World History: Capitalism and Socialism

Today we're looking at two ideas which have shaped the world today: capitalism and socialism. We looked briefly at these ideas when we looked at the Industrial Revolution, but we will expand on them today. Some form of capitalism and socialism have existed for centuries across the world: Joyce Appleby joked that historians of capitalism have stated that it started repeatedly since the Roman Empire; Peter Marshall has stressed how ancient Daoism and Buddhism can anachronistically be described as leading themselves into being anarchist; and the Zapatistas in contemporary Chiapas, Mexico have stated that their socialist policies are in continuation with indigenous practices. This is important to bear in mind as today we'll largely be looking at the development of modern capitalism and socialism - this leads us to a focus on Europe and North America. However, when I can, I want to expand this to look at developments in capitalism and socialism outside the Euro-American world. Before we begin, I also want to preface this post by stating that I am a socialist, so I will likely be more critical of capitalism than some other histories which you might read - such as Appleby's history of capitalism referenced in this post.

From Mercantilism to Modern Capitalism

A French seaport in 1638 during the height of French mercantilism

A basic definition of capitalism is an economic and political system where trade and the way goods are produced, the means of production, are in the hands of private owners. This is a broad definition and describes many societies throughout history, and one of the main forms which this took was mercantilism and merchant capitalism. Merchant capitalism, in particular, we have seen throughout the World History series, and could be found in most regions of the world - especially India, China, and Japan. Mercantilism, meanwhile, is a form of capitalism which aims to see the maximisation of a state's exports - trade and consumption was seen as finite, so it was believed that to survive you needed a monopoly on trade. This led to the formation of large companies, as it was a safer investment for wealthier individuals to own shares in a company than entirely rely on your own capital as in the past. A major mercantilist in England, Thomas Mun, was influential in the formation of the English East India Company (EIC), and similar ventures opened with the Dutch East India Company (VOC) and the Hudson Bay Company in Canada to name two prominent ones. Mercantilism required state intervention in order to protect trade, so in the seventeenth and eighteenth centuries protectionist policies were implemented to edge out competitors, and there were even wars - especially between the English and Dutch. However, by the late-eighteenth century mercantilism started becoming routinely criticised. The best known critic is that of Adam Smith. Smith was a Scottish economist and philosopher, and was highly influenced by the Scottish Enlightenment which led him in 1776 to write An Inquiry into the Nature and Causes of the Wealth of Nations. Smith did not live in a vacuum: it is no coincidence that his ideas of liberty were being repeated by other economists as American revolutionaries and Thomas Paine were calling for political liberty. In Wealth of Nations Smith broke from traditional narratives that humans were unpredictable and capricious, instead he argued that 'principle which prompts to save is the desire of bettering our condition, a desire which though generally calm and dispassionate, comes with us from the womb, and never leaves us till we go into the grave'. Smith argued that the 'invisible hand' of the free market should govern economics; states should take a backseat and allow the supply/demand generated by markets, caused by human purchasing power, to govern economies. It was human nature to naturally lead to productivity and the best market solutions.

