In order to fully understand the present, you'll have to connect the dots from the past. This chapter will summarize what Capitalism is and how it evolved during the times.
Capitalism is an economic system where money buys materials and/or technology (means of production) and labor power to produce products and services to sell at a profit.
Here’s a formula that demostrates this process created by Brendan Mcooney of Kapitalism101.
Money -- buys-->Means of Production & Labor Power -- to Produce -->Commodities -- to sell for-->Money+1 (Profit)
Capitalism, hands down, has been the most productive economic system society has ever used thus far. The system that was in place before it, Feudalism, only allowed a tiny minority access to a variety of luxuries and financial prosperity. If you were born poor, you died poor. If you were born rich, you died rich. Our economic status in those times were decided by inheritance. Only the rich had access to exotic and premium goods and services.
Capitalism enabled anyone who had capital to organize and create something of value to offer to the public. This empowered someone who was born poor the opportunity to surpass their class status if there was demand for what they produced. This also led to mass production, where lower class people gained access to a variety of goods and services previously only available to the upper classes.
Therefore, Capitalism created a better standard of living for more people. This was a new and exciting game for the people to play! Unfortunately, this game became rigged by corporate interests controling two things: government and currency. This produced (and continues to produce) a variety of negative effects on society and the planet. I would touch on those effects in a later chapter.
But let's begin to explore the three phases of Capitalism. Something I would like you, the reader, to note is each phase created the conditions to bring about the next phase. However, before we explore Capitalism, I'll start with the economic system that came before it, Manorialism.
(image of a farm peasant working the fields)
During the Early Middle Ages in Western (and parts of Central) Europe, peasants and lords lived on self-sufficient tracts of land, or manors. The villages were organized in a way that the peasants would work the land, give the majority of the harvest to the lords, and keep the remaining amount to live on. The lords would then exchange their excess supply of crops in exchange for luxury items in other distant lands.
(image of a merchant selling a rug in an outside marketplace)
Innovations in technology and increased travel and commerce enabled farmer peasants to start trading outside of the Lord's control to tax them. This lead to the development of town centers and cities; an alternative economy started to emerge. The towns became centers of trade and offered independence to people in the villages.
A typical example would be merchants getting a loan from a banker who would buy goods in one country, transport them in ships to another country where they are scarcer or more valuable, sell them for a profit, and then pay back the banker. This was earliest form of Capitalism called Mercantile Capitalism.
(image of workers on an assembly line)
During these times, the way to make the big bucks were to create factories to mass produce goods. This phase of Capitalism is called Industrial Capitalism. Entrepreneurs needed a lot of capital to satisfy the demand for railroads, cars, ships, etc., which they didn't have; so new types of financing were needed. This led to the emergence of investment banks, who would eventually gain control of the economy because they provided the capital.
Additional highlights of this system were tough working conditions (which gave rise to labor unions), monopolies, and the Prussian design of public schools to pump out more workers for the factories.
(image of fat bankers)
This leads us to the most current form of Capitalism, Finance Capitalism. This type of economic system isn't based on producing physical goods like Capitalism 2.0, it rather relies on the sale of financial products and services to create profits. High labor costs, in countries like the United States, creates strong demand for outsourcing cheap labor, to countries like China, to produce goods for resale.
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