Section 2: Capitalism Comes to America

Section 2: Capitalism Comes to America

“Economies Before Capitalism … Mercantile World … Plantations … The Tea Party … The Capitalist Constitution”
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  • Capitalism Comes to America > Economies Before Capitalism > What Do We Mean By Capitalism?
  • Capitalism Comes to America > Economies Before Capitalism > Long Distance Trade: Early Civilizations
  • Capitalism Comes to America > Mercantile World > World System: Trade and Ships
  • Capitalism Comes to America > Mercantile World > Virgin Soil and European Immigrants
  • Capitalism Comes to America > Plantations > The Plantation Complex, The Levant, and Sao Tome
  • Capitalism Comes to America > Plantations > The Industrious Revolution II
  • Capitalism Comes to America > The Tea Party > Not Every Revolution has a Party
  • Capitalism Comes to America > The Tea Party > John Adams Gets No Tea
  • Capitalism Comes to America > The Tea Party > Charlestown Gets Serious

Capitalism Comes to America > Economies Before Capitalism > What Do We Mean By Capitalism?

  • So whenever people hear that we’re teaching this course, they come up to me and they say, well, you’re teaching this course about capitalism.
  • So what is it? Yeah, and capitalism is extremely controversial to define.
  • There are elements that everyone agrees on, the sort of reorganization of labor, especially division of labor, the investment of money in terms of capital investment for higher productivity, the relationship between the state and markets in terms of protecting private contracts and private property.
  • I mean, you could look at these geniuses who we, in turn, look to as the fathers of the different theories about what capitalism is, somebody like Adam Smith who says, it all comes down to having free markets.
  • Or Karl Marx, who says, once you have a real system of wage labor and commodities, that’s capitalism.
  • That’s what really matters, the everyday lived experiences of people within capitalism.
  • Whether you identify yourself as a worker, or as an entrepreneur, or as a politician, you’re going to be touched by, and in fact, shaped by capitalism.
  • So it matters less to define capitalism, like a philosopher would, because in essence, that is not what matters.
  • What matters is how capitalism has emerged historically, transforming our world.

Capitalism Comes to America > Economies Before Capitalism > Long Distance Trade: Early Civilizations

  • What we want to do is get this story up into the Second Millennium of the Common Era because that’s when somethings are going to start to change.
  • We’re going to start to see some of the groundwork getting laid for what would ultimately be the Industrial Revolution and the rise of modern capitalism.
  • So let’s go back to that era where human beings had first started to invent agriculture.
  • It happens between about 8000 BC and 1000 BC in a variety of places.
  • So we can look at the river valleys of eastern China, the Indus River Valley along the border between Pakistan and India today, the Fertile Crescent in what is today Iraq and Syria, the Nile River Valley, and also Mesoamerica, today’s Mexico today’s Peru, and a couple of different areas in Africa as well.
  • In those places by about 3000 BC, we start to see the emergence of large states.
  • In all these places, it seems that large states start to emerge as rulers are able to assert some kind of control over the agricultural surpluses that are created by populations.
  • Many different things that are going to be characteristic over the next few thousand years started to emerge.
  • Large scale religious practices, often with temples and pyramids and these sorts of infrastructural creations, also appear.
  • Right after writing, or maybe this is the reason for inventing writing in some cases, we start to see commercial accounts.
  • We start to see records that goods are being moved and sold and bought.
  • So commerce and the state start to appear very, very early in what we would call organized large scale human civilizations.
  • Along with commerce and law, trade, taxes, the state, come other things like the invention of money.
  • Whether it’s in the form of coins or some other kind of token, we start to see that as well.
  • So by around the 1000 BC, we’ve got several major nodes of civilization, major nodes of commerce in which people are carrying out both short distance trade and bulky commodities like fuel and food, and long distance trade in lighter weight, higher value commodities like, again, precious stones or gold and other forms of money.
  • All of these things are starting to happen at one time.
  • It’s only going to be between 500 BC and 100 BC that we start to see some real unification of large scale civilizations which are going to provide an even larger opportunities for bigger and broader networks of trade.
  • So empires had risen and fallen since about 3000 BC. But the empire that rises by around 100 BC, that comes to dominate the entire Mediterranean Basin, is a new type of empire in certain ways.
  • What happens then is that slavery is so successful that it of pushes a lot of the Roman small farmers, the Italian small farmers into Rome and other cities.
  • For some reason around 200 AD, the Roman economy starts to sputter.

