What is imperialism and how did the Western European states use it to dominate the globe?
2.Explain how economics changed after the end of the Middle Age?
3.Look at the world around you today and highlight a few of the problems facing us as we go forward into the 21stcentury. Now using all course material, trace three of those problems back throughout history and explain how they came to be. An example would be “the threat of Nuclear Weapons” or something even as grand as “Poverty.”
Each question should have at least 1500 words, please.
background: History is a story of continuity and of change. When looking at any period in history, people tend to focus on changes: how technology or war or disease or an idea “remade” a specific society at a specific time. Sometimes these changes can be abrupt and dramatic, such as was the case in the development and deployment of the atomic bomb at the end of World War II. We tend to call these changes “revolutionary.” Other times, the changes can be slow and continuity can seem to dominate. An example of this would be agricultural production in much of the world until about two hundred years ago.
Whether one was in Europe or Asia or Africa, most agricultural tools and methods were centuries old. These we see as “evolutionary” changes. For you science majors, this is an example of science being used as a metaphor to help explain everyday life. For me, world history can be divided into three broad segments: the traditional world, the modern world and world today (or the recent past).The traditional world encompassed virtually the whole world prior to about 1500 cue (in the future, I will only use “cue” when I use “BCE” in the same lecture, otherwise you can assume all dates are in the common era) and continued in places until quite recently. The traditional world was one in which change came slowly and continuity seemed to dominate society. It was also a world in which transportation and communication were often difficult and societies could develop in a larger degree of isolation than is possible today. Most traditional societies tended to have rigid class structures and unified beliefs. Please note that in this time period there were civilizations like ancient Rome and China that made great advances but these advances never spread throughout the entire world. The modern world for me begins in Europe about 1500 cue and through European imperialism spread throughout most of the world. By the way, 1500 is not a “real” or firm date, no one grand (or dramatic) event divides the traditional world from the modern world but around1500 European nations began to expand in power and influence on a global basis, so for a one semester course on world history, 1500 is a convenient approximation to use. Two things separate the modern world from the traditional world for me. First, change becomes more rapid and more accepted in the modern world. Many (most?) people in the modern world assume economic and technological change will affect their lives. Second, transportation and communication changes both expand and contract the world at the same time. The world expands because countries and companies can operate on a global basis. The world contracts because this global expansion undermines local customs and traditions and people in different societies located throughout the world become more alike.-27-
The recent world for me begins in 1945 cue with end of World War II. Many other historians see the shift to the recent world as happening earlier, with the start of WWI and not the end of WWII. This is an example of historical interpretation as these scholars and I are looking at the same facts but coming to different conclusions. As we will study in excruciating detail later in the semester, one result of the Second World War was the shift in economic and military power away from Europe (the folks that started the Modern World) to new superpowers, including the United States. This period also can be viewed as a subgroup of the modern world because the trends present since 1500 only intensify after 1945.
issues confronting the world today: There are at least five major issues confronting the world today. In this lecture I will list them and discuss them briefly, you will have the chance later in the semester to consider these, and any other issues you may wish to add, in moredetail.1. Safety and security: In a great irony, many of the same technologies that have helped the United States become the only true global superpower over the last sixty years have also helped to undermine the safety and security of not just Americans but every one in the world today. The technology that brought the Second World War to an abrupt end and kept the Cold War between the United States and the Soviet Union from becoming too “hot” – nuclear weapons– now allows terrorists and countries to kill by the thousand and potentially the million. North Korea’s development of nuclear weapons threatens the U.S. and its allies. The events involving U.S. National Security Agency contractor Edward Snowden illustrates how easy it is to blur the lines between legitimate security concerns and police-state behavior. For more on Snowden, visit The Guardian’s (an excellent British newspaper that worked with-28-
Snowden to break the stories) website.62. Religious versus secular values: Throughout the world, the transportation and communication changes that have made our global society possible have intensified this long-standing debate. In part this is because humans have moved from unified and traditional societies in which people usually held the same religious and cultural beliefs to modern and diverse societies. This movement has not always been easy and continues to cause conflict globally. The debate over climate change in the U.S. has its roots in this conflict.3. Fairness in the global free market: As we shall see, one of the great shifts of the last thirty years has been to a global, capitalist economy worldwide. While this global market maybe efficient, many have questioned its fairness and this debate often is often linked with that between religious (or traditional) and secular (or modern) values. The election that took place in Canada in October 2015 can, in part, be viewed as a debate over the limits needed to make afree market economy fair, and the 2016 U.S. election can be seen as a populist referendum on the opposite side of this same issue. 