HISTORY OF IDEAS - Capitalism

Summary

This script explores capitalism's evolution and its enduring criticisms. From Giotto's 14th-century fresco symbolizing money's immorality to Adam Smith's 'Wealth of Nations' promoting humane capitalism, it charts the rise of capitalist virtues like hard work and innovation. Despite its productivity, capitalism faces ongoing scrutiny for worker exploitation and prioritizing trivial consumer goods over essential human needs. The narrative questions how to reconcile capitalism with ethical wealth creation and environmental sustainability.

Takeaways

• 🏛 Capitalism has been historically viewed with suspicion and criticism, dating back to its inception.
• 🖼 In Padua, 1304, Giotto's fresco 'Jesus and the Money Lenders' symbolizes the early Christian opposition to the pursuit of wealth.
• 📚 The publication of Luca Pacioli's 'Summa de arithmetica' in 1450 introduced double-entry bookkeeping, a foundational principle of modern capitalism.
• 💼 The Protestant Reformation, led by figures like John Calvin, fostered values conducive to capitalism, such as hard work and self-denial.
• 🏙️ The Dutch Republic in 1670 emerged as the world's first explicitly capitalist nation, valuing merchants over aristocrats.
• 🎨 Art, like Vermeer's 'The Lacemaker', began to depict the nobility of everyday work and domestic life, reflecting societal values.
• 📚 Adam Smith's 'The Wealth of Nations' in 1776 explained the mechanisms of wealth creation and the benefits of specialization and humane treatment of workers.
• 🏭 The Industrial Revolution brought wealth but also criticism, as depicted in Charles Dickens' 'Hard Times', which highlighted the exploitation of workers.
• 🌎 The failures of communism, such as East Germany's 'Neues Ökonomische System', demonstrated the inability to satisfy basic consumer needs, highlighting capitalism's strengths.
• 🛒 The fall of the Berlin Wall in 1989 showcased capitalism's ability to provide everyday luxuries, which were lacking in communist countries.
• 🌐 The protests in Seattle in 1999 against the World Trade Organization echoed historical criticisms of capitalism's disregard for producers and the prioritization of material over spiritual needs.
• 🍎 Despite its success, companies like Apple in 2015 faced challenges regarding worker exploitation and the ethical implications of consumer culture.

Q & A

What is the historical view of capitalism as depicted in the script?

The script portrays capitalism as having been viewed with disappointment, frustration, and suspicion since its inception, with a long-standing notion that spiritual life and the pursuit of money are at odds.

What is the significance of Giotto's fresco 'Jesus and the Money Lenders' mentioned in the script?

The fresco symbolizes the centuries-old idea in the West that business and money are enemies of a good spiritual life, with Jesus depicted as furious at the merchants and bankers in the temple.

How did Luca Pacioli's 'Summa de arithmetica' contribute to the development of capitalism?

Pacioli's book introduced double-entry bookkeeping, a principle that became standard practice in companies, suggesting that dealing with money could be a science learned through patience, reason, and hard work.

What were the Protestant virtues emphasized by John Calvin that were beneficial to capitalism?

Calvin emphasized virtues such as hard work, self-denial, patience, honesty, and duty, which were seen as extremely useful qualities for the advancement of capitalism.

How did the Dutch Republic in the 17th century exemplify capitalist values?

The Dutch Republic was the first explicitly capitalist nation where hard-working merchants were revered over lazy aristocrats, and Protestant sermons about thrift and hard work were common.

What is the main argument of Adam Smith's 'The Wealth of Nations' as described in the script?

Smith argued that economies grow through wealth creation, specialization, and the division of labor, and that capitalism is guided by an 'invisible hand' where individual profit inadvertently benefits society.

What criticisms does Charles Dickens level against capitalism in his novel 'Hard Times'?

Dickens criticizes capitalism for encouraging appalling conditions for producers, exploiting workers, and blinding people to the desecration of nature and human life through relentless capitalist logic.

What was John Ruskin's critique of capitalism in 'Unto This Last'?

Ruskin criticized capitalism for exploiting people and ruining the environment, and questioned the morality of spending money on trivial items rather than noble and beautiful things that humans truly need.

