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Transcript of From the fifteenth century on, European soldiers and sailors carried the flags of their rulers to...
A Small Peninsula…
From the fifteenth century on, European soldiers and sailors carried the flags of their rulers to the four corners of the globe, and European merchants established their storehouses from Vera Cruz to Nagasaki. Dominating the sea-lanes of the world, these merchants invaded existing networks of exchange and linked one to the other. In the service of “God and profit” they located sources of products desired in Europe and developed coercive systems for their delivery. In response, European craft shops, either singly or aggregated into manufactories, began to produce goods to provision the wide-ranging military and naval efforts and to furnish commodities to overseas suppliers in exchange for goods to be sold as commodities at home. The outcome was the creation of a commercial network of global scale.
—Eric Wolf, A People Without History
The Rise of Capitalism
The rise of capitalism Did not just emerge out of nothing Traceable trends in global markets and the
colonization process Ecological, cultural, social costs of “doing
business” The global spread of “conspicuous-
consumption” oriented capitalism has been both a blessing and a curse
A Small Peninsula off the Landmass of Asia
About four or five hundred years ago, the movement of goods and global communications became dominated by “a small peninsula off the landmass of Asia”
While European powers certainly used political and military power to extend their control, it was accomplished through economic domination of trade and market expansion.
Refresher on the World System
The Modern World-System, 1974
Looked at how the capitalist systems penetrated non-capitalist systems
A binary distinction between the core area and the peripheral area
Argued that world economies linked by exchange relations were largely impossible before about 1500
Continued
The capitalist world economy, which appeared around 1500, coincided with the expansion of commerce
The states of Northwestern Europe were able to impose a regional division of labor and specialization of production - e.g. sugar in the Caribbean, bullion in the Andes, and cereals in Eastern Europe
Little More…
Through increasingly powerful state bureaucracies, European powers continued to consolidate the flow of surplus toward the core countries
The world system theory urges us to examine the history of cultural conflicts to understand the change in any given cultural area
Eric Wolf
Europe and the People without History (1982)
A Critique of Civilization as a response to appeals from indigenous peoples to seek out the actual nature of the roots of the exploitative and oppressive conditions which are forced on humanity
Wolf emphasized the importance of the social relations that structured the organization of production and the distribution of goods and labor within and between societies
More Wolf
In his view, the motor for the rise of international capitalism was located in the West, and the system itself was built on exploitation, enslavement, genocide, and the formation of class structures and states
It also involved ethnogenesis - the creation of peoples without history both inside and outside Europe
People without History?
What did Wolf mean by this statement? People living at the margins of history People who live outside of the Western European
historical timeline But also those who live within the history of the West
but in a marginal or subordinate position "People Without History“ refers to those peoples
whose cultures lack a formally written articulation of their histories
Comfort for Capitalism
Returning to Robbins…Where are we today? Corporations have the same economic rights
as citizens Governments are opening markets
economically and militarily Nation states maintain armies to protect
investments Governments, educational institutions, and the
media encourage consumers to spend These are the conditions of doing business…
This is not “Natural” or “Old”
For most of human history we lived in small, relatively isolated communities
Until 10,000 years ago we were all foragers Then came agriculture, longer work hours,
harder labor However, additional labor maintains denser
populations Populations continued to increase…
Modes of Production
The major way in which human beings organize their production
“The concept of mode of production aims…at revealing the political-economic relationships that underlie, orient, and constrain interactions in a society…” (Wolf 1982: 76)
Kin-ordered Production and consumption organized through
kinship May be real or fictitious kinship May or may not serve to restrict access to resources
Modes of Production
Tributary the laborer has access to the means of production with the
obligation of tribute to a lord or a ruling elite “labor is…mobilized and committed to the transformation
of nature primarily through the exercise of power and domination” (Wolf 1982: 80)
Capitalist the laborer is separated from the means of production,
access is mediated by elite owners came into being when monetary wealth was enabled to buy
labor power for labor power to be offered for sale, the tie between
producers and the means of production had to be severed for good (enclosure movement in Europe)
Capitalist Mode of Production
Historically specific: did not exist in 1400 Private ownership of the means of production
(bourgeoisie) Distribution of goods controlled in a mainly market
economy People without means of production must become
laborers (proletariat) Development of capitalists class All or most of the inputs and outputs of production
are supplied commercially through the market
The Capitalist
The merchant, industrialists, and financier…
Person who controls the capital, employs the laborers, and profits from the consumption of commodities
A tour of the World at 1400
Like Wolf in “Europe and a People without History” Robbins starts our trip at the year 1400.