Capitalism Comes to America > Mercantile World > World System: Trade and Ships

  • Most European societies are not capitalist, certainly not in any modern sense.
  • Even in the cities and in the more active centers of the European trading economy we still do not see modern capitalist economic relationships.
  • Production was inefficient and societies were still stuck in the same Malthusian trap.
  • Nor did European societies dominate the world economy.
  • That’s where Columbus and other European explorers were trying to get to when they accidentally bumped into the Americas.
  • European societies would not, for the most part, be able to conquer or dominate other societies in the world in the 1500s.
  • Now on the other hand, over the next two centuries, Europe would be able to conquer and dominate many of the most complex societies in the Americas, like the Aztec and the Inca empires.
  • Between 1500 and 1600 the population of the Americas probably dropped from about 100 million to about 15 million as diseases brought in by Europeans, diseases for which the Native Americans had no immunity, raced through populations and devastated entire societies leaving the Europeans in charge and able to exploit both the existing resources and the surviving populations of many of the societies.
  • Over the next two centuries after Columbus, so in other words by 1700, Europeans would develop new institutions and new capacities.
  • For instance new kinds of production technologies, new ways of organizing and producing commodities would emerge.
  • If you look at the states that promoted and regulated the economies of the 1700s and the 1800s in the process of conquest between 1500 and 1700, they developed the bureaucracies, and the militaries, and the financial structures that allow them to go out and dominate the world, and to reorganize themselves into capitalist economies.
  • European economic growth could have unraveled just as we saw in other societies at other times.
  • If you look at the collapse of the Roman Empire, or if you look at the collapse that China up until 1700, the center of the world economy, was about to undergo over the next two centuries, we can see that it’s possible for societies and economies to slip backwards into full scale Malthusian crises.
  • The same thing could have happened for Western societies after 1700 for all kinds of reasons.
  • We know that Europe and Western societies, generally, would go through a transition to industrialization.
  • In other words European and then American capitalism as we know it would develop.

Capitalism Comes to America > Mercantile World > Virgin Soil and European Immigrants

  • Many historians now think that somewhere between 50 million and 100 million Native Americans lived in North and South America.
  • As European settlers moved in, they still faced considerable resistance, but they had the opportunity to grab far more land and riches than many of them would have ever been able to obtain in the Old World.
  • The result for them is a shift in expectations, a shift away from narrower constraints, a shift towards a more open world, in which, perhaps, we see the beginnings of an expectation, a set of expectations that would play a role in moving people to push beyond the old constraints of the Malthusian economy, the old constraints of the agricultural world that had limited people for over 10,000 years.
  • So the numbers I was talking about, 50 million, 60 million, 80 million dead, are so big, and the geographical scope, an entire hemisphere, North and South America, is so extensive that at times it can seem like all of the death and destruction blurs together.
  • When the slaves rise up, in what becomes the world’s biggest slave rebellion, 1791, a rebellion that ultimately becomes a war for independence, in which they create a new nation, and they come together to decide what to call that nation, they decide to memorialize the people who came before them.
  • They’re able to use that gold and silver to build an empire, an empire that doesn’t last, but is very powerful in Europe and around the world while it does.
  • Organisms, like the plant that we know as corn or maize, the potato, the sweet potato, cassava, tomatoes, and many other products, which are today essential parts of European, African, and Asian cuisines, and help through their benefits and the way that they can produce many calories from relatively small inputs of labor and land, through those abilities they’re able to increase the population of the Old World tremendously between 1500 and today.
  • By the 1700s, Europeans or people of European descent, I should say, born in the New World colonies are visibly healthier, stronger, and taller on average than their cousins who are born in Europe.
  • He said, once they did, who is smaller now? That’s an entertaining anecdote, but if we had gone back to Monticello and measured the height of Jefferson’s slaves, we would find that on average they would have been at least an inch shorter then people of the corresponding gender and age who were at Jefferson’s side of the table in Paris.
  • The fact is for the first 300 years of the Columbian Exchange, the movement from the old world to the new, of the people who come from the old world to the new, 8 million of the 11 million come in the bottom of slave ships, chained together, many of them not even surviving the voyage.
  • Of course, at the same time, it was the deaths of well over 50 million people from epidemic disease that had cleared the way for the farms and the plantations and for whites, at least, the opportunities that would so characterize the New World experience for many centuries after.
  • So it’s fair to say that the European colonies and the colonists who come to them are able to get a new sense, a new set of dreams and a new set of ideas in large part because they are, as one historian put it and I just put it a few minutes ago, beneficiaries of catastrophe.

Capitalism Comes to America > Plantations > The Plantation Complex, The Levant, and Sao Tome

