Capitalism as a Fundamentally Western Concept or System - Essay Example

Introduction Capitalism is considered as one of the most important economic systems in the world which dominated the world for more than three centuries. It is often considered as a Western concept because most of its philosophical underpinnings came from the Western thought. Adam Smith who is considered as the father of capitalism belonged to era of Scottish enlightenment and prepared the ground for the philosophical as well as academic foundations of the capitalism. With the rise of industrialism in Britain, the capitalism started to take its roots more firmly and dominated the ordinary day life of almost everyone in the West. The development of industrialization in West is also considered as the organic growth of the capitalist thoughts and philosophy as capitalism presented an alternative channel of achieving social good in a more comprehensive manner. The pace of industrialization therefore was considered as the epitome of capitalist society and as such the domain of social and economic development achieved its highest status under the development of capitalism in Western countries. What is however, also critical to note that capitalism does not only restricted itself to the Western countries and as such it spread across the non- Western countries also. Since 19th Century, the process of colonialism as well as well as rapid rise of imperialization as well as globalization ensured the rapid spread of capitalism in non-Western countries also. What started as a purely Western Phenomenon therefore soon emerged in non- Western countries too due to various factors. This essay will discuss as to how one can account for the spread of Capitalism in non- Western countries. Capitalism and its rise Capitalism rose as a result of the rise in industrialization in 18th century which witnessed the British society turning from a feudal society to more capitalist society. Capitalism in its essence advocates the use of private property rights and indicates that in a society, means of production shall be privately owned for the best possible use. As such capitalism is not only an economic system but it also a social system which regulates the society in an entirely different manner. The basic elements of capitalism therefore include private ownership of the means of production, exchange of goods and services in the market for the sake of profits as well as determination of prices and wages by the market forces is basically constitute the main ingredients of the capitalism.(Morton,2005) What is however, critical to note that capitalism started in Western countries as a result of rapid achievement of technological sophistication and industrialization however, it also provided an opportunity to exploit the resources at enormous speed and conversion rates with strong probability of earning higher profits. This therefore led the way for finding new avenues for achieving more profitability and exploit further resources. This drive therefore also led to the new emergence of capitalism into non- Western countries because of their abundant natural resources to provide cheaper raw materials to the factories in Industrial world. The rise of capitalism in non- western countries therefore can be attributed to three distinct factors of colonalialism, Imperialism and globalization. Colonialism and rise of Capital in Non- Western Countries The rapid pace of industrialization required new markets and resources to exploit and as such industrial countries especially British went on to acquire new territories. The term Colonialism therefore refers to the acquiring of new countries and areas by one country in another country. The history of Colonialism will indicate that through using military force, British, France and Netherland went on to acquire new countries. Within the span of almost 100 years almost half of the world was directly controlled by British forces to exploit the unequal relationships between the indigenous people and the metropolis. The mass scale exploitation of resources in colonies reflects an era of extreme political, social as well as economic subjugation of many countries in the world. Few of the reasons for the increasing pace of colonialism include making more profits as well as to expand the power of metropole countries. (Wallerstein,1974) It is important to note that under colonialism, governments took the initiative and invaded the new countries and once political as well as military power was acquired, businesses started to follow the State. As such there was nexus of businesses as well as governments to systematically capture new markets. The underlying principle was to produce and sell the products in markets which can yield maximum profits. Thus the world industrial powers, on the basis of their Military strength, started to capture non- Western countries such as India as they offered an abundant source of cheap raw materials to be imported for the industries. This therefore resulted into the economic as well as socio-political exploitation. What is also significant to note that due to colonialism, world witnessed two World Wars between European powers which witnessed the weakening of political powers over the colonies held under control for centuries. The reduction of political powers of British and other countries therefore resulted into either the independence of the countries or creation of new countries. However, before this happened, capitalism took its roots into non- Western countries and as such most of the colonies attempted to retain the economic and political system of their masters and continued to pursue capitalist objectives. Imperialism Imperialism is another important phenomenon which resulted into the spread of capitalism to non- Western countries. One of the most important theoretical and practical contribution was made by Lenin who described the rise of capitalism through imperialism. Lenin’s ideas on Imperialism are largely borrowed from the writings of British Scholar, J.A. Hobson. Lenin’s theory of Imperialism is the basis of the analysis of the interaction between third world and advanced capitalist countries. Lenin focused on two theories in attempted to combine them together in one i.e. The Theory of Monopoly and Theory of Imperialism.