Why? This is the time pointed to by Wolf and others as the beginning of the rise of modern capitalism
Robbin’s Quest
To understand “how did the distribution of wealth change, and how did one area of the world come to dominate most others economically?”
“How and why did these transformations in the organization of capital come about?”
“How did the level of global economic integration increase, and what were the consequences for the merchant adventurer, as well as others?”
Merchant-Adventurer
What was the world like for such a person in 1400?
World population at 250 million The largest trading city in the world was
Hangchow Major market-places Major concentration of global traders Major ports for the movement of goods Major overland trade routes to markets in Euro-Asia
Political Environment
Most political rulers in the 1400s still relied on a tributary mode of production
Most did not encourage trade While states valued the money garnered from
merchant-capitalists, they were still viewed with distain
Why? Threat to the aristocracy…
Economic Environment
No consumer economy yet World population lived on subsistence
economy (i.e. they produced what they needed)
No major currency across Europe, especially not globally
China and India richest states Possibly no major areas of poverty
The Rise of the West after 1400
China withdraws A traditionalist movement, possible response
to cultural intrusion of the “West” Trade expansion through exploration
Voyage of Vasco da Gama around the southern tip of Africa, the “discovery” of the “New World”
The rise of new navel powers such as Portugal The huge growth in the world economy and the
amount of currency in circulation
The Collapse of the Americas
Massive wealth extracted extremely quickly
Massive die off of native populationsPopulation size? 8.4 million? 50-
100 million? (p. 49) Not an unoccupied wilderness, but
rather a complex social arena
Cultural Extinction…
Some hard numbers Population of Tainos in Espanola (Haiti/Dominican) at
contact (1496): 8 million? Population in 1514: 22,000. Population in 1542: 200 By 1552 all Tainos people in Espanola where
extinct… 95 to 98 percent of the indigenous population died as
a consequence of European contact (p. 50 )
Slavery and Capitalism
How did the collapse of the native population lead to an increase in the slave trade?
Profitable, driving commerce in the New World
Helped to develop the plantation and ranchero systems
Environmentally destructive
Trading Companies
By the 1600s, states began to become more involved in global trade and commerce
Trading companies were very powerful Dutch East India Company British East India Company
Created massive wealth for the parent countries
Aided the spread of capitalism
The Rise of the Industrialist
1800, England becomes dominant over rest of European powers
Lost of American colonies offset by the colonization of India
Rise of industrialism in England Iron production increases Development of the steam engine Development of the cotton gin
Why did England take off? Increase in demand for goods Increase in the supply of capital Growth in Population Expansion of Agriculture An “English Spirit”
Entrepreneurial spirit, Protestant ethic State support of trade The rise of a merchant class A change in consumption patterns
Introduction of sugar, coffee, tea, etc
Capitalism
A new pattern of capital formationMoney is converted to commodities
that combine with the means of production and labor power to produce other commodities that are then sold for a greater sum than the initial investment
Capitalism
Requires labor force removed from access to means of production
As long as people have that access, no need to sell their labor
State sponsors restriction of access to means of production
Those who control the means of production also control the goods created
Thus labors must not only sell their labor to gain wages, but they must also purchase the products of their labor to survive
AND HERE WE ARE!!
Rise of Imperialism
Capitalism necessarily requires growth Production requires capital Production expands Thus rise of Imperialism
Imperialism Colonialism seen as necessary for growth and
stability Unequal exchange: colonies (individuals, states, etc)
produce only raw materials and must import finished goods at a higher overall cost
The Rise of the Corporation
Power no longer in ownership of land, but rather in the control of capital
New elite made up of bankers, aristocracy, businessmen, manufacturers, and jurists, among others, held together through newly developed kinship ties
Capital kept within families!!!
