Question: : What are the defining features of capitalism and in what ways does the study of its workings help us understand international relations?  (Capitalism and World Economy)

28 Mar 2023,11:14 AM

 

Essay Question: What are the defining features of capitalism and in what ways does the study of its workings help us understand international relations?  (Capitalism and World Economy)

Need to use the recommended readings for sources provided below.

 

Final Essay Guidance

The final essay should provide a full answer to the question that is coherently organized, clearly written, based on an appropriate level of research (see below) and which provides a well-considered and sophisticated argument. To achieve this, students must ensure that they submit the essay draft as the feedback they will receive will be essential in students fulfilling their academic potential in this assessment.

 

What is the minimum number of academic sources my essay needs to include?

The final bibliography of the essay must consist of a minimum of SEVEN academic sources of which at least four must be selected from the list of recommended readings on the POL106 QM+ portal under each essay (lecture) topic. 

 

What is the minimum number of academic sources that I need to include from the POL106 QM+ portal?

The essay must include at least four selected from the list of recommended readings on the POL106 QM+ portal under each essay (lecture) topic. These readings have been selected to provide a basis for answering each essay question. The recommended readings are provided.

 

Can I use sources from the Essential/Seminar readings?

The essential readings are primarily focused on the seminar discussions but, in some topics, they may also contain information relevant to addressing the essay question. However, if students do use these sources in the essay, they can only do so in addition to the minimum of four sources used from the recommended readings.

 

What counts as an academic source?

An ‘academic source’ usually refers to a book (monograph), chapter in an edited book or a journal article that has gone through a process of peer review before publication in which scholarly experts in the field that the book/chapter/article addresses have read through and confirmed the scholarly rigour and quality of the text. 

 

What does not count as an academic source?

Most other sources such as online blogs, reviews or journalism etc., have not gone through this process and, consequently, are not ‘academic sources’ though they can be used, sparingly, in student essays. 

 

Who can I ask if I am not sure about a source and whether I can include it?

If in doubt about a source that you wish to use just ask your seminar tutor or the module convenor.

 

Can I use the internet for researching my essay?

Students can use the internet to search for sources, but this must be secondary to their engagement with the academic sources provided for them on QM+ which address the question (that is why they have been selected) and which they must show evidence of engagement with, in the final essay. 

 

Students must avoid the following: 

•          Using sources such as Wikipedia and such like for the definition of key terms and/or other material that they think is relevant to the essay answer.

•          Undertaking google searches of the question as a way of by-passing the need to engage with the academic sources. Students who do this are likely to fail to address key assessment criteria in ‘research’, ‘knowledge and understanding’ and ‘quality of argument’ resulting in a low mark. 

 

How do I get a high mark of 70+? 

(a) In preparation of the essay:

(i) Use the learning resources available to you in the seminar discussions and/or through speaking with your seminar tutor as you work on the essay and especially in relation to the lecture topic that your essay question is connected with.

 

(ii) Give yourself enough time to work on the essay draft to ensure that you make the most of the essay draft assessment. This means that you plan your research and reading to allow you enough time over the semester and before the deadline to do the following: 

•          to read through and fully understand the arguments and evidence in the academic sources that you are using. For example, in some cases one source may take 4-5 hours to read through carefully and to take accurate notes on and, further, where you may also need to come back to the same source later if you found it difficult to read; and 

•          in completion of the final draft of the essay so that you have had time to read through it a number of times correcting grammar and spelling mistakes and ensuring that the written expression is clear and concise. This is a really important issue. 

 

Do not leave it too late to set up a meeting with your seminar tutor to discuss your plans for completing the essay.

 

(b) In the final submitted essay:

(i) It is written in clear and intelligible English.

 

(ii) It is well organized and coherently structured with effective use of paragraphing.

 

(iii) It is based on a good set of academic sources following the guidance above.

 

(iv) It evidences a high level of knowledge and understanding through a careful and thoughtful engagement with the academic sources through appropriate quotation and paraphrasing of sources and student commentary/analysis. Note that students do not need to research and find their own sources. Students can write an excellent essay using the QM+ recommended readings only (if used effectively) and that is why they have been provided.

