This Chapter Goes through history of emergence of different types of economic systems - very briefly.
Much more details discussions of this topic are available from my previous lectures in other courses, especially in connection with Polanyi.
Final Exam Questions:
1. Explain how the creation of enclosures in England created a labor class which made the industrial revolution possible.
2. Explain how surplus output created by the Industrial Revolution led to the creation of a consumer society.
3. Explain how the the industrial revolution created the necessity of colonizing the world, and also created the means to do so.
Student Answers:
Answer1. Before Enclosure Acts, the farmers had open fields or common land which they would use as a source of wood, playing games and cattle gazing. The enclosure (seizing of the common land) made peasants lives more miserable. Poor farmers had no choice but to migrate to industrial cities to find work. Having lost their means of self-sufficiency, they were forced to accept low wages and poor conditions. This is how enclosure tactic helped creating labor class for capitalism
Remember that massive Industrial Revolution allows massive OVER-PRODUCTION. What will be done with all of the excess goods that have been produced? Who will buy them, in a self-sufficient society, which encourages simple living? This culture of simplicity MUST be changed, OR excess production will not be of any value. We must change habits and ways of thinking of people, encouraging them to consume more and more, and encourage them to develop habits of wasteful, extravagant, and show-off spending. This is the only way that industrial excess production can be sustained. Similarly, if the domestic market is insufficient, we must export goods to others. BUT if other societies are built on self-sufficiency, they wont buy our excess goods. So we must destroy those societies, and make them dependent on us. Destroy their native institutions for education, health, social welfare, production of welfare, and teach them false doctrines of comparative advantage, force them to produce raw materials and send them to England to manufacturs clothes, after destroying their own industry for textiles.
A2. The consumer revolution marked a departure from the traditional society where most of the consumption had been satisfied by direct production of the consumer rather than market output. It emerged as the growing middle class got wages in terms of money and started spending it on market output (necessities as well as luxury consumption). Moreover, the expansion of trade and markets also contributed to the growing consumer revolution by increasing the variety of goods that could be made available to a wealthy society.
A3. Industrial Revolution led to colonization for 2 main reasons; 1) to get cheaper raw material for industries 2) to have places where they could sell their products.
Industries also provided industrialized countries with military weapons to fight in wars and to help them to colonize vulnerable empires. They also provided goods which would be traded with other countries as a way to enter there (Eg. East India Company entered Sub-continent through trade).
The Great Transformation (summary) - Post provides brief summary of key points of the Great Transformation
Rise and Fall of the Market Economy - Explains the market economy which arose in Europe after the Great Transformation, and how this is anti-thetical to Islamic values and ideals.
Resources for the Study of the Great Transformation - Large amounts of materials related to the Great Transformation is summarized briefly and linked in this post
Mitchell Wray Watts MMT Ch 3 Economic History & Rise of Capitalism - 15m Video Lecture on Historical evolution of economic systems, last of which is modern capitalism
Methodology of Polanyi's Great Transformation - This introduces three crucial methodological points used by Polanyi which contradict the methodological principles currently in use by economists for economic theory