Corporations
Massive consolidation of industry lead to the development of huge companies dominating the market
European and American powers act to divide up “influence zones”
Corporations acting as “extensions of capitalism”
Are they becoming the dominant governance units in the world?
Brief History of Corporations
A social construction of the state Allows private financial resources to be used for the
state… Allows individuals to apply massive economic and
political power to accumulate wealth Publicize Risk/Privatize Profit
Corporate charters represented a grant from the government that limited an investors liability to losses covering the amount of the original investment
Brief History of Corporations
Corporate law at the time was focused on protection of the public interest
Not on the interests of corporate shareholders Corporate charters were closely regulated by the states Forming a corporation usually required an act of
legislature Investors had an equal say in corporate governance Corporations were required to comply with the
purposes expressed in their charters
Brief History of Corporations
Fear of the power of corporation in the United States led to limits being placed on their development
Post Civil War America Corporations made huge profits during the war, able
to influence political process Resulted in corporate land grabs, development of
infrastructure Consolidation of power and wealth continued
Brief History of Corporations
Because of this growth in power… Corporations eventually gain corporate
charters into perpetuity Reduce liability of owners (accidents) Gained the right to operate in any way not
legislated AGAINST Restricted minimum wage laws Restricted “work day” legislation
Supreme Court Ruling on Corporate Personhood…
• In the early and mid 1800s, (1819 first ruling) the U.S. Supreme Court granted corporations a plethora of rights they had not previously recognized or enjoyed
• Santa Clara County v. Southern Pacific Railroad Company, 118 U.S. 394 (1886) was a United States Supreme Court case dealing with taxation of railroad properties. The case is most notable for the statement that corporations are entitled to protection under the Fourteenth Amendment
Fourteenth Amendment
The Fourteenth Amendment to the Constitution, which forbids a State to deny to any person within its jurisdiction the equal protection of the laws, now applies to corporations
Corporate Personhood
• Corporate charters were deemed "inviolable," and not subject to arbitrary amendment or abolition by state governments
• The Corporation as a whole was labeled an "artificial person," possessing individuality, immortality, and most importantly freedom of speech
What does freedom of speech allow a corporation to do?
Corporations
Corporations are granted the same protections an American citizen has…
Freedom of Speech The ability of corporations to lobby
legislatures with the same rights as citizens The growth in corporations use of the media
to lobby consumers Massive influence of corporations in
government
Proponents of corporate personhood believe that corporations, as representatives of their shareholders, were intended by the founders and framers to enjoy many, if not all, of the same rights as natural persons, for example, the right against self-incrimination, right to privacy and the right to lobby the government.
Opponents claim that certain rights of natural persons, such as the right to political and other non-commercial free speech, are now exercised by corporations to the detriment of the American democratic process as provided under the Constitution.
This of course led corporations to create conditions where they could make greater profits
Eventually placed the rights and freedoms of the corporation over those of the individual
The corporation came to exist as a separate entity with its own internal logic and rules
What are the Underlying claims of the capitalist Ideology?
Western Capitalism is natural, teleology (result of all prior action) of human progress
Humans are naturally greedy, although the poor are lazy and stupid
The poor therefore require “masters” and no savings to force them to work
Economy is disembodied from socio-political structure, operates according to abstract principles
“Free” market for labor and resources to sort themselves out by “supply and demand”
Underlying claims of this Ideology?
Governments don’t “interfere” in the market except to provide basic necessities to the lazy poor, while the picked-on wealthy, who are our benefactors, pay all the taxes but get nothing in return (vs. supporting investments in military, communications, transportation, etc.)
The wealthiest are those who sacrifice, work the hardest, and are entrepreneurial
Hard work = wealth = God’s providence, favoritism People have equal opportunity to accumulate wealth
Underlying claims of this Ideology?
