by Beatriz Muriel, The Institute for Advanced Development Studies
In the career of political leadership, history shows the ease with which persons, facts, and even words are sanctified or demonized. Anything goes in the race to conquer people’s hearts! In this game of seduction, valuable discussion gatherings have been done away with, much to the frustration of unbelievers, specialists, and intellectuals. This is without doubt the case of the so-called ‘western capitalist mentality’ that is currently demonized in Bolivia.
It is known that the capitalist system brings about levels of (long-term) economic growth that were never seen by the world before the mid-eighteenth century. The darker side of the system is also well documented, where in many cases unfairness between social groups perpetuated compared to the previous feudal system. However, the development root of the system is little known. This root spawned in response to the mindset of middle and lower class Englishmen and their survival strategies.
Historians and specialists have a common interpretation of important happenings and events during this period. The French Revolution promoted a “liberal” mentality in Europe in the face of the repressive system that prevailed. In this mentality it was thought that the individuals should be free to think and take initiatives, which was also translating into the valuation of private initiative (which today is known as entrepreneurship). In particular, the English had a practical sense of doing things, and had a freer social organization compared to the rest of Europe.
In this context, the so-called bourgeois revolutions, as well as the development process itself, led to the abolition of feudalism in which lords and large land owners had both property and legal rights over the land and family farms, forcing the peasantry into a series of work services and financial payments or something of the like.
The disappearance of feudalism was accompanied by the transference of lands from the lords to the peasants. Nevertheless, this transfer was not free in England and it is here where the admirable force, dedication, and work of a poor and suffering class saw the opportunity to improve their living conditions. Many peasants put their efforts toward improving land productivity with the aim of generating money surplus to buy their lands and support their families. However, in this productive dynamic many farmers could not succeeded, and had to migrate to cities in search of better fortune.
At the time, majority of the middle class from British cities found business opportunities in the technological innovations that were going on since the mid eighteenth century – in a kind of learning by doing – in sectors such as textiles, steel, and transport. This class was composed of families who already had some kind of business tradition or were economically independent.
Initially, capital accumulation came from re-investment of profits and personal savings, as well as loans from family, friends, or associates. Later on it started to come also from loans handed out by banks. Capital accumulation was the main restriction that left the poorest families with little chance to create business and, hence, to take advantage of this industrial revolution. Nevertheless, the reduced upper class also failed to actively participate in this revolution, possibly due to the “rentier mentality” that prevailed in that period.
This scene nicely frames the development of the capitalist system that is motivated by especially middle, but also lower, class. They had a proactive culture in generating wealth and economic growth and, in modern terminology, a great entrepreneurial spirit.
Why then criticize this western capitalist mentality?
Perhaps the most important errors have lain in the idea that the prevailing economic market forces have a social conscience and that capitalist development could democratize power. However, it is important to keep in mind that, although they are related, economy is economy, sociology is sociology, and politics is politics.
On the one hand, capital, together with technological innovations, became the most valuable input that was consequently highly valued for production. The labor force, on the contrary, experienced impressive growth in the cities driven by rural-urban migration, which contributed to a large excess of labor supply. This, in turn, opened the door to labor exploitation and abuses permitted by the prevailing political and social rules. On the other hand, this productive dynamic and capital accumulation outstripped the most able and perspicacious people; generating in many cases large concentrations of wealth and income inequality.
Understanding the functioning of the economic forces that govern capitalist worlds is like understanding the law of gravity. Whoever wishes to jump from the tenth floor hoping that gravity has a “social conscience” will only die (if a miracle has not occurred). However, this gravity force is critical for the very existence of human beings on this planet.
Under this reality, we have learnt to live with this law. We have invented for ourselves a series of tools so as to interact in harmony with this law, such as planes, parachutes, etc. In a similar perspective, to wish that economic forces might be “democratic and altruistic” will only lead us to dissatisfaction, heated discussions and fights. Nevertheless, these economic forces are fundamental for development. It is therefore the duty of all of us to learn and understand them in order to develop instruments able to bring them into harmony with a greater social and political justice.