Thread: Did "capital" exist in Antiquity and the Middle Ages? If trade was commonplace, why didn't Capitalism emerge then?

I'm studying economic history, and there's a big question bugging me (without solving it, I don't know I could completely understand the economic history of humanity):

Why didn't Capitalism develop before it eventually did? After all, Land has been a form of capital for humanity since the Neolithic, when the discovery of agriculture allowed for the production of food at the disposal of the population. Why couldn't the land-owners invest their surpluses in newer forms of capital (such as tools or machines)?

I understand that the necessary knowledge (especially scientific knowledge) for creating capital was not always there. But in the Middle Ages, for example, there WAS already some technological progress: I mean, you had plughs, cranes, bridges, windmills, etc. Why didn't any nobleman/merchant/artisan start to accumulate more and more capital to produce more and more (it's not like they couldn't create markets for their products)? They also had free labour (slaves and well, serfs were not that expensive to maintain).

I'd really appreciate some insight on this. Thanks in advance! (I posted this on the Economics and History forums, as I thought it belonged rightly to both).

Originally Posted by Matt24

I'm studying economic history, and there's a big question bugging me (without solving it, I don't know I could completely understand the economic history of humanity):

Why didn't Capitalism develop before it eventually did? After all, Land has been a form of capital for humanity since the Neolithic, when the discovery of agriculture allowed for the production of food at the disposal of the population. Why couldn't the land-owners invest their surpluses in newer forms of capital (such as tools or machines)?

I understand that the necessary knowledge (especially scientific knowledge) for creating capital was not always there. But in the Middle Ages, for example, there WAS already some technological progress: I mean, you had plughs, cranes, bridges, windmills, etc. Why didn't any nobleman/merchant/artisan start to accumulate more and more capital to produce more and more (it's not like they couldn't create markets for their products)? They also had free labour (slaves and well, serfs were not that expensive to maintain).

I'd really appreciate some insight on this. Thanks in advance! (I posted this on the Economics and History forums, as I thought it belonged rightly to both).

When did capitalism start, according to your description? You should define precisely what you mean by "captalism".

I think the idea that the purpose of capitalism is to create more commodities is a bit of a myth.
The purpose of capitalism is to accumulate more capital and it only counts currency as wealth.
If gold is the currency then the capitalists will do everything they can to accumulate gold, even if it reduces the production of other commodities.

I suppose capitalism starts with the idea of a fixed currency which can be stored indefinitely and lent out for interest.

Banking began in Italy in the 13th and 14th century. It was considered usury by the Church until it was established as a fair (non-sinful) way of generating capital. It didn't hurt this transformation when wealthy merchants began pouring money into the pockets of the Church. An economy is like an engine, money, fuel. When money circulates freely, the engine runs; when it becomes hoarded by the wealthy, the engine sputters. Wealth/ money
is power in condensed form. Amassed fortune is used by it's holders to wield power and influence over those who don't have either. Capitalism is an economic idea; Democracy, a social/societal one.

Capitalism as we understand it requires the backing of laws. In particular, company law shields individual shareholders from the debts of the company should the venture fail. Shareholders can lose some or all of their investment, but they can't be called on to meet any further liability beyond that. Which makes more people more willing to invest in companies.

It is as Adelady states. The Bernie Maddoffs and many others demonstrate why the investment markets require government regulation. Greed tends to overtake
the system. Power corrupts, or tends to. Absolute power, in finance or government, corrupts absolutely. This is a truism which happens to be utterly true. A cursory look at history confirms it.

Originally Posted by umbradiago

Banking began in Italy in the 13th and 14th century. It was considered usury by the Church until it was established as a fair (non-sinful) way of generating capital. It didn't hurt this transformation when wealthy merchants began pouring money into the pockets of the Church. An economy is like an engine, money, fuel. When money circulates freely, the engine runs; when it becomes hoarded by the wealthy, the engine sputters. Wealth/ money
is power in condensed form. Amassed fortune is used by it's holders to wield power and influence over those who don't have either. Capitalism is an economic idea; Democracy, a social/societal one.

One little correction:
International banking was one of the practices by the Knights Templar beginning circa 1129-1150

Thanks. I did not know that. Weird, wild stuff ! That's my Johnny Carson.

Capitalism genuinely began with the idea of stock companies,
, and capitalists do not seek to horde cash or
get as much cash as possible, rather the uber wealthy have diverse reserves of stock and real estate,
this is why you always hear the rich say I need to free up the money, because cash sits and depreciates, they look to have as little cash as possible, when advantageous.

Also Bernie Madoff is only proof that people should do their homework, we have since seen the rise of activist investors

Scupltor makes a valid point so I'll extend from there and keep going back. The Koran was written during the height of the dark ages, it forbids charging interest on debt. The Torah has laws on borrowing. The Ancient Roman Empire actually had insurance companies for the ships used in shipping activities. In Eurasia the serfs were tied to the lands, and the lands value was in no small part determined by how many and who the serfs were, who were tied to that land.

Capital though is not the same as Capitalism just as Commune isn't the same as Communism. You need to start with a definition (yours or someone else's of Capital) and move from there. Most historians would probably argue that the start of currency rather than bartering for goods, marks the start of a nation / state economy. That point in time would take you back all the way to before the rise of Ancient Egypt. Good luck with your paper, if you chose that definition you have a very long paper to start writing!