 

(v)  It answers the question fully with a considered and sophisticated argument.

 

(vi) The sources and citations are presented appropriately and accurately.

 

Note: there is no 10 percent leeway (above or below) on the word count limit and submitted essays with a word count (significantly) above or below the word count may be penalized in the ‘addressing the task’ criterion. Seminar tutors do not read draft texts other than the formally submitted (500 word) draft essay-plan.

 

Recommended readings:

 

*Appleby, Joyce (2010) Relentless Revolution: A History of Capitalism, New York: W. W. Norton, ch. 1 – Chapter one.

Fulcher, James (2004) Capitalism: A Very Short Introduction, Oxford: Oxford University Press, ch. 1 & 3 – EBOOK – Chapter one and three.

*McNally, McNally (2009) ‘Inequality, the Profit System and Global Crisis’ in Julie Guard and Wayne Antony (ed.) Bankruptcies and Bailouts, Halifax and Winnipeg: Fernwood Publishing  

 *O’Brien, Robert and Williams, Marc (2013) Global Political Economy: Evolution and Dynamics, Basingstoke: Palgrave, ch. 4-5 – Chapter four and five.

 

 

 

POL106 Introduction to International Relations: Capitalism and World Economy  

 

1. INTRODUCTION

Capitalism – a social system/form of political economy – based on private property, competition between firms in markets and the accumulation of profit as the main purpose and driver of economic activity.

 

 

Historically novel form of organizing society to meet collective human material needs – many of which, today, are far from essential for a comfortable life.

 

A highly dynamic and ‘revolutionary’ ‘mode of production’ – ‘all that is solid melts into air’ (Karl Marx).

 

Capitalism disrupts existing social and economic relationships that are associated with new technologies, new ways of organizing production and the compulsion to increase levels of profit through competition that drives innovation.

 

Capital accumulation/expansion two dimensions:

(1) In a spatial or horizontal sense – expansion to new spatial domains (e.g., the non-European world in the early phases of capitalist development from the C17th as a key feature of colonialism).

 

(2) In a vertical or intensive sense – expansion into ever more domains of human life/activity within existing capitalist countries (e.g., since the 1980s in UK, USA, Europe – healthcare, education, nature – biotechnology and GMOs).

 

The consequences of the expansion of capitalism or what Marx, referred to as the ‘development of the productive forces’ or ‘forces of production’ – has been a massive increase in humanity’s collective wealth and ability to transform nature.

 

Capitalism – then and now – is also defined by huge levels of inequality as reflected in the concentrations of economic wealth and consequent social and political power.

 

Crises – an ever-present possibility and reality of capitalism (1870s, 1930s, 1970s, 2007-8) – key to understanding international relations and the behaviour of states as reflected in the political and geopolitical effects of such crises.

 

2. CAPITALISM: DEFINING FEATURES

(i) Production of goods and services (commodities) for market exchange (commodities), to make profits.

 

Ultimately, what is produced and exchanged in a capitalist market is based on profit; all other considerations tend to be secondary.

 

(ii) Competition between firms/market actors ‘regulates’ economic activity.

 

 

Capitalist market is organized upon a kind of invisible and de-centred structure that compels all firms to continue to innovate and exploit their factors of production to the greatest level of efficiency.

 

(iii) The market exchange of commodities is founded on a definitive social (class) relation between owners of capital and owners of labour power.

 

This fundamental social divide emerges after people who had once had access to land/means of production are forcibly expelled or deprived of that and the original act of private property might be regarded as theft.

 

This creates a two class divide in capitalist societies based on:

(a) Owners of capital/means of production – the bourgeoisie, capitalists or employers = this class lives and reproduces itself – over generations through living off interest, profit and rent NOT wages. A very small portion of the overall population.

 

(b) Those who own nothing but their labour power – workers, the proletariat/employees.

 

The State

There is no such thing as a free market and to have economics you must also have politics. To have a market use must also have a state or something that approximates a state. Capitalism is a form of political economy.

 

So, what is the role of the state and politics in capitalism?

 

The state provides the legal framework and enforcement of rules that allow markets to function.

 

State is also central – then and now – to the establishment of capitalist markets – they did not exist prior to the C16th.