Adam Smith

Smith based his writings on economic developments in Britain since the 1600s, and this leads us back to a discussion we had when we looked at the Industrial Revolution, why did modern capitalism emerge in Europe? Max Weber argued that it was due to the 'Protestant work ethic' - this falls apart when we look at the rapid industrialisation of Japan in the 1870s. Modern, industrial capitalism primarily emerged in Britain and the Netherlands for several reasons. The first is weakened monarchical power - the long history of republicanism in the Netherlands and the Wars of the Three Kingdoms in Britain resulting in the execution of Charles I gave their respective parliaments more power. This prevented possible restrictive laws on markets from being passed, and gave non-royals the ability to forge legislation - it is no coincidence that the UK and US quickly adopted aspects of Wealth of Nations. Changes in the countryside played a great influence - crop rotation and new crops from the Americas, like potatoes, allowed more crop production and population growth. Due to increasing crop yields this drove down the price of food which allowed people to have greater ability to purchase goods. In England, the Enclosure Acts, which Karl Marx placed great emphasis on for the formation of modern capitalism, placed common land in the hands of private owners which, in turn, forced tenant farmers off of land and into urban areas. Britain's easy access to coal, and the high numbers of waterways in the Netherlands and Britain allowing for easier transport, allowed for industrialisation to take place. The first chapter of Marx's Kapital explains well how this promoted the origins of industrial capitalism. He uses the example of a coat being made of 20 yards of linen, but is worth double due to the value of labour. As the factory owner owns the means of producing the coat they keep the profit after the value of the goods and labour has been taken out. To maximise profit you have to reduce the value of labour without overproducing - he uses diamonds in this case, they are valuable as they are hard to get, but if they were common their price would decrease. Mechanisation made the production of commodities faster and easier reducing the hours needed to produce our coat, so factories emerged to house the machinery and increasing urban populations created a workforce to work in the factories. Finally, modern capitalism could not exist without the exploitation of colonised peoples - as argued by David Landes, industry needed slavery. Britain and the Netherlands were deeply involved in the Atlantic Slave Trade and imperialism through the EIC and VOC. Raw materials could be produced abundantly and cheaply in India, Indonesia, and the Caribbean, and the colonised regions opened up markets for the selling of finished products.

The Capital Revolution

In 1848 Marx and Friedrich Engels wrote that the new capitalist, bourgeoisie class 'has put an end to all feudal, patriarchal, idyllic relations...It has been the first to show what man's activity can bring about. It has accomplished wonders far surpassing Egyptian pyramids, Roman aqueducts, and Gothic cathedrals; it has conducted expeditions that put in the shade all former Exoduses of nations and crusades'. Wherever capitalism touched it greatly changed. The most notable example is the impact on the environment. Lands completely changed as they were uprooted for mining and construction - the construction of the Suez Canal managed to link two of the major seas. The burning of fossil fuels warmed global temperatures putting us, unfortunately, on the current path to climate catastrophe - smoggy cityscapes became common in late-nineteenth century art. Before 1811 the peppered moth in England was white, but soot from chimneys in northern England made the trees appear darker so they rapidly evolved to be black. Thanks to deindustrialisation since the 1970s these same moths are returning to their whiter colouration as trees are less sooty. Capitalism created new industries and made older ones more profitable creating demographic shifts. In Britain, cities like Glasgow, Birmingham, and Manchester dwarfed older seats of power, so much so, that several acts had to be passed in parliament redistributing where parliamentary seats were. Gold rushes in South Africa, California, and Australia saw booms in population as people rushed to make a fortune from gold, or from miners. In Australia 'bushrangers' preyed upon prospective gold miners, and some have become subject to folk legend, like Nat Kelly. These regions saw other demographic changes. California saw an influx of immigrants from China and Mexico, and Australia from Germany and China which today influences the demographics of the regions. Africans started moving to the cities, and in the South African gold mines different ethnic groups started interacting, and new ideas of sexuality even emerged. New groups, the bourgeoisie, started supplanting traditional elites. Although new capitalists in Japan were often from poorer samurai families, and intermarriage between poor samurais and wealthy merchants had happened before 1868, Japanese conservatives in the 1870s and 1880s feared capitalism believing it was disrupting the Confucian order of the country. There was a push and pull between old elites and the new: Prussian Junkers in Germany remained influential until World War Two but ceded ground to new industrialists; and while British aristocrats balked at the idea of allowing steel magnate Andrew Carnegie into their 'circle' they had to begrudgingly marry their children to American industrialists and allowing a Jewish banker, Lionel de Rothschild, into the House of Lords in 1858. However, this did not stop the Rothschilds from being subjected to intense antisemitic attacks - a topic for when we look at racism in a future post.

