Colonialism, Capitalism and Development

 Colonialism and capitalism are inextricably linked to one another

 Colonialism refers to ruling over a foreign state whereas capitalism refers to the production of
goods and services incentivized by profit maximization
 Colonial expansion was accompanied by ethnocentrism
 This led to the extermination, displacement and marginalization of indigenous populaces
 Capitalism in the sphere of economics was structured on the basis of social classes this further
subjugated the indigenous populaces
 Colonialism reinforced the transition from pre-industrial or pre-capitalist societies towards
capitalist industrial societies
 This was achieved via commoditization, commercialization, mercantile and finance capital
investments
 The colonies gradually started primitive accumulation which was the emergence of a productive
capital and a working class both of which are necessities for capitalist production
 The transition to capitalism in north western Europe took place between the 16th – 19th
centuries
 Global development of capitalism adversely affected the integration of pre-capitalist societies
into the new emerging economic structures because the industrial revolution was brought
externally by the colonial masters via aggressive and radical processes rather than internally.
 Capitalism and colonialism share three key areas
o Periodic stages of uneven development between colonizing powers and within colonies
o Various colonial states represented different interests
o Diversity of the pre – colonial societies on which European domination was imposed

Stages of Colonialism and Capitalism

 Understanding the nexus between European colonization and the development of capitalism
outlines 3 stages:
o 16th century (1500s) – The Crisis of Feudalism and the 1st Stage of Expansion
 European expansion is closely linked to the crisis of feudalism reflected by
 The emergence of independent groups of merchants and introduction
of urban manufacturing
 Dynastic wars for sovereignty within and between existing political
territories
 Series of peasant uprisings
 The challenges faced by pre-capitalist feudal states pushed them to search for
and seize wealth of foreign lands
 The systematic colonial rule was initiated by Gangster entrepreneurs – consisted
of explorers, mercenaries and merchant adventurers
o 17th and 18th centuries (1600s and 1700s) – Merchants, Slaves and Plantations
 Witnessed the intensification of pursuit of treasure and trade
  Establishment of new forms of settlements and introductions of international
trade which was directly linked with the development of manufacturing
industries and transition to capitalism in Europe
 Triggered the need for procurement of slaves from Africa
 The later half of the 17th century experienced the mercantile trade war which
was armed conflict within colonies which further intensified antagonistic
European expansion
 Intensified European expansion accelerated the transition to capitalism and
international division of labor
o 19 and 20th centuries (1800s and 1900s) – Colonialism in the Era of Industrial
th

Capitalism and Imperialism

 Experienced consolidation of schematic colonial rule through state formation
 Consequently, capitalist colonialism took over feudal colonialism because it
possessed greater power and domination in an international context
 The expansion in this period changed the processes of colonialism as extensive
and large – scale demand of different types and volumes of raw materials were
required
 The distinctive features of this period were:
 Imperialism of free trade – effective network of naval bases in addition
with political and military capacity were established
 Monopoly Capitalism – according to Lenin the great depression in late
19th century took place due to the mutation of capitalist competition
into a more extreme and dangerous form
 Finance capital – which was a dominant form of capital carried out via
banking
 European expansion in connection with capitalism in this period was due to the
need to find new outlets for exports of capital for two reasons:
 Competition for overseas sources of raw materials and securing markets
for European manufactured goods
 Search for more profitable investment opportunities
 Colonialism during imperialism provided a framework for industrial capitalism to
expand internationally.