I discussed in another piece how capitalism is often defined in terms outside of its actual practical and objective history. Some wish to frame it from purely theoretical (read that as wholly idealistic) frames. What I have here in this piece, is a reading from Dr. Douglas Rushkoff, Professor of Media Theory and Digital Economics at the City University of New York, and author of “Program or Be Programmed”. In his book, “life inc: How Corporations Conquered the World, and How We Can Take It Back”, he goes into some detail about capitalism’s sordid history.
On that topic of corporations and corporatism, he writes:
Though not completely distinct from commerce or the free market, the corporation is a very specific entity, first chartered by monarchs for reasons that have very little to do with helping people carry out transactions with one another. Its purpose, from the beginning, was to suppress lateral interactions between people or small companies and instead redirect any and all value they created to a select group of investors.
“life inc: How Corporations Conquered the World, and How We Can Take It Back”, Douglas Rushkoff, pg 3
He spends a couple pages discussing roots of capitalism in 13th century merchant class extending trade for artisans while landed nobility shrunk. While this powerful, yet diminishing aristocracy provided military protection to vassals who governed peasants under Feudalism, they also watched as this growing merchant class developed international reach. He writes:
The aristocracy longed for a way to participate in the new economy–a way to invest that didn’t put them or their good names at any risk. For their part, the new merchant class had certainly increased the speed and breadth of wealth creation–but this also made for a highly competitiive and fluid business environment.
Continuing, he states…:
The division of labor is not the same thing as the specialization of labor. On the surface, it may appear that a society of merchants, managers, and various levels of laborers is more specialized than one of shopkeepers and artisans. But it was not to the manager’s advantages to hire highly specialized laborers who could demand higher wages. Instead, managers standardized processes in order to hire the least qualified and most replaceable laborers around.
As the commercial economy spread, the peasant had to turn the only marketable skill he had–physical labor–into his means of survival. Evidence of this sort of wage labor can be traced all the way back to Portugal in 1253.
…both the aristocracy and the most successful of the mercantile class required a new mechanism through which they could invest their almost “generic” capital in the form of pure financial and legal power. This mechanism had to offer the ability to invest in a business with total discretion, anonymity, limited liability, passive participation, and little or no expertise.
Traditional family businesses, which shared labor, risk, and capital by blood ties, were no longer sufficient to the task. New kinds of laws, contracts, and standardized currencies would be required to extend these agreements to people of different families and regions. Florence, with its key location on the Mediterranean (as well as its widely accepted currency, the gold florin), became the birthplace of the first “limited partnership” firms. the precursors to full-fledged corporations, they distinguished between the liability of the firm’s directors and of those who merely contributed capital, who would only be responsible for the amount of their contribution.
As the operators of these huge projects sought to secure even more capital from a wider range of regions and social classes, they formed a more advanced form of limited partnership called the joint stock company, which could generate investment from shareholders on an open market. This broke business open, allowing for the creation of businesses by virtually anyone capable of getting investors.Finally, the monarchy had something it could offer the bourgeoisie who threatened to unseat them.pg 6-7