How did the East German economic system attempt to address the flaws of capitalism?

The East German system aimed to provide good working conditions and focus on the production of essential goods like housing and education, rather than capitalist fripperies, to address the perceived flaws of capitalism.

What event in 1989 highlighted the appeal of capitalist production capabilities?

The breaching of the Berlin Wall led East Germans to West German supermarkets where they marveled at the variety and availability of goods, showcasing capitalism's ability to provide life's little luxuries.

What are the two main flaws of capitalism identified in the script?

The script identifies that capitalism tends to ignore the sufferings of workers and often builds wealth by satisfying non-essential human needs, such as unhealthy food or poor-quality entertainment.

Outlines

00:00

💼 The Origins and Criticisms of Capitalism

This paragraph discusses the historical view of capitalism as being at odds with spiritual life, exemplified by Giotto's fresco 'Jesus and the Money Lenders'. It highlights the significant role of Luca Pacioli's accounting principles in the development of capitalism, moving away from faith-based money management to a scientific approach. The Protestant virtues, as emphasized by John Calvin, are identified as crucial for the rise of capitalism, advocating for reinvestment of profits and the moral acceptability of business success. The Dutch Republic is presented as an early capitalist society, where hard work is valued over aristocratic laziness, as depicted in Johannes Vermeer's paintings. Finally, Adam Smith's 'The Wealth of Nations' is noted for its explanation of wealth creation and the benefits of specialization and humane treatment of workers.

05:02

📚 The Dark Side of Industrial Capitalism

The paragraph delves into the negative consequences of unbridled capitalism, as depicted in Charles Dickens' 'Hard Times'. It criticizes the exploitation of workers, especially children, and the disregard for the environment under capitalist logic. John Ruskin's 'Unto This Last' is mentioned as a critique of capitalist consumption, arguing that fortunes are built on trivialities rather than moral and beautiful necessities. The failures of East German communism, particularly the 'Neues Ökonomische System', are highlighted, showing the inability to satisfy basic consumer needs, which led to riots and the eventual preference for capitalist production capabilities. The paragraph also touches on the anti-capitalist protests in Seattle in 1999, drawing parallels between historical and contemporary criticisms of capitalism.

10:05

🌍 The Global Impact and Future of Capitalism

This paragraph addresses the global reach and influence of capitalism, exemplified by Apple becoming the world's largest corporation. It points out the ongoing challenges within the system, such as worker exploitation in the supply chain and the production of non-essential goods. The narrative questions the sustainability of capitalism's focus on non-essential needs and its impact on the planet. The future challenge is framed as finding a way to make money through humane and environmentally friendly practices that cater to the nobler needs of humanity, suggesting a periodic resurgence of discontent akin to Jesus' anger in the temple.

Keywords

💡Capitalism

Capitalism is an economic system based on private ownership of the means of production and the creation of goods and services for profit. In the video, it is portrayed as both a productive system and one that has historically been criticized for its negative impacts on workers and society. The video traces the evolution of capitalism, from its early stigmatization in Christian teachings to its modern form, highlighting both its economic achievements and moral challenges.

💡Double-entry bookkeeping

Double-entry bookkeeping is an accounting method where every financial transaction is recorded twice, once as a debit and once as a credit. It was introduced by Luca Pacioli in his book 'Summa de arithmetica' and is crucial for the development of capitalism as it allowed for more accurate tracking of financial transactions. The video suggests that this innovation was a significant step towards the rationalization and systematization of economic activities.

💡Protestant virtues

The Protestant virtues refer to the values of hard work, self-denial, patience, honesty, and duty, which were emphasized by theologians like John Calvin during the Protestant Reformation. These virtues are seen as conducive to the capitalist work ethic, where success is linked to personal discipline and investment. The video highlights how these values were instrumental in shaping the moral framework that supported the rise of capitalism.

💡Division of Labour

The Division of Labour is the specialization of individual workers in specific tasks within the production process, which increases efficiency and output. Adam Smith discussed this concept in 'The Wealth of Nations,' using the example of pin manufacturing. The video connects this principle to the growth of capitalist economies by showing how specialization leads to greater productivity.

