There various groups in society that contribute differently to the growth of the economy. Some own and run major business enterprises and those who work in such business. This leads to the emergence of social classes in society, with the elites who own most business enterprises at the top of the hierarchy. The elites at the top of the scale tend to have the upper hand in influencing decisions, especially in their favor, leading to a capitalist society. Modern capitalism, therefore, is a system where the elites who control the wealth of the community form a political system to protect their interests. This can be traced back to the 16th century where Great Britain adopted it after the English Civil War and the Glorious Revolution, becoming the first to practice modern capitalism. During this time, Great Britain saw a transition from a feudal society to a capitalist society (Rössner, 2020). This paper discusses the events that led to the origin of modern capitalism in Great Britain, its evolution, and how it influenced the former British 3rd world colonies.
Scholars attribute modern capitalism to England to the growth of the cloth industry between the 16th and 17th centuries (Kuo, 2018). Initially, the feudal system was being used to run the society in England. The landowners and the wealthy exchanged their land and other wages to peasant workers in exchange for their service. In the feudal system, most of the wealth accrued was channeled towards community development, such as building cathedrals and other social amenities. However, several historical events led to modern capitalism, where wealth was reinvested in other profit-making projects rather than community welfare. An increase in the supply of precious metals such as diamond, which led to inflation in prices of such commodities, was one of the contributing factors to modern capitalism development. Capitalists had to protect themselves from the government policies and the backlash of the people. As a result, they formed the representative form of democracy where they elected their fellow capitalist to represent them in the government to protect their interests of maximizing wealth.
During this period, prices had increased while wages were still low, making the capitalist the significant beneficiaries of inflation. As a result, economic development shifted from being a public initiative to a private initiative so that the capitalist can benefit a lot. Another evolution occurred when the capitalists changed their financial activities from commerce to industrial. This was because there were surplus capitals that had been accumulated. Therefore there was the need to invest in the technical knowledge developed due to the industrial revolution. During the First World War, most economic activities were disrupted, and the prices of precious metals such as gold dropped significantly, leading to the 1930 Great Depression. There were desperate measures to revive the economy, and therefore, the policy of laissez-faire was adopted, which meant that the state should not interfere in economic matters. This led to economic inequality because most of the wealth was accrued by the elite at the expense of the middle class (Vlados, 2019).
Colonialism played a significant role in the development of modern capitalism. The British command a large number of colonies that stretched from Africa through to America. These colonies were essential in the supply of raw materials for industries that were developing in Britain. Most of the capitalists in Britain advocated for colonialism because they knew that there would be a constant flow of raw materials with colonies. Thus the amount of capital will increase. This notion led to the economic exploitation of colonies deprived of their resources such as minerals and land. They were also drained of their human resource through the emergence of slavery, especially in Africa that saw most non-disabled people being taken away to other places to work for Britain. Most of them were overworked without any pay, which meant that they generated a lot of wealth for modern capitalists cheaper or at no cost (Ince, 2018). When resistance increased among the colonies, which eventually marked the end of colonialism by granting independence to most colonies, most countries became poor because they lacked the resources to develop economically. This was one of the significant impacts of capitalism in the former British colonies. These countries, especially in Africa, are mostly 3rd world countries that lack the solid economic background necessary for developing themselves economically. The elites in these countries have adopted modern capitalism from their colonial masters and have confiscated most of their wealth for themselves at the expense of the poor.
In conclusion, modern capitalism originated in Great Britain between the 15th and 16th centuries. The development of modern capitalism has experienced evolution since its inception due to various historical factors discussed above, including inflation, the first and the second world wars, the Great Depression, and colonialism. British economic exploitation of its colonies encouraged modern capitalism, where capitalists could access raw materials efficiently. Due to economic exploitation, most of the colonies are poor, and their elites have adopted the same system of modern capitalism to accumulate wealth at the expense of the poor.
References
Ince, O. U. (2018). Colonial capitalism and the dilemmas of liberalism. Oxford University Press.
Kuo, D. (2018). Clientelism, capitalism, and democracy: The rise of programmatic politics in the United States and Britain. Cambridge University Press.
Rössner, P. R. (2020). Capitalism and Freedom in Pre-modern Thought. In Freedom and Capitalism in Early Modern Europe (pp. 109-128). Palgrave Pivot, Cham.
Vlados, C. (2019). The phases of the postwar evolution of capitalism: The transition from the current crisis into a new worldwide developmental trajectory. Perspectives on Global Development and Technology, 18(4), 457-488.