Japanese women in a basket weaving factory

The bourgeoisie were not the only class to emerge thanks to capitalism - there was also the working class. We see different cultures and identities emerge consequently. Prior to industrialisation, women could find some form of emancipation thanks to textile works - they could make their own textiles in their home. The factory saw the means of production taken out of their hands which limited their agency. We will explore the idea of 'separate spheres' more when we look at the origins of feminism in a future post, but it is important to reference it here. This was an idea, primarily in Europe and the US but it was also adopted in Japan, that there were two spheres: the public, of work and politics dominated by men, and the private, of the home and family dominated by women. This was less the case for working class women - working class women, and children, regularly worked in factories or other industries. In 1882, women comprised three-quarters of textile workers in Japan, and these figures were replicated across industrial societies. Factory life was hard regardless of age and gender - to save costs owners allowed poor and dangerous conditions to flourish. Injury and death was common, and reformers largely focused on child and female labour when criticising poor working conditions. In 1911 the Triangle Shirtwaist Factory in New York burnt down killing 146 garment workers, of which 123 were women, which caused outrage and the laws passed in order to improve work conditions. Women were not passive in this. E. Patricia Tsurumi has discussed how women resisted sexual abuse and poor work conditions through go-slows, strikes, running away (over 60% of Kanebo mill workers between 1905 and 1915 did so), and singing insulting songs: The owner and I are like spinning machine thread/ Easily tied, but easily broken. 

New Cultural Worlds

Carnegie Hall in 1910

An emergence of a new class with purchasing power created a new and exciting world. As argued by Eric Hobsbawm, the home 'was the quintessential bourgeois world, for in it...could the problems and contradictions of his society be forgotten or artificially eliminated'. The domestic sphere emerged to ensure that the home remained central in society - this is especially prevalent in Japan when Meiji reformers after 1868 cast the nation as one family. In Britain, Christmas was redeveloped to be about family just as much as Christ; Christmas trees, songs, and dinners were meant to symbolise the warmth of the family. The public, both bourgeois and working, looked to Queen Victoria - firmly out of political life the royals served as something to emulate, so the German Prince Albert introducing the German tradition of Christmas trees to his family was adopted by everyone. Wealthier women could work before marriage in clerical employment, but they were expected to give this up when they got married. It is notable that these women also became reformers. City life was seen as breeding sin, vice, and poverty, so they formed organisations to tackle this. The Women's Christian Temperance Movement in the US is a good example. The first suffragettes, like Emmeline Pankhurst in the UK, were also moneyed women, and they aimed to use their position to gain the vote. Clothing has always been used to signify class, and capitalism continued this trend. However, new consumption allowed those who could afford it to dress like the wealthy. This was even the case at the fringes of capitalism. Jean and John Comaroff have discussed how, before colonial rule, Tswana royals in southern Africa controlled access to European clothing and wore it to meet with Europeans. Entertainment could now be purchased. Poor and wealthy went to shows, sometimes together to the scandal of society, and holidays emerged. The Rokumeikan in Japan became a scene where elite could sip drinks and do the waltz combining European and Japanese formal wear. New and old elites started making contacts for the first time - aristocrats had to allow nouveau riche into their circles, and they became the patrons of culture. Andrew Carnegie sponsored the construction of venues, like Carnegie Hall, and even expeditions to discover dinosaurs. 1916 saw oil tycoon John Rockefeller become the first billionaire, and financier J.P. Morgan, supposedly, joked that, when asked how much it costs to own a yacht, replied 'if you have to ask, you can't afford it'.

Empire and Capitalism

Khama III, Chief of the Bamangwato and Sir Albert Spicer, London Missionary Society Treasurer

