Jan 23 14 ENV222 lecture notes.pdf

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University of Toronto St. George
School of Environment
Geoffrey Mac Donald

6) Jan. 23 Causes: Capitalism Desai, Meghnad (1993). “Capitalism.” In Joel Kreiger editor in chief, The Oxford Companion to Politics of the World. New York: Oxford University Press. pp. 112-114. ! 1. Definition of capitalism reader p. 111 "a set of economic and legal institutions which together make the production of things for private profit the normal course of economic organization." ! reader p. 111 four elements necessary for capitalism . production by private actors, not the state (as in communism) . legal system, enforced by the state, which protects private property . legal system which ensures contracts between buyer and seller can be enforced . legal system which ensures investor receives significant portion of profit (although some is taxed by the state) ! Note that according to this definition, capitalism involves action by both the market (provide investment, private production) and the state to provide the legal system, plus not mentioned in reading, provide the physical infrastructure (roads, water pipes etc) which because they are public goods cannot be provided by the market. This means that state and market are mutually dependent - each needs the other. ! 2. Historical evolution of capitalism - based on reading . Western Europe evolution from feudalism, roughly 1300s - 1500s . advent of sailing ship commerce, origins of the business corporation 1600s . 1700s, steam engine (and other technology) combined with organization (factory system) vastly increased economic growth . 1700s emergence of modern state, with organizational and technological power to enforce law . 1800s concept of limited liability (investors only lose what they have invested, not other money, property) which encourages risk taking . 1800s threat to capitalism, writings of Karl Marx; basic struggle between labour and capital over division of wealth created by capitalism . 1800s spread of capitalism from Europe to rest of the world, originally through imperialism (colonies) . 20th c. threats; 1917 Russian revolution, communist regime former USSR; 1930s Depression (capitalism not working) . World War II: vast increase in demand (guns, ships, planes etc) which ends Depression . 1945 - 1972; emergence of welfare state, makes capitalism politically acceptable; "golden age" of capitalism, high annual economic growth, shared by capital and labour . 1970s - present; emergence of neo-liberalism; growth of welfare state (social justice) checked and scaled back; economic growth benefits no longer shared, but going only to capital . 1970s - present; globalization of production (China makes the consumer goods we buy) . 1989 fall of the Berlin Wall, collapse of USSR, Russia turns to state-capitalism !1 (government owns factories); as does China; "the triumph of capitalism" - today capitalism is the established means of social organization throughout the world ! 3. Economic growth . defined as increase in wealth (for our purposes, focus is on material wealth/products) over time; roughly, Canadian wealth has doubled in past fifty years . in part results from increased productivity - same combination of capital, labour and materials produces more goods in same time (eg, more skilled worker; change in production method, such as assembly line) . but also comes about through change in one of more of the three factors; eg, technological change - worker uses a more efficient machine, which can make the same product with less material and labour input, faster; eg, more capital in
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