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Edited by Jürgen Basedow, Giesela Rühl, Franco Ferrari and Pedro de Miguel Asensio

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Edited by Jürgen Basedow, Giesela Rühl, Franco Ferrari and Pedro de Miguel Asensio

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Edited by Jürgen Basedow, Giesela Rühl, Franco Ferrari and Pedro de Miguel Asensio

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Edited by Jürgen Basedow, Giesela Rühl, Franco Ferrari and Pedro de Miguel Asensio

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Edited by Jürgen Basedow, Giesela Rühl, Franco Ferrari and Pedro de Miguel Asensio

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Edited by Jürgen Basedow, Giesela Rühl, Franco Ferrari and Pedro de Miguel Asensio

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Jean Bosco Shema and Samuel Mutarindwa

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William Kingston

The institutional basis of capitalism, individual property rights, was an invention of the ancient Greeks, and was subsequently the basis of Roman wealth. Christianity then introduced a new emphasis on the importance of the individual, so that this combination produced a medieval form of capitalism, first in the shape of monastic innovation and wealth, and then in independent cities. Although about Church doctrine, the Reformation was at least equally about who was to own this new wealth, and in the course of this a change was made which reversed a principle that had been accepted for millennia, which was that money could not be lent at interest. Once usury was accepted, capital for investment became available as never before, and this was particularly availed of by followers of John Calvin. Rejection of a religious basis for society required a secular one, and this was provided by what was known as the Enlightenment, which was essentially the application of rationality to the solution of all human problems.

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William Kingston

Capitalism was not an inevitable historical evolution, but a unique combination of a particular emphasis on the value of individuals and individual property rights. During the past three centuries, as McCloskey has estimated it, individuals in the Western world have become richer by a factor of 30. Schumpeter wrote what was intended to be history of it in terms of economic ‘cycles’, but was weak on the causality of these because he did not give enough importance to institutions. However, in the form of changing property rights, these are the key to the origin and development of capitalism. The wealth that this generated came from technological innovation, but the pace of this slowed after World War I, and after a brief resurgence due to the Second World War, it was progressively replaced by innovations in finance. Capitalism’s power to generate real wealth was eroded from within, and Schumpeter’s prediction of its replacement by socialism became increasingly plausible.