Friday 6 July 2018

The Origins of Wealth (Part 2 of 4)

NJ Bridgewater

The Elements of Capitalism

Capitalism is, basically speaking, economic freedom. Within a capitalist economy, according to Bast and Walberg (2013), “there is no conscious authority in charge of operating or managing the economy”, with authority, instead, being “diffused throughout the system.”[1] In other words, the economy is not managed by a central authority, as in socialism, nor are the means of production controlled by the government. It is characterised, they argue, by three institutions: private property, the free market, and the rule of law, all of which are essential for capitalism to function.[2] This conception relates closely to the ideas of John Locke (1632 – 1704), the famous English philosopher and physician known as the “Father of Liberalism”, who argued that man (i.e. the individual, regardless of gender) is born “with a title to perfect freedom” and that each individual has a natural right and power “not only to preserve his property, that is, his life, liberty and estate, against the injuries and attempts of other men”, but also the power to endow government with the right to punish breaches of these natural rights.[3] In other words, Locke argues that individuals have a natural right to property, as well as a natural right to preserve that property and punish those who abuse his natural rights. However, this power to judge and punish breaches of his rights he has resigned “into the hands of the community”, which preserves these rights for the populace, i.e. its members.[4] It should be noted, here, of course, that by Liberalism is meant classical Liberalism, i.e. the idea of individual freedom and liberty, contrasting with the ideas of the modern Left, which now inclines more towards socialism, collectivism and Cultural Marxism (i.e. the modern movement to undermine capitalism, Western culture and the family structure based on Marxian ideas and concepts).

John Locke, Father of Liberalism [5]               

Thomas Hobbes, Author of The Leviathan[6]

The rule of law may be defined to include the rules, “whereby every man may know, what Goods he may enjoy and what Actions he may doe, without being molested by any of his fellow Subjects”, referring to a code or system of law instituted by a sovereign power, which Thomas Hobbes (1588 – 1679), author of The Leviathan, also calls “propriety”, and the system in place which maintains these rules and adjudicates on any disputes.[7] Hobbes calls this latter authority “the Right of Judicature”, which belongs to the sovereign power of state, and which includes the right “of hearing and deciding all Controversies, which may arise concerning Law, either Civill, or naturall, or concerning Fact.”[8] The rule of law thus implies not only the existence of a code or system of laws (e.g. English common law and legislation), but also the sovereign power which makes these laws, and a judiciary which decides upon all matters legal and civil. A good description of the basis of the rule of law has been given by Plato in his aptly-named dialogue, Laws, wherein he states that the “the legislator has to be careful how the citizens make their money and in what way they spend it, and to have an eye to their mutual contracts and dissolutions of contracts, whether voluntary or involuntary: he should see how they order all this, and consider where justice as well as injustice is found or is wanting in their several dealings with one another; and honour those who obey the law, and impose fixed penalties on those who disobey…”[9] He also comments on those who administer the law justly, saying that “the lawgiver reviewing his work, will appoint guardians to preside over these things,—some who walk by intelligence, others by true opinion only, and then mind will bind together all his ordinances and show them to be in harmony with temperance and justice, and not with wealth or ambition.”[10] This is the basis of good governance and a basic condition of capitalism and free societies. Furthermore, the rule of law cannot exist without justice, which, Plato says, is “a thing more precious than many pieces of gold” and “the excellence of the soul by which happiness is attained.”[11] The Qur’ān, the great centre-piece and inspirer of the Islamic Golden Age, likewise exhorts its adherents: “O ye who believe! stand fast to justice”[12] and “give back your trusts to their owners, and when ye judge between men… judge with fairness.”[13]  It is only by establishing the rule of law and just institutions that lasting wealth and prosperity can be established.

The earliest human communities, being based on the hunter-gatherer model already referred to, contained all of the elements of capitalism referred to above. The individual members of the community each had private property, in the form of various collectibles and tools, while they also shared goods and services with their next of kin. They also engaged in free market trading with other bands and clans, usually once a year during an aggregation of clans or festival. They also had norms and rules which allowed them to function, punish wrongdoing and ensure the rights of each individual within the community. These are the basic elements of capitalism, and they were present in the earliest human communities in East Africa, long before mankind made the bold move to expand and seek out new shores and climes in distant lands. This system contrasts quite strongly with feudalism—a much later system in which feudal lords owned all the land and serfs worked as virtual slaves for the landowners. The feudal system was the basis of the European economy during the Middle Ages and Renaissance, and continued in Russia until relatively recent times, when serfdom was abolished by Tsar Alexander II in 1861.[14] Serfdom in England only came to an end with the Tenures Abolition Act 1660, during the lifetime of John Locke, passed by the Convention Parliament shortly after the restoration of King Charles II to the throne.[15] Feudalism was already on the decline though, having flourished from circa 700 AD until the first quarter of the 14th century.[16]

