Capitalism is a recent historical phenomenon, and its impact is most often unappreciated. Have you ever wondered why so many centuries past by without any significant advances in technology and material comfort? Have you ever questioned why the industrial revolution suddenly sprang forth seemingly out of nowhere to improve the lives of almost everyone on the planet in such a short time? Let’s take a look and see why.

[You might want to check out the previous post “Capitalism – villain or solution?” in conjunction with this one.]

The context – A brief history of capitalism

In the middle ages, the average person (peasant or surf) lived in conditions that would horrify most westerners today. They ate meals off a dirt floor in huts held together with mud. They had no bathrooms, soap or running water, no underwear, radios or central heating; they worked 18 days to barely subsist and lived on the edge of starvation in constant fear of famines and plagues that periodically wiped out huge numbers of people. Even Kings and noblemen lived in conditions worse than even the poorest people today. Infant mortality is estimated to have been between 30-50% and life expectancy was between 25-30 years at birth, rising to about 50 for those fortunate enough to reach the age of 30.

The period of European history called the Enlightenment (1685 – 1815) enabled massive changes in philosophy, science, and politics, and as a result, things changed radically. The tight grip of the church that had lasted for centuries gave way to the age of reason. The root cause was the philosophical shift from faith and mysticism to empirical evidence and logical thinking. The discovery of the scientific method led to the scientific revolution and to numerous innovations and inventions. At the same time, the Philosophy of reason led to ideas of political freedom rooted in the concept of individual rights of men.

The thinking of English Philosopher John Locke (1632 – 1704) had a strong influence over the founding fathers of America, and through them, his ideas led to the creation of the United States of America. For the first time in human history, a country was created where the rights of men superseded the state. Men were to be served by a limited government given the role of protecting the rights and property of men and the enforcement of contracts.

Capitalism is the social expression of the concept of individual rights. This is why Capitalism was born with the independence of the United States of America from England in 1776. Of course, the concept of trade was not new, but capitalism brought trade into the mainstream. Men were now economically and politically free, and trade flourished. [It is crucial to note that capitalism was opposed from the start, and has been undermined continuously ever since by collectivists on the left and mystics on the right. With increasing state control both sides of the Atlantic and the introduction of the Federal Reserve central bank in America, capitalism has long been lost to the mixed economy.]

The industrial revolution followed with the USA leading the way. England benefited from established trade routes from its imperial days as well as being the freest country in Europe. For the brief span of roughly 150 years capitalism exerted its benevolent influence. The population of Europe rose by 300% in the 19th Century, where previously it had grown by 3% per century. The world enjoyed 100 years of international peace from 1812 to 1914, and the global slave trade was abolished as it became clear that slave economies are far less efficient than a free market, and therefore cannot compete. The standard of living of almost everyone in the world rose as a result of capitalism, yet these days no one knows what it is and wrongly holds it responsible for much suffering and for m...