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Medieval Europe's urban centers were the cradle of private market economies. According to economist Joseph Schumpeter, capitalism’s story began with the creation of credit. Leading the charge were moneylenders and urban merchants, predominantly in North Italy, who were the early pioneers of this financial revolution.
The real momentum for capitalism kicked off in the 16th century. Historians have written extensively about the shift from feudalism to capitalism, attributing it to declining productivity, a demographic crisis, and a shortage of peasant labor. These factors led to lower rents, fewer labor services, and greater freedom and mobility for peasants in Western Europe.
The commercialization of agriculture was crucial to the rise of capitalism. Britain's booming textile industry produced more than it consumed, leading to unprecedented productive capacities and earning England the title of the "workshop of the world." This period, spanning the 16th to 18th centuries, is often referred to as "commercial capitalism."
Capitalism thrived on the private ownership of warehouses, ships, and global trade. Merchants lent money at interest and connected with production by buying and distributing raw materials for peasants working at home in the traditional putting-out system. Over time, they gradually took control of the rural cottage industry.
This period saw the rise of proto-industrialization with merchants coordinating a decentralized putting-out system. Eventually, this led to the establishment of non-mechanized factories that introduced the division of labor into the production process.
Historians agree that the discovery of the ‘New World’ was a major catalyst for the rise of capitalism. The influx of gold and silver from Latin America led to significant wealth accumulation, fueling economic growth and development.
Initially, Spain benefited the most from the New World’s riches, but soon, Dutch and English merchants seized much of the wealth. As Adam Smith pointed out, it wasn't just the import of gold and silver that enriched Europe; the discovery of America created an endless market for European goods, sparking a significant division of labor and economic transformation.
During the 16th to 18th centuries, a new moral code emerged that justified capitalist inequity. Wealth was seen as a result of will and hard work, while poverty became a moral failing. Absolute states played a crucial role in this era by creating uniform monetary systems, legal codes, and unified home markets, all while eliminating internal tariffs.
In Northern Europe’s advanced countries, a new consumption attitude emerged, dubbed the "industrious revolution." This development paved the way for significant capital accumulation, market expansion, and technological innovations, setting the stage for the rise of modern capitalism.
From the mid-18th to the mid-20th century, Europe underwent a modernization revolution with the development of industrial infrastructure like railways, automobiles, air transport, electricity, and telecommunication. Cities grew, and public schools, hospitals, and prisons spread, while bureaucratic and rational procedures for governing social life emerged, transforming society as a whole.
Inspired by the world events of the time, Karl Marx delved into the last stage of capitalism in his three-volume work 'Capital: A Critique of Political Economy.' Marx argued that rapid capital turnover would sooner or later concentrate wealth among a few, leading to recurring crises that would eventually cause the newly emerged system to collapse.
Although Marx analyzed the final stage of capitalism, he didn't actually use the term “late capitalism.” The phrase was coined nearly a century ago by Werner Sombart, a controversial German historical economist, in his famous work 'Der Moderne Kapitalismus.'
Sombart made a significant contribution by defining three periods of the capitalist economic system: early or proto-capitalism, advanced capitalism, and late capitalism. According to Sombart, late capitalism specifically referred to the economic, political, and social deprivations following the aftermath of the First World War.
Mandel described late capitalism not as a change in the core of capitalism, but as a new era marked by accelerated production and exchange. A key feature of late capitalism is the increasing capital investments in non-traditional areas, such as the expansion of credit.
The term “late capitalism” gained traction after Belgian Marxist economist Ernest Mandel’s treatise, 'Late Capitalism,' was published in 1975. Mandel used the term to describe the economic boom following World War II, marked by the rise of multinational companies, global capital circulation, and increased corporate profits and individual wealth, especially in the West.
Mandel also argued that the period of exceptional economic growth would hit its limit by the mid-1970s. During this time, the world economy faced oil crises in 1973 and 1979, while Britain experienced a banking crisis due to falling property prices and rising interest rates.
Since Mandel's writing, economic crises have become a recurring theme. The 1980s saw regional financial crises in Latin America, the US, and Japan. In 1997, the Asian financial crisis hit, and the 2008 US subprime crisis led to the Great Recession.