(Taleski,2004). Lenin considered imperialism as highest form of capitalism as the unprecedented growth of industry and resulted into the concentration of economic power into the hands of few large organizations which started to dominate the world economic scene. The basic idea of Lenin was that the rise of monopoly has radically changed the relationship between the advanced capitalist nations and the rest of the world and also qualitatively altered the nature of capitalism within the advanced countries themselves. The historical roots of Lenin’s theory of Imperialism can also be attributed to the increasing trends witnessed in Europe when capital started to concentrate in the hands of few corporations duly supported by the large financial set ups. Accordingly, Lenin explains the development that capitalist industrial national export financial capital to colonial countries to exploit their resources and labor. This super exploitation of Poor countries allows the capitalist countries to maintain some homeland workers politically satisfied with slight higher standards of living to ensure peaceful labor capital relations. Lenin described Imperialism as the highest stage of capitalism therefore Capitalism is a process that the capitalists are forced into the search of greater profits in even shrinking and unstable markets. Lenin’s Theory of Imperialism is therefore also aimed at improving the theories of Marx by explaining a phenomenon which Marx could not have predicted i.e. the shift of capitalism to become a global system. It is however, important to understand that Lenin viewed Imperialism as an economic phenomenon rather than viewing it as a political phenomenon which Joseph Schumpeter attempted to disassociate from capitalism. According to Schumpeter, imperialism cannot be just limited to the pursuit of economic gains but rather imperialism is a “heritage of autocratic states”. According to Schumpeter, the inner logic of capitalism favors free trade and where free trade exists there will be no motivation for one particular class to impose themselves on another class and as such goods will move from one country to another as though that country was politically their own. Accordingly, the exploitative relationships between advanced and underdeveloped countries cannot exist for longer where politically independent countries exist. Schumpeter therefore views imperialism as a social phenomenon rather than an economic phenomenon as conceived by Lenin. Lenin’s theory of imperialism however, fail to distinguish the relationship between imperialism and colonialism and as such most of the writings of Lenin can be considered as the product of his time rather than assumed as futuristic look on the relationship between economically developed and underdeveloped countries. Further, with the emergence of USSR as a significant power in Post- War era divided the world into separate groups i.e. one led by USSR and other by US. The power of large corporations was subsequently lesser in that era as compared to the era emerging after the break up USSR. Thus, it is important that Imperialism shall not only be viewed just as an economic phenomenon but its social and political implications shall also be taken into consideration. Lenin’s theory therefore ignores the role of State in the process of accumulation as Imperialism is also viewed as a Foreign Policy option to manage the transnational relationships between States. Globalization Globalization is another critical aspect which can be discussed to indicate how capitalism spread into non-western countries. Growth of globalization however, resulted into the systematic weakening political power of the States which were subject to globalization powers. The various concepts of globalization indicate that the returns of the globalization are unequal as it favors few and creates problems for larger masses of the society.(Gupta,1997). The integration of the economy with the politics necessitate that the countries increasingly view globalization as process of political economy also as the implications of globalization have the consequences which can easily be considered as political in nature. The process of globalization often brings with it different changes which are either harmful for a particular society or helpful for it. Some studies however indicate that the overall flow of good and services in this global economy is slightly higher than it was earlier and as such only financial capital have moved across possibly in a bid to spot the arbitrage opportunities to earn higher returns. The arguments like this weaken the overall argument that the globalization is beneficial to the economy therefore is relatively arbitrary and considering the side effects of globalization, it is now considered more as a negative phenomenon rather than a positive force. The liberalization of trade as well as financial markets have put the firms in a position where they can lobby in government for gaining advantages which can provide them easy access to the international markets. However, it has been strongly advocated that the theoretical benefits of globalization and its actual benefits are far apart from each other and as such the difference between the two creates the potential for conflicts. Since globalization’s benefits are already variable therefore coupled with these differences, the overall face of globalization, especially in developing countries is painted as one that of the negative force. (Sklair & Robbins,2002). Further, it is also argued that the globalization has resulted into the gradual vanishing of the traditional values of the society and as such the resulting changes which are appearing in different societies as a result of globalization are therefore largely viewed as snatching the rights from the people. It is therefore argued that the effort shall be made to bring back the lost values of the individual societies so that the globalization as a force is presented in more positive manner.