Growth, uncertainty and the Third World in the rise and fall of capitalism

Abstract

Capitalism is subject to a growth imperative, because uncertainty about the future makes it impossible to survive remaining in a stationary state. Furthermore, growth beyond what is possible for a closed system is necessary for long-run survival. Profitable, some would say predatory relations with other systems and institutions are necessary. The distinction between capitalist and non-capitalist systems and institutions is private ownership and administration through markets in one case and bureaucratic ownership and administration in the other case. The historical development of capitalism is reviewed, starting with the merchant-guild capitalism of feudal society. Merchant-guild capitalism gave rise to great rewards of conquest, the modernization of European agriculture, urbanization of the peasantry and the Industrial Revolution. The latter's prosperity resulted in “excess supply” and the solution to that problem was found in welfare capitalism, corporate capitalism and the multinational institutions of world control. What this means for the Third World is then examined empirically and theoretically, the latter by considering three models of capitalist development. One is the neoclassical model of exogenous growth, the second is the endogenous growth version of the model and the third is a biological type of model that recognizes how growth in the size of the West relative to the Third World makes it increasingly difficult to satisfy the demand for continued growth on the part of corporate capitalism. As the demands on the environment rise, and as the collapse of civil society in Africa and elsewhere in the Third World takes place, the decline of capitalism begins.