The theory of capitalism emerged during Europe during the 16^th-18^th centuries. This concept of capitalism can be used as a framework to work with in order to understand the economic changes that occurred in countries such as England and France and eventually the rest of Europe during that period. The oncoming of capitalism can be identified as a shift from feudalism, which can be considered as the predominant economic structure existing during Europe at the time.

Although the process of transition has been of great interest to historians alike, there is no one particular theory that can explain the course of the development of capitalism. For the sake of brevity, three theories will be explained that showcase the transition to capitalism. The theories in question were put forward by Adam Smith, Karl Marx, and Max Webber respectively. There are also many theorists who have branched out, using those three theories as a foundation. Some of those theories will also be mentioned in this essay. This essay will also delve into the impact that capitalism has had on the world. As this transition had occurred while other major developments were taking place in Europe at the time, events such as the Industrial Revolution have also been taken into consideration when analyzing the impact of capitalism on the global world.

Adam Smith attempts to explain the transition from feudalism to capitalism by focusing on the individualistic tendency for self-improvement and the self-betterment of their conditions in the society they live in. According to Smith, this tendency can be expressed by the willingness “to truck, barter, and exchange” ( Holton 1985, p. 35) The phrase ‘ trucking propensity’ can also be used to describe this tendency. He claims that the emergence and the development of the ‘commercial society’ can be credited to an increase in the division of labor and an increase in capital. This increase in resources would be a result of the frugal nature and of individuals. According to R.J Holton, “Smith argued that the development of the division of labor and 'commercial society' should be regarded as unintended consequences of such behavior.” ( Holton 1985, p. 35) thus we can say that Smith regarded the transition to capitalism as an incidental event

Smith also emphasized the importance of ‘moral sentiments’, such as justice and ethics, as according to him, without these principles, the society would enter into economic dystopia or chaos. Thus, Smith’s theory does not only focus on the economic factors such as capital and division of labor but also attempts to accentuate the relevance of social factors in the development of the ‘commercial society’.       

The Marxist perspective on the transition to capitalism lays its foundation in the capitalist mode of production. This theory bases its focal point on the importance of wage-labor in a society. The relationship between a wage-laborer and a capitalist can be interpreted in two ways. Firstly, the society in the process of transition must have a legal framework which allows a worker to sell his labor in exchange for either money or some other good or commodity. Secondly, the capitalist individual who is purchasing the manual labor from the worker must be able to make a profit on the goods produced, in comparison to the money spent in acquiring the manual labor in the first place. Thus, “The extraction of this 'surplus value' from wage-laborers under conditions of competition between capitalists, is what constitutes the fundamental dynamic of the capitalist system” ( Holton 1985, p. 65).

In Marxist theories, the transition can be identified as starting from the 16^th century.. A factor that needs to be considered is that during that time period, the notion of mercantilism was emerging, which would result in the expansion of trade and would also result in the growth of towns. Yet, Marx was critical of the inclusion of mercantilism in the transition to capitalism. One reason behind this critique could be because the entire concept of mercantilism lay outside the process of production and thus was not included in wage-labor, which is central to the Marxist theories. Also, through trade and commerce would only involve the labor making commodities, “Yet for capitalism to emerge he saw it as necessary not simply for products to assume a commodity-form, but also for labor itself to take on the nature of the commodity, i.e. to become saleable as labor-power” ( Holton 1985, p. 71).

While examining Adam Smith’s theory with that of Karl Marx, a few differences can be identified. Unlike Smith, who centralized the importance of individuals working together in a society, Marx prioritizes that the individuals act as “free 'producers' unfettered by natural or social limits.” ( Holton 1985, p. 70). Smith also emphasizes on the importance of exchange of commodities, while on the other hand, Marx is extremely critical of the same. Many historians have also branched out on Marx's theory on the transition from feudalism to capitalism. Some of these are-

(a) the 'exchange relations' perspective-reflected in the work of Sweezy and Wallerstein;

(b) the 'property relations' perspective - associated with Dobb, Hilton, and Brenner;

 (c) 'Marxist eclecticism'- associated with Perry Anderson. ( Holton 1985, p. 74)

Max Webber focuses his theory on the ‘modern capitalist spirit’ rather than capitalism itself.  It is important to note that the ‘spirit’ that Webber focuses on, should not be interpreted in a metaphysical context, as it is instead used to describe a certain set of values. This is evident as “this 'spirit' is defined as a type of social action involving the rational calculative pursuit of profit-maximization. This mentality is associated with values such as thrift, diligence, and asceticism in 'worldly' economic affairs.” ( Holton 1985, p.104) Thus, according to Webber,  this major paradigm shifts away from the orthodox catholic church which would result in individuals engaging in trade and business in a more secular society. This could have resulted in the unintentional historical development of capitalism

Another important aspect of Webber's theory was that he rejects the notion of a ‘prime mover’, which we could interpret to mean that according to him, there was no one particular course of transition and that it could have taken many routes instead of just one. Therefore, this theory is not limited to just one factor, such as technology, politics, etc, but can be a blend of two or more factors. Due to this reason, Webber's theory detaches itself from the rest of the theories mentioned in this essay as all the other theories offer only one route that explains the transition from feudalism to capitalism.

As previously mentioned at the start of the essay, the notion of capitalism emerged during Europe around 16^th-18^th centuries. Although it was mainly confined to only a few countries, such as England and France, it quickly became the dominant economic model that it is today. The political, social and economic events that unfolded during that time period have played a very important role in the expanding of capitalism from a few countries in Europe to a global phenomenon. We will now analyze two of the events in an attempt to understand them in relation to the exposure of capitalism.

The industrial revolution, which took place in England during the 19^th century, can certainly be considered as one of the most important revolutions that ever took place. One of the main elements that emerged out of this revolution was the rise and the development of a capitalist society. This is evident as “It is only in the 1830s that literature and the arts began to be overtly haunted by that rise of the capitalist society, that world in which all social bonds crumbled except the implacable gold and paper ones of the cash nexus (the phrase comes from Carlyle).”    ( Hobsbawm 1996, p. 27) although the revolution in itself was limited to England in a geographical sense, its ideas and notions spread across the world. Also a colonial power, its relations with its conquered states in Africa and Asia also helped in the exposure of capitalism. An example can be India itself, as they follow a mixed economic model, which is a fusion of both a capitalist economy and a social economy.

The economic policy of mercantilism, which emerged during the 16^th century during Europe, may also have played a key role in capital development across the world. Driven by profit- maximization, barter exchange, and colonial expansion, the balance of trade grew as the modernized European nations established contact with other nations, and thus spread their superior ideas and notions such as capitalism.

In conclusion, the transition from feudalism to capitalism can be considered ambiguous progress which has invited many historians to present their views. This essay examined the views of Adam Smith, Karl Marx, and Max Webber in order to get a better understanding of the transition itself and also to delve into some of the canonical texts of this particular discourse. The position of capitalism as an economic model in a global context was also explored.

REFERENCES-

Holton, R.J. 1985. The Transition from Feudalism to Capitalism. Macmillan Education : New York

Hobsbawm, Eric. 1996. The Age of Revolution. Vintage Books: London