What is Capitalism?

Before defining what is Capitalism I have decided to provide you with five videos that explain the philosophical foundations of Capitalism as a social system. By listening to these videos, you’ll get a wonderfully elaborated explanation of What Capitalism is and of what it consists of.

Video – What Is Capitalism (1/5)

Video – What is Capitalism 2/5

Video – What is Capitalism 3/5

Video – What is Capitalism 4/5

Video – What is Capitalism 5/5

“Capitalism is the only social system based on the recognition of individual rights and, therefore, the only system that bans force from social relationships.”¹

Published in 1966 this abstract from Ayn Rand‘s work on Capitalism explains in a clear and unequivocal way the true concept and definition of a system based on reason and in the recognition of the rights of free and responsible men.

Capitalism in the previous quote means a full, pure, uncontrolled, unregulated social system known as “Capitalism Laissez-faire“. It is a system that works as a set of interacting or interdependent moral, political and economical principles that are incorporated into legal systems, institutions and governments. This moral, economical and political principles are contingent to the identification that the members of the system do in order to understand the nature of man and are applied to the rational understanding of man’s psycho-epistemology (man’s mode of functioning in acquiring knowledge).

In human history there hasn’t yet existed a capitalist laissez-faire social system that fulfills the previous requirements; and only glimpses of its potentiality have been achieved through history. However, since the 15th Century “economies organizing themselves on capitalist lines have experienced greater economic dynamism: increasing productivity, increasing employment, and generating more rapid advances in economic wealth, living standards, and improved health of the population.”² It is because of many of the principles of Capitalism Laissez-faire that Globalization and all the different forms of Capitalism have managed to benefit humanity and achieved our current conditions. Unfortunately, it has been because of the philosophical contradictions and irrational actions of man that also many adverse results have come into being from these mixed forms of capitalism and economic crisis, inequalities in the distribution of wealth and environmental degradation are still existing.

The Board of the Center for the Study of Capitalism at Wake Forest University explains what are some of these forms of Capitalism that currently exist and also explain which are some of its capitalist characteristics,

In the 21^st century capitalism exists in several forms. These include 1) free market or market-led capitalism such as we are accustomed to in the U.S.; 2) corporatist or state-led capitalism where the government exerts significant guidance, leadership, and influence over the deployment of private capital (e.g. France, Japan in the 1980s); and 3) managed capitalism, in which worker groups and broad social welfare issues exert significant influence on private corporate behavior (e.g. Sweden, Germany).³ Whereas some evidence suggests that market-led capitalist economies experience greater economic dynamism and higher rates of per capita income growth than economies with other forms of capitalism,⁴ other evidence points to less volatility and fewer inequities in other forms of capitalism than in market-led economies.⁵

This blog was created to study how and when Capitalism and its philosophical principles played a role in Global History. It is my goal to demonstrate with a narration of past events how the roots of Wealth enabled for the interconnection of the World and how we could learn from the past to build more rational and objective societies.

Sources:

¹Rand, Ayn. Capitalism: The Unknown Ideal. Signet; Fitst Signet Printing, 1967 edition (July 15, 1986)

² About Capitalism. BB&T Center for The Study of Capitalism. http://capitalism.wfu.edu/about/capitalism/

³ D. Coates, 2000, Models of Capitalism, Blackwell: Malden MA.

⁴ R. L. Heilbroner & W. Milberg, 2006, The Making of Economic Society, Prentice-Hall: Upper Saddle River NJ; E. Phelps, 1999, “Lessons from the Corporatist Crisis in Some Asian Nations”, Journal of Policy Modeling, 21 (3), 331-339. E. Phelps, 2007, “The Economic Performance of Nations: Prosperity Depends on Dynamism, Dynamism on Institutions”, in E. Sheshinski, et al, ed., Entrepreneurship, Innovation, and the Growth Mechanism of Free Enterprise Economies, 342-356, Princeton University Press: Princeton NJ.

⁵ M. Walker & R. Thurow, 2009, “U.S., Europe are an Oceans Apart on Human Toll of Joblessness”, Wall Street Journal, May 7, A1.

Why Globalization Matters?

“It was by making myself a Catholic that I won the war of the Vendee [the war of counter-revolution in western France], by making myself a Muslim that I established myself in Egypt, in making myself Ultramontane [a devotee of the papacy] that I won men’s hearts in Italy. If I were to govern a Jewish people, I would re-establish Solomon’s Temple.” Napoleon Bonaparte

It is with Napoleon’s astonishing remark that I decided to give you some light of what Globalization refers to and why I choose to write about it as one of the two pillars of my research.

The term Globalization (also referred to as Globalisation) refers to what many different historians considered a process of interrelation (or unification) of the world. It was a process of cultural, political and economic relations that for the first time in history united all mankind.

It has been the aim of historians to identify When does Globalization begun and How it begun. But also, it has been their aim to question if Globalization as a process has already concluded or if it is an ongoing process in the 21st. Century. As well, historians are still trying to explain if Globalization should be judged (or not) as the result of only positive (good) results in regard to increasing the wealth, culture and technology of the world; while other historians argue that Globalization has also resulted in poverty, losses, conquest and cannibalization.