Russian revolutionary Vladimir Lenin famously stated that imperialism was the final stage of capitalism, Hannah Arendt argued they marched hand in hand. Regardless, empire and capitalism were intrinsically linked. Colonial rule saw the economies of colonised societies to geared towards the export of raw materials and the import of finished goods - as late as the 1950s Britain tried to make nut production the crop of Tanganyika in east Africa. Although it is an exaggeration to say that Britain broke the thumbs of Bengali textile weavers, Britain did break Bengal's textile production to prevent competition. As we saw when we looked at British rule in India, key parts of the Indian continent was converted to the production of raw materials, primarily cotton, in what Romesh Chandra Dutt in 1902 described as the 'drain theory'. Britain had prevented the development of an Indian economy 'draining' it of resources. This had devastating direct consequences. When crops failed, as they were prevented from growing crops on land for cotton or saffron, it created devastating famines - a tenth of Orissa's population died in the 1865-6 famine, 3.5 million died in Madras and a million in Mysore in the devastating 1876-8 famine. While capitalism prevented famines during crop failure in Europe, it made it far worse in India. Capitalism was often used as a way for colonial expansion - Britain used opium to edge its way into China, and Britain and France used loans to Egypt in order to enforce their hegemony, and the US used companies to oust governments in Central America. Meanwhile, Leopold II of Belgium formed a company to rule the Congo for him. Today's Democratic Republic of the Congo has its shape due to traders setting up stations along rivers to best monopolise rubber and ivory. The Congo Free State, similarly, saw some of the worst atrocities in colonialism where Congolese were brutally enslaved, beaten, and killed in order to extract resources. A leather whip, the viboko, became the symbol of Belgian rule as Congolese were forced to work over 80 hours a week in poor conditions. Elsewhere, there were hopes to bring the colonised into a capitalist market. The work of the Comaroffs is especially interesting in this regards. The London Missionary Society (LMS) in southern Africa particularly tried to introduce consumerism, linking consumerism to Christian faith. Tswana were encouraged to buy European clothing as a sign of faith, and Tswana, in turn, adapted it for themselves - children and unmarried women wore pre-Christian clothing and wore European later. I want to discuss this more in our next World History post as we've just scratched the surface of colonialism and imperialism here.

The Origins of Modern Socialism

Marx and Engels

Conditions created by capitalism, although it brought benefits, it also brought intense suffering. Poverty, disease, and alcoholism were just some of the problems which capitalism either caused or accentuated. There were reformers who hoped to relieve the poor, such as York confectioner Seebohm Rowntree, but others rejected socialism entirely. Instead of private individuals owning means of production workers should own it - this was socialism. As we've already mentioned, some form of socialism have existed in some form across the world and history - Peruvian Marxists have argued that the Inca were 'feudal communists' as they did not use markets. Regardless, the first of the modern socialists emerged with the 'Utopian socialists' like Charles Fourier, Robert Owen, and Henri de Saint-Simon, although George Lichtheim describes them as 'doctrinaires' instead. These socialists argued that self-governing communities should be formed based on egalitarian ideas - Fourier is believed to have coined the term 'feminism' and advocated for homosexual emancipation. However, utopian socialists were later criticised by a new generation of socialists for being utopian. The most notable of these were the 'scientific socialists' of Karl Marx and Friedrich Engels. Engels in particular in Socialism: Utopian and Scientific (1880) argued that utopians created new ideas with no practical way in achieving them, whereas 'scientific socialists' looked at real world conditions and developed theory from there. Marx was born into a German Jewish family (which converted to Christianity to avoid antisemitic laws), and had a long history of radical politics. He was influenced by philosopher Georg Wilhelm Hegel and adapted his ideas of dialectical materialism. Human history was a conflict of classes driven by ideas, a thesis combats and antithesis before reaching a synthesis which, in turn, forms its own antithesis. Engels was the son of a German factory owner, and became upon seeing the horrific conditions of his father's Manchester factory became radicalised. Mary Burns, an Irish worker in his father's factory, greatly influenced his views, and in 1845 wrote The Condition of the Working Class in England. Marx and Engels became close friends and regularly worked together joining the Communist League. Inspired by the 1848 revolts Marx and Engels wrote their most influential piece - The Communist Manifesto - setting out their ideas in a way for workers to easily access.

