Re: Historical Dynamics & Corporate Growth-Imperative

Sat, 12 Jul 1997 18:16:34 +0100
Richard K. Moore (rkmoore@iol.ie)

7/12/97, Marc W.D. Tyrrell wrote:
>Since we can easily find "pre-capitalist" examples of this type of
>pattern, what then is "unique", if anything?

Dear Marc,

Thanks for your perceptive observations. Please understand I was only
trying to give an example of what I meant by "dynamic analysis", in answer
to Randy's comment:
>"identification of dynamic pattern-trends." (I think I know what you
>mean. Sort of.) Maybe a bit more on that would help.

So I improvised a mini-thesis (capitalism as cause of Euro expansion) and
sketched out how one might investigate the dynamics. On the historic
details necessary to investigate "for real" I'm weak - my contribution (if
any) to wsn is the "sytems" part, I have a good handle on systems (both
logical and real) since that's been my career field and personal interest
as well for some time. History has been a hobby, but I'm clearly out my
depth history-wise on this list.

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I'll comment first on your question about "unique"...

My line of argument is that for expansionism to arise, there needs to be: (1) CAPACITY: military capability to expand (2) DRIVING ELEMENT: element in the society which has a motivation to expand and which is sufficiently influential to obtain necessary societal support

We know Europe had the capacity militarily to expand, and the economic base to upgrade that capacity if sufficiently motivated. The driving element might have been capitalism, at least the question is worth investigating.

I'd want to chart the "societal influence" of capitalism, and chart the "expansion motivation" of capitalism - over time. If these charts synchronized with Euro expansionism generally, then I'd say capitalism would be a strong contendor for the title of "primary driving element" of Euro expansion.

Let's say that capitalism WAS the driving element. That still doesn't mean capitalism was the "unique factor" in Euro global SUCCESS - it simply means capitalism was the MOTIVATOR: the SUCCESS Europe experienced with expansionism might accrue to other circumstances in Europe and in the world... things like "relative military power", existence of "expansion competitors", etc.

If one wants to attribute the SUCCESS to capitalism, one would need to make a case that capital-driven expansion was more effective in some way than other modes of expansion.

My opinion on what was UNIQUE about Euro expansionism, in terms of its global successes, is simply LUCKY HISTORICAL TIMING - Euro's TURN at the expansion GAME happened to come at a time when: (1) sizable, world-travelling, trading ships were obtainable (2) cannon-based warships were obtainable (3) new-world trade had been opened, with all that implied

European expansionism might have been driven by something other than capitalism, and the result might have been quite similar. Something, perhaps capitalism, perhaps a complex of drivers, was the TRIGGER - but Europe itself was the GUN. The power of Europe at that particular time, and located where it was, meant that if ANY expansion-trigger came along, the result could be historically momentous.

The Crusades, I'd say, were not capitalist driven. And they are an earlier example of Euro expansionism. This proves that other motivators are possible, but little else, as so many of the conditions for wider success simply didn't exist at that time. But if capitalism had been around then it might have made some difference - it would have provided a mechanism (beyond trading and looting) to translate territorial power into value, and might have motivated better-organized and better-funded Crusades.

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>It also strikes me that treating "capitalist/-ism" as a *single* >force is inappropriate. What will you look at as its key >characteristics? Accumulation of capital? If that is the case, then >one could easily argue that the Roman Empire was "capitalist". There >is certainly no doubt that Crassus and Otho influence "national" >policy.

The aspect of Western capitalism that I consider most characteristic is what I call the "growth imperative". Western capitalism (and this may or may not be unique) is not based on the accumulation of wealth - it's based on the growth of capital. The paradigm is to invest in a venture (now institutionalized as the CORPORATION) which promises to increase the value of the investment. The investor later extracts his increased value (by selling stock) and re-invests it elsewhere. If he spends or retains his profit to any considerable extent - he's not a capitalist.

Note that operating profitability of the corporation itself is of strictly secondary concern. A corporation whose operations run at a loss can be a very good capital investment if there is reason to expect the corporate assets can be sold at a profit in some future time-window. It is a common MISPERCEPTION that capitalism is PRIMARILY driven by maximization of corporate profits. This can be observed quantitatively by noting which profit/earnings ratios are "permitted" for different corporate sectors by Wall Street.

What we have with Western capitalism is a collection of publicly-traded corporations, each of which is possessed by the GROWTH IMPERATIVE - the CORPORATION's only reason for being is to INCREASE THE VALUE of itself (more or less: its total stock valuation). Profit is simply a means of internal-funding for growth.

If a society has such a collection of growth-driven corporations, then guess what? - they grow. The society increasingly depends on them to maintain economic activity, and so they naturally become increasingly influential in societal policy making.

At some point the collective corporate ability to grow runs into the boundaries of societal circumstances, and the corporate growth imperative transforms into a societal-growth imperative, driven by the underlying corporate imperative.

As you pointed out with the East India Company, they expanded into India on their own - they had to use some of their own profits to fund an administrative infrastructure. They eventually managed to get London to take over, and the more usual procedure has been for corporate influence to obtain government managment (and public funding) of infrastructure expansion - this is the most fundamental example of "corporate welfare". Recall the ex-marine author who described his career as "making the world safe for Standard Oil".

I don't believe Rome was capitalist in this sense. But even if it were, that wouldn't change any of this analysis. Rome didn't expand further for reasons unrelated to its economic system - it simply reached the limits of its military and administrative capacity, given the technology and tactics of the day.

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>Again, a question of definition. The Cathars in southern France in >the 11th century probably meet all of your criteria. Their end was >not, IMHO, "effective".

I'm not sure what your point is here. Let's assume the Cathars were capitalist and had reached the point where they desired to expand - the question then is their capacity. They simply didn't have enough relative strength to take over France, let alone expand further.

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I hope this clarifies. Looing forward to your further comments. I'll be on holiday for a week, will catch up then.

Regards, Richard