The term "late capitalism" saw a resurgence in 1991 when Marxist literary critic Fredric Jameson published 'Postmodernism or the Cultural Logic of Late Capitalism.' Building on Mandel's idea of accelerated, global capitalism, Jameson argued that late capitalist societies have lost their crucial historical connection and are now captivated by the present.
According to Fredric Jameson, late capitalism is defined by a globalized, post-industrial economy where everything, from material goods to immaterial aspects like most arts and lifestyle activities, becomes commodified and consumable.
In this stage of capitalism, we witness innovation for innovation’s sake, wealth hoarding, rising inequality, and the superficial, self-centered self-image projected by celebrities or "influencers" through social media. Societal changes are quickly turned into products for exchange.
In 'Late Capitalism and the Ends of Sleep,' Jonathan Crary argues that today's rampant 24/7 capitalism, driven by intrusive technologies and social media, is eroding basic human needs like sufficient sleep. It's also eliminating the "useless time of reflection and contemplation."
Since its conception, "late capitalism" has mainly described the latest stage of capitalist development, often attributed to periods following economic crises. Recent global upheavals, like the 2008 subprime crisis and the financial turmoil from the COVID-19 pandemic, have simultaneously expanded and concentrated wealth.
In essence, the rich get richer, and the poor get poorer, and such is the cycle of capitalism. Contemporary economists like Thomas Piketty and Joseph Stiglitz warn that growing inequality could irreversibly jeopardize our future, especially with the help of Big Tech and its highly ambitious plans.
A more realistic take on contemporary capitalism might lead us to go back to the pre-WWI terminology: we are once again in a period of "latest capitalism," a phase humanity has seemingly experienced for centuries.
Yet, the looming environmental catastrophe makes self-approving thinking seem outdated, or even dangerous, as the urgency of "what comes after" our current world condition is underscored by the obvious climate change and environmental disasters. Asserting the lateness of capitalism could be a hopeful stance amidst troubling planetary circumstances.
Sources: (Quillette) (Sage) (The Guardian) (The Conversation) (ScienceDirect)
See also: This is what the world could look like in 50 years
This isn’t the first time a Marxist theoretician has dubbed a phase of capitalism as terminal. In 1916, Vladimir Lenin, the first Soviet dictator, argued that imperialism and the concentration of capitalism into monopolies were signs of capitalism’s demise and the dawn of socialism.
Artificial intelligence and robotization mark a new frontier in production by reducing labor inputs to almost zero. AI, through iterative trial and error, will enable not only the automation of production but also the automation of the automation process itself.
AI and robotization will surely create value without any human labor, challenging the labor theory of value and the entire Marxist paradigm. Therefore, this phase of capitalism might, in fact, be far from "late-stage" and will become increasingly evident as global technology rapidly advances.
For the past 500 years, capitalism has been the dominant economic system, and it's gone through various stages. Its roots trace back to ancient history with bartering and trading, which Adam Smith, the father of modern market capitalism, considered part of human nature. Nowadays, the phrase “late capitalism” has become a viral meme, highlighting the absurdities of certain free market economies. On social media platforms like X, hashtags like #latecapitalism, #tardocapitalismo, and #spätkapitalismus make light of ideas such as "endless growth". Academically, “late capitalism” pops up in discussions about populist rises, financial investments, Big Tech, and migration conditions.
But where did this term come from, and what does it really mean? Click through the gallery to discover more.
Do we live in "late capitalism"?
Is capitalism evolving, decaying, or simply repeating itself?
LIFESTYLE Politics
For the past 500 years, capitalism has been the dominant economic system, and it's gone through various stages. Its roots trace back to ancient history with bartering and trading, which Adam Smith, the father of modern market capitalism, considered part of human nature. Nowadays, the phrase “late capitalism” has become a viral meme, highlighting the absurdities of certain free market economies. On social media platforms like X, hashtags like #latecapitalism, #tardocapitalismo, and #spätkapitalismus make light of ideas such as "endless growth". Academically, “late capitalism” pops up in discussions about populist rises, financial investments, Big Tech, and migration conditions.
But where did this term come from, and what does it really mean? Click through the gallery to discover more.