Capitalism and Socialism: Crash Course World History #33


Hi, I’m John Green, this is Crash Course World
History, and today we’re going to talk about capitalism. Yeah, Mr. Green, capitalism just turns men
into wolves. Your purportedly free markets only makes slave of us all.. Oh god Stan, it’s me from college. Me from
the past has become me from college. This is a disaster! The reason he’s so unbearable,
Stan, is that he refuses to recognize the legitimacy of other people’s narratives. And
that means that he will never ever be able to have a productive conversation with another
human in his entire life. So listen, me from the past. I’m gonna disappoint
you by being too capitalist. And I’m gonna disappoint a lot of other people by not being
capitalist enough. And I’m gonna disappoint the historians by not using enough jargon.
But what can I do? We only have twelve minutes! Fortunately, capitalism is all about efficiency. So let’s do this, me from college: Randy [Ransom]
Riggs becomes a best-selling author, Josh Radnor stars in a great sitcom, it is NOT
going to work out with Emily, and do NOT go to Alaska with a girl you’ve known for ten
days. Okay, let’s talk capitalism. So capitalism is an economic system, but it’s
also a cultural system. It’s characterized by innovation and investment to increase wealth.
But today, we’re going to focus on production and how industrial capitalism changed it.
Stan, I can’t wear these emblems of the bourgeoisie while Karl Marx himself is looking at me,
it’s ridiculous. I’m changing! Very hard to take off a shirt
dramatically. So let’s say it’s 1200 CE and you’re a rug
merchant. Just like merchants today, you sometimes need to borrow money in order to buy the rugs
you want to resell at a profit, and then you pay that money back, often with interest,
once you’ve resold the rugs. This is called mercantile capitalism, and it was a global
phenomenon, from the Chinese, to the Indian Ocean trade network, to Muslim merchants who
would sponsor trade caravans across the Sahara. But by the 17th century, merchants in the
Netherlands and in Britain had expanded upon this idea to create joint stock companies.
Those companies could finance bigger trade missions and also spread the risk of international
trade. But the thing about international trade is that sometimes boats sink or they get taken
by pirates, and while that’s bad if you’re a sailor because, you know, you lose your
life, it’s really bad if you’re a mercantile capitalist because you lost all your money.
But if you own one-tenth of ten boats, your risk is much better managed. That kind of
investment definitely increased wealth, but it only affected a sliver of the population
and it didn’t create a culture of capitalism. Industrial capitalism was something altogether
different, both in scale and in practice. Let’s use Joyce Appleby’s definition of industrial
capitalism: “An economic system that relies on investment of capital in machines and technology that
are used to increase production of marketable goods.” So imagine that someone made a Stan machine
(by the way Stan, this is a remarkable likeness) and that Stan machine could produce and direct
10 times more episodes of Crash Course than a human Stan. Well, of course, even if there
are upfront costs I’m going to invest in a Stan machine so I can start cranking out 10
times the knowledge – Stan, are you focusing on the robot instead of me? I AM THE STAR
OF THE SHOW. Stanbot, you’re going behind the globe. So when most of us think about capitalism,
especially when we think about its downsides – long hours, low wages, miserable working
conditions, child labor, unemployed Stans – that’s what we’re thinking about. Now admittedly,
this is just one definition of industrial capitalism among many, but it’s the definition
we’re going with. All right, let’s go to the Thought Bubble.
Industrial capitalism developed first in Britain in the 19th century. Britain had a bunch of
advantages – it was the dominant power on the seas, and it was making good money off
its trade with its colonies, including the slave trade; also, the growth of capitalism
was helped by the half-century of civil unrest that resulted from the 17th century English
Civil War. Now, I’m not advocating for civil wars or
anything but in this particular case it was useful because before the war, the British
crown had put a lot of regulations on the economy: complicated licenses, royal monopolies,
etc. But during the turmoil it couldn’t enforce them, which made for freer markets. Another factor was a remarkable increase in
agricultural productivity in the 16th century. As food prices started to rise, it became
profitable for farmers, both large and small, to invest in agricultural technologies that
would improve crop yields. Those higher prices for grain probably resulted from population
growth, which in turn was encouraged by increased production of food crops. A number of these agricultural improvements
came from the Dutch, who had chronic problems feeding themselves, and discovered that planting
different kinds of crops, like clover, that added nitrogen to the soil and could be used
to feed livestock at the same time, meant that more fields could be used at once. This
increased productivity, eventually brought down prices, and this encouraged further innovation in
order to increase yield to make up for the drop in prices. Lower food prices had an added benefit: since
food cost less and wages in England remained high, workers would have more disposable income,
which meant that if there were consumer goods available, they would be consumed, which incentivized
people to make consumer goods more efficiently, and therefore more cheaply. You can see how
this positive feedback loop leads to more food, and more stuff, culminating in a world
where people have so much stuff that we must rent space to store it, and so much food that
obesity has become a bigger killer than starvation. Thanks, Thought Bubble. So this increased productivity also meant
that fewer people needed to work in agriculture in order to feed the population. To put this
in perspective, in 1520, 80% of the English population worked the land. By 1800, only
36% of adult male laborers were working in agriculture, and by 1850, that percentage
had dropped to 25. This meant that when the factories started
humming, there were plenty of workers to hum along with them. Especially child laborers.