Globalization has been studied from different approaches in Social Sciences. Sociologists and Anthropologists have focused on the cultural effects that the transfer of technology, mass migrations, institutions and products has had in different regions of the world. Political Theorists studied how Globalization affects the institutions, norms and hierarchical authorities in specific regions and how changes in other regions may have had altered the status quo. Economists study how globalization increased the commerce and transactions between regions and territories through trade, investments, and flows of capital just to mention a few.

In this blog I’ll aim to discuss Globalization as a process and a result of the interconnectedness of human’s psycho-epistemology in specific contexts and periods of history. My mission is to study how human behavior is not determined by nature and how human free will (action that results from rational or irrational reasonings chosen between opportunity costs) has shaped the course of history until the present.

Continue reading “Why Globalization Matters?” →

Making a Moral Revolution. From 1773 to 2011.

The protests of the groups named 99% seem to continue igniting fury all over the world since they occupied Wall Street at Liberty Square in Manhattan’s financial district. By now, they claim at OccupywallSt.org that the protests are being held in more than 1500 cities around the world (virtual map). In all those cities the protests have taken different shapes and discourses. They seem to cry for different things. Their leaders emphasize their own agendas and it has been hard for me to identify a common single demand.

Curiously, most of these protesters most surely do not recall that on a day like today more than 200 years ago a public meeting similar to theirs was first organized. It was in October 16, 1773 that the First public meeting of protest against the Tea Act took place in Philadelphia. These protesters demanded from their rulers (The British Parliament) a respect of their rights to property and individual rights. They asked for the Parliament to respect their right to elect their own Representatives and to be taxed by those representatives only.

Three years later, after their demands were not listened by the British government the United States Declaration of Independence was signed by the representatives of thirteen American colonies then at war with Great Britain. It was the first Declaration ever written in history that considered as its core that all men had unalienable Rights and that among these rights are Life, Liberty and the pursuit of Happiness.

Since then, these rights were slowly forgotten and captured by government. Slowly, the sons and daughters of these revolutionary protesters forgot the reasons that created such a wonderful Declaration. Now, the protests of the Occupy movements face a similar contradiction. As The Ayn Rand Center for Individual Rights argued in their article What the Tea Party Movement Must Stand For, it is necessary for them to organize against one single claim: They should demand for a Moral Revolution in which their government returns to them their rights to Life, Liberty and the pursuit of Happiness.

It is until now Ayn Rand the only philosopher who has provided a moral defense for these revolutionaries. As she wrote in Capitalism: the Unknown Ideal,

“The world crisis of today is a moral crisis–and nothing less than a moral revolution can resolve it: a moral revolution to sanction and complete the political achievement of the American Revolution. . . . [YOU] must fight for capitalism, not as a “practical’ issue, not as an economic issue, but, with the most righteous pride, as a moral issue. That is what capitalism deserves, and nothing less will save it.”

Friday Book Review: “1493” by Charles C. Mann

Reviewed by Marek Kohn, Financial Times

“In hindsight, 1492 might have been a good point at which to reset the calendar. Traditionally, the year in which Columbus discovered America is seen as the moment Europe began to shape a New World. Today it looks more like the start of a process that has stitched the drifting continents back together: 1492 was the Year Zero of globalisation, and 1493 was Year One.”

Syria on the road to chaos?

Last night I attended a lecture titled “Syria on the Road to Democracy or Chaos?” by Ph.D. Candidate Mohammad Maghout hosted by the Institute of Oriental Studies in Leipzig University. The lecture was an overview of the last 20 years of political oppression and autocrat government in Syria. The speaker emphasized how Bashar al-Asad was an exact continuation of the government his father, Hafiz al-Asad held in Syria from 1970 to 2001.

Maghout explained that in Syria the government was not only feared but that a cult of reverence toward the al-Asad regime had being built. He explained that in the 40 years of autocratic regime the regime had amassed its power upon a pyramidal network of tribal, religious and economic leaders that belonged to different ethnic groups and tribes. In Maghout’s reasoning, it was these ethnic and tribal differences one of the key elements that allowed for the Syrian government to control the population while confronting them every time political tensions appeared. Indeed, these confrontations were evident after the the 2011 Syrian uprising (from January 26th to March 15th of 2011) and as Salman Shaikh wrote yesterday in the NYTimes (Preventing a Syrian Civil War. NYT. October 12th, 2011), it is these ethnic confrontations and sectarianism that could bring Syria into chaos.

One thing was left without a clear answer from Maghout’s lecture. It was the question on “why didn’t Syrians react to all the lies, political oppression and corruption of the al-Asad regime previously”. Maghout explained that Syrians were not only divided in ethnic groups that conflicted within their understanding on “Who Syrians really are”, but that it had passed already too many years of fear for government’s power that brought the population to fear political activity and the use of freedom of speech to protest against government. While this is true, I consider it not to be sufficient reason.

It may be necessary to understand which was the role (or lack of it) of the economic leaders during the unrest. I am sure that understanding how crony capitalism works could bring some interesting tools to understand what is the effect of privileges in a society. And as such, could be a valuable tool to understand how can the results of these social movements be differentiated. The participation of crony capitalists protecting corrupt governments and the participation of entrepreneurs is psycho-epistemological different because of the goals they aim to achieve. It is entrepreneurs who most often support (economically and logistically) social movements that demand freedom of speech, equality of rights, an end to corruption and the respect of private property.