  • Can you talk a little bit about where this term “slave” came from, and the history of the slave plantation in the Old World? So really, the origins of the slave plantation complex that we came to see in the New World start, actually, in the eastern Mediterranean, and they start with the Crusades.
  • As Westerners go into the area that is today Israel, Palestine, Syria, Lebanon, and they fight against the Islamic states that occupy that part of the world, they also run into a lot of new products.
  • Typically, what they do is they bring in slave laborers from the Black Sea and from other areas that are connected to the Mediterranean and they put them to work growing sugar cane there.
  • So all the people who are laboring on these plantations are this mixture of people from Eastern Europe and that region from the Balkans to the Black Sea.
  • This continues on for hundreds of years, basically until Constantinople became Istanbul- when, in 1453, that great city switches over, and the slave markets are closed.
  • Now this sounds like a disaster- and it was- but it also pushes up wage rates across Western Europe and leaves lots of great farmland that really isn’t being plowed- isn’t being harvested- due to lack of labor.
  • Portugal encounters them and begins to first buy and then kidnap slaves from the Congo kingdom.
  • There, they transplant the sugar plantation system and it does- as an economic enterprise- it does terrifically well.
  • That’s what’s so interesting about Sao Tome, to me, is that it’s this- almost a rehearsal for New World slavery, that you actually- they actually took all the Slavs and Jews and people of the eastern Mediterranean from the plantations there to this island right off the west coast of Africa where they also bought slaves and took people from West Africa to these new plantations.
  • So this amazing mixture of peoples and economic policies and principles at work here- that are at work in the later part of the 1400s.
  • You’ve got this innovative set of labor practices- new kinds of slavery, new kinds of machinery, and a new crop- sugar cane.
  • So in this larger section, we’ll talk about the way the sugar plantation enterprise develops, how it expands, helps to create a horrific slave trade that eventually will move over 12 million Africans out of the continent of Africa, and will help to develop the economy of the modern world.
  • First of all, the way that certain kinds of economic enterprises are created and then transplanted to other places, because the plantation as a system- as a kind of business enterprise- is going to be something that, as Lewis was suggesting, you could move just like the sugar cane plant.
  • The role of commodities and the importance of consumer markets- the role of the movement of people.
  • There was a lot of money moving around the Atlantic, just like there was a lot of sugar and a lot of enslaved human beings.
  • It’s impossible to imagine any of these events happening without state sanctioned corporations, especially things like the Dutch East India Company and other kinds of enterprises actually finding that state support to move these commodities and to move these people.

Capitalism Comes to America > Plantations > The Industrious Revolution II

  • So the actual process of taking one good and turning it into another good is still technologically very inefficient.
  • There are a few changes, which do not amount to industrialization, which don’t involve the implementation of new machines or non-human sources of power.
  • We start to see an increasing emphasis on the division of labor, on taking tasks and breaking them down into smaller parts and assigning those smaller tasks to specific individuals.
  • One craftsman would draw out the wire, Smith said, make metal into wire, cut it into pieces, sharpen each piece, make the head for the pin, and put that on.
  • One person who sharpened the pin and so on, you can multiply the speed of production, the efficiency of production, many, many times over.
  • So what are the consequences of industrious revolution? Well there might be a change that lasts in people’s work ethic, in their attitudes towards work.
  • As attitudes towards time and work and how long people are supposed to work and how much they’re supposed to work, as those attitudes change, employers start to believe that all time should be use more efficiently.
  • Some of the same innovators that I talked about are also going to start applying new scientific tools to making the production process more efficient.
  • If you make it more consistent, you could make the production process more efficient.
  • So the application of new technological tools, like the pyrometer, is going to help lead towards the more efficient production of manufactured goods over time.
  • Even though there are new technologies and new attitudes, it’s still possible that existing limits could have constrained the ultimate expansion of the European and North American economies.
  • Limits on resources, limits on land, limits on the ability of the agricultural economy to feed all of these folks who are working in new jobs.

Capitalism Comes to America > The Tea Party > Not Every Revolution has a Party

  • How did this happen? How did we break away? And what part did capitalism play in the formation of this experiment that is the United States? In this segment, we’re going to talk about one of the central events of the American Revolution, the Tea Party, something that has come to symbolize both for Americans and around the world that revolution.
  • The question is, after all, how could the Revolution occur at all? How could the Sons of Liberty gather up and overthrow the most powerful empire in the world? And why did it happen at that particular time? In 1760, Benjamin Franklin wrote about just how impossible it was for the American colonies to work together.
  • The Colonies, he said, “have different forms of government, different laws, different interests, and some of them different religious persuasions and different manners.

Capitalism Comes to America > The Tea Party > John Adams Gets No Tea

  • John Adams, soon to be president, wrote to his wife Abigail in 1774 about a recent event that he had while traveling during these events.
  • He stopped at an inn, and he inquired at this inn, a certain Mrs. Huston’s inn.
  • Now Mrs. Huston didn’t appreciate the meaning of honestly smuggled.
  • Tea was tea, and if you drank it, you were un-American.

Capitalism Comes to America > The Tea Party > Charlestown Gets Serious

  • This wasn’t simply the events of the well-to-do.
  • So the people gathered in Charlestown, just near, outside of Boston to cleanse the entire village of tea.
  • They decided to form a committee to quote “demand from all inhabitants of all the town all the tea that they might have by them.
  • Quote, “if any of the inhabitants of this town shall do anything to counteract or render ineffectual the foregoing votes they are not only inimical to the liberty of America in general, but also show a daring disrespect to this town in particular.
  • So the entirety of the town of Charlestown gathered on the following Friday in the middle of a square.
  • It marked you as part of something new, something that was not part of the British crown.

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