Understanding The Global Capitalist Revolution
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Understanding The Global Capitalist Revolution
Introduction
According to Jeffrey Sachs, we currently live in the age of the global capitalist revolution. Like other revolutions, this area starts develops and is marred by various challenges. It, therefore, begs the question, “what is the global capitalist revolution nature?” Sachs describes it as the intensification or intertwining and profound trends. These concepts include the globalization of society and capitalist diffusion (Sachs, 2020). Besides, remember that globalization is a rather ancient process of cultural exchanges and long-distance trade, which have gradually expanded over time (1000 years). Also, advances in technology in critical economic areas such as communications and transport have characterized globalization’s heights. For instance, in his book, “The Wealth of Nations,” Adam Smith vividly talks about the “Discovery of America and the discovery of the East Indies passage via the Cape of Good Hope.” He calls this a theory derived from more than two centuries of experience, enabling improved specialization, facilitating the seamless diffusion of various technologies, and inducing innovation. In this paper, we will therefore review the growth and existence of law, society, and economy in this new age of global capitalism. After all, we discover many of humanity’s’ most significant drawbacks and notable strengths in these three realms.
A Historical Look At Capitalism
To carefully understand the problems of law brought about by capitalism, it first essential to look at it historically. Capitalism usually is a system of three distinctive dimensions, namely, cultural, economic, and politico-legal. Economically, capitalism is remarkable as it defines property rights over all outputs and inputs of human-made production and trade these rights to the more organized markets. Across history, up until the heights of capitalism, much of human labor heavily relied on land instead of market trade. The land here was inalienable, inherited, and communal, while capital was in the hand of those holding political power. Under capitalism, everything was placed under market exchange. Moreover, such a deal was controlled by wide-range institutional arrangements, accounting systems, corporations, and patterns of contracts that emerged continually under the centuries of evolution (Sachs, 2020).
Culturally, the changes witnessed were similarly dramatic. First, social mobility eliminated the need for ancient subservience and hierarchy patterns, while gender differences paved the way for market forces. However, changes in the politico-legal avenue were maybe the most notable transformations compared to the social advancements (Sachs, 2020). Here, following the lessons of Max Weber, it is worth mentioning that capitalism brought about a new type of state as well as a legal order. For instance, throughout state organizations across history, those in power were usually decided based on their leadership charisma and their community or social group’s traditions. On the other hand, for the national capitalist organization, power depended on a law-bound, rational state. Here, the government played a significant role in the capitalist organization. Therefore, it had to be healthy or robust enough to be a third-party enforcer of the labor social division. Similarly, it should be self-limited and work within its laws. Such has produced the growing paradox that has driven legal speculation and western political powers for more than two centuries, which is how to make a self-limiting but admirably healthy state.
Feudalism To Capitalism
Feudalism existed between 300AD to 1400 AD, as the idea of capitalism slowly began to develop. It’s worldly believed that feudalism came to an end following the European renaissance. This time saw significant growth in science, art, literature, and the development of freedoms and rights. Even though the revival had a vital part to play in the emergence of capitalism from feudalism, other factors also led to its transition. For instance, the growing discontent with the feudal system and different external influences created a prolonged impact on the more medieval communities. Examples of internal factors contributing to the end of feudalism include rebellions from the locals, internal conflicts, and general inefficiency.
Moreover, this feudal system prescribed the need for group heads between the inhabitants and those in power (monarch), increasing the tension and suspicion between them. According to Karl Marx, the collapse of feudalism is mainly because of various internal factors. The more the demand for commodities grew because of the emergence of new trade routes and markets, the feudal structure, which was overly rigid of production, failed and became irrelevant. Furthermore, innovative production methods emerged, thereby increasing and facilitating a better labor division for improved productivity. The more the capitalist production methods rose, the more landlords started to see themselves as businessmen and thus, strived to earn greater economic returns.
Likewise, with the innovation of technology, new farming techniques emerged, and the need for constant human labor was eliminated as machines took the place of ‘men.’ Lastly, one of the significant external factors that led to the evolution of feudalism to modern capitalism was trade growth. As merchants began to expand their businesses, the country’s gained more stability. These traders became a unique class in society that was not bound by various obligations and could conduct trade at their discretion. Slowly, they began to transform society from being subsistent reliant to becoming strong economic forces.
Strengths and Weaknesses of Global Capitalism
Typically, capitalism is a system within the economy characterized by inadequate government intervention, private firms owning means of production, and goods and services being distributed following price mechanisms instead of governmental price control systems. Below are some of the advantages and disadvantages of global capitalism presented by Jeffrey D Sachs and witnessed in various economies across history.
Strengths
Economic freedom assists in attaining political freedom. If governments own systems of production and control prices, it will instantly lead to a powerful, bureaucratic state, whose views and qualities grow into other spheres of life. There is also increased efficiency as organizations are always faced with pressures to produce on-demand goods. Such means that they will have to avoid wastage and cut costs. However, firms owned by the state are often inefficient in that they are not willing to dismiss surplus workers and are ‘afraid’ of introducing fewer incentives into work practices. Global capitalism further improves economic growth and innovation as entrepreneurs and companies are continually looking to manufacture profitable goods popular with their customers’ demographic. Similarly, individuals and firms facing incentives need to be more innovative and work smarter to create an economic expansion and innovation environment. This assists in increasing a country’s real gross domestic product and better standards of living.
Weaknesses
Increased monopolistic power is one of the most significant challenges of global capitalism. The private capital ownership helps firms to gain full and unrivaled power in labor and product markets. They can easily exploit their position and charge higher prices. There is also the issue of monopsony power, where organizations pay low wages to their workers. As Sachs states, in this capitalist society, there is usually significant inequality between capital owners and those working in these organizations. Another weakness of global capitalism is it ignores the social benefit. Such means that a capitalist firm that is only interested in increasing profits will overlook the negative externalities, such as production pollution and its destruction on living standards (Sachs, 2020).
There is also the issue of wealth deficiencies and inherited wealth. While capitalists feel that society is fair as it rewards individuals on their hard work, in reality, people are wealthy simply because of their inherited wealth or are born within the privileged class in society. Hence, a capitalist society fails to follow equality principles and provides equal opportunities for even the poorest in the social course to become wealthy.
Conclusion
Thus, the globalization confluence and the spreading of capitalist ideals have produced a unique global market society full of economic growth. Despite this, most economists take a somewhat nuanced stance regarding capitalism. They are seen to support ‘free-market’ principles and still look at challenges such as externalities, inequality, and monopolistic power that affect the markets. However, this is widely perceived to be challenges and instabilities unique to our age. Sachs, therefore, offers a fresh perspective on the various ongoing processes taking place in modern times. He emphasizes the need for innovative methods of international cooperation and governance. This will help prevent conflicts from achieving multiple political, economic, and social objectives for sustainable development.
References
Sachs, J. (2020). The Ages of Globalization: Geography, Technology, and Institutions., New York: Columbia University Press.