4. The impact of economic and technological change on the global environment: As the global economy grows, so too do stresses on the environment. Environmental debate is both national, within every nation in the world there is an ongoing debate over the benefits of development versus its environmental costs, and transnational. A few years ago Australia, for example, had a divisive national debate over “carbon taxes” and both the long- and short-term costs of the policy of heavily taxing polluters. What happens when one nation pollutes the air orwater and that air or water flows into another nation? How does the international community deal with a nation that sets its environmental standards so low that it has an unfair economic advantage over the nations that follow standard practices?5. The spread of democratic values: Over the ten years or so, we have seen a rapid rise in demonstrations demanding democratic rule in autocratic states located in both the Middle East and Asia. Although many westerners (meaning those people who live in Europe and the Americas) have welcomed these movements, one short term result has been a de-stabilization the world economy. Another has been the rise of groups using terrorist tactics to argue fora very different world order.
Overview: Modern imperialism started as the coastal nations of Europe first began exploring(and later conquering) the world in the fifteenth century (1401-1500). As we shall see shortly, a variety of factors (both physical and intellectual) encouraged these nations to expand from their homelands in Europe to become world powers. The period from approximately 1500 to 1939was a time of European global dominance. World War I (1914-1918) weakened the European imperial powers and the early (and dramatic) victories of Germany and (especially) Japan in the opening days of World War II (1939-1945) set the European empires in terminal decline.
Working definition: In module 1.02 I gave a working definition of imperialism as the policy of extending a country’s power and influence through colonization, use of military force, or other means. In this module we will develop that definition further. European expansion: I take a structural approach to European expansion in the period 1400-1900. To start with, I will argue that there are four stages of imperialism: (1) Exploration; (2)Trade; (3) Conquest and (4) Settlement. All colonies went through these four stages, some very quickly and others over a more extended time period. Exploration is when the imperial power first discovered a new land. Starting in the late-fifteenth century, many coastal European nations sent out ships to explore and to map the world. For a nice presentation on a 1562 map of America, click here.8 The other three stages of imperialism are impossible without this first stage. By about 1750, almost all coastal portions of the world had been explored by ships sent from Europe. The next stage is trade. Trade is when the imperial nations exchange goods(mostly) and services with the “new” lands. (Realize that these lands are only “new” to the imperial discoverers, they and their people had been there all along). Trade is a relationship among equals; it only takes place if both sides want to do the deal. If Europeans want gold or spices and the other side wants iron pots or woolen blankets, trade can take place. This stage can be short lived (for example, in some cases the first European mission of discovery started with trade and switched almost immediately to conquest) or it can last for centuries. In some cases, like Ghana (which we study in more detail later), trade and conquest can coexist. There the British traded with some people and conquered others. The next stage in colonization is conquest. This is when the imperial power uses its superior military resources to obtain what trade could not. In this stage, the European nations used their superior military and naval technology to take resources from a land by declaring that land to be a colony and substituting(in some manner) the law and rule of the imperial nation for that of the local people. As part of conquest, land and resources were taken from the old owners and transferred either to the new imperial nation directly or to people from that nation. Conquest can happen quickly (for example, Spain in Mexico and much of South America) or it can take decades. des (France in Algeriais an example of a very slow switch to conquest). Inherent in conquest is violence and, unlike trade, it is not a voluntary relationship between equals. Often, however, imperial powers exploited divisions among locals in order to aid the imperial power in its conquest. The final stage of imperialism is settlement. After an imperial nation has conquered a new colony, it will send out soldiers, government officials, business people, and often farmers and workers to live in the new land. This is when the values and traditions of the imperial nation begin to substitute for the local values. As we shall see in the next lecture, sometimes this settlement is both permanent and extensive (which utterly changes the colony and why you and I are speaking English – a language not native to Pennsylvania) and other times this settlement is very fleeting and confined to a few locations like coastal cities and inland trading posts (as in much of Asia, where local languages and customs largely survived colonization).Because it was modern imperialism, which began with extensive European exploration in the15th century, that spread ideas like capitalism and nationalism throughout the world (key components in the phenomenon we call globalization today), I will argue that we need to go back a few hundred years to fully understand the world we live in today. Starting in the 1400s,the larger coastal nations of Europe (Spain, Portugal, Britain, France, and the Netherlands)10began to explore the world. At that time, these nations had both the knowledge and the infrastructure to support these global missions. Similar to space exploration today, only a limited number of nations could afford to devote the needed resources to exploring the planet in the fifteenth century. Italy is not on this list even though it had both knowledge and some of the basic elements because it was not then unified as a single nation (this would not happen for300 years) and the individual states that make up what is now modern Italy could not support the massive undertakings that were global exploration and conquest. That is why, for example, natives of Italy (like Christopher Columbus) explored the world not for their homelands but for more powerful nations (in the case of Columbus, it was Spain).
