The Culture of Capitalism

HIS 320
August 2, 2009

          In the middle of the fifteenth century, the world began to see economic and political changes that would eventually lead to the creation of the culture of capitalism. The shift from feudal and agricultural societies to capitalism was not immediate; the changes that occurred took many years and encompassed a number of factors that enabled the new consumer oriented system to thrive.
          Capitalism can be expressed as the relationship between its elements: commodities, money, labor, means, and production.  Richard L. Robbins explains the fundamental purpose of capitalism in his book Global Problems and the Culture of Capitalism:
          In capitalism, people produce or obtain goods not for their use, but for the purpose of exchange-that is, their 
          object is to produce or obtain commodities (C), not to obtain another commodity (C1), but to get capital or 
          money (M).  (Robbins 2008)
In its simplest form, capitalism can be described as the pursuit of wealth.  Wealth may be in the form of things or money.  In both cases, the capitalist works towards acquiring more than is needed to survive.     
          Capitalism requires three components: the capitalist, the laborer, and the consumer.  Each of which, play an important role in the system.  If all three are not present, capitalism would not be successful.  The capitalist is a person or business entity that desires to make a profit.  They provide the capital (money) to get the production of goods started.  They may fund the building of a factory, and buy machinery and tools that will be used to produce all types of goods from clothing to televisions.  The laborer is the individual who performs the labor needed to produce goods in exchange for money.  The consumer exchanges money for goods. 
          On a side note, the consumer is required to perpetually consume more and more goods.  This is probably the most important driving force in the success of capitalism.  A capitalist society needs increase in consumption over time in order to prosper.  Consumers drive profits and therefore determine the stability and growth of the economy.    
          As the economy grows, essentially, the capitalist invests capital into production, and in return, makes more capital.  The process is then perpetuated.  The more money invested in production of goods, the more money the capitalist can make.  Most investors no longer care how money can create more money in the culture of capitalism; they are only concerned with the amount of return on their investment.  This process is often referred to as “the black box”.  Robbins again illustrates:
          Nevertheless, it is in the black box that commodities are produced and consumed.  It is in the black box that 
          we find the patterns of social, political, economic, ecological, and ideological life that either promote or 
          inhibit the conversion of money into more money. (Robbins 2008)
          In order for the capitalist to make a profit, they must be able to produce goods at the lowest cost and sell the finished products at the highest price the market will afford.  The difference between the production costs and the sell price is the profit.  This principle is especially important when looking at how capitalism shapes societies around the world in search of making bigger profits.  The capitalist’s quest is to make the most profit and in turn, this quest has shaped virtually all aspects of human culture: social, political, economic, ecological, and ideological, as Robbins suggests.       
Rise of Capitalism
The rise of capitalism took several centuries to develop.  Beginning in the fifteenth century, the origins of capitalism were slow at first and gradually gained momentum as money became a motivating force.
Before the creation of capitalism, the most common forms of economy took the shape of trade and barter systems.  Farmers would sell their surplus crops in a market or trade them for goods they could not produce themselves.  This system of exchange was beneficial to both the farmer and the craftsman. 
          By the fourteenth century, China had become a major player in world trade.  China had the most advanced economic system which included both paper and coin currency.  Since most other governments at the time issued their currency in metal coins only, any currency left in China through the process of trade, could be melted down and kept in China.  This enabled China’s wealth to grow.  Through “…guilds and associations of merchants, such as jewelers; guilders; antique dealers; dealers in honey, ginger, and boots; money changers; and doctors”, the economy thrived and China became the world exporter of goods. (Robbins 2008)  Trading with Europe was especially lucrative as they valued the silks and spices found in the East.
          With the Rise of Europe and Colonialism from the sixteenth through nineteenth centuries, the lucrative slave trade, trading companies, cheap labor, the rise of capitalists, and investing developed.
The slave trade provided the cheapest labor for the capitalist culture.  Since one of the main components of capitalism is to reduce production costs, slavery was an effective way to reduce those costs.  Sure, plantation owners had to purchase and then feed their slaves, but they didn’t have to pay them a wage.  Capitalism was a key perpetuating force of slavery in the United States.
          The rise of the capitalist also saw the rise in investment.  As discussed earlier, “the black box” of capitalism allows investors to invest their money without really knowing the ugly details of how the profits are obtained.  This is still true today.      
