From agrarian roots to the digital age: tracing the historical foundations of modern capitalism.
The ontological origins of capitalist thought are deeply rooted in the transition from agrarian feudalism to commercial mercantilism in Western Europe. Understanding these foundations is essential to grasp how capitalism evolved into the dominant global system of the 21st century. This article continues our series, exploring the definition, etymology, and historical stages that shaped the architecture of modern capitalism.
📖 Definition and Etymology of Capitalism
• The term “capitalism” gained prominence in the mid-19th century, often used by socialist critics such as Louis Blanc and Pierre-Joseph Proudhon to describe a system where capital was appropriated by a few, excluding those who contributed only labor.
• Etymology: “Capital” derives from the Latin capitale, based on caput (“head”), originally referring to heads of cattle — one of the earliest forms of movable property.
• By the 12th and 13th centuries, the concept expanded to include commercial assets such as funds, inventories, and interest-bearing money.
🔄 From Feudalism to Mercantilism
• In the feudal system, land ownership defined economic power, with peasants working in exchange for protection rather than wages.
• The rise of urban centers and the expansion of trade catalyzed the shift toward mercantilism (16th–18th centuries).
• Mercantilism emphasized state-sponsored monopolies and maintaining favorable trade balances, marking the first step toward a national and global economic order.
⚙️ The Industrial Revolution and Adam Smith
• The Industrial Revolution transformed production through mechanization and factory systems.
• Intellectual shifts toward “natural liberty”, championed by Adam Smith in The Wealth of Nations (1776), established the modern capitalist paradigm.
• Capitalism became associated with innovation, division of labor, and minimal regulation (laissez-faire).
✝️ Cultural Shifts: Protestant Ethic and Colonial Expansion
• The Protestant Reformation reshaped attitudes toward wealth, legitimizing hard work and frugality as religiously sanctioned virtues.
• Combined with the influx of precious metals from colonial expansion, this cultural shift created fertile ground for capital accumulation and reinvestment in productive capacity.
📊 Historical Stages of Capitalism
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| Understanding the transition: From the ontological roots of feudalism to the complex architecture of 21st-century global capitalism. |
🏭 Social Transformation and Alienation
• By the 19th century, industrial capitalism created a new social structure based on ownership of capital rather than land.
• The industrial class often surpassed traditional nobility in wealth and influence.
• This reorganization introduced the concept of alienation, where workers became separated from the final product of their labor — a theme central to later critiques of capitalism.
The genealogy of capitalism reveals a system that evolved from cattle as capital to digital finance and global markets. Each stage brought innovation and prosperity, but also new dilemmas of inequality, exploitation, and sustainability.
👉 In the next article, we will explore the Functional Mechanisms of Capitalism, focusing on the engine of the market and Adam Smith’s famous metaphor of the invisible hand — concepts that continue to shape contemporary economic thought
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