Geography and Resources in the Development of Industrial Capitalism

 Many factors that were internal and important to the rise of industrial capitalism in western Europe. When asked why capitalism as we know it started in England and not somewhere else, on can handwave about the English Genius, but there were historical and geographical reasons that capitalism started in England. 

One of the geographical reasons was that there are several rivers that are short and spread to the sea. This is important because the moving force for a lot of factories was a waterwheel that was driven by consistent water flows, and there was a huge belt that ran around this central axel that drove the machinery that was needed to make the division of labor work. The other geographic reason is that there was a lot of coal, and it was easy to get to. This was important because even though there were a lot of rivers, the development of the steam engine made coal resources necessary, but if you wanted to build a factory you were not limited to riverfront property.

Photo by Artem Bali from Pexels

One historical reason that Capitalism as we know it started in England was that there was a class of people who were available to work these machines. The enclosure acts helped push people off the land. So that there was a reciprocal relationship between industrialization and enclosure. Machines made people less necessary, and with enclosures there were more people available to build and work machines. 

How does one take these historical precedents as a guide-post for how to organize your economy then? Well, for one, geography is huge. One of the reasons that Singapore is now lauded as an example to emulate (see England wanting to be the “Singapore of Europe” post-Brexit) is not just because it has free-market tendencies, but because it is strategically located, with up to a quarter of global trade passing through the Straits of Malacca (Fessenden). Though geography and access to resources is important, they are not necessary – for example, Switzerland has been able to build its manufacturing base despite being a landlocked nation in the alps, with its own cultural barriers, being a meeting point for French, German, and Italian cultures. But resources are not the secret either, since the resource course and Dutch disease are both well documented, where focusing on one resource limits your economy and makes your currency vulnerable to outside forces. It is also, on its own, not something any country can change. How would it be possible to take South Sudan and put it in a more convenient place?

The more salient issue is the one about industrialization. As we have seen in Engels writing on the Manchester of his day, the housing for internal immigrants was poor, in that it was not built for people, but as for animals. We can see the same thing when we read about the conditions of the working class in Lagos of today or the smog of old Mumbai. One thing that a developing nation could do is to look at its urban planning and infrastructure, so that as the economy developed in some sort of big push as Rosenstein-Rosen’s idea of development (168) the people who were drawn from the unproductive rural subsistence agriculture into the industrializing urban center, they would have the mental and physical capacity to work productively and add to the nation’s wealth instead of magnets for do-gooder NGOs to come and lament their plight without making any real structural change. This planning is something that has worked for the Chinese state. Though the western press periodically sees writing about the “Ghost Cities” of China and hand-wringing about overdevelopment, the Chinese party has done a good job in moving the urban population from worrying about developing country problems to worrying about industrializing country problems.

Works Cited

Cypher, J. M. (2014). The process of economic development. London: Routledge, Taylor & Francis Group.

Fessenden, M. (2015, February 24). See Shipping Traffic Move Through Straits Around the World. Retrieved from https://www.smithsonianmag.com/smart-news/see-shipping-traffic-move-through-straits-around-world-180954399/

Colonialism, Development and the Emergence of Industrial Capitalism

It is hard to separate the very idea of capitalism in any of its forms from the emergence of colonialism and imperialism in what are now the lesser developed countries.  

To really think about this, it goes back to Smith. In looking at the output of the pin factory, he celebrates the division of labor in which “This great increase of the quantity of work which, in consequence of the division of labour, the same number of people are capable of performing, is owing to three different circumstances; first, to the increase of dexterity in every particular workman; secondly, to the saving of the time which is commonly lost in passing from one species of work to another; and lastly, to the invention of a great number of machines which facilitate and abridge labour, and enable one man to do the work of many.” (Wealth of Nations, Book 1, Chapter 1). The Smithian framework that he looks at is a right and just celebration of the increase in output. But there is a potential problem there where there is so much history interwoven in the celebration of the increase in output. It makes me think of Ellen Wood’s description of capitalism not as an inevitable, teleological continuation of the path of history, but instead as a separate thing that happened in one small corner of the world. Once can easily imagine a million small capitalisms developing but then dying in their crib. It was not until increased output was able to be a twin with the military might of the British Navy that these pins would be able to go everywhere. If you just had the output and tried to market it in the single nation, the market for pins would soon be saturated unless you were able to grow the market. You can do that internally, by making pins more fashionable, and making the output less durable, but you can also do that by looking outside your borders, in which you take your innovation and you undercut local producers in your market. Wealth from your near abroad and is funneled to the owners of capital.

