Evolution of Economic History and Capitalism
T1. Contemporary Economic History
1.1 What is Economic History?
According to Jean Bouvier, it is the study of production facts and their evolution in space and time: 1. History of Techniques: history of technological changes affecting production factors (land, labor, and capital). Changes in factor proportions (technological innovation). 2. History of Changes in Space: studying productivity changes in areas (fertile-empty), political, and administrative spaces. 3. History of Economic Fluctuations Over Time: study of boom/crisis stages. Economic cycles. Upward trends.
1.2 Origins of the Discipline
Renaissance (14th-16th centuries): Birth of history as a science. Shift from theocratic explanations to rational human behavior, focusing on political and military history (nobility). Enlightenment (17th century): Emergence of economic theory and history. The bourgeoisie seeks credibility through economic activities. Developments (19th century): British Classical School (Adam Smith): Market as the perfect allocator, minimal state intervention. German Historical School: Market imperfections require state arbitration (minimum wage, unions). Marxist Economic Theory (Karl Marx): State allocation of goods, services, and factors. 20th Century: Neoclassical Theory: Freer markets, gap between economic theory and history. Great Depression (1929): Market failure necessitates state intervention, uniting history and economic theory. Neoconservatives (1960s): Growth stage, separation of economic theory and history. Cliometrics: Econometric techniques applied to history. New Economic History: Counterfactual analysis. Specialization in company history, environmental history, etc.
1.3 Features and Dimensions of Capitalism
Phases
- Industrial Capitalism (1750-1914): Industrial Revolution in Britain, self-financing production units.
- Financial Capitalism (1914-2000): Increased need for external financing, banks and financial institutions gain importance.
Elements
- Private property in goods, services, and factors.
- Market as a delivery mechanism.
Institutional Changes
- Emergence of science.
- Modernization of economic activity (double-entry bookkeeping, banks, stocks, investment funds).
- Changing family concept (smaller families).
- Transformation of social structure (class society).
- Democratization of states (women’s suffrage in Spain, 1931).
Changes in Production Factors
- Increased workforce (human capital) due to reduced mortality rates.
- Uneven distribution of natural resources.
- Expansion of physical capital (technological innovation + investment).
Role of the State
- Increased social spending (welfare, health, housing, education) and investment (public works).
- Increased public participation in GDP (from 10% in early 19th century to 46% today).
Changes in Economic Structure
- Demand: Shift from private consumption to increased investment and public spending.
- Supply: Reduction in agriculture, increase in industrial and service sectors.
Capitalist System Growth
GDP measures changes when compared between countries using GDP per capita. Annual average growth increased from 0.4% to 1.2% during the capitalist period. Divergent Development: Structural changes (shift from agriculture to secondary and tertiary sectors). Uneven Progress: Refers to standard of living, welfare (literacy rates, health indicators, purchasing power).