(Prempeh,2004). Sovereignty and globalization As discussed above that the globalization also creates internationalization therefore there occurs a free flow of goods and services across the borders. This also means that the governments have to accommodate those organizations which bring in capital into the country. Capital inflow also requires that the governments must provide the concessions to the multinational organizations through either tariff reductions or providing them tax free zones. The emergence of export processing zones clearly depicts an example of how the government of developing countries have to provide concessions to the international organizations in order to pursue export led growth strategies as well as availing the opportunity of creating jobs for the masses. This however, also means that the governments shall have make amendments into their policies so that the international organizations don’t turn their backs on them. These policy concessions therefore clearly depicts how the sovereignty of the countries can be compromised in terms of making indigenous economic policies which are directed at improving the conditions of the masses rather than providing policy concessions to global organizations. An important aspect of the process of globalization is also a fact that it advocates the free flow of goods and services and many agreements such as GATT, NAFTA, and WTO have been made in order to ensure the free flow of goods and services across the countries. However, it is also argued that such agreements often do not prove beneficial to the developing countries because developed countries enjoy extensive competitive advantage and often get the lion’s share in the free trade agreements. Since developing countries are often raw material suppliers therefore they have to pay high when the same raw materials are re-exported to them by making value addition. This situation can very well be described from a quote of an unknown economist which said that developing countries export potatoes and import chips. This is the situation in which globalization has placed many countries into because of structural deficiencies of these developing countries. Some empirical studies also indicated that globalization do not have any significant impacts on the welfare states and as such pursuing globalization policies either warrant changes in the policies of the welfare or abolishing globalization as a positive force for change.(Brady , Beckfield & Kaiser,2005). This argument also indicates that the globalization does not contribute towards the welfare effects on the states despite losing control over the economic policy making. Significant other evidence also indicates that the large multinational corporations often take the benefits of such liberalization by manipulating the market forces within these developing countries. The example of NIKE’s contract factories clearly indicate that how globalization forces are re-shaping the world’s working standards as well as forcing the governments not take any corrective measures against such organization. Conclusion Globalization, Imperialism as well as Colonialism are some of the factors that resulted into the spread of capitalism into non- western countries. Capitalism started as a new phenomenon into industrial era in Britain and as such resulted into rapid growth. Capitalism advocated the free flow of goods and services in markets and emphasizes on markets as the major source of change in society and its structures including the relationships between the States. The systematic exploitation of resources of other countries created socio-political exploitation of the masses also which resulted into the friction between developing and developed world. The recent phenomenon of terrorism is also largely viewed within the perspective of the clash of civilization between capitalism and Islam as capitalism were largely perceived as something which was fast eroding the Islamic and other religious values. The current financial crises are also largely viewed as a failure of the capitalism in industrial Western States and there is now growing emphasis on the role of government in regulating the markets. References 1. Brady, David, Kaiser, Martin Seelieb & Beckfield, Jason (2005) Economic globalization and the Welfare State in affluent democracies, 1975 -2001- American Sociological Review. 70(6) 921-948. 2. Gupta, S (1997). The Political Economy of Globalization. New York: Springer,. 3. 3. Morton, A (2005) The Age of Absolutism: capitalism, the modern states-system and international relations. Review of International Studies. 31 (3) 495-517 4. Nakano, Takeshi. 2004. ‘Theorising Economic Nationalism’, Nations and Nationalism, 10 (3) 211-229 5. Prempeh, Osei Kwadwo (2004) Anti-Globalization Forces, the Politics of Resistance, and Africa: Promises and Perils- Journal of Black Studies 34 (02) 580-598. 6. Sklair, L & Robbins, P (2002) Global capitalism and major corporations from the Third World. Third World Quarterly. 23 (1) 81-100 7. Wallerstein, I (1974) The Rise and Future Demise of the World Capitalist System: Concepts for Comparative Analysis,. Society for Comparative Studies in Society and History.. 16 (4) 387-415 Read More