Session 4
Session 4. Historical Arguments for Capitalism, a Historical Caution about It, and a Method for Analyzing Arguments: (1) Adam Smith on How the Division of Labour Increases the Material Welfare of Society, and Is Driven by the Propensity to Exchange and Invest; (2) Smith on How Capitalism Unintentionally Destroys Feudalism; (3) Marx and Engels' Praise for How Capitalism Generates Wealth and Raises the Standard of Living; (4) Thomas Malthus on How Capitalist Progress Encourages Population Increase among the Poor, which, if Unchecked, Immiserates Them.
Read first: Adam Smith, "Of the Division of Labour," "Of the Principle which Gives Occasion to the Division of Labour," The Wealth of Nations, ed. Canaan, pp. 7-21.
Then read: Adam Smith, "How the Commerce of the Towns Contributed to the Improvement of the Country," The Wealth of Nations, ed. Canaan, pp. 432-447. [ClassesV2]
Then: Karl Marx and Friedrich Engels, from Section I of The Communist Manifesto, in Karl Marx, Selected Writings, pp. 158-164. [ClassesV2]
Finally: Alec Fisher, "A first example—from Thomas Malthus," The Logic of Real Arguments, pp. 29-47.
So you’d like to know more…Click here for materials on Malthus and population pressure.
Maurice Dobb, "The Decline of Feudalism and the Growth of the Towns," Studies in the Development of Capitalism (New York: International Publishers, 1949): 32-82, pp. 32-37.
[At bottom of this page]
What exactly is feudalism? Is it a hierarchical relation in which each person owes service to those above in return
for protection and consideration, a relation made by a contract that cannot be altered? In short, a relation of vassal to a higher lord? But if this is feudalism, then colonial Spanish America was never feudal. Is it then a system of economic production in which production is for use, not for exchange? But if that is true, then feudalism virtually did not exist in many early-modern European colonies, where most production was for exchange domestically or on international
markets; and, also, feudalism was on the decline in sixteenth-century Russia, just when serfdom and feudal
obligations to landlords were being widely extended over the peasantry. But in both those cases, we do want to say
that feudalism was present. To escape the difficulties of these two conceptions of feudalism, this article proposes a
third. It urges us to see feudalism as serfdom: as a system of production in which the producers are forced to perform
services for an overlord, with no genuine quid pro quo in return (and hence is like plantation slavery, and unlike
capitalist wage-labor); but in which the producer owns the means of production (and hence is unlike either slavery or capitalist wage-labor).
Angus Maddison, The World Economy: Historical Statistics (OECD, 2007)
Gives the data on estimated growth in GDP and GDP per capita for various transitions from mercantilism to industrial capitalism. Finds that there has been enormous improvement in per capita GDP in the rich capitalist countries since their change to capitalism. At the same time, per capita GDP in many capitalist sub-Saharan countries is today lower than it was in 1800, the advent of industrial capitalism.
Peter Laslett, The World We Have Lost—Further Explored (London: Routledge, 2004)
Paints a famous picture of feudal and mercantilist society and economy in England, before it was upended by capitalism.
Martin Ravaillon and Shaohua Chen, “The Developing World Is Poorer than We Thought, But No Less Successful in the Fight against Poverty,” Quarterly Journal of Economics 125 (2010): 1577-1625.
Finds that the percentage of people in the developing world living on $1.25 a day in constant dollars was cut in half between 1981 and 2005. Since most of this reduction occurred in China, which changed from a communist economy to a capitalist economy during this period, this seems to support the view that capitalism lifts people out of absolute poverty. But how accurate are the Chinese data? And how much progress is it to move from $.56 a day to $1.26?
Food and Agriculture Organization of the United Nations, The State of Food Insecurity in the World, 2012 (Rome, 2012).
Finds that in 2010-2012, 12% of the world’s population were undernourished, whereas in 1990-1992, 19% were. That’s an improvement, and it might be in part due to countries’ moving from communism to capitalism during that time. But at the same time, the world produces enough food for no one to be undernourished. So why isn’t it getting to those 12%?
United Nations Development Programme, Human Development Report 2013
Finds in Table 2 that the world has improved in human development (HD)—a measure of life expectancy at birth, mean years of schooling, expected years of schooling, and GNI per capita–between 1990 and 2010, and that China has made big improvements in HD between 1990 and 2010, and that Russia has made modest improvements. So those improvements could be attributed to their turn to capitalism. But how confident can we be that the advent of capitalism was a main cause?