Capitalism & Economic Growth

• Since the 1700s, increased average living standards became a permanent feature of economic life in many countries
• This is mostly due to the Industrial Revolution, which caused the rise of capitalism

Capitalism

• Hodgson (2024) defines it as a 'Social formation' with the following:
• A legal system establishing and ensuring the right to private property
• Widespread exchange/markets involving money/credit
• Widespread private ownership of the factors of production (land/capital)
• Labor/contract laws
• Developed banking and financial institutions, use of credit/collateral, and selling of debt
• Joseph Schumpeter stated innovation drives economic growth, and entrepreneurs play a central role in capitalism
• Capitalism is a form of private property economy, in which innovations are carried out using borrowed money
• In general, it implies credit creation

Roman Empire

• Ancient economic history is "in its infancy"
• Following the fall of the Roman Republic in 27 BC, the Roman Empire became the dominant European political/economic power
• The standard of living in ancient Rome was similar to 17th/18th century Europe
• GDP per capita was that of 1700 Spain/Italy
• Several theories suggest this was achieved through moderately stable political conditions, cross-ocean trading, specialization of labor, and high urbanization rates

Week 1

• The Battle of Hastings was fought on Oct. 14, 1066, where William, the Duke of Normandy, killed King Harold, starting the Norman Conquest of England
• King William decided to stay in London, but sends his army to conquer
• In turn diminishing his own power which leads to the creation of the Feudal System