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Kidicious
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Diety of Kidiverse
Mar 2003
time: 21:20
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The definition of the word "capitalism" comes from the words "capital" and "capitalist" as used by classical economists - Smith through Marx. It was first defined simply as a system of exchange where one class (capitalists) own the capital.
Randians are living in their own little world.
quote:
The terms capital and capitalist came into use towards the middle of the 18th century to designate means of production and their owner/employer.
With reference to capital, Adam Smith divides the stock of goods owned by someone into two parts.
"That part which, he expects, is to afford him [this] revenue, is called his capital. The other is that which supplies his immediate consumption." [1776, Adam Smith, Book II, chapter 1]
Smith does not employ the word capitalist, preferring either a circumlocution ("the owner of capital"; "the persons whose capitals are employed") or a concrete, specific noun (farmer, manufacturer, merchant, retailer). [1776, Adam Smith, see especially Book II, chapter 5].
David Ricardo gives the following definition of capital:
"Capital is that part of the wealth of a country which is employed in production, and consists of food, clothing, tools, raw materials, machinery, etc. necessary to give effect to labour." [1817, David Ricardo, Chapter V, On Wages]
Ricardo employs the term capitalist now and then, sparingly, using more often the concrete, specific nouns of manufacturer and farmer.
Neither Adam Smith nor David Ricardo seemed to have ever employed the term "capitalism." A possible explanation might be that these two authors, while struck by the high productivity brought about by the new organization of labour and the introduction of new machines, did not consider the wider use of capital, the development of trade and the growth of production as something heralding a new historical period, to be qualified by a brand new name.
Adam Smith and David Ricardo were certainly aware of the advent of a larger freedom of commerce (at least in England and with respect to the strictures of the feudal and mercantilist periods) that had liberated energies and led to a more productive division of labour, technical and social.
They realized also that production had taken a new dimension and that larger amounts of capital (compared to labour) and higher business skills were required in an industrial enterprise. But this meant only that the attention should be focused on capital (fixed and circulating) and on the way it was made to work by the capitalist (e.g. division of labour).
Besides Smith and Ricardo, many other scholars like Charles Babbage (1832) and Andrew Ure (1835) applied themselves to the task of writing about the mechanical progress and the technical novelties of their times, in the service of production.
So central had the role of capital become in social life that Karl Marx titled his major work "Das Kapital"; and this shows the importance that he too (or he especially) was according to technology and production.
In "Wage Labour and Capital" Marx gave the following definition of capital:
"Capital consists of raw materials, instruments of labour and means of subsistence of all kinds, which are utilized in order to produce new raw materials, new instruments of labour and new means of subsistence." Further down he states: "Capital, also, is a social relation of production." [1849, Karl Marx]
To stress the importance attributed by Marx to capital, that is to productive technological devices, in the shaping of society, it is sufficient to refer to a famous passage in the "Misère de la philosophie":
"Social relations are closely bound up with productive forces. In acquiring new productive forces men change their mode of production; and in changing their mode of production, in changing the way of earning their living, they change all their social relations. The hand-mill gives you society with the feudal lord; the steam-mill, society with the industrial capitalist." [1847, Karl Marx]
While using extensively the terms "capital" and "capitalist," Marx does not employ the word "capitalism," preferring the expression "capitalist mode of production" or "capitalist form of production" to qualify what was taking place in the sphere of social and economic life.
It might then appear as a surprise to somebody that none of the three classic economists (Adam Smith, David Ricardo, Karl Marx) seemed to have found the need to use the specific term "capitalism" to designate a certain period of history.
The word "capitalism" came to the fore only at the beginning of the 20th century and it has been extensively employed ever since.
The merit (or demerit) of its conception and diffusion deserves to be ascribed to a different category of scholars. They were sociologists and historians, of German extraction and of, mainly, socialist or liberal tendencies.
In 1902 an influential book was published bearing the title "Der Moderne Kapitalismus" [Modern Capitalism]. In those pages, its author, Werner Sombart, traced the root of capitalism from ancient times to the modern age. He defined capitalism as
"an economic organization of exchanges, in which basically two different groups of people, the owners of the means of production Š and the workers with no property, cooperate in a rational process of production, joined by the market." [1902, Werner Sombart]
In another text, "Der Bourgeois" (1913) Sombart identified the spirit of capitalism in the union of initiative and risk taking attitudes with economic acumen and reckoning. [1913, Werner Sombart]
On the subject of the spirit of capitalism the famous text by Max Weber, "Die protestantische Ethik und der Geist des Kapitalismus" had already appeared [1904-1905, Max Weber].
So, the term capitalism got well established in academic circles at the beginning of the 20th century and was then taken up by (socialist) critics of the industrial system who were, rightly, focusing their attention on some (past and present) negative aspects related to work mechanization and social deprivation, but often overlooking the new possibilities opened up by the revolution in the means and forms of production.
Throughout the 20th century the term was not only used but also overused and, quite extensively, misused in many places by many people. It is then important to identify and list the essential and original features of what is now generally known as "capitalism."
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From "capital" to "capitalist" to "capitalism"
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17-05-2005 19:51
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