The Evolution of Capitalism: From Liberalism to Imperialism (1750–1918)

The Expansion of Capitalism

Capitalism is a system inherently driven toward territorial expansion. Its ultimate, unchanging logic remains the maximization of profit. The capitalist system fundamentally creates a class structure where a few possess the means of production, while the majority do not.

Stages of Capitalist Development

• Mercantile Capitalism (16th–17th Centuries)
• Liberal Capitalism (18th Century): Based on Enlightenment ideas and the theories of Adam Smith. Characterized by an economic policy of ultra-liberalism (laissez-faire). This era saw the start of industrialization and the bourgeois revolutions of the 18th century.
• Industrial Capitalism (1750–1873): The Industrial Revolution occurred during the late 18th century through the mid-19th century (c. 1750–1860). The 19th century later faced an economic crisis resulting from the saturation of the industrial model.
• Imperialist Capitalism: This stage emerged as a result of systemic changes implemented to overcome the crisis of Industrial Capitalism.

The Great Depression (1870s–1918)

The period from the 1870s until World War I (1918) is often associated with the Great Depression (or Long Depression) of the 19th century. This economic crisis resulted from the saturation of industrial capitalism and led to the birth of a new model: the Second Industrial Revolution.

Features of the Second Industrial Revolution

• New technology development, notably electricity.
• New forms of organization for production processes.
• Changes in the forms of business organization.

The industrial development phase went into decline when England was no longer the sole industrial power, as countries like Germany and the USA joined the ranks of industrialized nations. This increased competition, keeping prices down in the open market, even though overall industrial growth remained positive during this crisis period.

Symptoms of the Supply Crisis

1. The prices of industrial products began to fall, triggering a process of deflation (overall falling prices).
2. Companies continued producing, thereby fueling deflation.
3. Business profits declined significantly.
4. Extension of protectionism.

To overcome this crisis in the late 19th century, capitalism pursued two main strategies:

• Territorial expansion (Imperialism).
• Corporate adaptation through concentration: Bank capital transformed into financial capital, and banks evolved into universal banks.

Processes of Business Concentration

The crisis spurred the development of monopolistic business organizations aimed at controlling markets and prices:

• Cartel: An association of independent companies that agree to coordinate production and fix prices, often succeeding in raising prices.
• Trust: A large business entity formed by merging several companies under a single management structure (often via a legal trust agreement).
• Holding Company: A company that controls other companies by owning a majority of their stock.

These changes fundamentally altered the market structure. While monopolies reduced traditional competition, the competition between these large entities promoted technological innovations aimed at reducing production costs.

Colonization and Imperialism

Factors Driving Capitalist Expansion

• Demographic Factor: High rates of emigration coupled with economic growth and population increase.
• Economic Factors: The pursuit of cheaper costs and the possibility of creating a truly global market.
• Pressure Groups: Groups with mixed economic and political interests advocating for expansion.
• Geopolitical Competition: Intense fight between major powers to control global trade routes and resources.
• Ideological Drivers: Rising nationalisms and militarism.

Colonial Dynamics

The colonial dynamic focused heavily on Africa, which was the last major region to be fully partitioned and settled by European powers, alongside continued conquest in Asia.

Consequences

The establishment of colonies had long-lasting consequences, contributing significantly to global tensions, including the outbreak of World Wars I and II.