Continuing my structural approach, I would argue that seven main reasons pushed and pulled these European nations into what we now know as modern imperialism starting around 1500.First, these nations possessed advanced military and naval technology. By about1500, Europe had developed state-of-the-art warships and cutting-edge weapons. For the most part, Europeans had assembled the basic technologies from others. For example, gunpowder(needed for both military arms and naval guns) came from China and much of naval navigation technology came from the Arab world. The Europeans then updated these technologies and often combined them in extremely effective ways. Second, the European nations developed experience in using these technologies in wars against each other in Europe. Before the coastal nations of Europe used these technologies to explore and eventually to conquer much of the world, they fought a series of wars among themselves. China, one of the world’s strongest and most technologically advanced nations in 1500,essentially had all the same technologies but used very few of them because it had no major rivals to worry about. Europeans nations both refined the technologies in these wars and gained experience in their use. The third reason was a rise in learning in Europe in the period around 1500 that provoked an increased curiosity about the rest of the world. After along period (approximately nine hundred years) of economic stagnation following the disintegration of the Roman Empire in western Europe, Europeans began to develop economies that could support such luxuries as cities, universities and global trade. The result was what we now call the Renaissance and with it came an interest in the world beyond Europe. The motivating factor for some of this curiosity was trade (the fourth reason). As some Europeans became richer, they wanted goods that were essentially luxuries, such as spices and silks. As these were rare in Europe, they became high-profit goods for those who could supply them. Recall that Columbus “discovered” America while searching for a direct sea route to China for trade. The fifth reason that Europeans explored the world is that many European nations were relatively resource poor. By 1500, many of the forests of Europe had been cut down in order to build the wooden ships needed for naval power and the search for naval supplies dominated the geopolitical thinking of some nations (“geopolitical” means the political aspects of geography). Other resources, such as gold and silver, were rare in Europe and had become symbols of wealth. Spain, with its discovery of the comparatively abundant-49-
supplies of these metals in the Americas, overnight became Europe’s richest nation. Like the United States today with petroleum, the European nations of this period were dependent upon imported resources. By about 1550, the other coastal nations of Europe saw how rich Spain had become from its colonies and the sixth reason for imperialism –competition with other European nations – came into play. Because military and naval power is linked with wealth – simply put, a rich nation can afford more and better equipment than a poor one – global exploration and imperialism quickly became a national quest because of the fear of growing weaker than a neighboring nation. The final reason for imperialism was religion: conquering the world for a Christian god. While it is often popular today to discount the importance of religion in motivating the crusaders’ battles in the Middle East and Spain’s later global expansion, a fair reading (again my historical interpretation) has to include religion as a major motivating factor. Religious divisions within European Christianity(between Protestants in the Netherlands and England and Roman Catholics in Spain and France) seemed only to increase this competition. This period of European expansion is a good example of how historians’ interpretations have changed over time. Fifty years ago, your grandparents would have learned about the “Age of Exploration” and would have been taught the story of brave European men in small ships who took great risks to explore the world. The Europeans would have been the heroes and the storywould have been viewed through their eyes. Twenty-five years ago, your parents might have learned about “The Age of Conquest” and heard more about the adverse effects this age of exploration had on the non-European peoples, such as the spread of disease and economic and political exploitation. Today, I will tell both stories because both are at least in part true. Why have historians’ interpretations of this period changed so much? To some extent, it is because of new evidence. We now know much more about the non-European peoples than we did fifty years ago. But equally important is the fact that historians have asked new questions about the past. Issues like racial discrimination and events like the Vietnam War have caused new generations of historians to ask these new questions. This time period is an excellent example of how people look back to the past to find the roots of current problems. As eachgeneration faces different issues, it asks different questions. For example, my linkage between imperialism and economic globalization is not something that someone would have looked at fifty years ago because globalization was not then (at least for Americans) the pressing issue it is today.
