1) Thanks to Kate for starting this discussion. I've been thinking a lot about this lately, because everyone assumes they know what capitalism is, and what it means, but when you ask people it becomes clear there is no simple answer. https://twitter.com/KateRaworth/status/1347871386258333699
2) I think it best to start off defining what capitalism is not, and what the process of capitalism actually means. I will do this in the next 2 tweets. Then I will explain the origin of the current capitalist system.
3) There seems to be a general assumption that capitalism is synonymous with owning private property, trading, making a moderate profit to make a living. I say this is false, highly misleading, and it becomes obvious when you define the core meaning of capitalism.
4) Capitalism is derived from capital in a financial sense. Here capital is wealth or assets that can be invested, for big return i.e. by investing this wealth, you can expect a return of far more wealth.
5) If you look at the voyages in the early days of the colonial activities of European countries, it will be seen that wealth individuals financed voyages of colonisation and discovery, as an investment, for a large return from money made from these voyages.
6) This didn't start in European countries at the start of colonisation 500-600 years ago. I simply chose this example because it is the beginnings and origins of the modern financial system. Similar arrangements happened in ancient times.
7) Therefore, at it's very purest, act of capitalism is where wealthy people finance ventures that they often don't carry out themselves, where large sums of money can be made, but the person carrying out the venture, would not themselves be able to finance it.
8) This is very important to understanding capitalism. We are not talking about everyday trade and transactions. We are talking about a very wealthy person investing a large amount of money, to facilitate a venture which couldn't otherwise go ahead, for a big return.
9) Before the period of colonisation a wealthy person generally derived their income from owning large estates i.e. land and resources, and the revenue from farming, forestry, mining or whatever activity that took part on the land they owned.
10) This provided a steady income, but their wealth didn't rapidly grown. The amount of revenue they generated, depended on how much land they owned or controlled. This is why they would start wars or conquest, as a means to rapidly grow their wealth.
11) Of course there was a certain amount of investment in ventures, but opportunities were limited, and there was no continuous economic growth. There was lucrative trade, but a few individuals would control this.
12) When European countries started to colonise both the so called New and Old World, this created far more opportunity, for those with wealth, to rapidly increase their wealth by financing these colonial ventures.
13) The British East India Company is a great example of how this process developed, and as will become apparent, I have chosen it for a very good reason, because it is the origin of the next stage of development, the industrial evolution.
14) We take industrial production, factories for granted now. But surprising factories and production lines didn't really exist in the Ancient World. The Arsenal at Venice, which built ships is one of the few examples.
15) Surprisingly, the first real examples of factories, all occurred in Britain, several hundred years ago. The first factories used water power and technology around since the Ancient world, so it wasn't the technology that inspired them.
16) Industrial, factory production line manufacturing allowed a whole new means for the wealthy to invest their capital in. It was the first time economic growth, year on year could be guaranteed.
17) However, what I was fascinated about was why this arose in Britain? The popular myth is that clever British people created the technology for these factories, steam engines, spinning jennies etc. But the first factories didn't use this technology.
18) As the first factories in Britain didn't use this new technology, rather it was developed for factories which already existed, but used old technology. This cannot explain how the first factories and industrial production arose in Britain.
19) Prior to factories manufacturing was done by crafts people in their own properties. It really was a cottage industry. I lived in Blackburn for some time, one of the centres of the early industrial revolution. But cloth production there dates back to the 16th Century.
20) Quite surprisingly I found out that factories were actually started by the British East India Company in India, before any existed in Britain. It was done as part of the very systematic way the British Empire exploited it's colonies.
21) In other words, the factory system started in Britain, because enterprises like the British East India Company learned to better systematically exploit their colonies, to provide the best returns for their wealth investors, investing their capital. This was how it functioned.
22) This is clearly the origin of the modern capitalist system, simply because the evidence showed this systematic pattern of investment of capital, for ever greater and more reliable returns, started here.
23) I thought I would lay out this history, the origins, because I have never read it anywhere else, and it is quite contrary to the narrative in my history books. But the facts and the evidence is clear as you can see for yourselves.
24) I am not trying to make any great claims for discovering this. Maybe others have documented it, and I am simply referring to certain factual evidence.
25) Overall what I am attempting to do is to clarify the origins of the modern form of capitalism, and how it developed. It does surprise me that many theories of capitalism are quite inconsistent with the historical fact and evidence.