Markets get exhausted, and your near abroad seeks to emulate you. You must look further afield for potential markets. At the same time, your own resources are limited. Manchester, Liverpool, and Birmingham can become the workshops to the world, but they are hungry. They need cotton from the subcontinent and Egypt and the American south. They need rubber from the south pacific. How best to proceed? Do you buy the goods you need on the open market from local producers, or is there a better, cheaper way? I read a story recently about the South Pacific Company was always in need of rope for its ships. Instead of buying from the local producers, they created concessions on the islands, and they bought from the companies that they controlled, and formerly free entrepreneurs became workmen, with start and end times and wages set not by their need and their clocks, but by the company.

Colonialism and imperialism are just the capitalistic division of labor writ large, why Lenin called it the highest stage of capitalism. The colonial subjects were deliberately kept down so that they could be cheap labor for the developed west and a cheap source of resources, while being a captive market for the colonial power. This deliberate decision was reinforced up until the point it was no longer in the best financial interests of the parasite colonializer to be directly involved in the affairs of the less developed world (though they often still try to exert their influence). The legacy of colonialism is that capitalism is entrenched throughout the world, but there are certain winners and losers, of whom most did nothing to earn their relative well-being. I sit in my home and enjoy all creature comforts, while someone with equal mental and physical endowments born elsewhere may struggle to survive because the East India Company was the boss of the county for years and the infrastructure and institutions development was deliberately slowed.

Works Cited

Baddeley, M. (2006) Convergence or Divergence? The Impacts of Globalisation on Growth and Inequality in Less Developed Countries, International Review of Applied Economics, 20:3, 391-410, DOI: 10.1080/02692170600736250

Cypher, J. M. (2014). The process of economic development. London: Routledge, Taylor & Francis Group.

Engels, F., & McLellan, D. (2009). The condition of the working class in England. Oxford: Oxford University Press.

Fessenden, M. (2015, February 24). See Shipping Traffic Move Through Straits Around the World. Retrieved from https://www.smithsonianmag.com/smart-news/see-shipping-traffic-move-through-straits-around-world-180954399/

Lenin, V. (n.d.). Imperialism, the Highest Stage of Capitalism. Retrieved from https://www.marxists.org/archive/lenin/works/1916/imp-hsc/

Smith, A. (2003). The wealth of nations. New York, NY: Bantam Classic.

Wood, E. M. (2017). The origin of capitalism: A longer view. London: Verso.

ICE-9: Linkages, Path Dependency, and The Logic of Capitalism

I normally do not like it when writers use a personal scale to talk about the economics of countries. If you see that rhetorical move in the wild, you know that it is about to be used as an excuse as to why we have no policy that somehow takes care of a broad base of people but oddly can still funnel contracts to arms dealers and remove social obligations from society’s wealth winners. I’m going to talk not about a household with its simplification, but myself as an economic actor.

When I was a younger man, I had wanted to be a poet. I took the classes and studied the literature, but not too hard. I also wanted to go out with my friends and drink as much as I could almost every night and be told I was clever. I wanted that poet’s life. So, when I was close to graduating from undergrad, I applied to MFA programs so that I could continue that life. I only applied to four programs and did not get into any of them. I then sat around in the town I was trying to leave for a whole year and waited on the application cycle to come back around. This time, I told myself I was being smart and pragmatic and leveraging my skills for a future that was more certain than being a poet. I was going to get a master’s in literature. I know it sounds strange now, but at the time an MA in literature made sense from a pragmatic standpoint. This was in 2005, times were different.

I got into a program and was funded so that I could justify moving halfway across the country with me and my truck and my dog. I was about three months in when my anxiety was spiking, and I was not sure if I had made the right decision. I had spent a whole year waiting for the opportunity to redo the applications, to be accepted in somewhere and get out of the one town and now I was somewhere new and somehow all my problems were not solved. I just wanted to drop out. I wanted to get my dog and some of my books and just go somewhere. I was not sure where I wanted to go, but I had to go somewhere. The most concrete place I had thought about was going to the beach somewhere in Mexico.