💡Invisible hand

The 'Invisible hand' is a term coined by Adam Smith to describe the unintended social benefits resulting from individuals pursuing their own self-interest in a market economy. The video uses this concept to illustrate how capitalism can lead to societal benefits despite being driven by personal gain, although it also raises questions about the morality of such an approach.

💡Unrestrained capitalism

Unrestrained capitalism refers to a form of capitalism without significant government regulation or social controls. The video criticizes this form of capitalism through Charles Dickens' portrayal of the harsh conditions in 'Hard Times,' suggesting that without checks, capitalism can lead to exploitation and suffering among workers.

💡Consumption

Consumption in the context of the video refers to the act of using up goods and services, often in excess. It is criticized by John Ruskin, who argues that capitalism encourages the production and consumption of unnecessary and even harmful goods at the expense of more noble human needs. The video uses this term to critique the materialistic focus of capitalist societies.

💡Neues Ökonomische System (NÖS)

The Neues Ökonomische System (New Economic System) was an attempt by East Germany to address perceived flaws in capitalism by providing better working conditions and focusing on cultural and intellectual goods over consumerist products. The video contrasts this with the failures of communist economies to meet basic consumer needs, highlighting the ongoing debate over the merits of different economic systems.

💡Anti-capitalist protesters

Anti-capitalist protesters are individuals who oppose the capitalist system, often due to concerns about social inequality, environmental degradation, and the exploitation of workers. The video describes protests in Seattle against the World Trade Organization, illustrating ongoing discontent with capitalism despite its economic successes.

💡Humane capitalism

Humane capitalism is a concept that suggests capitalism can be practiced in a way that is ethical and considerate of workers and the environment. The video concludes by posing the challenge of how to achieve such a form of capitalism that aligns with nobler human needs and avoids the exploitation and environmental harm often associated with the system.

Highlights

Capitalism is viewed with disappointment, frustration, and suspicion despite its global prevalence.

Criticism of capitalism is not new and has been present since its inception.

Giotto's fresco 'Jesus and the Money Lenders' reflects the historical antagonism between spirituality and commerce.

Luca Pacioli's 'Summa de arithmetica' introduced double-entry bookkeeping, a foundational capitalist practice.

John Calvin's Protestant virtues aligned with capitalist values, emphasizing the virtue of hard work and investment.

The Dutch Republic in the 17th century was the first explicitly capitalist nation, valuing merchants over aristocrats.

Adam Smith in 'The Wealth of Nations' explained the growth of capitalist economies and the benefits of specialization.

Slavery was deemed inefficient in capitalism, and treating workers well was more profitable.

Charles Dickens criticized the exploitation of workers and the degradation of nature under capitalism.

John Ruskin criticized the consumerist aspects of capitalism, advocating for moral consumption.

East Germany's attempt at an alternative economic system failed due to an inability to satisfy basic consumer needs.

The fall of the Berlin Wall revealed the appeal of capitalist productivity and consumer goods.

Anti-capitalist protests in Seattle in 1999 echoed historical criticisms of capitalism's disregard for producers and spiritual values.

Apple's success in 2015 highlights ongoing challenges in capitalism, including worker exploitation and the production of non-essential goods.

The future challenge for capitalism is to create wealth humanely and address the nobler needs of humanity.

Transcripts

Today,

pretty much every economy in the world is organized along capitalist lines

but at the same time, capitalism is almost everywhere regarded

with disappointment, frustration and suspicion.

Interestingly, none of the criticisms are new. They've been dogging capitalism

since its inception. So let's look back in time

to figure out how capitalism got its bad name and what might be done

to improve it. Padua, Italy, 1304.

0n the wall of a church in Padua near Venice, the painter Giotto makes a

fresco:

Jesus and the Money Lenders. It restates for his own times

an idea that had by then already been well established for centuries in the West:

the notion that a good spiritual life and the pursuit of business

and money are sworn enemies. Jesus goes to the temple in Jerusalem,

sees merchants and small-time bankers crowding the forecourt and gets furious.

This sacred place is not a fitting arena for the polluting activities

of buying and selling. The Christian attack on the immorality of money

is deeply influential and severely holds back the development of capitalism

for centuries. Venice, 1450.