A cleric, a knight and a peasant under feudalism[17]

Capitalism also contrasts strongly with communism and socialism, as practised by North Korea and Venezuela, where the human cost of economic ruination, privation and authoritarian control is still keenly and bitterly felt. Thankfully, however, from the 17th century onwards, modern capitalism has spread widely, along with the principles of private property, the free market and free trade, along with the rule of law. This incredible expansion is largely due to the growth and spread of the British Empire, as well as its former colonies, e.g. the United States of America, accompanied by a huge boom in technology, innovation and industry which have encompassed the world since the 19th century. The British Empire also helped to initiate and spread the benefits of the Industrial Revolution. In 1820, 75% of mankind lived on less than a dollar a day—today, only about 20% live under that amount, which is the effect of mass economic growth, free market capitalism and the spread of new sciences and technology.[18] As the Cato Institute notes in its 2017 Economic Freedom of the World Annual Report, worldwide income inequality and the poverty rate both declined during the last two decades of the 20th century, and this has accelerated since 2000, leading to even greater economic prosperity for people around the world.[19] This is driven, they argue, primarily by gains in sound money and trade liberalization. By sound money, they mean money with “relatively stable purchasing power across time”, i.e. money which doesn’t erode in value through runaway inflation, and trade liberalization means reducing the barriers to trade internationally.[20] In both cases, basic conditions for a thriving capitalist economy are created, leading to greater economic growth and reducing economic disparities and extreme poverty in its wake. Furthermore, according to the World Bank, the world’s extreme poverty rate had been halved from 1990 to 2010.[21] The situation is still not great, with 1.29 billion living below the extreme poverty rate of $1.25 per day, but the situation is improving, and this is due, in large part, to the three elements of capitalism already mentioned: private property rights, a free market and the rule of law. Where these elements are missing, extreme poverty predominates, and, where they are found, extreme poverty decreases, and economic growth prevails. Relative poverty will always exist, as complete equality is impossible, but extreme poverty does not have to, and it is on its way out.

Ancient Cities, Agriculture and Wealth

We have mentioned both the ancient epochs of mankind’s pre-history and modern capitalism, but what about what happened in between? We know that there are still hunter-gatherer groups such as the San people, i.e. the various Khoesān-speaking groups who were indigenous to Southern Africa, including South Africa and Botswana, and there are also urban, First World societies which feel the full benefits of the free market economy, and there is everything in between, including communist states with self-inflicted economic ruin and poverty. But it was not always so, and mankind’s long rise from the level of primitive subsistence has spanned a relatively short span in the total length of human existence, as well as in the much longer, and, indeed, immense existence of the Earth which is our home. As Israeli writer Yuval Noah Harari writes in his book, Sapiens: A Brief History of Humankind, humans—under which umbrella he includes Homo erectus, Homo ergaster and the Neanderthals—lived and subsisted by gathering plants and hunting wild animals for millions of years.[22] This changed, he notes, about 10,000 years ago, when Homo sapiens, i.e. modern man, did something extraordinary—they began devoting all their time and effort to cultivating certain plants and domesticating various species of animals, providing greater nutrition and a higher standard of living than they ever could have previously contemplated or imagined.[23] In the Old World, at least, agriculture began circa 9,500 – 8,500 BC in a region spanning south-eastern Turkey, western Persia and the Levant, with wheat and goats being domesticated about 9,000 BC, peas and lentil around 8,000 BC, olive trees around 5,000 BC, horses around 4,000 BC and grapevines around 3,500 BC.[24] All of these developments were extraordinary in their impact, allowing mankind to spur ahead in development and begin to create the building blocks of civilization, including the accumulation of both knowledge and capital.

