Thursday, June 10, 2021

QUORA: ‘What were those new ideas from which led to the rise of capitalism?’

 QUORA: ‘What were those new ideas from which led to the rise of capitalism?

I left this answer:

For once, a question on Capitalism is properly framed. Unlike virtually all other political/economic social systems, Capitalism as it is understood today was not “created” or in any way imposed. Capitalism arose organically and naturally as a consequence of a specific set of ideas--the ideas of The Enlightenment. 

The Enlightenment taught that man can be guided by reason; that reason is the attribute of the individual; that each has free will; that therefor the individual must be free to act in pursuit if his own interest according to his own judgement; that every individual human being possesses the same freedom; that inalienable individual rights are the principles that sanction the individual’s freedom in a social context; That rights are guarantees to freedom of action only, not an entitlement to other people’s lives, property, or labor; that these rights are deduced from man’s nature, not as grants, privileges, or gifts of some “higher authority”; that all men are equal in their rights; that rights, being natural in origin, precede government; that therefore governments are created specifically, and only, to secure these rights through objective law. Summed up, this is individualism.


These ideas spell the end of systems of rulers and subjects, masters and slaves, or any other kind of tyranny by man over man. In practice, this led to voluntarism in human relations, in which people deal with each other only by mutual agreement. The natural result of these ideas is laissez-faire Capitalism. It should be noted that laissez-faire Capitalism was never fully achieved. Vestiges of pre-Enlightenment society, with its statism and collectivism, remained. Failures to implement the full, universal practice of individual rights included slavery and unequal recognition of rights for women, among other failings. The full, undiluted implementation of Enlightenment theory has never been achieved. But to the extent that these ideals are observed is the extent to which Capitalism happens.

Of course, elements of markets and business and ideas of liberty have popped up here and there throughout history. But it was never explained systematically and philosophically until The Enlightenment, roughly the late 17th through the 18th Centuries. But once the principles of individual rights, including property rights, government as protector of rights, and equality of liberty under the rule of law were formally expressed and implemented (however unevenly), the ordinary individual was finally liberated to pursue personal happiness, unleashing innovation and entrepreneurship that ignited the Great Enrichment that still has not run its course.

Once again, let me express my appreciation for the accuracy of the question. Unlike all other social systems—statisms like fascism, communism, and other forms of socialism, monarchy, theocracy, military dictatorships, one-man authoritarianisms, et al—Capitalism was not and by its nature cannot be imposed from the top down. As the question implies, Capitalism arises as a result of ideas. It arises from the grass roots. The Founders of America, to cite the most notable example, didn’t set out to create Capitalism. To my knowledge, they never even used the word capitalism to describe what they were creating. They set out to liberate all men (“men” generically understood), and ended up creating the world’s leading Capitalist nation. All that was needed for “the rise of capitalism” is the liberation of the ordinary man through the legal and moral guarantee of his inalienable rights to life, liberty, property, and the pursuit of happiness.

Related Reading:

The Capitalist Manifesto -- Andrew Bernstein

Leave Me Alone and I'll Make You Rich: How the Bourgeois Deal Enriched the World First Edition -- Deirdre Nansen McCloskey and Art Carden 


Enlightenment Now: The Case for Reason, Science, Humanism, and Progress -- Steven Pinker

The Rational Optimist: How Prosperity Evolves -- Matt Ridley

Suicide of the West: How the Rebirth of Tribalism, Nationalism, and Socialism Is Destroying American Democracy -- Jonah Goldberg, Appendix pages 353 - 379, in which Goldberg summarizes “The Miracle”; the explosion of prosperity of the last 250 years after thousands of years of stagnation.

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