A Franciscan friar, Luca Pacioli, publishes the first ever book on

accounting:

Summa de arithmetica. It's the single most important capitalist invention

until the birth of the joint stock company and the modern factory.

In the book Pacioli introduces the principle of double-entry bookkeeping

which gradually become standard practice in all companies.

Pacioli's textbook proposes that dealing well with money

doesn't depend on faith anymore. Money isn't a divine punishment or reward;

it's a kind of science that can be learnt through patience,

reason and hard work.

Geneva, 1555. In powerful sermons to his congregations in Geneva,

the Protestant theologian John Calvin emphasizes to his Swiss

audiences the importance of what have become known as the Protestant

virtues: hard work, self-denial, patience,

honesty and duty. These will turn out to be extremely useful qualities

for capitalism. Calvin along with many other preachers who share his

outlook explains that you must never indulge yourself not spend money having

a lavish life.

You must simply put any surplus income back into your business

as an investment. Calvin adds that being good at business

is far more pleasing in the sight of God than being an aristocratic

warrior or even a monk. Perhaps more than technology,

it's this new mindset that will accelerate the progress

of capitalism. 1670,

Delft, Dutch Republic. The newly independent Dutch Republic is the world's

first explicitly capitalist nation where lazy aristocrats

are looked down upon and hard-working merchants revered.

In the churches, Protestant sermons about thrift and hard work are heard.

In the arts outgo glorifications of kings and queens.

Johannes Vermeer finishes painting The Lacemaker,

a depiction of the intricate careful and homely tasks

of manufacturing lace. In his painting The Little Street,

the suggestion is that living peacefully and quietly in your own home

running a business is far more glamorous and noble

than fighting in a war or going to a monastery.

1776. 141, the Strand, London.

These are the offices and shops of Strain & Cable, publishers

who have a big success with a new book: an inquiry into the nature and causes of

The Wealth of Nations

written by a Scottish philosopher called Adam Smith.

Smith demystifies wealth creation by explaining how capitalist economies grow.

He reaches several important conclusions. Slavery

is remarkably inefficient. Violence is less of an incentive than money

for a worker and the cost of buying and maintaining slaves

far exceeds the cost of wages. Capitalists will make far more money

by treating their workers legally and humanely.

It's by specializing that economies grow, says Smith.

Smith focuses on the pin making industry and concludes that while

one worker could make up to 20 pins a day, a team of

10 workers well arranged could make not 200 but 48,000 pins,

thanks to what Smith terms the Division of Labour.

Smith also tells us that capitalism is guided by an invisible hand.

By maximizing one's own profit, individuals

inadvertently benefit society providing goods that people want and need.

As Smith puts it: "It is not from the benevolence of the butcher, the brewer,

or the baker that we expect our dinner, but from their regard

to their own self-interest." These ideas further remove the moral suspicion

that once surrounds capitalism. But not all will be won over.

1854, London. The British economy

is now the largest in the world thanks to its enormous industries of cotton,

shipbuilding, steel and coal. Vast cities have chewed up the countryside of

the Midlands and northern England. Merchants and the newly rich capitalist

class

have triumphed. But many are furious. Charles Dickens,

one of Victoria England's most passionate critics of unrestrained capitalism

publishes a novel: Hard Times. Set in the fictional town of Coketown,

a version of Manchester, it takes aim at heartless capitalists

like Mr. Gradgrind who abuse their workers, exploit young children in mines

and chimneys

and use their relentless capitalist logic to blind them to their desecration

of nature and human life.

Here is Dickens' writing on Coketown: "It was a town of red brick, or a brick that

would have been red

if the smoke and ashes had allowed it; but as matters stood

it was a town of unnatural red and black like the painted face of a savage."

Dickens argues that capitalism is evil because it encourages appalling

conditions for the producers.

Under the sway of capitalist logic otherwise quite nice people

will keep coming up with reasons why it's okay to employ

a child in a factory or to let poor people starve once they've reached the end of

their working lives.

