For a better understanding of capitalism and it impacts on our society I am going to explain Britain overseas extensions through capitalism.

Colonization allowed the island nation to build one of the most impressive empires in history. Throughout much of the colonial period, the Great Britain followed a mercantile system of economic control.

The British presence in India began in the early seventeenth century, when the British East India Company wins trading rights on the fringe of the Mughal empire in 1617. On june 23 of 1757, Robert Clive leads a British military force to victory at Plassey against the Nawab of Bengal. As a result, the East India Company takes political control over a large swath of India, despite its background as a trading company.

During this time there was a class of manufactuers in Britain who benefited more from manufacturing than trading. They were interested in having more raw materials from India as well as sending their finished goods back. Between 1793 and 1813, these British manufacturers launched a campaign against the company, its trade monopoly and the privileges it enjoyed. Ultimately, they succeeded in abolishing the East India Company’s monopoly of Indian trade. With this India became an economic colony of Industrial England.

At this point we should talk about mercantilism, which is one of the great whipping boys in the history of economics. This dispatching mercantilist doctrine is one of the foundation stones of modern economics. At the heart of mercantilism is the view that maximising net exports is the best route to national properity. Boiled to its essence mercantilism has the idea that the only measure of a country’s wealth and success was the amount of gold that it had. So that’s why the best way of ensuring a countr’s prosperity was to make few imports and many exports, thereby generating a net inflow of foreign exchange and maximising the country’s gold stocks. For this reason, Great Britain implemented policies which were designed to protect its traders and maximise income.

Later, in the late 18th Century, Adam Smith raised the first systematic analysis of ‘political economy’ which gave powerful impetus to free trade. The imposition of free trade ensured India could not protect its domestic industries, which were being wiped away by the onset of cheap imports of manufactured goods from Britain.

LIMITATIONS

The 'liberal' view believes in freedom for private powers at the expense of public power (government). It asserts that markets, free from the distortions caused by government controls and regulation, naturally will harmonise demand and supply of scarce resources resulting in the best possible world for populations at large.

The 'realist' view (formerly commonly labelled "nationalist") accepts the power of free markets to deliver favourable outcomes, but holds that optimum conditions generally are obtained with moderately strong public power exerting some regulatory control.

The 'Marxist' view believes that only robust application of strong public power can check innate tendencies for private power to benefit elites at the expense of populations at large.

The 'constructivist' view assumes that the domain of international economic interactions is not value-free, and that economic and political identities, in addition to material interests, are significant determinants of economic action.