The Economic Transformation of America: 1600 to Present

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Fernand Braudel, a modern French historian, sees three intertwined but distinguishable strands of history. They are: material life, economic life, and capitalism. Material life, he says, sets “the limits of the possible”. Material life means the routines of daily work, the everyday tasks that we perform so that we can sustain ourselves. It covers the means by which we travel to work, the efforts we perform there, the products we make in use, etc. Without including knowing how material life has changed, we would not be able to understand the economic transformation of America. Economic life mainly encompasses market activity, which includes the jostling of buyers and sellers on the market square, the complex acts of offer and bid, purchase and sale that make possible the essential social relationship of exchange. The strand of our overall theme is the evolution of our involvement with the market, both as buyers of goods and as suppliers of our energies. A vital part of the economic transformation of America is the enlargement of economic life. The third strand is capitalism itself. The best way we can gain an understanding about the nature of capitalism is if we focus our attention on the three elements that it introduces into material and economic life: capital, the market mechanism, and the division of economic and political activity. 1)Capitalism is orientated to the continual accumulation of material wealth – as capital. The material wealth in capitalism is in the form of productive capital. Wealth is used to build machines and equipment. The sole purpose of the wealth is to create still more wealth. Consequently, capitalism is expansive in terms of the value and volume of its output. This character of capitalism is the source of its extraordinary historic impact. The capitalistic force dominates the economic transformation of America. 2)Under capitalism, the production and distribution of wealth is entrusted to the market mechanism. The market system is a combination of maximizing drive generated throughout society, and the disciplining pressures exerted by the pressure of competition attempting to maximize his wealth as well. It is this combination that gives capitalism its restless search for economic opportunities achieved via a constant effort to match supply to demand. 3)Capitalism creates a new division between economic and political activity. Economic power separating from political power is an essential element of the capitalist structure and thus a central feature of capitalism. This separation brings with it a new conception of economic freedom and new sources of political conflict. I hope this helps you understand a little more clearly the focus of this book. I also hope that you will realize that the theme of the economic transformation of America is in fact the theme of the development of American capitalism. To follow the development of capitalism means that we must watch the unfolding of material life as it constantly expands the limits of the possible. It also requires that we observe the expansion of economic life as market transactions knit us ever more tightly together. But most importantly, we must direct our attention to the achievements and failures of the larger structure that we call capitalism. You will shortly see if you have not already that these threads constitute nothing less than the historic evolution of capitalism itself.

The first form of capitalism emerged as a result of the rise in international trade, or mercantilism. Mercantilist policy states that the prosperity of a nation depends upon its capital, and that the volume of the world economy and international trade is unchangeable. The early form of capitalism differed in two respects from what we know today as capitalism. First, it sought its profits from trade rather than from production. Second, merchant capitalism did not yet depend on competition as a central regulator of the system....
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