So far all this sounds pretty good, right? I mean, except for the child labor – who wouldn’t
want more, cheaper food? Yeah, well, not so fast. One of the ways the British achieved all this
agricultural productivity was through the process of enclosure, whereby landlords would
reclaim and privatize fields that for centuries had been held in common by multiple tenants.
This increased agricultural productivity, but it also impoverished many tenant farmers,
many of whom lost their livelihoods. Okay, for our purposes capitalism is also
a cultural system, rooted in the need of private investors to turn a profit. So the real change
needed here was a change of mind. People had to develop the capitalist values of taking
risks and appreciating innovation. And they had to come to believe that making an upfront
investment in something like a Stan Machine could pay for itself and then some. One of the reasons that these values developed
in Britain was that the people who initially held them were really good at publicizing
them. Writers like Thomas Mun, who worked for the English East India Company, exposed
people to the idea that the economy was controlled by markets. And other writers popularized
the idea that it was human nature for individuals to participate in markets as rational actors. Even our language changed: the word “individuals”
did not apply to persons until the 17th century. And in the 18th century, a “career” still
referred only to horses’ racing lives. Perhaps the most important idea that was popularized
in England was that men and women were consumers as well as producers and that this was actually
a good thing because the desire to consume manufactured goods could spur economic growth.
“The main spur to trade, or rather to industry and ingenuity, is the exorbitant appetite
of men, which they will take pain to gratify,” so wrote John Cary, one of capitalism’s cheerleaders,
in 1695, and in talking about our appetite, he wasn’t just talking about food. That doesn’t
seem radical now, but it sure did back then. So here in the 21st century it’s clear that
industrial capitalism – at least for now – has won. [Aside to Marx] Sorry buddy, but you know,
you gave it a good run. You didn’t know about Stalin. But capitalism isn’t without its problems,
or its critics, and there were certainly lots of shortcomings to industrial capitalism in
the 19th century. Working conditions were awful. Days were long, arduous, and monotonous.
Workers lived in conditions that people living in the developed world today would associate
with abject poverty. One way that workers responded to these conditions was by organizing
into labor unions. Another response was in many cases purely theoretical: socialism,
most famously Marxian socialism. I should probably point out here that socialism
is an imperfect opposite to capitalism, even though the two are often juxtaposed. Capitalism’s
defenders like to point out that it’s “natural,” meaning that if left to our own devices, humans
would construct economic relationships that resemble capitalism. Socialism, at least in
its modern incarnations, makes fewer pretenses towards being an expression of human nature;
it’s the result of human choice and human planning. So, socialism, as an intellectual construct,
began in France. How’d I do, Stan? Mm, in the border between Egypt and Libya. There were two branches of socialism in France,
Utopian and revolutionary. Utopian socialism is often associated with Comte de Saint Simon
and Charles Fourier, both of whom rejected revolutionary action after having seen the
disaster of the French Revolution. Both were critical of capitalism and while
Fourier is usually a punchline in history classes because he believed that, in his ideal
socialist world, the seas would turn to lemonade, he was right that human beings have desires
that go beyond basic self interest, and that we aren’t always economically rational actors. The other French socialists were the revolutionaries,
and they saw the French Revolution, even its violence, in a much more positive light. The
most important of these revolutionaries was Auguste Blanqui, and we associate a lot of
his ideas with communism, which is a term that he used. Like the Utopians, he criticized
capitalism, but he believed that it could only be overthrown through violent revolution
by the working classes. However, while Blanqui thought that the workers
would come to dominate a communist world, he was an elitist. And he believed that workers
on their own could never, on their own, overcome their superstitions and their prejudices in
order to throw off bourgeois oppression. And that brings us to Karl Marx, whose ideas
and beard cast a shadow over most of the 20th century. Oh, it’s time for the Open Letter?
