1. Economic History : Revision Capitalism vs Socialism (Marxism) Alternative views of Economic History Marcus D. Niski

2. 2 Introducing the Debate Revising: Firstly, recall our schema: debate over how things are in the present, & about future directions, rely on competing histories Firstly, recall our schema: debate over how things are in the present, & about future directions, rely on competing histories Our special focus is on why liberals & socialists debate the origins of capitalism Our special focus is on why liberals & socialists debate the origins of capitalism

3. 3 The Origins of What?? We looked at the origins of Capitalism… We looked at the origins of Capitalism… But what is capitalism? But what is capitalism? Well the 2 theories we’ll be looking at don’t agree about that Well the 2 theories we’ll be looking at don’t agree about that We need to look at the different stories they tell to see how their answers to this question differ, but for the time being, … We need to look at the different stories they tell to see how their answers to this question differ, but for the time being, …

4. 4 From a liberal perspective: From a liberal perspective: Capitalism = market economy based on commercial activity (buying & selling of goods for profit); & money is used for exchange as opposed to barter.

5. 5 Whereas, from a socialist perspective….(Marxist) Capitalism is based on the exploitation, by private owners of the means of production, of those who are forced to sell their labour for wages…

6. 6 Note 2 things here: Note 2 things here: 1. Liberals emphasise commercial activity (buying & selling = free exchange); whereas socialists emphasise the system of production. 1. Liberals emphasise commercial activity (buying & selling = free exchange); whereas socialists emphasise the system of production. 2. The liberal definition is compatible with a story about individual freedom; whereas the socialist definition emphasises an unequal & exploitative relationship. 2. The liberal definition is compatible with a story about individual freedom; whereas the socialist definition emphasises an unequal & exploitative relationship.

7. 7 When liberals defend capitalism & socialists criticise it, they rely on: When liberals defend capitalism & socialists criticise it, they rely on: 2 competing accounts of the relation between present, past & future & 2 competing accounts of the relation between present, past & future & 2 competing views of human nature 2 competing views of human nature

8. 8 present, past & future Liberal view : the present Liberal view : the present capitalism is superior to any other system b/c it is the most productive, the most efficient, capitalism is superior to any other system b/c it is the most productive, the most efficient, & it is the only system that is compatible with freedom & it is the only system that is compatible with freedom

9. present, past & future Liberal View - the past: Liberal View - the past: capitalism is the outcome of an inevitable & irreversible process of social evolution capitalism is the outcome of an inevitable & irreversible process of social evolution 9

10. present, past & future Liberal View - the future: Liberal View - the future: Liberalism & capitalism triumphs over all competing alternatives: Liberalism & capitalism triumphs over all competing alternatives: “The End of History” (Francis Fukuyama) “The End of History” (Francis Fukuyama) 10

11. 11 present, past & future socialist view - the present: socialist view - the present: capitalism is a deeply flawed system: it is based on fundamental inequalities; exploitation & domination capitalism is a deeply flawed system: it is based on fundamental inequalities; exploitation & domination

12. present, past & future Socialist view – the past: Socialist view – the past: the rise of capitalism was neither inevitable nor irreversible: it was a locally specific & historically contingent event (i.e. it didn’t have to happen & it can be replaced even now) the rise of capitalism was neither inevitable nor irreversible: it was a locally specific & historically contingent event (i.e. it didn’t have to happen & it can be replaced even now) 12

13. present, past & future Socialist view – the future: Socialist view – the future: Capitalism & liberalism will be undermined by fundamental contradictions Capitalism & liberalism will be undermined by fundamental contradictions The capitalist system will destroy itself The capitalist system will destroy itself Socialism will replace capitalism Socialism will replace capitalism 13

14. 14 2 competing views of human nature: the liberal view: the liberal view: humans are naturally self-interested, competitive & acquisitive they have a natural tendency to ‘truck, barter & trade’

15. 15 the liberal view, continued: the public good is best guaranteed when individuals freely pursue their own private, selfish aims public virtues/private vices (Mandeville) “the invisible hand” (Smith)

16. 16 the liberal view, continued: capitalism is the outcome of an evolutionary process through which the above features of human nature ultimately prevail

17. 17 the socialist view: the socialist view: humans are social beings, they are naturally cooperative

18. 18 the socialist view, continued: The common good is best realised through cooperative effort Only an alternative based on this aspect of human nature will be equitable & sustainable

19. 19 the socialist view, continued: Capitalism brings out the most negative & ultimately destructive aspects of human nature An alternative that brings out the cooperative side of human nature is both possible & desirable

20. 20 “In place of the old bourgeois society, with its classes and class antagonisms, we shall have an association, in which the free development of each is the condition of the free development of all”

21. 21 * Socialists have traditionally agreed with one part of the liberal story: i.e., that there is progress through social evolution; but their different concept of human nature leads to a different conception of social evolution

22. 22 * The endpoint of social evolution for liberals is a society that gives maximum freedom to self-interested individuals * The endpoint for socialists is a society of equals, free of domination & exploitation

23. 23 This leads to 2 different approaches to the past: * Liberals see ‘market society’ as naturally emerging & try to show that this is what people embrace as soon as “obstacles” are removed

24. 24 For socialists, by contrast, “The history of all hitherto existing society is the history of class struggles” true of capitalist as of earlier social systems, except that now it is “simplified” – the struggle is now between 2 classes only

25. 25 Henri Pirenne: the commercial theory Influenced by the liberal tradition in its approach to the past, present and future. Influenced by the liberal tradition in its approach to the past, present and future.

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27. 27 Immanuel Wallerstein: the world-system theory. Influenced by the socialist tradition in its approach to the past, present and the future. Influenced by the socialist tradition in its approach to the past, present and the future.

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