The age of empires: Quickly European exploration turned to conquest and, by 1500, modern imperialism began. Between 1500 and 1939, military and naval might allowed a handful of nations to dominate much of the world. This lecture will explore European imperialism at its height from about 1750 to 1900. One of the ironies we shall explore is that the same European concept that was partially responsible for imperialism – nationalism – was also responsible for imperialism’s decline, as non-European people borrowed it to form their own nations and with these new nations came the end of the age of empires. As with the previous lecture in this module, I will offer a general framework and then the text can fill in the details. My lecture is an attempt to impose some structure on the many, sometimes conflicting, events that make up history. Geopolitics: Central to my understanding of modern imperialism are the twin geopolitical concepts of the “Imperial Center” and the “Colonial Periphery.” All these terms mean is that in almost every empire there was a central point of control – London for the British Empire, for example – where key decisions about the empire were made and the wealth of the empire usually flowed and then there was the rest of the empire on the periphery or outside edges. This periphery was where the wealth flowed from to the center. One way tothink of these concepts is view an empire as an old-fashioned wagon wheel, with the imperial center as the hub, the colonial periphery as the wheel itself, and the spokes as the military and naval ties linking the two together. Decision makers at the imperial center tended to view the world on a global level and see problems as imperial ones while those on the colonial periphery worried more about their specific problems. These differences in world view could and did cause friction (such as the taxes and laws Britain passed prior to the American War for Independence; what seemed reasonable to London was viewed as unfair in the colonies).I view modern imperialism as happening in essentially two stages. The first stage lasts from about 1500 to 1800 and is centered on economic and military considerations. It is an exclusively European-led phenomenon and involves European colonies in the Americas, coastal Africa and limited locations in Asia. The second stage begins in 1800 and continues essentially to 1939. It starts as an exclusively European activity but by 1900 non-European nations, such as the United States and Japan, have begun to build empires. In this second stage, pure competition seems to trump all other considerations. Imperialism seems to be the road to power and nations begin to conquer territory simply to keep it from other imperial nations. For example, one argument that the United States made for its annexation of the Philippines12at the end of the Spanish-American War in 1898 was if it did not take over that land, surely some other country would. In this second stage, imperialism was truly a global phenomenon. To help make sense out of imperialism, I have developed two dichotomies: one based on the makeup of the population in the colonies (or what life was like on the periphery) and the other based on the type of colonial rule developed at the imperial center. If you will, these dichotomies provide two set of criteria by which the experiences of a specific colony can be compared. They are really spectra upon which specific colonial experience can be considered. Again, this is an example of historical interpretation and it was Professor Michael Hunt of the University of North Carolina that introduced me to this way of thinking, so thanks ProfessorHunt.The first dichotomy is between “traditional” versus “settler” colonies. In a traditional colony, few people other than government officials, soldiers and business people move to the colony. Those that do move tended to stay in enclaves in coastal cities and major trading posts. The colony itself is viewed more as a collection of resources than as desirable place to live. Most people who come out from the imperial center only do so for their job and usually intend to return to the imperial center when that job is done. An example of a traditional colony would be the British colony of the Gold Coast, now known as Ghana in Africa. At the other extreme is a settler colony. In settler colonies one of the main purposes is for people from the imperial center to move to the colony to live permanently. Often this sets up a conflict between the locals and the new residents that can be particularly evident at the time of decolonization. Examples of settler colonies include the United States, Canada, South Africa andAlgeria. The second dichotomy looks at the imperial arrangement. There are two extremes as to how the imperial center can rule a colonial periphery. The first is “collaboration.” The collaboration model is most closely associated with the British Empire and used locals (natives)to help govern. The basic philosophy was to “divide and conquer” the local people. It made for the fewest changes in everyday life for people outside of the major cities. The other model was “assimilation” and this was used by Spain and France. Using this model, the imperial center tried to convert locals to the imperial culture and religion and to extend imperial rule more deeply into