 

It is the actions of the state (or other legal-political institutions such as the EU) that brings capitalist markets into being and it is the state that: (i) helps maintain them; and (ii) expand them.

 

3. THE WORLD BEFORE CAPITALISM

Capitalism is a historically distinct way of organizing social life so, most of human existence has been defined by non-capitalist social relations and societal organization.

 

Capitalism is the product of a long-drawn out set of processes involving population change, technological innovation, wars and revolutions.

 

Prior to capitalism there were multiple ways in which societies were organized: slavery, hunter-gatherers, pastoral nomads, feudalism and subsistence farming.

 

Most, if not all of these, forms of producing things and sustaining life, had distinct social characteristics different from capitalism, different ways of engaging with the natural environment, different kinds of social relationships between people and different kinds of political and geopolitical effects.

 

First, in general, the level of material – in terms of what things were produced and consumed – development was rather limited, and production was not based on innovation or competition between firms/producers.

 

Secondly, while these systems realized changes to nature, many of them did not amount to a fundamental transformation of how humans engaged with and depended on nature. Many of these pre-capitalist forms of society were explicitly based on working in harmony with nature.

 

Thirdly, in many respects while these societies were relatively under-developed (or poor) in a material sense, most humans had some access to the commons – land and its resources (fruit/vegetables and wildlife).

 

People living in these societies were not ‘market dependent’; markets were limited (in spatial terms and products exchanged); they did not need to sell their labour power for a wage to live.

 

We can also see the existence of very different forms of society from capitalism across the C20th and especially between 1917 and the 1980s.

 

Over this period, new societies were created (in Russia, China, East-Central Europe, North Korea, Vietnam, Cuba etc) through forms of social revolution (see lecture 15) that overthrew and destroyed existing forms of capitalism to establish what were regarded as ‘post-capitalist or ‘socialist states’.

 

Markets – historical existence but on the margins of social life; prior to C17th not the basis for social order or organizing society.

 

 

4. ORIGINS AND DEVELOPMENT OF CAPITALISM

Some of the pre-requisites of capitalism: urban-based trade; private property and a class of free or wage labourers who sold their labour as the basis of their livelihood had existed on the margins of many societies – especially in Europe – for centuries.

 

However, it was to be in north-western Europe and particularly in England – over the course of the C17^th that capitalism emerged to become the dominant and general mode for organizing social life and society.

 

This was a process – driven by upheaval, class conflict and state transformation – that by the early decades of the C19th had led to the emergence of a fundamentally different and historically unique form of society – industrial capitalism based on wage labour.

 

Although capitalism first emerged in north-western Europe, its emergence reflected a set of global processes connected to colonialism and empire.

 

Consequently, at the same time as social, economic and political changes were taking place within Europe, European states were also establishing colonial empires in Asia, and the Americas and also seizing and enslaving Africans to work in the plantations (sugar, cotton and tobacco) in the Caribbean and Americas.

 

These peoples were integrated – through coercion and extreme violence – into different kinds of social relationships to those that had existed before, producing value and goods that were sent back to the metropole, thus contributing to the economic development of Europe and providing wealth and material resources that facilitated the development of capitalism in Europe.

 

In the case of the Portuguese and Spanish empires of the C16-17^th – the extraction or plunder of silver and gold was sent back to Europe to fund economic development and further plunder.

 

So, the wealth produced by enslaved Africans ended up circulating within Europe contributing to its economic growth even if it did not directly lead to the promotion of capitalist industrialization in Spain and Portugal.

 

With the rise of the British Empire through the C18th – Atlantic slavery became a key source of wealth creation and material development with enslaved Africans working in the Caribbean and North America on the sugar, tobacco and cotton plantations.

 

Consequently, it was England, or British imperialism and empire that played the world historical role of creating an international capitalist economy, upon which the current global/globalizing one is ultimately based.

 

Further, what it means is that capitalism – at its point of origin – had a global character and orientation and the explanation for its emergence cannot be explained purely through a national history.

