seen that much significance in the arrest and trial of Aghajari, even though some members of
Iranian clergy have gone as far as calling Aghajari the Salman Rushdie of Iran, and Ayatollah
Meshkini, the main thinker of Islamic Republic, has called for death penalty against Aghajari.
The allegations against Aghajari seem so irrelevant to the nonreligious mind that many wonder why he
is even arrested by IRI. Even outside Iran, people closely follow the actions of Ayatollah Montazeri
and Taheri, but do not see much to ponder on in the case of Aghajari, whereas in reality, both
Montazeri and Taheri are trying to save the Shi'a clergy from its collapse, following the
identification of Shi'a clergy with the Islamic Republic, but Aghajari's issue is not about saving the
Shi'a clergy!
The prosecution of Aghajari is one of the most important events in the history of Shiism in Iran. It is as
important as the Baha'i and Khomeini movements of the past. If Baha'i movement wanted to
make prophets and Christ out of the Shi'a clergy, and if Khomeini movement wanted to raise the
status of Shi'a clergy to that of Imams and the Pope, Aghajari's call is to bring down the clergy,
from the heavens back to Earth, to the level of a layman.
In a way, what Aghajari is stating is very similar to what Luther called for, in the 15th Century Europe,
with regards to the Catholic Church, when he questioned the need for Catholic clergy as the
intermediary of people and God, and spoke for direct contact of the individuals with the Christian
30
Capitalism
God, which basically equated the clergy with
the layman.
Whither Capitalism???


A special report on the future of finance: Greed--and fear
Economist, The (London, England) - Saturday, January 24, 2009
 The
golden age of finance
collapsed under its own
contradictions. Edward Carr asks
why it went wrong and what to
do next
THE monument to Soviet central planning was supposed to have been a
heap of surplus left boots without any right ones to match them. The great
bull market of the past quarter century is commemorated by millions of
empty houses without anyone to buy them. Gosplan drafted workers into
grim factories even if their talents would have been better suited elsewhere.
Finance beguiled the bright and ambitious and put them to work in the
trading rooms of Wall Street and the City of London. Much of their effort was
wasted. You can only guess at what else they might have achieved.
Capitalism
31
Summers cautions on modest US recovery
By Sean O'Grady in Davos, Monday, 1 February 2010, The Independent
A clear warning about the true health of the US economy and the state of US-Chinese
economic relations has been issued by Larry Summers, President Obama's leading
economic adviser.
Speaking at the World Economic Forum in Davos,
Mr Summers was cautious on last week's
apparently strong US growth figures. "What we
are seeing is a statistical recovery and a human
recession," he said. "My judgment ... will be that
GDP growth will continue at a moderate rate at
least for the next several quarters. What is
disturbing is the level of unemployment. This is
not just a cyclical phenomenon but also a
structural…
phenomenon.“http://www.independent.co.uk/news/business/news/summers-cautions-on-modest-
us-recovery-1885356.html
Capitalism
32
Capitalism
without
Freedom
”The real issue is
whether the Chinese
government
has
created some new
form
of
state-led
capitalism. On closer
inspection, its biggest
contribution has been
creating the space for
private companies to
do their thing.”
http://www.economist.com/news/businessbooks-quarterly/21627564-privatecompanies-have-been-hugelyunderestimated-china-unstated-capitalism
Capitalism
33
Summary
 What
are its characteristics
– Profit Maximizing
– Market Economy
– Private Property
– Progress and Change
– New Class Relations
– Financial Industry
Capitalism
34
Summary
 What
are its impacts and/or
consequences including geographic
– Uneven Spatial Development
– Expansion of Long Distance Trade
– Emergence of new Ideologies
– Emergence of the Nation-State
Capitalism
35