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Chapter Chapter 2

HISA04H3 Chapter Chapter 2: Themes In World History Reading Notes 2

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Daniel Bender
Chapter 2

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Where Did Capitalism Come From?
Capitalism In Britain
Capitalism emerged in 18th century Britain when the demand for industrial production was
sparked by increased consumption and market proliferation.
It was in 18th century Britain that thinkers such as Adam Smith laid down the foundation for a
capitalist way of thinking about the economy. Capitalist ideas were put forth such as a division
of labor, competition, the free operation of the market, and production for profit.
Merchant Capitalism
Merchant capitalism in the 17th century paved the way for the emergence of capitalist ideas in
18th century Britain. Merchant capitalism expanded markets on an international level and
created new ways of investing in company shares and various voyages.
Why is Merchant Capitalism not considered “full” capitalism?
The problem with merchant capitalism was that it did not involve competition as most trading
companies tended to monopolize the industry and it did not play a huge role in fueling the
True Capitalism Emerges in 16th century England
Capitalism in the true sense of the word emerged in 16th century England. There was a
noticeable growth in the manufacturing of basic household items as they were being produced
in workshops. Half of the population was dependent on wage labor meaning that half of the
population relied on external markets for the purchasing and consumption of essentials.
Journeymen and the first unions
Journeymen - Worker organization and exploitation, famously found in capitalist production
(factories), originated in the 16th and 14th century. Journeymen, craftsmen without much
experience but having completed apprenticeship, were often employed by a master craftsmen.
In order to maintain cheap labor, the master would bar his employees from obtaining a master
status or joining various trade and craftsmen guilds. Naturally, these Journeymen formed what
can be considered the first unions. As you can see, craftsmen were already being divided into
an employing and laboring class, a characteristic capitalism knows all too well.
Putting out system (a feature of merchant capitalism)
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Putting out system - Merchants used their capital to buy a material such as wool put this out to
spinners and weavers collect the finished fabric distributing it to other craftsmen and then selling
the finished product. This obviously involved capital to pay the people involved in the process.
Why the putting out system cannot be considered proper capitalism
The putting out system cannot be considered proper capitalism because although the
merchants owns the finished product, he does not own the means of production.
The Enclosure movement (a transition from feudal practices to market practices)
The Enclosure movement - Market relationships began to supercede feudal ones by the 15th
century. Lords were becoming landowners who lived off the rent from tenant farmers who
competed in a market for those tenancies. The enclosure movement saw land fenced off into
distinct blocks owned by particular individuals. This made managing one’s land a lot easier.
Enclosure dispelled medieval practices of land inheritance and instead made it marketable
Competition in agriculture (a transition from feudalism to capitalism)
Competition in agriculture meant farmers were inventing new and better ways to cut costs and
produce food faster. This competition led to new opportunities for employment in the form of
farm labor.
The black death - (a crisis in late feudalism that led to a transition to free markets)
The black death - The plague had erased a third of the population and made it difficult for lords
to enforce their rights and control their slaves. This empowered a much smaller agricultural
labor force to resist the lords’ control. Slaves could flee their lord’s households and find labor
elsewhere because it was so scarce.
The Norman conquest ended up producing a society in Britain that was more favorable than
other European societies to the emergence of fully fledged Capitalism.
Capitalism in Europe
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