But here is the problem with that. You cannot drop out. I had my truck, but that truck was registered in the old start. I had bank accounts, I had debt, I had old friends, I had new friends. I had known people in my past who had made this severing of the past, but once that severing was done, their social position was a step down, and they had to exist in society – new linkages were necessary. Even the most off the grid person who can make everything they need and never talk to another person still exists in the realm of social relations because of how property is designated in our country. You must be off the grid somewhere, such that you are either trespassing or on your own land which creates its own tax obligations. Now, these linkages are not necessarily bad, either those that bind us to corporations or the state or other people, but they are undeniable. Each choice we make that involves another body creates these linkages, so that every other future choice is brought forth in context of all the others that have happened in the past. We love the idea of a Tarzan or a Robinson Crusoe, but even these men were brought to their states through social interactions.

I talk about these personal linkages because reading in economic development has really shown me that these linkages are not just for one person that wants to drop out. One of my old thoughts was that if I were running a developing country, I would just repudiate the debt. This thought was spurred on by reading books like “Confessions of an Economic Hitman” where it seemed that so much of the work of the multilateral institutions was done in bad faith and saddled the developing countries with, at best, questionable infrastructure for hydroelectric power that displaced thousands of people. At worst, the funds from loans were siphoned off by corrupt rulers and spend on European riches. Either way, if a new government came in post-post-colonial and represented the will of the people, there would be a big debt overhang that hamstrings the government from investing in the people of the nation and instead facilitated the flow of resources outward so that any growth paid off the loans in the investor countries. Reading Yilmaz Akyüz’s essay “Internationalization of Finance and Changing Vulnerabilities in Emerging and Developing Economies” really showed me that the linkages that I found as an individual within the capitalistic system that bound me to the system even though I wanted to get away from it were persistent even at higher levels of analysis. A country cannot just say goodbye to the IMF or the world bank, but there is internal and external debt in internal and external currencies held both by people inside and outside the countries that make any kind of withdraw impossible. These linkages mean that trying to start a new slate is not just turning your back on the IMF but is a huge and seemingly impossible coordination problem with all your creditors and equity holders to make any kind of fair reconcilati0on with the past. And that whole thing is that we are talking about equitable distribution on claims of property while people inside the Developing Countries live in dollars a day – somehow their claims matter less, as we have seen with contemporary issues with Puerto Rico. On top of that these ownership claims are transferrable, as Akyüz does mention a contemporary issue with Argentinian debt, where a fund came and bought debt for pennies on the dollar and then sued Argentina in a court in New York and their claims were decided to be valid, so the vulture fund was able to claim possession of Argentinian assets abroad. In this case they were able to gain possession of a ship even though they were not the original claimant of the debt.

                What we see is that these linkages are strong and persistent and no matter what, you can not pull yourself away from them. The economic system has its own logic at every level, from the personal to the seeming sovereign. I’m not sure what is to be done. Akyüz suggests that “one of the key lessons of history of economic development us that successful policies are associated not with autarky or full integration into the global economy, but strategic integration seeking to use the opportunities that a broader economic space my offer,” all the while minimizing risks (55). An arms-length, circumspect relationship is probably a best-case option of what we can do. Full integration means that you give up control, but you cannot fully remove yourself from the relations and linkages as even a global economic hermit like North Korea has borders.

                I have long had a metaphor in my head about what capitalism is. It is such a totalizing force that you cannot imagine postmodernism without it, since it is the first world system that you cannot really think of something outside the world system. Even the development and collapse of the Soviet system happened in the context of capitalism, and if Marx is right, would not have developed without capitalism developing first. Where Marx seems to have been wrong was that Capitalism is malleable and changeable and flexible with the development of technology, but it subsumes all. In his novel “Cat’s Cradle,” Kurt Vonnegut posits the idea of a new substance, Ice-9. In the novel, water had normally only crystalized at our commonly known temperature of 32 degrees Fahrenheit because that was the only way that the molecule “knew” how to do. Substances crystalize because once energy is removed from a system, molecules find a way to order themselves based on their chemical properties and the surrounding conditions. A scientist in the book figures out a way to make water crystalize at a higher temperature. This is an incredible problem for the characters in the book, as once water “learns” a new way to crystalize, every crystal of the new substance is a seed crystal that once it touches more water, will teach the new molecules this crystal form and so on. All the water becomes Ice-9, and the world as we know it is destroyed. This is capitalism. Once in existence, it spreads broader and deeper until every breath you take is monetized – and there’s no escape.

Works Cited

Akyüz, Y. 2015. “Internationalization of finance and changing vulnerabilities in emerging and developing economies,” South Centre Research Papers 60.

Perkins, J. (2016). Confessions of an economic hit man. San Francisco: Berrett-Koehler.

Vonnegut, K. (2010). Cat’s cradle. New York: Dial Press Trade Pbks.