Capitalism has expanded and changed in a multitude of ways. From the 1500s when capitalism slowly began to take shape up until today, where we live in a society dominated by capitalism. In Capitalism: A Short History by Jurgen Kocka, he argues that capitalism is “mostly used to denote an economic practice or an economic system, frequently with special attention to its social and cultural consequences.” Kocka goes to great lengths to argue that capitalism changed over time because it was contingent on several capitalist principals such as globalization, colonization, state formation, and industrialization working together.
Throughout this book, the author demonstrates how external dynamics have drove capitalism forward. Kocka starts by exploring the formation of merchant capitalism, although it was among the minority during the 1000s through the 1500s. He continuously reiterates that “The manifestations of capitalism depicted were minority phenomena, all taking place while the economy and society functioned by and large non-capitalist principles.” Kocka uses the weak European economy and political basis to help demonstrate that merchant capitalism was very slowly starting to expand. Following the early to mid 1000s, long distance trade began to emerge as globalization progressed. Long distance trades focus was to move goods from a market where they were cheap to a market where they were expensive. Due to the lack of industrialization and commercial finance, merchant capitalism was based heavily on traveling and trading. However, he suggests that the difference between capitalist developments in Europe and other countries such as China and Arabia is caused by the slow expansion of merchant capitalism in Europe into production and financing. As globalization continued to be a prevalent, force, free trade began to progress. This meant that as goods were being traded, the idea of paying for them emerged. This increased the need for specific goods, so merchant capitalism began to create finance and banking because debt and credit were emerging, which led to financial capitalism. The use of trading things for other things such as other goods or currency slowly developed capitalism. Agriculture was also a significant factor during this time because feudalism was widespread in Europe. Feudalism involved serfs living on the lord’s land where they were obligated to work for him and give him a share of what they produced. This also impacted capitalism because people were working for one another and it reinforced the idea of credit. As globalization continued to progress, colonialism also began to take shape. Due to the growth of towns and cities in Europe, they helped promote agriculture and trade, therefore, breaking down feudalism.
It is not until after the 1600s, which is known as the era of discovery that capitalism began to truly transform. As time passed, financial capitalism became more powerful, with the joint-stock company and stock exchanges. One of the contingent factors that helped shape capitalism was colonialism because it was funded by merchant bankers, who were highly praised by the state. Capitalism was starting to gain momentum because “via the stock market and speculation, entire classes of society got their first introduction to the hopes and disappointments, the gains and losses, that capitalism so abundantly held in store for them.” Following the developments of financial capitalism, agrarian capitalism developed causing a plantation economy to begin to progress. Large-scale agrarian capitalism was striving to obtain wage labor but they were releasing workers to the growing industry and urban economy. Although merchant capitalism still existed, industrialization began to take shape. The first industrial revolution began in the late 18th century, changing the dynamics of capitalism. Proto-industrialization changed capitalism because it helped create conditions and establish fully industrial societies. People began to realize that household production were no longer efficient, and they began to rely on factory production, and pro-industrialization helped this transition.
As the second industrial revolution spread in the 19th century, capitalism was changing yet again. Kocka illustrates how industrialization changed capitalism. Innovations in technology and the emergence of factories and manufacturing plants are at the center of industrialization. Due to the emergence of factories, and the demand for employees, wage labor developed. Kocka then discusses how wage labor turned into a phenomenon and how the mass quantity of fixed capital boomed. The use of technological and organizational innovations were needed to keep up with the demands. Kocka argues that this reconstructed the social structure and attributed “to the unpopularity of capitalism.” As factories began to advance, capitalism became more closely affiliated with the state. Capitalism became dominant and was starting to spread globally due to the impact industrialization had. Things like joint-stock companies were transformed into large-scale business enterprises in which capitalists were separated from the entrepreneur, which was known as managerial capitalism. Kocka suggests that this transition from ownership to managerial capitalism led to the creation of large enterprises and contributed to the frequent irresponsible behavior by salaried managers in higher positions of the firm. Following this, capitalism began growing and becoming even more complex, so financializing became prominent. The way in which financialization changed capitalism is through the development of insurance companies, mutual funds, and multi-national corporations. This brings us to the present day, where companies like Amazon are booming and corporations like Walmart are excelling.
Throughout the book, Kocka reiterates that capitalism emerged as a tool of critique and analysis, and explains why this dual function is important. I agree with Kocka in the sense that external factors have changed capitalism over time and that capitalism continues to progress. Kocka notes that all the alternatives to capitalism have been proven to be inferior. I appreciate the way he mentions the faults and issues with capitalism because I agree that capitalism is not perfect and that the system faces many issues. As Kocka explains the growing inequalities and disintegration of public welfare that capitalism creates, I feel the uneasiness begin to rise within me. This impacts everyone, and it’s a scary thought. Kocka also notes that he fears that the capitalistic need of constant growth and expansion could lead to the exhaustion of natural and cultural resources. Kocka acknowledges that capitalism can be defined or interpreted in many different ways and that there are both positives and negatives to capitalism. Overall, Kocka does a good job of demonstrating how capitalist principals such as globalization, colonization, state formation, and industrialization work together to change capitalism over time.