— Amir Ali (The Indian Express has launched a new series of articles for UPSC aspirants written by seasoned writers and erudite scholars on issues and concepts spanning History, Polity, International Relations, Art, Culture and Heritage, Environment, Geography, Science and Technology, and so on. Read and reflect with subject experts and boost your chance of cracking the much-coveted UPSC CSE. In the following article, political scientist Amir Ali elucidates the idea of capitalism.) Capitalism is an idea, a mode of economic production and a system of organising the world with a five-hundred-year history behind it. The idea is so omnipresent that it can be difficult to understand and indeed think outside of it. The beginnings of capitalism in the way it has configured the contemporary world can be traced back to 17th century England when the enclosure movement set in motion what Karl Marx referred to as the ‘primitive accumulation of capital’. He used this term to explain the process of the privatisation of the means of production that pushed labourers into wage subsistence for survival. The enclosure movement involved the fencing off of common lands to deny customary rights to people to subsist on the land, forcing them to live by selling their labour. One of the first features of capitalism is, thus, the privileging of private property that is inextricably linked to the profit motive. Property has been so central to the conceptualisation of capitalism that political philosophers such as John Locke have been interpreted as providing a theoretical prop to its development by being a votary of the natural right to life, liberty, and, crucially for our purposes here, property. Emphasis on individuality and free markets Capitalism is centrally understood as a political, economic and philosophical system that believes human happiness and thriving is best furthered by individual private enterprise and competition. This should not be inhibited or thwarted in the name of a collective like society or an agency like the state claiming to speak on behalf of such a collective. There is thus a great deal of stress on individuality, free enterprise, free markets and an overall emphasis on freedom and liberty. The 20th-century proponents of free market capitalism such as Friedrich Hayek in books such as The Road to Serfdom (1944) have considered socialism to be antithetical to capitalism, believing it to be a recipe for a lack of freedom and consequent authoritarianism. Capitalism received a great boost during early modern times when the Industrial Revolution in England in the late 18th century created vast profits that made England the foremost country in the world for at least two centuries. The Industrial Revolution was one of the first instances of the immense productive powers that capitalism was capable of unleashing, something we have witnessed more recently in the often stupendous technological advances that have paved the way for the communications revolution of our own times. Marxist analysis of capitalism This was a point that Karl Marx, capitalism’s greatest analyst and critic, made when he looked at capitalism’s historical contribution to raising the forces of production to astronomical levels. This concept (forces of production) is central to the range of terms used in Marxist analysis to understand the complexity of capitalism as a mode of production - another concept that captures the way in which economic and productive activity is organised and carried on. Marxist analysis has emphasised how capitalism has organised productive activity in increasingly socialised ways by encompassing and implicating ever-wider sections of society. And yet ironically, the proceeds of economic production are privately appropriated in the form of profits. Despite the spectacular achievements of capitalism, its critics have always been wary of the inequality and destitution that it brings in its wake. Marxists in their development of a class analysis suggested that the contradictory tendencies of capitalism were reflected and embodied in the great social conflict and antagonism between the bourgeoisie, the prosperous class that owned the means of production, and the proletariat, the class that could only survive by selling labour and receiving wages that allowed for a mere subsistence of eating and procreation and that results in a kind of dehumanisation. This phenomenon of workers being dehumanised is captured by the concept of alienation, which Marx developed early on in his career in his Economic and Philosophic Manuscripts of 1844 that elaborated on the elimination of the very essence of being human by capitalism and the exploitation of wage workers that it entailed. Capitalism which originated in England and Western Europe spread to other parts of the world through colonialism. Colonialism created an extractive and exploitative resource in the colonies for the colonising metropolitan countries. This created the squalid conditions that characterise the peripheral third world. Marxist-inspired Latin American dependency theorists in the 1960s detailed the ways in which the terms of trade were adversely set against third-world societies that exported mainly primary agricultural goods, rather than more advanced manufacturing goods which in those decades was still the domain of the advanced and metropolitan first world countries. Crises of capitalism Capitalism is known to periodically experience crises of overproduction and supply. During such moments of acute crises, there is a mismatch between the quantity of goods produced for supply in the market and the level of demand, leading to economic downturns. In such phases, economic activity is known to decline into a depression. This was what happened to the world economy in the 1930s after the great stock market crash of 1929. The depressed state of the world economy was brought to an end with the Second World War, and a new economic order was subsequently created by the ideas of the renowned British economist John Maynard Keynes. Keynesianism created a model of regulatory capitalism in which the state played a very important role by regularly infusing vast sums of money into the economy to stimulate growth and investment and counteract periods of economic sluggishness and high unemployment. https://www.youtube.com/watch?v=YCybw3tYDts?si=cMX6vi0K_2KgmTF_&w=560&h=315 But the dominance of Keynesian economics came to an end in the 1970s when sudden increases of petroleum prices, known as oil shocks, created a situation of ‘stagflation’. Stagflation results from simultaneous occurrence of stagnation in economic growth and inflation. The 1970s thus marked a transformation in global capitalism by breaking away from Keynesian orthodoxy and inaugurating a different form of capitalism. Unlike the previous Keynesianism, the aim no longer remained the attainment of full employment but there was an emphasis on controlling the money supply and inflation. This new capitalist orthodoxy, known as monetarism, is especially associated with the Chicago economist Milton Friedman. As a result of these momentous changes, manufacturing increasingly migrated from advanced capitalist economies such as the US and the UK to regions such as China and the rising East Asian tiger economies. The 1970s also brought about a larger financialisation of the global capitalist economy in which massive amounts of money flowed uninhibited across international boundaries, adding greater financial instability to a capitalist system already known for its lack of stability. This was to manifest itself in the form of the 1997 East Asian financial crisis and more seriously in the 2007 financial crisis. Experience of India In over three decades of economic liberalisation, India has been transformed into a far more assertively capitalist society than ever in its history since independence, even though we have been termed a socialist society in the preamble of the constitution. The most important aspect of the resurgent three decades of capitalism in India is an expansive new Indian middle class that in its perceived size is viewed as a potential and promising emerging market. Indian capitalism with its rising middle class, influential infotech companies, rapid urbanisation and suburban conurbations such as Gurugram is believed to have powered India into the higher rungs of the top league of nations. This is a far cry from the mediocrity of a socialist India and its 'Hindu rate of growth' of 3.5 percent. It may be too early to say what will be the outcome of India’s brave capitalist odyssey. The answer to that question will be discussed for many years to come. Post Read Question Describe the salient features of capitalism. In over three decades of economic liberalisation, India has been transformed into a far more assertively capitalist society than ever in its history since independence. Evaluate. How is the thriving new middle class seen as a promising emerging market in India’s resurgent capitalism? Evaluate the merits of capitalism in terms of promoting human freedom, well-being and happiness. (Amir Ali is an Assistant Professor at the Centre for Political Studies, Jawaharlal Nehru University, New Delhi) Subscribe to our UPSC newsletter and stay updated with the news cues from the past week. Stay updated with the latest UPSC articles by joining our Telegram channel – IndianExpress UPSC Hub, and follow us on Instagram and X. Share your thoughts and ideas on UPSC Special articles with ashiya.parveen@indianexpress.com.