 

It is also meant that the labour and exploitation of Africans was a key part of the wealth creation that contributed to the rise of (British) capitalism; this is the argument of the Trinidadian Marxist writer, Eric Williams that he outlined in his pioneering book, Capitalism and Slavery that was published in 1944.

 

However, whilst the origins of capitalism are global, the particular kinds of society that became capitalist first were geographically specific and rested on a particular and historically distinct set of social transformations.

 

So, what were the key historical developments that created capitalism?

 

(1) Creation of private property (e.g. in land; end of (peasant) ‘rights to the commons’ through ‘enclosures’.

 

(2) Creation of ‘free’ or wage labour, basis of a proletariat (no access to means of production other than own labour).

 

We need to recognize this historical process – that has not ended (see developments in India, China etc) as a process involving coercion and violence.

4. HISTORICAL PHASES OF CAPITAISM AND INTERNATIONAL RELATIONS

(a) Industrialization and Imperialism (1800-1914)

Early decades of the C19th that an industrial form of capitalism developed characterized by large-scale mechanized factory production based in cities producing mass-produced goods involving thousands and thousands of workers.  

 

The spread of capitalist industrialization throughout the C19th was associated with:

 

(i) widespread social and political instability as particular social classes – peasants and artisans were forced to adapt to meet the competitive challenge of industrial capitalism.

 

(ii)  geopolitical rivalry between the main European great powers as advances in industrial technology and economic power provided the basis for military strength.

 

The advance of industrialization was closely connected to imperialism in two important ways:

 

(i) Each European capitalist power (the US had the benefit of internal economic expansion and empire-building that it carried out in relative isolation as a continental state) constructed imperial frameworks based on colonies as a way of securing raw materials and markets for their goods.

 

(ii) Western industrialization was assisted by the resource extraction and exploitation of the non-European world.

 

During this period while a transnational capitalist market developed with the market exchange of goods and services across borders (which sped up with the railways and steamships) this was also a market that was highly fragmented into distinct geopolitical zones.

 

Britain had the largest empire it was also the primary source of capital exports (i.e., the financing of industrial development elsewhere) and it was also responsible for moving (and securing) most of the goods around the world.

 

It was the contradictions of this system and, especially the intensification of geopolitical rivalries at the end of the C19th that was a major cause of World War One.

 

(b) Inter-War Crisis and Great Depression (1918-39)

World War One bankrupted Britain and weakened her economically. US emerged from the war as the dominant industrial and financial power but was not willing to take on international economic leadership in place of Britain.

 

The defeat or Germany, its loss of territory and economic resources also weakened the post-war revival of the European economy as Germany was the motor of economic growth.

 

The ‘Wall Street Crash’ in October 1929 triggered the Great Depression – the most severe crisis in the history of capitalism.

 

The crisis quickly spread as states sought to protect their national economies from falls in production, trade and access to finance for investment. Result was a global fall in economic demand and collapse in international trade.

 

Through the 1930s there was economic stagnation as banks went bankrupt, trade volumes collapsed, and mass unemployment spread – reaching 6 million in Germany in late 1932 (20% of the labour force).

 

This was because the main capitalist powers failed to agree on establishing a new way of managing the world economy and this was, in large part, because countries like Britain did not want to give up its empire, the USA would not open its markets to imports and Nazi Germany would only accept the creation of a German Empire in central and eastern Europe through war as a way of dealing with Germany’s economic crisis.

 

(c) ‘Fordism’ and Liberal Capitalism (1945-1971)

The organization and workings of the post-war capitalist system was built on American hegemony. At the war’s end, the US was responsible for around half of all global industrial production – a quite staggering figure – and owned 70% of world gold stocks.

 

This based on the following:

 

(i) Capital exports – initially through the 1947 Marshall Plan to Western Europe; this helped re-build the economically devastated Western Europe and esp. West Germany.

 

(ii) Gradual introduction of a global free-trade system based on the GATT system.

 

(iii) Establishment of IEOs under the UN system: the World Bank and the IMF providing an international forum to manage international finance and funding for development projects/post-war reconstruction.

 

(iv) The Bretton Woods managed exchange-rate system: US dollar as the primary currency of international trade with exchange rates fixed by inter-governmental agreement based on each currencies value in gold.