1860, London. The English reformer John Ruskin

publishes Unto This Last, a furious track against capitalism

that takes aim not so much at the production side of capitalism

as the area of consumption. Like Dickens

Ruskin is incensed that people are being exploited

and the environment ruined. But he asks a further question:

In the name of what? Ruskin notes that large capitalist fortunes

are built up on selling people absurd things: knick-knacks, fancy plates,

embroidered napkins,

bonnets carved sideboards. The whole of the suffering of the cotton factories of

Manchester

are being fed by our appetite for very cheap shirts with delicate collards.

We are ruining our lives for trinkets, whereas for Ruskin

money shouldn't only be made morally, it should be spent morally

on the truly noble and beautiful things that humans need.

He contrast the beauty of Venice with the ugliness of modern Britain

to make his point. Berlin, 1963.

The leader of communist East Germany, Walter Ulbricht

launches an ambitious new scheme: the Neues Ökonomische System

or NÖS. It aimes to solve for East Germans

the two major failings of capitalism in his eyes.

One: It will guarantee workers good conditions with a huge expansion in the

number of

state schools, housing blocks and holiday camps. And secondly:

It will focus not on the fripperies of capitalist production

like blue jeans and pop music; it will give people the works of Plato and Marx

and uplifting television programs about track to production.

1976, Dresden, East Germany.

The fatal flaws of communism come to a head in January

with a massive riot

about the unavailability of coffee. East Germans love drinking coffee

but a huge rise in global prices means that the German Democratic Republic

can no longer afford to import it in the necessary quantities.

The Politburo decides to remove all coffee from shops

and replaces it with "mich Kaffee", mix coffee

which is 51 percent coffee and 49 percent a range of fillers including

chicory, rye and sugar beet. Dissatisfaction with this

eventually has to be quelled with the use the Stasi or secret police.

It's an inadvertent tribute to capitalism which is especially good

at providing us with life's little luxuries. Edeka hypermarket near Hamburg,

November, 1989. East Germans who have recently breached the wall

head straight for West German supermarkets like Edeka near Hamburg.

They marvel at the productive capacities of capitalism

and the ability that it has to provide such modest but very important things as

olive oil, party hats, ice spuns and coffee. The old East German elite

who had believed that the people could be satisfied with philosophy,

athletics, sauerkraut and TV programs about farming

are hounded out of office.

1999, Seattle, USA. The World Trade Organization,

a capitalist body dedicated to removing protection from industry

and liberalizing markets gets together for its next round of talks,

10 years since the fall of communism and after a decade

of unprecedented economic growth. But though the mood of politicians is

upbeat, out in the streets hundreds of thousands of anti-capitalist protesters

have gathered to call an end to the iniquities of global capitalism.

The complaints are strikingly similar to those made

by Jesus Christ. Capitalism doesn't look after the producers

and capitalism downgrades the important spiritual

ends of life for the sake hamburgers, unsustainably cheap clothes

and garish distracting mass media. With their beards and guard figures

many of the protesters look a little like Renaissance's renditions of Jesus.

The police take a very heavy hand, fired tear gas into the crowds,

arrest 2000 and call in the National Guard. The protest remind the world

that besides the winners of capitalism there is an enormous

army of the disenfranchised and the angry who see more sense in Jesus, Dickens and

Ruskin

than in Adam Smith and Bill Clinton.

2015, Cupertino, California. Apple Computers

officially becomes the largest corporation in the world. It's a giant

success story.

But the very same challenges remain. It turns out that Apple are

indirectly responsible for the suffering and abusive of workers in the supply chain

in China

by the Foxconn corporation and with the launch of the Apple watch,

a gadget that seems to have no particularly urgent purpose,

questions are once again raised about why we are exhausting ourselves and the

planet

for ends that are so out of proportion with the costs they impose on

all of us. To generalize: Capitalism is amazingly productive

but it has two big flaws. Firstly, it systematically inclines to ignore the

sufferings of workers

unless regularly prodded not to. And the wealth of companies is often built up on

satisfying

what are not the essential needs of human beings. Fortunes are made

on making unhealthy food or bad television programs.

The challenge for the future is how we might be able to make money humanely

by treating people and the earth well and also

make money through activities which address the more noble

end of human needs. Till then, the rage of Jesus in the temple

will periodically always go on.