          The Industrial Revolution in the nineteenth century paved the way for capitalism through technological advancements in agriculture and the mass production of goods in factories.  As the agricultural industry saw great advancements with the use of machinery in the process of harvesting and transportation of commodities, farmers were forced out of jobs and lost the use of lands previously farmed in a feudal society.  The use of machines required less human labor to produce larger quantities of food.  Because fewer people were needed in the mass production farming process, more people were left without a way to support their families.  This led many peasants to move into the cities in order to find work.
          As populations in cities grew, fewer individuals were making or growing their own goods.  They were forced to purchase goods that they were previously capable of making themselves; a demand for manufactured goods increased.  When demand for goods increases, so does the demand for factory labor.  The former peasant classes of the old system were now the factory laborers in the capitalist system.
          The shift from a trade and bartering system into a capitalist economy is seen as the factory workers began trading their labor for money.  Money could not fee their families, but it could buy the food which could, however.  As more factory workers spent their earnings on the necessities, the capitalist business owners made more profits.  The system of capitalism had begun to work. 
          In the middle of the nineteenth century, the world witnessed the rise of imperialism (where the core countries dominated the peripheral), the emergence of new capital, and the rise of the nation-state.  Robbins explains how the Industrial Revolution affected the world:
          The results of the Industrial Revolution in Europe were impressive.  The period from 1800 to 1900 was 
          perhaps one of the most dynamic in human history and, certainly until that time, the most favorable for 
          accumulation of vast fortunes through trade and manufacture. (Robbins 2008)
With core countries like England and the United States exploiting cheap labor in poor countries,
          …people all over the world were converted into producers of export crops as millions of subsistence farmers 
          were forced to become wage laborers producing for the market and to purchase from European and
          American merchants and industrialists, rather than supply for themselves, their basic needs.” (Robbins 2008)
          Following World War II, the United States was “the world’s leading economic power” (Robbins 2008)  This was a direct result of the development of the corporation.  A corporation is an entity invented by society comprised of one or more individuals.  The state grants “private financial resources to be used for public purpose.” (Robbins 2008) In short, a corporation is a made up entity that can protect individuals from personal liability when dealing with business risks.  When personal assets are protected behind a corporation, individuals are more likely to take risks with larger payoffs.  They may be willing to invest more and in turn profit more. 
          Adam Smith, a philosopher, economist, and author of The Wealth of Nations “…claimed corporations operated to evade the laws of the market by artificially inflating prices and controlling trade.” (Robbins 2008)  Since corporations had a lot more money and pull than the individual industrialists and certainly merchants of the past, they were able to influence political decisions which benefited them.  They lobbied for liability limitations to be passed for corporations.  This protected the individual owners and management financially against being responsible for employee injury; thus, giving corporations protection under the law and the ability to rapidly expand.
          In the early 1920s, corporations began to manipulate the market by influencing the purchasing habits of customers with advertisements and marketing strategies.  The capitalists moved to change societal beliefs regarding the consumption of goods.  Previously, in the nineteenth century, people were encouraged to be frugal.  It was ingrained in the culture of the time.  However, that mentality was not beneficial to capitalism.  So, the cultural standards had to change in order to keep up with the economic changes. 
          A clear change is seen in Paris based department store, Bon Marche.  For the first time, products were displayed in attractive arrangements; store windows were decorated to highlight the fantastic features of the products inside.  People were encouraged to meander through the store in hopes they would make an unplanned purchase.  Traditionally, stores in places like the U.S. would line products along a shelf instead of a display case or other attractive alternative.  In some cases the customer would hand the clerk a list of items that were needed-there was no browsing of isles to see what was available. 
          The consumer became an ever more important part of the selling process.  There were many more choices than in previous generations and companies had to compete for every sale.  Marketing and advertising allowed corporations to inform the public about their products and eventually influenced the symbols and icons of the era.  Through magazines, television, and the internet, ordinary citizens were transformed into consumers.  Consumers are told how to dress, where and what to eat, where to live, and the kind of car they should drive through the media.  They have become consumers and that’s just what capitalism requires.
The Impact of Capitalism
The impact of the capitalism is evident around the world.  In the core countries, wealth is increasing for the top few and the standard of living is higher than previous generations; however, in the periphery, people are suffering from increased poverty, disease, environmental damage, and political conflict.