Harari makes the playful suggestion that plant species domesticated Homo sapiens, rather than vice versa, since the life of a hunter-gatherer was more stimulating, they had greater knowledge of the animals they hunted and plants they gathered, and life became more—not less—difficult for the average man.[25] There is some truth to this statement. Some kinds of knowledge were lost, humans are naturally explorers and need stimulation, which farming the same field day in and day out does not necessarily provide, and pampered elites did eventually emerge. This narrative ignores, however, the constant fight for survival and struggle of the hunter-gatherer lifestyle, the precariousness of life on the savannah and open plain, and the many and numerous benefits that civilization has offered to mankind, including a much higher standard of living, more abundant wealth and knowledge, and freedom from the constant necessity to forage and search for food afforded by differentiating labour. Nevertheless, he does acknowledge the long-term benefits of the Agricultural Revolution, including better protection against wild animals, rain and cold, as well as more food per unit of territory, allowing the species to expand and multiply at a much faster rate.[26] While Harari downplays these benefits, and feels that the hunter-gatherer lifestyle was preferable, I think most people at the time were glad that they were able to have more children, put a roof over their heads, feed them more reliably, and not have to wander miles upon miles hunting for wild animals, woolly mammoths and other dangerous creatures, while constantly at fear of being ripped to shreds by a lion, bear, wolf or other vicious predator. I think Harari’s arguments, while romantic to modern readers, might fall on deaf ears if presented to our ancient forebears.

Ancient Egyptian Farmers[27]

Agriculture led to the next inevitable step in the rise of mankind: the development of villages. By about 8,500 BC, the Middle East was dotted with numerous permanent villages, such as Jericho, with permanent settlers who cultivated plants and tended domesticated animals.[28] The Middle East, and wider Fertile Crescent, were uniquely suited for the development of agriculture and permanent settlements, as noted by Jared Diamond in Guns, Germs and Steel: The Fates of Human Societies. This is due, partly, he argues, to the Mediterranean climate, which is characterized by mild, wet winters and long, dry summers, allowing for cereals and pulses to develop.[29] The abundant flora of the Fertile Crescent also allows for annual harvests of nearly a ton of seeds per hectare, resulting in some 50 kilocalories of food energy from wild cereals for each kilocalorie of work, and seeds could be stored for use later on in the year.[30] This allowed for some hunter-gatherers to settle down before they even cultivated plants.[31] When agriculture did develop, eight founder crops were domesticated, i.e. emmer wheat, einkorn wheat, barley, lentils, peas, chickpeas, bitter vetch and flax.[32] They were also able to utilize four domestic animals as food, along with the three cereals (emmer wheat, einkorn wheat, and barley) and four pulses (lentil, peas, chickpeas, and bitter vetch) already mentioned.[33] By 6,000 BC, there were already societies in the Fertile Crescent which were almost completely dependent on crops and domestic animals. In other words, they were not that different from most people today, and they ate essentially the same basic foods that we eat.[34] One can consider that when dipping into one’s chickpea-based hummus with a loaf of barley bread and some lentil soup. With the development of agriculture and permanent settlement, and a growing human population, villages, in turn, grew and became larger. As houses became permanent, and more and more people swelled the paths and spaces between each house, greater social organization became necessary. This was provided largely by what has come to be known as ‘religion’. The topic of religion, faith, Dharma or Dhamma, I have discussed in greater detail in my previous book, Mindfulness: Five Ways to Achieve Real Happiness, True Knowledge and Inner Peace, which outlines Five ‘Ways to Be’, in order to achieve a life of balance and equanimity, peace and fulfilment.[35] I have also addressed this topic in the second book of the series, Meditation: Five Ways to Master your Mind, Body and Spirit, which will be published soon. For the purposes of this essay, however, let us consider the topic of religion in a historical sense.

Göbekli Tepe, Anatolia[36]

We know from archaeologists that the earliest large human settlement found to date, Göbekli Tepe, located in Anatolia, which dates to 9500 BC, at a time when the inhabitants would have been hunter-gatherers, did not serve any practical or utilitarian purpose.[37] We can speculate, therefore, that the structure was primarily cultural and religious in focus.[38] Perhaps built at the command some ancient Prophet, Priest or Seer, Göbekli Tepe could have served as a meeting-place for thousands of foragers and hunters to meet together, cooperate and, perhaps, worship or engage in spiritual practices. Religion and spirituality, then, go to the heart to human history, and are integral to the development of civilization. As Harari points out, the location of Göbekli Tepe is also significant and telling, as einkorn wheat is believed to have originated in the Karaçadag hills, which are a mere thirty kilometres from the ancient temple-settlement.[39] Is this a mere coincidence, or do the ancient origins of organized religion, agriculture and human settlement go hand in hand? This question can be discussed in the context of the origins of the first cities in Mesopotamia, which centred around temples, and which were organized and managed by priest-kings.

