chapter 2 the historical development of capitalism feudalism and the birth of capitalism the...
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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 workingon their “lords”farm, not earningwages, but paying a largeshare of theiroutput as “rent”in return forthe right to keep some output fortheir 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
Barriers to Entry - Low
One Buyer Many Buyers One Seller Monopoly A Few Sellers Oligopsony Oligopoly Limited Quantity of Sellers
Monopolistic Competition
Many Sellers Monopsony Perfect Competition
Attributes of Alternative Market Types
Perfect Competition Monopoly OligopolyHomogeneoous products Unique Product Similar ProductsEach producer makes asmall share of output
One producer makes all ofthe product
Several sellers divide themarket
No one seller influencesPrices
Prices set to maximizeprofit
Prices set through pricingstrategies
Entry to market is easy High Barriers to Entry High Barriers to EntryFlow of information isPerfect, eliminating excessprofit
Monopolist is able tocontrol the market
Oligopolists engage instrategic behavior—competitive or collusive
Markets are fluid Market is rigid Market may be unstable,competitive strategies tocreate stability: productdifferentiation,advertising, industryagreements
“Pure” Monopoly
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
LaborexploitationIn the IndustrialRevolution
What abouttoday infactoriesin 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
Dominated bySpain & Portugal
NapoleonicWars, AmericanRevolution,Latin AmericanIndependence
British &French -dominatedexploitationof Africa,Asia, and theMiddle 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 nationalexport platformsto peripherallocations
European Influences in North America ca. 1800
Slave Tradeto theAmericas
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