          Many industries take advantage of cheap labor in countries outside the core.  This means they can produce goods at a much cheaper cost than if they were to produce them in the United States or Western Europe.  The iconic retailer of the twentieth and twenty-first centuries is Sam Walton’s Wal-Mart.  This corporation is a great example of the capitalist corporation working the system to create as much profit is possible.  “Wal-Mart succeeds in lowering prices by pressuring its over 21,000 worldwide suppliers to be efficient and produce things at lower costs, savings which it then passes on to consumers.” (Robbins 2008)  As a result, the suppliers must reduce their costs anyway they can.  They may need to lay off workers, close plants, cut costly safety measures, require pay cuts, or even hire children in countries in the periphery in order to cut costs and provide Wal-Mart the goods they want at the prices they demand. 
          The corporation currently uses the slogan “Save money. Live better.”  But what the slogan doesn’t say is that this philosophy only applies to the core countries.  Western societies can save money and live better at the expense of the underpaid, malnourished people of the periphery. 
          In addition it is also these same people who must endure the most environmental damage.  As the demand for cheap goods increases, industries move to the periphery.  Therefore, with more and more corporations moving factories outside the core countries, more environmental destruction will occur in these surrounding areas as explained by Robbins:
          The production, processing, and consumption of commodities, however, require the extraction and use of 
          natural resources (wood, ore, fossil fuels, and water) and require the creation of factories and factory 
          complexes, which create toxic by-products, whereas the use of commodities themselves (e.g., automobiles) 
          create pollutants waste. (Robbins 2008)
          When people are faced with pollution in their rivers, depleted natural resources, sick family members and no means to support their families, often rebellion and protest arise.  In most cases the violence is directed towards the individual people who are causing the immediate threat, while it should be focused towards the system that allows these crimes against humanity to happen.  Robbins suggests:
          that rebellion and protest that seems endemic to the culture of capitalism is largely antisystemic, consisting 
          of responses of groups who at some time were socially or economically marginalized or who have 
          disproportionately in the expansion of capitalism into the periphery. (Robbins 2008)
Dealing with Capitalism
In general, the people of the core countries don’t want their consumption to cause others to be in poverty, suffer from curable diseases, or live in a polluted environment.  So, corporations and governments have forged ways of shielding the public from really understanding the true human and environment costs of capitalism.
          Changing terminology is a really effective way of dealing with the negative effects of capitalism.  It’s an inexpensive and very effective option.  For example, the media may report that people of indigenous backgrounds are malnourished instead of staying they are starving; they might report worker protest and vandalism as terrorism.   
          Public Relations firms may be hired to paint Corporations as job providing, environmentally aware opportunities that are providing cheap goods and helping less fortunate countries economically.  All the while, their business practices wipe our farming communities, lower wages, and destroy the environment.
          As more people in the core become aware of the issues brought on by the culture of capitalism, it’s becoming earlier to improve the effects.  For example, retailers of coffee that choose to pay fair wages to its laborers, place a label on the packaging informing the consumer their product may have a slightly higher price tag because they value the human costs of doing business. 
         The benefits of capitalism can be seen everywhere.  Development in technology, medicines, quality of life and education all can be attributed to capitalism; although, not all people enjoy the same benefits.  In some respects, the benefits do not outweigh the costs.  As a result of the depletion of natural resources and toxic pollutants, everyone on the planet suffers in some way.  Global warming is attributed to the effects of increased consumption and the culture of capitalism.    
As economic and political changes occur around the world, a correlation between those changes and the culture created by capitalism seem apparent.  The desire to obtain wealth and create money from money has driven capitalism to the point where cultures are being defined by the economic system for which they subscribe.  Robbins’ summarizes:
         At no other time in human history has the world been a better place for capitalists.  We live in a world full of 
         investment opportunities-companies, banks, funds, bonds, securities, and even countries-into which we can 
         put money and from which we can get more back.  These moneymaking machines, such as Nike Corporation, 
         have a ready supply of cheap labor, capital, raw materials, and advanced technology to assist in making 
         people all over the world clamor to buy. (Robbins 2008)
While the current states of the world may be the perfect environment for capitalists to make their money, there are also human and environmental costs that may just be too high.
         From the fifteenth century to today, capitalism has shaped the world we live in by changes economic structures, cultural practices and beliefs, and the environment.  It’s unfortunate, that a system for which peoples’ lives are given a monetary value and the accumulation of wealth supersedes the health of the planet, that it’s still a growing force in today world.  Perhaps one day mankind will be able to find a balance between the needs of all people and the wants of a few. 

Works Cited
Robbins, Richard H. Global Problems and the Culture of Capitalism. New York: State University of New York at
          Plattsburg, 2008.

© Copyright 2009. Alyssa Burley.