In France, a different theorist emerged called Pierre-Joseph Proudhon who rejected the idea of the state entirely - Marx and Engels had advocated the proletariat, the producing class, seizing the state in order to bring about socialism. In 1840 his text What is Property? declared that 'Property is Theft', and that rejecting property and state could the proletariat be liberated. He declared, as well, that he was an 'anarchist', but, unlike later anarchists, he believed that markets could exist under socialism. Also, he was very antisemitic and sexist, so much so that he was denounced by many other anarchists, although he did state that 'In my ideal society I would be guillotined as a conservative'. Meanwhile, a Russian theorist, who became involved in the 1848 Czech Rebellion, made his way to France - Mikhail Bukanin. Bukanin was influenced by Proudhon but rejected the idea of having a market in any form. Louis Blanqui, meanwhile, controversially argued that a small cabal should take control of the state to aid the working peoples. Despite their clashes, Marx and Bukanin helped form the International Workingmen's Association, better known as the First International, in 1864 uniting all socialists and trade unions in order to plan out revolution. However, it was deeply divided and women were barred until 1865. In 1867 Harriet Law became the first female member, but she remained its only female member.

The Paris Commune

1871 proved to be the most important year in leftist history. Louis Napoleon declared war on Prussia but was roundly defeated and abdicated leaving France in disarray. The peoples of Paris rose up, and a crowd of women marched upon the local barracks seizing cannons and weapons. Leftist journalist Louis Delescluze and Polish officer Jaroslaw Dabrowski were elected to lead the newly formed Paris Commune. Proudhonists, Blanquists, libertarian socialists, and scientific socialists made up the ideology of the Paris Commune, and this is shown by their policies. Guillotines were symbolically burnt to show a break with the violent French Revolution, the Church and state were declared to be separate, the Louvre was turned into a arms factory, the Vendome Column depicting Napoleon was torn down, and workers given control over companies. Women were integral to the Commune where Louise Michel became one of the most influential figures in the revolt, and the Union des femmes pour la défense de Paris et les soins aux blessés was formed by socialist bookbinder Nathalie Lemel and Russian exile Elisabeth Demitrieff. The Women's Union demanded women's education, divorce, suffrage, and an end to capitalism. The Commune was very international - French, German, Russian, Spanish, and even Algerian individuals joined together in protecting the Commune. However, when the French Third Republic got together intense street fighting began and the Commune was brutally crushed. Afterwards, the First International became heavily divided over why the Paris Commune failed. Marx in The Civil War in France (1871) argued that the communards were too quick to dismantle the state, if they had taken it over they could have better defended themselves. Meanwhile, anarchists like Bukanin argued that it failed as they left too much of the state intact - no one took over the Bank of France which then funded the French army. Marx kicked the anarchists out of the First International, and since then the left has been divided between Marxists and anarchists. Prussian chancellor Otto von Bismarck commented that 'Crowned heads, wealth and privilege may well tremble should ever again the Black and Red unite!'

Developments with Socialism after 1871

A collection of Japanese anarchists including Osugi Sekae and Ito Noe

Anarchism and what would become Marxism would continue to develop after 1871. Marx and Engels continued expanding their ideas - Engels released his Socialism: Utopian and Scientific and Marx would eventually release his very influential Das Kapital. Marx's ideas were always changing and he rejected the term 'Marxism' as it implied that he had the answers - he believed people should start with his ideas. Marx and Engels were also keen to dispel cult of personalities which occasionally cropped up. However, the rift with the anarchists was never healed and anarchists were barred from the Second International when it was formed in 1889. Anarchism similarly developed - a Russian aristocrat Peter Kropotkin - would become the most influential anarchist thinker helping influence anarcho-communism, and Italian anarchist Errico Malatesta helped influence anarcho-syndicalism. Marxism and anarchism went beyond their roots with European male thinkers as new thinkers and activists applied their ideas to new situations. For example, Russian Marxist Alexandra Kollontai blended Marxism and feminism, and is seen as the founder of Scandinavian feminism for her activism in the region during World War One. Similarly, Rosa Luxemburg and Clara Zetkin in Germany would try and combat sexism in the labour movement, and try to apply class emancipation to the suffrage movement. Across the world activists blended local ideas with new ideas - Peter Marshall has argued that Mohandas Gandhi was even inspired by anarchism. Swami Vivekananda reinterpreted the Bhagavad Gita to craft it as a libertarian text which future anarchists, like Aurobindo Ghose, would build upon. Japanese censors prevented the translation of Marxist texts, but Kotuku Shusui managed to escape censors by translating anarchist texts - it took until the 1920s for Lenin to be translated into Japanese! Kotuku asserted that anarchism fit with Daoism and Zen Buddhism helping form the paper Heimin. Feminist Ito Noe was an influential writer for the paper Bluestockings calling for female and class emancipation. In the 1920s the anarchist movement was brutally crushed, Ito was strangled in prison, so Marxism replaced anarchism, but, even today, the Japanese Communist Party has strong anarchist leanings. In 1905 the influential 'One Big Union' the International Workers of the World (IWW) was formed in Chicago. Founded by figures like Irish socialist James Connolly, Jewish thinker Emma Goldman, and 'Big Bill' Haywood, among others, it was inspired by anarchist thought to unite the labour movement. Russia was a site of both Marxist and anarchist movements, but the most significant figure to come from this was Vladimir Lenin. A history of secret societies due to state repression influenced what would become Marxist-Leninism. Lenin argued that the workers had to be guided by a revolutionary vanguardist party, as Lenin would succeed in establishing the Soviet Union Marxist-Leninism would become the dominant Marxist thought among twentieth-century communist parties.

