The Emergence of Capitalism - Essay Example

Capitalism emerged from an economic system in the 17th century though capitalism became a dominant force in the 18th century. Capitalism first developed in England. Subsequently, capitalism grew out of mercantilism and feudalism. Production of goods took place at individual level during feudalism era. Individual artisans who were members of guilds produced commodities. Individuals owned their means of production (Acemoglu and Robinson, 2015). During the feudal era, the labor market was unimportant to the economy and the King and his team did not employ people to work. The system did not allow ownership of land. The system allowed a person to live on the land and in return, offer services to the king. The system was like a pyramid with the king at the top, and the ordinary people were at the base. In between the king and the ordinary people was a vassal who swore loyalty to the king.

The Earl ruled each area of the land and enforced the laws. The king gave the earl full right to govern the land. Sometimes ordinary people suffered significant hardships under the mercy of the leaders above in return for services. In the feudal system, the ruler offers fighters a parcel of land in exchange for a military service. The people involved swore using the bible. In choosing the individuals, factors such as financial status, local custom, skill of the fighter, and quality of land played a part (Acemoglu and Robinson, 2015).

However, feudalism discouraged a united government. Individual lords would divide their lands into smaller portions and offer the parcels of land to lesser knights and rulers. The ordinary people would further split the little piece of land into further small pieces. The feudal government was an agreement between individuals and not between citizens and nation states. Therefore, dukes, earls, and individual barons would freely declare war on each other (Acemoglu and Robinson, 2015). The Dukes and those under the king would always breach the bonds of loyalty. Loyalty was not to a particular race or geographic area but among individuals.

Secondly, feudalism discouraged economic growth and trade. Peasant farmers worked on the land and the king, and those lords over the peasant farmers restricted their movement, did not allow them to change lands without permission (Ivanchenko and Ivanchenko, 2013). The feudal lord claimed one-third to one-half of the farmers produce in fees and taxes. Additionally, the farmers would work on the lord’s land in exchange for working on their land. The ordinary people would grind their grain; bake their bread, use bridges and roads built by the king. However, the rulers forbid the ordinary citizens from setting up their bridges, roads, ovens, and mills. Therefore, the king had a monopoly over the regular citizens, and he would exploit the opportunities to the maximum. Therefore, such practices were often economic necessities (Ivanchenko and Ivanchenko, 2013).

During the feudal era, the labor market was unimportant to the economy and the King and his team did not employ people to work. The system did not allow ownership of land. The system allowed a person to live on the land and in return, offer services to the king. For instance, companies did not employ blacksmith but rather allowed the blacksmith to make horseshoe at an hourly rate (Ivanchenko and Ivanchenko, 2013). The blacksmith earned income from the products that he sold. The blacksmith derived his income from selling his goods. Subsequently, guilds restricted membership and required several years of unpaid labor. However, guilds offered rules and laws that governed the operation of the land. Merchants would approach independent producers, buy their goods, and later sell the same products at the market. Therefore, wage labor was rare on such occasions because individuals controlled the means of production. Accumulation of capital was not the priority of the system then. The guild regulated the little wage labor that existed at the time (Ivanchenko and Ivanchenko, 2013). Many scholars define capitalism as a system based on private ownership of the means of production. One of the marks of capitalism is the existence of labor market and use of wage labor. There is a need to understand the role of labor markets in capitalism. Therefore, capitalism emerged in the 17th century during the British Agricultural Revolution and eliminated several ordinary people or peasants. As federal system ended, the incoming authority privatized land and as a result, several peasants had no title deeds and therefore became jobless and homeless. Wage labor rose in the cities as farmers looked for jobs in the city (Ivanchenko and Ivanchenko, 2013).

Drastic advances in mechanism tool place when merchant class evolved into the capitalistic class through the employment of workers and building of factories. Accumulation of capital gave rise to capitalism that then exploded in the 18th century. The principle of capitalism is that individuals saw that right to ownership of the newly created values coming from ownership of the tools creating the value as compared to labor used to create the value. Such kind of practice involved private ownership. Initially, people worked for the king but in this case, people lived and worked at home and produced their goods (Ivanchenko and Ivanchenko, 2013) and earned their income from the products they created. Individuals controlled and owned their means of production and thus owned their labour products. Some bright individuals invented Spinning Jenny in 1764 and thus enabled spinners to produce threads quickly. Therefore, modern capitalism began during this season (Ivanchenko and Ivanchenko, 2013).

Independent home producers were no longer able to compete and gave up their independent home activities to work at home and look for jobs in the cities. Arkwright became successful and soon other producers conformed (Ivanchenko and Ivanchenko, 2013). With time, many industries transited from old ways of independent production by guilds, artisans, and individuals to collective production of wage-labour capitalism. The independent means was few and less efficient and the capitalist embrace and promoted increase in efficiency that led many individual to abandon their independence to work for wages. However, the wages were lower than the previous income. Capitalism is also about the employment of age labor, private ownership of means of production, and private accumulation of capital (Ivanchenko and Ivanchenko, 2013). Consequently, because of capitalism, labor rose to a commodity to capital ownership. Therefore, according to capitalism, labor is a commodity and as a result, the market drives the price of labor.

According to Robinson (2011), the capitalist economic theory does not attempt to compensate employees by real contributions made. According to capitalist theory, labour markets determine wages and as a result, the market value of the employee’s labor determines the amount of pay to employees. An individual cannot determine the created value (Ivanchenko and Ivanchenko, 2013). The prices that people in the market are willing to sell their labor determine the market value of employee labor. Capitalist limit competitions in commodity markets and promote competition in the labor market and therefore the industry is opposed to collective bargaining. Capitalist limit markets within borders by maintaining the ability to hire wage workers across borders.

Subsequently, there is more restriction to consumer markets than labor markets and as a result, there are higher prices for goods at a lower labor cost to produce the goods. Capitalism does not view labor as a source of property rights and as a result, there is widespread adoption of labor and private concentration of capital leading to the dominance of labor market as the determining factor in labor compensation (Dobra, 2014). According to an argument by Karl Marx, capital increase and grows faster when capitalism develops though he pointed out that capital increase or growth will depend on the state of the economy. Karl Marx says that capitalism, can reach its peak and begin to drop, thus lead to falling profits rates and thus reduces economic growth (Dobra, 2014). The idea is similar to that of David Ricardo that the economy can come to a standstill or reach its peak.

Capitalism first developed in England. Capitalism emerged from an economic system in the 17th century though capitalism became a dominant force in the 18th century. Subsequently, feudalism discouraged a united government. Individual lords would divide their lands into smaller portions and offer the parcels of land to lesser knights and rulers. The ordinary people would further split the little piece of land into further small pieces. The feudal government was an agreement between individuals and not between citizens and nation states. Feudalism discouraged economic growth and trade. Peasant farmers worked on the land and the king, and those lords over the peasant farmers restricted their movement, did not allow them to change lands without permission. The feudal lord claimed one-third to one-half of the farmers produce in fees and taxes. Consequently, capitalism also did not promote economic growth.