 

(v) European economic integration: initiated with the ECSC in 1951 and formalized with the 1957 Treaty of Rome est. the EEC to create a (West) European Common Market.

 

This period was described as ‘Fordist’ through the way in which the US mass manufacturing model pioneered by Henry Ford was exported and replicated across Western Europe and Japan.

 

However, this system unravelled in the early 1970s as a major world recession occurred because of to two developments:

 

(i) First was the breakdown of the Bretton Woods managed exchange rate system. Because of US economic difficulties connected to economic competition from the revived Japanese and West European economies, the US president, Richard Nixon, responded by unilaterally ending the US participation in the system in August 1971 by ending the US dollar’s fixed exchange rate with other currencies.

 

Nixon’s decision made US exports cheaper (as the US dollar depreciated in value) and the US also imposed tariffs on imports and this unilateral act – caused political frictions with the other major capitalist powers.

 

(ii) International economic instability worsened, and a world-wide recession was triggered as Middle-Eastern oil producers organized within the oil cartel, OPEC, implemented an embargo on oil exports to western countries because of their support for Israel in the 1973 Yom Kippur war with Arab states.

 

The recessions across Western economies led to widespread industrial conflict between workers – organized in trade unions – and employers.

 

The collapse of the Bretton Woods system also coincided with the demands by a group of former colonies that were now members of the UN – the so-called G’77 for a NIEO.

 

The reforms called for changes to international trade rules and especially concerning raw materials and food, development finance to better promote economic development and industrialization and technology transfers.

 

(d) Neoliberalism and Globalization (1971-)

The crisis of the 1970s in the capitalist world economy opened up the possibility for a radical restructuring in the organization and workings of the world economy.

 

The elections of Thatcher in 1979 and Ronald Reagan as US President in 1980 were turning points that launched such a restructuring. Domestic changes were replicated, internationally, through the workings of the World Bank and IMF and the establishment of the WTO in 1995.

 

Domestically, both governments were influenced by Neoliberal thinking associated with Friedrich Hayek and Milton Friedman as revealed in the following:

 

(i) Privatization of public assets (e.g., publicly owned industries such as steel, telecommunications and cars were sold to private buyers).

 

(ii) Taxes – especially on wealth and income were cut to promote economic activity and investment.

 

(iii) Welfare spending was cut and what remained of welfare benefits were delivered through ‘means testing’.

 

(iv) Public services were opened up to private competition such as energy, transport etc.

 

(v) Workers rights in the form of the legal protections for trade unions were rescinded as the balance of social power in the workplace was tilted towards.

 

And internationally, both governments pushed through a number of changes that had global ramifications:

 

(i) They promoted free trade and the liberalization of markets and this played out with the negotiations for and the establishment of the WTO in 1995 – a global regime to uphold free trade.

 

Two key and inter-connected developments followed from this:

 

(1) Japanese and then Western capital began to set up production in China through off-shoring production turning China into the workshop of the world.

 

(2) This off-shoring of manufacturing production to East Asia and China in particular led to the decimation of large sections of manufacturing industry across the West.

 

(ii) More broadly, the commitment of these governments and, subsequently, the EU to globalization set in place profound changes that led to the kind of world economy we have today defined by:

 

The Free movement of capital across borders; global supply chains where manufactured goods are produced in multiple spatial locales but organized within one firm; and an increasing role for banks and other financial institutions in the workings of the capitalist economy.

 

 

5. CONCLUSIONS

Capitalism: a highly disruptive system that is revealed in ever-changing concentrations of economic activity and wealth (and power) in particular geographical areas that contrasts with the under-development of other areas = uneven development.

 

Based on the drive for profit and growth, capitalism contains the seeds for a permanent cycle of crises. This is how capitalism renews itself as uncompetitive firms and inefficient production techniques are discarded and new ones emerge and a new growth cycle begins.

 

Because of these twin characteristics, capitalist development has important international political and geopolitical effects.

 

States play a key role in managing capitalism and it is the response by states and especially hegemons to crises that tend to produce geopolitical effects.

 

Crises can reveal the weakness of a hegemonic power and open up the possibility for a rival hegemon to emerge and this can also trigger conflict.