The story

History of Capitalism


Capitalism has its beginning in Europe. Its characteristics appear from the low middle ages (from the 11th to the 15th century) with the transfer of the center of the social and political economic life of the fiefdoms to the city.

Feudalism went through a serious crisis due to the demographic catastrophe caused by the Black Death that decimated 40% of the European population and the hunger that plagued the people. However, the high birth rate allowed for the progressive increase of the population, which in 1500 was approximately 70 million inhabitants across Europe, which meant recovering pre-Black Death levels.

Although the settlement was mostly rural, there was a slight tendency towards population migration to the cities. At the beginning of the 16th century, some of them, such as Naples, Paris, Seville and Lisbon, had about 200 thousand inhabitants.

In the rural world the following transformations can be highlighted between the 15th and 16th centuries:

• The progressive decline of servitude.
• Slight growth in farm incomes relative to increased manufacturing or trade. As a result, the burdens imposed by the rural nobility on the peasants had increased noticeably.
• The concentration of rural property in the hands of large noble families over time has consolidated some of the six most characteristic traits and institutions, such as inbred marriages and birthrights. The gentry emigrated to the cities.
• Peasant uprisings, especially in the Holy Roman Empire (present-day Germany), caused by manly tributes, droughts, plagues and years of famine.

The cities expressed a reciprocal desire to unite, by marriage, the bourgeois families and those of the nobility - the bourgeois class. This new social class sought profit through commercial activities.

In this context, also come the bankers and money changers, whose gains were related to money in circulation, in a booming economy. Historians and economists identify in this bourgeoisie, and also in the money changers and bankers, embryonic ideals of the capitalist system: profit, wealth accumulation, control of production systems, and business expansion.

The modern epoch can be considered, precisely, as an epoch of "social revolution" based on the "substitution of the feudal mode of production for the capitalist mode of production." With the liberal revolutions of the Modern Age capitalism established itself as the predominant economic system for the first time in history in the countries of Western Europe. Some of these revolutions were the English Revolution (1640-60, Hill 1940), the French Revolution (1789-99, Soboul 1965) and the US Independence, which built the institutional framework to support capitalist development. Thus began the age of modern capitalism.

Phases of Capitalism

Phase One - Commercial Capitalism or Pre-Capitalism: This phase extends from the sixteenth to the eighteenth century, beginning with the Great Navigations and European Maritime Expansions. The accumulation of wealth was generated through trade in spices and raw materials not found on European soil.

Phase Two - Industrial Capitalism: It begins with the Industrial Revolution. The accumulation of wealth came from the trade in industrialized products from European factories. Nature's enormous capacity for transformation through the increasing use of steam-powered machines, generating a large production where the multiplication of profits was increasing.

Phase Three - Monopolistic-Financial Capitalism: Begun in the twentieth century (after the end of World War II) and extending to the present day. One of the most important consequences of the rapid growth of the Capitalist economy was the brutal process of capital centralization. Several companies have sprung up and grown rapidly: Industries, Banks, Stock Brokers, Commercial Homes and so on. The fierce competition favored large corporations, leading to mergers and mergers that resulted from the late nineteenth century in the monopolization of many sectors of the economy.