[1] See: Joseph L. Bast, Herbert J. Walberg (2013) Education and Capitalism: How Overcoming Our Fear of Markets and Economics Can Improve (Stanford, Calif.: Hoover Institution Press), p. 85.
[2] See: Bast & Walberg (2013), pp. 85 – 86.
[3] See: John Locke (1690) Two Treatises of Government (London: Printed for Awnsham Churchill), The Second Treatise of Civil Government, Chapter II. URL: (accessed 02/07/2018).
[4] See: Locke (1690).
[5] Image source: Thomas Hobbes, by John Michael Wright (1617 – 1694) – National Portrait Gallery: NPG 225 (public domain), uploaded 3 August 2013. URL: (accessed 04/07/2018).
[6] Image source: John Locke portrait from the Library of Congress (public domain), uploaded 3 August 2013. URL: (accessed 02/07/2018).
[7] Thomas Hobbes (1651) The Leviathan, or, The Matter, Forme and Power of a Common-Wealth Ecclesiastical and Civill (London: Printed for Andrew Crooke), Part II, Chapter XVIII, 7. URL: (accessed 04/07/2018).
[8] Hobbes (1651), Part II, Chapter XVIII, 8.
[9] See: Plato (author), Benjamin Jowett (translator) The Dialogues of Plato, translated into English (Oxford: Oxford University Press), Laws, Book I. URL: (accessed 04/07/2018).
[10] See: Plato (author), Jowett (translator), Laws, Book I.
[11] See: Plato (author), Benjamin Jowett (translator) The Dialogues of Plato, translated into English (Oxford: Oxford University Press), The Republic, Book I. URL: (accessed 04/07/2018).
[12] See: J M Rodwell (1861) The Koran (London: Williams and Norgate), 4:135.
[13] Qur’ān 4:58 (Rodwell translation).
[14] See: Serfdom in Russia (Wikipedia article). URL: (accessed 02/07/2018 16:19 AST).
[15] See: Tenures Abolition Act 1660 (Wikipedia article). URL: (accessed 02/07/2018 16:23 AST).
[16] See: Feudalism in England (Wikipedia article). URL: (accessed 02/07/2018 16:23AST).
[17] Image source: An inhabited initial from a 13th-century French text representing the tripartite social order of the Middle Ages: the ōrātōrēs (those who pray – clerics), bellātōrēs (those who fight – knights, that is, the nobility), and labōrātōrēs (those who work – peasants and members of the lower middle class). Author unknown (public domain), uploaded 5 September 2012. URL:  (accessed 02/07/2018).
[18] See: Ian Vásquez (2001) Ending Mass Poverty, Cato Institute. It originally appeared in Economic Perspectives, September 4, 2001 URL: (accessed 02/07/2018).
[19] See: James Gwartney, Robert Lawson, Joshua Hall (2017) Economic Freedom of the World: 2017 Annual Report (Cato Institute, Fraser Institute in Canada, etc.), p. 19. Available online at: (accessed 02/07/2018).
[20] See: Gwartney et al (2017), p. 5.
[21] See: Sudeep Reddy (2012) World’s Extreme Poverty Cut in Half Since 1990, The Wall Street Journal, Feb 29, 2012 11:13 am ET. URL: (accessed 02/07/2018).
[22] See: Yuval Noah Harari (2014) Sapiens: A Brief History of Humankind (New York: Harper Perennial), p. 70.
[23] See: Harari (2014).
[24] See: Harari (2014).
[25] See: Harari (2014).
[26] See: Harari (2014).
[27] Image source: The dawn of civilization: Egypt and Chaldea, G. Maspero (1897) (public domain). URL: (accessed 04/09/2018).
[28] See: Harari (2014).
[29] See: Jared Diamond (1999, 1997) Guns, Germs and Steel: The Fates of Human Societies (New York: W.W. Norton & Co.), p. 135.
[30] See: Diamond (1997), p. 136.
[31] See: Diamond (1997), p. 136.
[32] See: Diamond (1997), p. 141.
[33] See: Diamond (1997), p. 142.
[34] See: Diamond (1997), p. 142.
[35] See: NJ Bridgewater (2017) Mindfulness: Five Ways to Achieve Real Happiness, True Knowledge and Inner Peace (Five Ways to Be, Volume 1) (Abergavenny, UK: Jaha Publishing).
[36] Image source: Göbekli Tepe, Şanlıurfa, uploaded by Teomancimit, 6 September 2011(CC BY-SA 3.0). URL: (accessed 04/07/2018). For more information on the license, see: (accessed 04/07/2018).
[37] See: Harari (2014).
[38] See: Harari (2014).
[39] See: Harari (2014).

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