everyday life. What was everyday life like in these colonies? It varied greatly but here are three generalizations. (1) Life could be particularly good for people that moved from the imperial center to the colonial periphery. Usually, they were able to make more money and live a better lifestyle. It was this potential for better lives that often drew people to the settler colonies. (2)For local elites who collaborated or assimilated, life could also be quite good. In Ghana, forexample, an entire native middle class was created under British rule. (3) For average folks, the impact would vary greatly. Under a collaboration mode and/or in a traditional colony, often little changed. Village life seemed to continue much as before and there might be very little contact between a native in the countryside and new settlers from the imperial center. Under an assimilation model and/or in a settler colony, there were more issues. Everyday life could change greatly and often whole villages were uprooted to make room for new settlers (think of the forced movement westward of native Americans in U.S. history).
imperialism’s expansion: Around 1800, the great powers of Europe began there final phase of imperial expansion that would end in the early-twentieth century with both France and Britain possessing global empires and many other countries with key colonies around the world. At the heart of this final phase of imperial expansion was economics. Countries took new colonies in large part to control economic resources and to prevent those same economic resources from being controlled by others. By about 1900, imperialism seemed the road to economic wealth and both newer European nations and non-European powers like Japan and the United States joined in this race for global power and wealth. Germany and Italy were both nations created during the nineteenth century and both saw the acquisition of colonies as key to their continued expansion. The United States had, of course, been created as a rejection of British imperialism but, by the end of the nineteenth century, it, too, saw the need for colonies for its ongoing rise to power. With the annexation of the Philippines at the end of the Spanish-America War, America for the first time acquired land that it had no intention of ever becoming states. Japan, concerned by the U.S.acquisition of the Philippines, also began to acquire colonies in Asia and became increasingly concerned the European colonies in Asia and how they affected Japan’s access to economicresources.When WW1 started in 1914, imperialism was truly a global phenomenon and virtually everyplace in the world outside of Europe and the Americas was either an imperial power or a colony. The next lecture will look at the economic consequences of the phase of modern imperialism and I will suggest how its legacy still affects the world today.
defining “capitalism”: Today we will look at the background of what many claim is the dominant economic system in the world today: capitalism. I will argue in the next lecture that despite the allure of capitalism as an economic system, there is no nation in the world today that has adopted capitalism as its exclusive model. All nations, including the United States, areon a continuum between capitalism (which we will define and discuss today) and socialism(which we will look at in the next lecture in this module).Way back in module 1.02 I gave you a working definition for capitalism as “an economic and political system in which a country’s trade and industry are controlled by private owners for profit, rather than by the state.” A key source for understanding capitalism is Adam Smith’s Wealth of Nations, in which Smith, an eighteenth-century Scottish philosopher, first described the advantages of capitalism – free enterprise – over government control of the economy(which was known as the “mercantile system” at that time). In essence, Smith argued that if every one worked for his or her own best interest – let greed be their guide, if you will – that the overall economic well-being of the nation would be greatest. He called the effect of all these individual, private decisions the “invisible hand. “At its base, Smith’s definition of capitalism is still the core of our understanding of how the system works today. Other names for capitalism are the “free market” or the “free enterprise system.” The word “free” does not mean that there is no charge for the goods and services but instead that individuals – people and companies – are free to make decisions without government interference. Realize, of course, that all societies regulate the economy in some manner (some goods and services are made illegal – murder for hire and some drugs are typical examples – and others are tightly controlled, for example, guns and prescription drugs).That is why I will argue in the next module that capitalism is but one pole on a continuum upon which all modern economies can be placed. For me, pure capitalism has three distinguishing characteristics: (1) property is controlled by private individuals and organizations and not the government (“private property”); (2) key economic decisions regarding the allocation of goods and services are made by the same private individuals and companies (“private decision making”); and (3) government planningdoes not control the economy (“unplanned nature of the economy”).As a footnote to these thoughts, it is important to realize that people around the world view capitalism through different lenses. Those in the United States, a nation that has actively encouraged the spread of capitalism throughout the world, tend to link capitalism as an economic system with democracy as a political system because that has been our experience. Both Presidents Bill Clinton (Democrat, 1993-2001) and George W. Bush (Republican, 2001-2009), for example, have argued that the growth of capitalism in the People’s Republic of China(“Communist China” or “Mainland China”) will eventually bring democracy to that nation. A good example of this argument can be found on the Hoover Institution’s web site (the Hoover Institution is a politically conservative “think tank” located at Stanford University).Other people, particularly those outside of America and western Europe, tend to link capitalism with another western idea: imperialism. For these people, there is no consistent link between capitalism and democracy; many countries are capitalist but not democratic (in addition to China, many other nations in Asia, Africa and South America have had autocracies[module 1.02] in conjunction with a largely capitalist economy) and other nations are democratic but have chosen socialist (or planned) economies (Britain, Canada, Sweden, Finland, France, Norway and Ghana are all examples of democratic nations that have had heavy socialist elements in their economies). The link that people in these nations tend to see is that once a handful of European nations economically exploited much of the world (what we call imperialism) and now a handful of multinational companies (headquartered mostly in the United States, Europe and Japan) are doing the same thing. This latter view is why many people in countries that were colonies until recently are so suspicious of economic globalization today. A short history of capitalism: What follows is a very quick overview of a very complex subject. I have greatly simplified this story which takes one textbook that I consulted almost
one hundred pages to tell. Like much of the modern world, the birth of capitalism can be traced to Europe and the breakdown of feudal system. Feudalism was a traditional economic system in which a small number of elite individuals controlled the wealth of the nation through the ownership of land and the exercise of force. As with all traditional economies, the feudal system in Europe was very risk adverse and the aristocracy greatly regulated the economy. This brought a level of stability but at the price of limiting economic growth. By about 1500, the feudal system had broken down or was breaking down throughout Europe in the face of economic, technological, intellectual and social changes that would produce not just capitalism but also imperialism, nationalism and rationalism. Slowly throughout Europe, money became more important than land and people who invested their money well in new colonies, new technologies and new business enterprises became rich. Throughout this time, however, the governments continued to regulate parts of the economy. Although the concept of the capitalism was developing, it was doing so within a framework of national economies in which the governments continued to be risk adverse. For example, many European governments regulated the price of necessities like bread for a long time. These governments feared – with good reason – armed rebellion if a free market caused people to starve. Governments in this early stage (say from 1500 to 1800) also regulated the economy in ways that they thought would bring the greatest benefit to their specific country. For example, in the eighteenth century, Britain required that all tobacco from its colony in Virginia pass through a British port before going on to another European nation. Although this increased the final price of tobacco (and likely decreased sales under the capitalist economic concepts of supply and demand), Britain argued that this requirement made money for both British tobacco brokers and the British government. This form of economic regulation was known as “mercantilism. “Adam Smith in The Wealth of Nations (written in 1776, the same year the colonies that became the United States declared their independence from Britain) argued that mercantilism and other government regulation always harmed the economy by increasing prices and decreasingefficiency. Smith did not invent capitalism but instead described and explained the system that was developing around him in Europe. The capitalism that Smith described was that of his time, many small producers and individual consumers meeting face to face in small markets (in fact, one common form of economic regulation at the time was for local governments to require that certain goods only be sold in public markets). It was not the capitalism of big companies trading throughout the globe. In fact, the handful of big enterprises that did exist at that time were mostly government monopolies that were attacked by Smith. What Smith gave to capitalism was an intellectual framework to justify what had already been happening for almost300 years: the slow transition from government regulation and control of most economic activity to a privately-based, free market