An Open Letter to Karl Marx’s Beard. But, first, let’s see what’s in the secret
compartment today. Oh, robots. Stan Bots! Two Stan Bots, one of them female! Now I own
all the means of production. You’re officially useless to me, Stan. Now, turn the camera
off. Turn the ca– I’m going to have to get up and turn the camera off? Stan Bot,
go turn the camera off. Hey there, Karl Marx’s beard. Wow, you are intense. Karl Marx, these days
there are a lot of young men who think beards are cool. Beard lovers, if you will. Those
aren’t beards, those are glorified milk mustaches. I mean, I haven’t shaved for
a couple weeks, Karl Marx, but I’m not claiming a beard. You don’t get a beard by being lazy, you
get a beard by being a committed revolutionary. That’s why hardcore Marxists are literally
known as “Bearded Marxists.” These days, that’s an insult. But you know what, Karl
Marx, when I look back at history, I prefer the bearded communists. Let’s talk about
some communists who didn’t have beards: Mao Zedong, Pol Pot, Kim Jong-il, Joseph freakin’
Stalin with his face caterpillar. So, yeah, Karl Marx’s beard, it’s my great
regret to inform you that there are some paltry beards trying to take up the class struggle
these days. Best Wishes, John Green Although he’s often considered the father
of communism, because he co-wrote The Communist Manifesto, Marx was above all a philosopher
and a historian. It’s just that, unlike many philosophers and historians, he advocated
for revolution. His greatest work, Das Kapital, sets out to
explain the world of the 19th century in historical and philosophical terms. Marx’s thinking
is deep and dense and we’re low on time, but I want to introduce one of his ideas,
that of class struggle. So, for Marx, the focus isn’t on the class,
it’s on the struggle. Basically Marx believed that classes don’t only struggle to make
history, but that the struggle is what makes classes into themselves. The idea is that
through conflict, classes develop a sense of themselves, and without conflict, there
is no such thing as class consciousness. So, Marx was writing in 19th century England
and there were two classes that mattered: the workers and the capitalists. The capitalists
owned most of the factors of production (in this case, land and the capital to invest
in factories). The workers just had their labor. So, the class struggle here is between
capitalists, who want labor at the lowest possible price, and the workers who want to
be paid as much as possible for their work. There are two key ideas that underlie this
theory of class struggle. First, Marx believed that “production,” or work, was the thing
that gave life material meaning. Second, is that we are by nature social animals. We work
together, we collaborate, we are more efficient when we share resources. Marx’s criticism of capitalism is that capitalism
replaces this egalitarian collaboration with conflict. And that means that it isn’t a
natural system after all. And by arguing that capitalism actually isn’t consistent with
human nature, Marx sought to empower the workers. That’s a lot more attractive than Blanqui’s
elitist socialism, and while purportedly Marxist states like the USSR usually abandon worker
empowerment pretty quickly, the idea of protecting our collective interest remains powerful.
That’s where we’ll have to leave it for now, lest I start reading from The Communist
Manifesto. But, ultimately socialism has not succeeded
in supplanting capitalism, as its proponents had hoped. In the United States, at least,
“socialism” has become something of a dirty word. So, industrial capitalism certainly seems
to have won out, and in terms of material well-being and access to goods and services for
people around the world, that’s probably a good thing. Ugh, you keep falling over. You’re a great
bit, but a very flimsy one. Actually, come to think of it, you’re more of an 8-bit. But how and to what extent we use socialist
principles to regulate free markets remains an open question, and one that is answered
very differently in, say, Sweden than in the United States. And this, I would argue, is
where Marx still matters. Is capitalist competition natural and good,
or should there be systems in place to check it for the sake of our collective well-being?
Should we band together to provide health care for the sick, or pensions for the old?
Should government run businesses, and if so, which ones? The mail delivery business? The
airport security business? The education business? Those are the places where industrial capitalism
and socialism are still competing. And in that sense, at least, the struggle continues.
Thanks for watching, I’ll see you next week. Crash Course is produced and directed by Stan
Muller. Our script supervisor is Danica Johnson. The show is written by my high school history
teacher, Raoul Meyer and myself. We’re ably interned by Meredith Danko. And our graphics
team is Thought Bubble. Last week’s phrase of the week was “the
TARDIS,” so you can stop suggesting that now! If you want to suggest future phrases
of the week or guess at this week’s, you can do so in comments, where you can also
ask questions about today’s video that will be answered by our team of historians. Thanks for watching Crash Course, and as we
say in my hometown, Don’t Forget To Be Awesome. All right, Stan, bring the movie magic…
Yes!

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