Colonialism was for civilizing the savages or for saving oppressed people from totalitarian archaic states
Peripheral peoples are poor because racially or culturally inferior, not because colonized and exploited
Major capitalist countries are the most “civilized”, promoting peace and human rights
The UN, World Bank, and IMF are philanthropic, development-oriented institutions
Underlying claims of this Ideology?
Capitalism = democracy, with the most important decisions made by the masses
“Economic Growth” means betterment for all; and when wealthy do well, all do well
Standards of Living rise with global capitalism, and standard of living is the same as quality of life
Science & Industrial Revolution spurred capitalist growth, not vice versa
Humans vs. Nature: Human can dominate their natural surroundings and growth knows no limits
If not “free market” capitalism, the only alternative is “godless” communism
Corporate Ideology and Globalization
As corporate libertarianism expands… International Bank for Reconstruction and Development
Allowed development of markets in periphery countries The International Monetary Fund
Allowed currency exchange on a global level General Agreement on Tariffs and Trade
Created a forum for nations to negotiate trade policy that eventually lead to…
The World Trade Organization Global forum for trade agreements Intended to “level playing field” but benefits wealth elite who
drive the negotiations
Global Capital Control
Development of the World Bank resulted in massive lending campaigns
Resulting in large-scale debt in periphery countries who received the World Bank loans
Why/How did this happen? What went wrong?
Currency backing Lending Glut in money due to Oil booms
Global Debt
The change in how money is constructed Originally based on the gold standard in most
countries Bretton Woods accords: other counties would use
the American Dollar as the primary currency of trade (as backed by gold at a rate of 35 dollars per ounce)
Mid 1960s, US begins printing cash in excess of its gold supply
By 1971, US declares it will no longer re-deem dollars on demand for gold
Global Debt
This move divorced the American dollar from any tangible base
Dollar is now “covered” by “the expectation that people will exchange it for things of value”
“Money” became unsecured credit And countries began to print more and more of it Which lead to more and more lending However, money was lent via loans with adjustable interest
rates Debts quickly began to accumulate as loans grew beyond
the levels that borrowing counties could afford to pay back Does this sound familiar to you personally?
The Power of Capital Controllers
Corporate capitalism has allowed the development of capital controllers who have power over vast sums of wealth
This wealth is necessary for the working of the economy/infrastructure
However, these controllers are beholden to virtually no one
Their goals often conflict with the goals of the state
Financialization Process Modern global economy is based on a process
involving the flow of finance capital, money, and securities, rather than the actual production and distribution of goods and services
The flow of capital is now more important than the flow of actual goods. By the 1990s, 90 percent of the worlds commercial transactions involved stocks, bonds, and commodity futures
By 2000, 75 percent of American wealth was financial By 2003, the entire world had become integrated into a
single financial network working on a computerized backbone.
This allows the movement of global capital across the globe in nano-seconds
In 2010 the number of high-net-worth individuals in the world -- those with at least $1 million in investable assets excluding primary residences -- grew 8.3% to 10.9 million, and their wealth rose 9.7% to $42.7 trillion
Wealth is still concentrated in the U.S., Japan and Germany, which accounted for 53% of the world's high-net-worth population
Power in Motion
The global flow of capital into and out of communities How much? On any given day, nearly 1 Trillion dollars move across
the globe Power has consolidated into the hands of a few global
elite Who are not restrained by government oversight…
US International Direct Investment Flows
Period FDI Inflow FDI Outflow Net Inflow
1960–69 $ 42.18 bn $ 5.13 bn + $ 37.04 bn
1970–79 $ 122.72 bn $ 40.79 bn + $ 81.93 bn
1980–89 $ 206.27 bn $ 329.23 bn – $ 122.96 bn
1990–99 $ 950.47 bn $ 907.34 bn + $ 43.13 bn
2000–07 $ 1,629.05 bn $ 1,421.31 bn + $ 207.74 bn
Total $ 2,950.72 bn $ 2,703.81 bn + $ 246.88 bn
http://www.bea.gov/international/xls/table1.xls