economy. In the time since the publication of Smith’s masterwork, capitalism continued to grow slowly and unevenly. The period, from about 1800 to 1970, was the golden age of “industrial capitalism.” Starting in Europe and then spreading throughout the world, governments changed their laws to encourage the growth of free enterprise and industry. Capitalism tended to be most developed in Britain, France and Germany and less so in the rest of Europe. in Britain, France and Germany, millions of people moved from small villages, as the traditional rural economies collapsed, to big cities hoping to work in the new factories. These people often worked in harsh conditions. In the European colonies, capitalism affected much of the population in some in way but many people continued to live in largely traditional economies well into the twentieth century. By about 1900, in addition to the leading nations of western Europe (Britain, France and Germany), large scale industrial capitalism had spread to the United States and Japan. Increasingly national economies came to be dominated by a few big companies and by 1900some of those companies were expanding beyond their national markets to the global one. “Smokestack” industries like steel and railroads became symbols of national pride. Adam Smith’s hundreds of small merchants had often shrunk to two or three major producers in many cases. Although these companies often generated good earnings for their owners,capitalist economies experienced problems of uneven growth. This (and other issues) caused some people to begin looking for alternatives as early as the mid-nineteenth century. We will examine why people searched for these alternatives in more detail in the next lecture. The balance sheet on capitalism: After two hundred years, we can now draw up with some assurance a “balance sheet” on capitalism. A balance sheet is a financial accounting term that means “a written statement of the assets, liabilities, and capital of a business” (from the Oxford English Dictionary) and is often used, as I am doing here, simply to mean a comparison of its pluses and minuses. Although not all scholars would agree on all items, I feel what follows is a fair balance sheet and most scholars would agree on these five basic points. Capitalism does two things better than any other economic system thus far developed: (1) in the long run, it creates more wealth and (2) in the long run, it creates more goods and services. The qualifier “in the long run” means that other economic systems may perform better than capitalism for a few years or a few decades but none have been able to do so for a longer period of time, say forty years or more. These two points are capitalism’s two great pluses. If what I just said is true, and as the production of wealth and “stuff” (my “technical “term for goods and services) is at the heart of any economy, then why have some people sought alternatives to capitalism for over one hundred and fifty years? Read on for capitalism’s minuses (or its problems).Three problems have been identified in capitalist economies over the long run. Not all people see these as serious problems but even capitalism’s greatest supporters would acknowledge their existence if downplaying their importance. First, capitalist economies do not experience even growth but instead go through cycles of booms (rapid economic expansions) and busts (major economic contractions like the United States and Europe is going through now). The net effects of these booms and busts will be economic growth in the long run but some economic downturns have lasted for more than a decade (the Great Depression in the United States in the 1930s is an example) and people have literally starved to death during some of these economic downturns. The second issue with capitalism is one ofLecture: Alternatives to Capitalism Outline for “Alternatives to Capitalism” lecture 1. What are/were the alternatives to capitalism 2. Defining socialism 3. Socialism as a reaction to industrial capitalism 4. Socialism and capitalism as a continuum the fairness of the allocation of wealth under capitalism. Under Adam Smith’s ideal system, all the competitors started out equally and one could argue that the reason some ended with more wealth than others was that those winners were better or smarter. Although the results were not equal, one could argue they were “fair.” Today, in the real world, people, companies and countries do not start out equally on a level playing field. Imagine if you had an utterly brilliant idea but you also had to compete with Microsoft or Walmart or some other big company. Over most of the last forty years the American economy has continued to grow but so has the gap between the rich and the poor. All these issues combine to cause some people to ask whether the government needs to intervene to allocate wealth (and with it “stuff”) more fairly. Finally, some people have begun to question the effects of capitalism on local and religious values. Global capitalism is both transnational and amoral (no one, including Adam Smith, would argue that even under the most ideal conditions there is anything moral about how capitalism allocated wealth and stuff), so local values and religious beliefs are often overridden by the market.
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