ABSTRACT
As we indicated in section 3.2, the contemporary economy is dominated by a capitalist mode of
Chapter map In the introduction to this chapter, we emphasize the geographical expansion and historical evolution of the capitalist economy. We then outline the relationship
The growth of industrial production from the late eighteenth century was supported and facilitated by the geographical expansion of capitalism. The great increases in output and productivity associated with the application of new technology and the development of an elaborate division of labour within factories required, as Adam Smith observed, a corresponding increase in the extent of the market. At the same time, industrialization was dependent on an increased volume and range of raw materials, drawn from different parts of the globe. Through the growth of capitalist production and trade, an international division of labour was created during the nineteenth century. This involved the developed countries of Europe and North America producing manufactured goods, while the underdeveloped world specialized in the production of raw materials and foodstuffs. This global trading system was supported and justified by the doctrine of comparative advantage, classically expressed by David Ricardo, the great English economist, in 1817. It emphasizes the benefits of international trade, stating that countries should export the goods which they can produce with greater relative efficiency. In recent years, the theory of comparative advantage has provided an important intellectual foundation for the dominant neo-liberal ideology of globalization. While the growth of a world economy can be traced back to the voyages of exploration and discovery in the sixteenth century, geographical expansion gained new momentum as the industrial revolution took off, culminating in the ‘age of empire’ between 1875 and 1914 (Hobsbawm, 1987). The inherently expansive nature of capitalism as an economic system has underpinned a search for new markets, new sources of raw materials and new supplies of labour, forging economic relationships between territories on a global scale.
