Two hundred years ago, before the advent of capitalism, a man’s social status was fixed from the beginning to the end of his life; he inherited it from his ancestors, and it never changed. If he was born poor, he always remained poor, and if he was born rich-a lord or a duke-he kept his dukedom and the property that went with it for the rest of his life.
As for manufacturing, the primitive
processing industries of those days existed almost exclusively for the benefit
of the wealthy. Most of the people (ninety percent or more of the European
population) worked the land and did not come in contact with the city-oriented
processing industries. This rigid system of feudal society prevailed in the
most developed areas of Europe for many hundreds of years.
However, as the rural population
expanded, there developed a surplus of people on the land. For this surplus of
population without inherited land or estates, there was not enough to do, nor
was it possible for them to work in the processing industries; the kings of the
cities denied them access. The numbers of these “outcasts” continued to grow,
and still no one knew what to do with them. They were, in the full sense of the
word, “proletarians,” outcasts whom the government could only put into the
workhouse or the poorhouse. In some sections of Europe, especially in the
Netherlands and in England, they became so numerous that, by the eighteenth
century, they were a real menace to the preservation of the prevailing social
system.
Today, in discussing similar
conditions in places like India or other developing countries, we must not
forget that, in eighteenth-century England, conditions were much worse. At that
time, England had a population of six or seven million people, but of those six
or seven million people, more than one million, probably two million, were simply
poor outcasts for whom the existing social system made no provision. What to do
with these outcasts was one of the great problems of eighteenth-century
England.
Another great problem was the lack
of raw materials. The British, very seriously, had to ask themselves this
question: what are we going to do in the future, when our forests will no
longer give us the wood we need for our industries and for heating our houses?
For the ruling classes it was a desperate situation. The statesmen did not know
what to do, and the ruling gentry were absolutely without any ideas on how to
improve conditions.
Out of this serious social situation
emerged the beginnings of modern capitalism. There were some persons among
those outcasts, among those poor people, who tried to organize others to set up
small shops which could produce something. This was an innovation. These
innovators did not produce expensive goods suitable only for the upper classes;
they produced cheaper products for everyone’s needs. And this was the origin of
capitalism as it operates today. It was the beginning of mass production, the
fundamental principle of capitalistic industry. Whereas the old processing
industries serving the rich people in the cities had existed almost exclusively
for the demands of the upper classes, the new capitalist industries began to
produce things that could be purchased by the general population. It was mass
production to satisfy the needs of the masses.
This is the fundamental principle of
capitalism as it exists today in all of those countries in which there is a
highly developed system of mass production: Big business, the target of the
most fanatic attacks by the so-called leftists, produces almost exclusively to
satisfy the wants of the masses. Enterprises producing luxury goods solely for
the well-to-do can never attain the magnitude of big businesses. And today, it
is the people who work in large factories who are the main consumers of the
products made in those factories. This is the fundamental difference between
the capitalistic principles of production and the feudalistic principles of the
preceding ages.
The development of capitalism
consists in everyone’s having the right to serve the customer better and/or
more cheaply. And this method, this principle, has, within a comparatively
short time, transformed the whole world. It has made possible an unprecedented
increase in world population.
In eighteenth-century England, the
land could support only six million people at a very low standard of living.
Today more than fifty million people enjoy a much higher standard of living
than even the rich enjoyed during the eighteenth-century. And today’s standard
of living in England would probably be still higher, had not a great deal of
the energy of the British been wasted in what were, from various points of
view, avoidable political and military “adventures.”
These are the facts about
capitalism. Thus, if an Englishman-or, for that matter, any other man in any
country of the world-says today to his friends that he is opposed to capitalism,
there is a wonderful way to answer him: “You know that the population of this
planet is now ten times greater than it was in the ages preceding capitalism;
you know that all men today enjoy a higher standard of living than your
ancestors did before the age of capitalism. But how do you know that you are
the one out of ten who would have lived in the absence of capitalism? The mere
fact that you are living today is proof that capitalism has succeeded, whether
or not you consider your own life very valuable.”
In spite of all its benefits,
capitalism has been furiously attacked and criticized. It is necessary that we
understand the origin of this antipathy. It is a fact that the hatred of
capitalism originated not with the masses, not among the workers themselves,
but among the landed aristocracy-the gentry, the nobility, of England and the
European continent. They blamed capitalism for something that was not very
pleasant for them: at the beginning of the nineteenth century, the higher wages
paid by industry to its workers forced the landed gentry to pay equally higher
wages to their agricultural workers. The aristocracy attacked the industries by
criticizing the standard of living of the masses of the workers.
Of course-from our viewpoint, the
workers’ standard of living was extremely low; conditions under early
capitalism were absolutely shocking, but not because the newly developed
capitalistic industries had harmed the workers. The people hired to work in
factories had already been existing at a virtually subhuman level.
The famous old story, repeated
hundreds of times, that the factories employed women and children and that
these women and children, before they were working in factories, had lived
under satisfactory conditions, is one of the greatest falsehoods of history.
The mothers who worked in the factories had nothing to cook with; they did not
leave their homes and their kitchens to go into the factories, they went into
factories because they had no kitchens, and if they had a kitchen they had no
food to cook in those kitchens. And the children did not come from comfortable
nurseries. They were starving and dying. And all the talk about the so-called
unspeakable horror of early capitalism can be refuted by a single statistic:
precisely in these years in which British capitalism developed, precisely in
the age called the Industrial Revolution in England, in the years from 1760 to
1830, precisely in those years the population of England doubled, which means
that hundreds or thousands of children-who would have died in preceding
times-survived and grew to become men and women.
There is no doubt that the
conditions of the preceding times were very unsatisfactory. It was capitalist
business that improved them. It was precisely those early factories that
provided for the needs of their workers, either directly or indirectly by
exporting products and importing food and raw materials from other countries.
Again and again, the early historians of capitalism have-one can hardly use a
milder word-falsified history.
Source: http://bastiat.mises.org/2014/01/how-the-early-capitalists-saved-europe-from-starvation/By
Mises Updates Monday, January 13th, 2014 [A
selection from Economic Policy: Thoughts
for Today and Tomorrow
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