Capitalism is the world’s dominant ideology. Despite assuming several different political guises, it is, so any examination of the majority of the world’s ‘economies’ would reveal, the main organising principle by which most nations in the world are run. It may, for example, be part of welfare state capitalism, such as you might find in Australia. It may be integral to modern Chinese ‘communism’ (Martin Hart-Landsberg, in the Monthly Review (2012), notes that the Chinese economy is ‘a capitalist one…with Chinese characteristics’), it may be Adam Smith’s essentially laissez faire economics, as is perhaps the chief practice of the U.S.A. Furthermore, if capitalism is NOT the dominant system in a country, I shall argue, particularly for many developing nations, it is the principle by which that country wishes itself to be run. The ruling cartels of that country want capitalism in some form to be its dominant ideology. Neo-liberalism loves to enrich dictators.
Neo-liberalism adherents favour small government and demand that government regulation of economic practice is reduced or absent; neo-liberalism demands an allowance of business as usual because business knows best and will do best, eventually, for people. Neo-liberalists prefer no counterweight of unionism, or organised workers’ counterweights to the practice of business. What neo-liberalist capitalism permitted in the 18th and 19th centuries – and increasingly now – is an exploitation of workers and growing inequality. The natural world was deemed [biblically justified] the dominion of man, available for our use and so we see the exploitation of natural resources. Neo-liberal capitalism is the key ideology of a globalised world; as a principle it is idealised, glorified and desired. This is because it is NOT merely an economic phenomenon; its values and motivations tend to pervade most people’s thinking and decision making processes, whether they are essentially economic, social/cultural or environmental. It is associated with democracy and individual freedoms; private business has become the way we organise life. It is, for many, the only way to run a country. In some way, we have become Homo economicus. Homo economicus, him or herself, is the CONSUMER given life—not as entity but as operating principle—in our modern-neo-liberal-capitalism; both reminder and reminded, so Kath Kenny (2017) reminds us, ‘that we [certainly in the first world] are always at work now: even if it’s just our online avatar promoting the work we are doing, or sending out round-the-clock signals we’re looking for new work.’ The human has been reduced to an isolate, a competitive individual. This has occurred via a seduction regarding how we think about how to live. Foucault (2008, cited in Kagan, 2016) argues in The Birth of Biopolitics that our way of life has become something based on ‘the rules of competitive market capitalism; no longer rights, laws, ethical considerations, and kinship loyalties, but interest, investment, and competition’: we (think of the collective I’s) have become homo economicus; entrepreneurs of self.
Capitalism was born out of various industrial revolutions that began sometime around 1750 CE. It is – at least originally – that factory-based, technologically-innovative, profit-driven, labour-exploiting and inequitable form which grew up in Europe (first in the United Kingdom) and later the USA. As it has grown it has mutated and changed — these transmogrifications and re-configurations are part indeed of its historic permission to keep sinning. Its history is a series of enthralling reinventions of itself. Neo-liberal principles are near and dear to its heart.
What is the sequence of transition from pre-industrial to industrial capitalism?
The ways in which most of the world shifts from preindustrial capitalism to industrial capitalism is debated. Contested, to use the historians’ term. Why did it begin in Britain and not say France or Germany? (Some historians even ask why capitalism of the technological industrial kind did not begin in China, in the 14th century – see the OPINION BOX: Why didn’t China experience an Industrial Revolution before Britain?)
Why didn’t China experience an Industrial Revolution before Britain?
Professor Lin (Peking University, Australian National University and Duke University) wrote in the introduction to ‘The Needham Puzzle: Why the Industrial Revolution Did Not Originate in China’ (1995) that,
‘One of the most intriguing issues for students of Chinese history and comparative economic history is: Why did the Industrial Revolution not occur in China in the fourteenth century? At that time, almost every element that economists and historians usually considered to be a major contributing factor to the Industrial Revolution in late eighteenth-century England also existed in China.’
Professor Lin further notes that:
- China had a lead over the west in technology until around the age of European exploration, China, for example, had invented key elements of advanced civilisations: gunpowder, the magnetic compass, paper and printing.
- China had high agricultural output.
- Its ‘industrial’ developments had facilitated urbanisation.
- Commerce, food production and markets were linked.
‘Many historians agree that by the 14th century China had achieved a burst of technological and economic progress… it had reached the threshold level for a full-fledged scientific and industrial revolution.’
So why didn’t it happen?
Was it what is known as the high level equilibrium trap: an unfavourable man-to-land ratio?
A high population meant that China, according to this theory, had too large a population for its resource base. Because labour was cheap and plentiful there was no incentive to solve problems with innovative technologies. Demand for labour saving technology declined in China because a ‘high man-to-land ratio depletes agricultural surpluses as a source of capital formation’.
With Britain, by contrast, man-to-land ratios were not so high. Furthermore, Britain’s and then Europe’s and the USA’s industrial revolutions were fuelled by ‘sustained high and accelerating rates of technological invention’. China had had , according to Lin and others, an early technological lead as a result of experiential innovation (more people willing to experiment) but China lacked a scientific experimental basis for innovation such as Europe developed in the 17th century.
Modern science did not arise in China. Why not?
Two key arguments are given for China’s lack of a scientific revolution. These are summarised in the diagram at the end of the Opinion Box; here they are in text form:
Chinese bureaucracy did not give rise to a mercantile class as happened in Europe with feudalism. This mercantile class provided the capital [finance] needed to fuel the onset of Europe’s industrial revolution.
Wen-yuan Qian and others argue that ‘it was China’s imperial and ideological unification that prohibited the growth of modern science in China’. In other words, it can be said that friction and tensions in Europe provided the dialectic to scientific invention; China’s wholeness, its unity, worked against it.
Contrast this with:
Coming… part 2: Why neo-liberal capitalism should have died circa 2008.
How do we solve the problems caused by industrial capitalism and its corollaries? What alternatives exist?
 Welfare state capitalism is under threat in Australia, as in many other countries. Neo-liberalism erodes the welfare state.
 China’s communism may better be defined as a mixed, state controlled, private enterprise economy.