Conclusion
The nineteenth and twentieth centuries have been greatly shaped by the clash between capitalism and socialism. Capitalism broke the old feudal world and forged a new revolutionary system, but, in doing so, created suffering for the masses. Socialism emerged as a force to resist and liberate the masses. Joyce Appleby argued that capitalism was a cultural system just as much as an economic one - as we have seen this is accurate. Capitalism formed new identities and cultural practices, as argued also by Marx and Engels the means of production forms a superstructure which all things in society comes from. Equally, socialism developed its own culture - as seen in the Paris Commune egalitarian and emancipatory ideas influenced a desire to emancipate workers and women. The anarchist-Marxist divide continues to divide the left - they even fought one another during the Russian and Spanish Civil Wars. These ideas continue to shape our lives today, and many of the debates we have now have been argued for the last century and a half. When we see a pop-up ad on the internet its origin lies back with Adam Smith in 1776, and the means to critique it with Marx.

The sources I have used are as follows:
-Eric Hobsbawm, The Age of Capital, 1848-1875, (London: Abacus, 1975)
-Joyce Appleby, The Relentless Revolution: A History of Capitalism, (New York, NY: W.W. Norton & Company, 2010)
-Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, (New York, NY: MetaLibri, 1776/2007)
-Karl Marx and Friedrich Engels, The Communist Manifesto, (London: Penguin, 1848/2015)
-Karl Marx, Das Kapital, Volume 1, (London: Redwood Press, 1887/1971)
-Friedrich Engels, Socialism: Utopian and Scientific, (London: Progress Publishers, 1880/1970)
-John and Jean Comaroff, Of Revelation and Revolution, Volume 2: The Dialectics of Modernity on a South African Frontier, (Chicago, IL: University of Chicago Press, 1997)
-George Lichtheim, A Short History of Socialism, (London: Weidenfeld & Nicolson, 1970)
-Colin Campbell, The Romantic Ethic and the Spirit of Modern Consumerism, (Oxford: Basil Blackwell, 1987)
-T.C.W. Blanning, 'The Commercialization and Sacralization of European Culture in the Nineteenth Century', in T.C.W. Blanning, (ed.), The Oxford Illustrated History of Modern Europe, (Oxford: Oxford University Press, 1996), 120-147
-E. Patricia Tsurumi, 'Female Textile Workers and the Failure of Early Trade Unionism in Japan', History Workshop, 18, (1984), 3-27
-Peter Marshall, Demanding the Impossible: A History of Anarchism, (London: Fontana Press, 1993)
-Kristin Ross, Communal Luxury: The Political Imaginary of the Paris Commune, (London: Verso, 2015)

Thank you for reading. Next time we will look at imperialism and colonialism, and how that affected colonised peoples. For other World History posts we have a list here. For future blog updates please see our Facebook or catch me on Twitter @LewisTwiby.