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1-1-7 Development of Modern Capitalism.txt
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1-1-7 Development of Modern Capitalism.txt
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*Broad and Shallow Knowledge for Intellectual Conversations*
Vol 1. Part 1. [History] Chapter 7.
> **[Developement of Modern Capitalism]** - Oversupply has started
Capitalism was started by industrial revolution. In other words, industrial revolution inevitably started capitalism. Capitalism doesn't mean anything special. It just means birth of factories.
```
Industrial Revolution ¡æ factories ¡æ products ¡æ Monetary economy ¡æ Capitalism
```
Before factories were a thing, if one wanted to buy a product, they had to put in the order first and get it once its completed. Supply <= Demand. But with factories, they produce products in bulk. People who needs the product doesn't have to wait and just could go to the market and buy one. "supply > demand".
```
Characteristic of Capitalism: Supply > Demand
```
To put it simply, oversupply. To understand this easier, think of a department store. Lots and lots of products are just waiting to be bought. They even put up ads begging and persuading us to buy them. This is not an abnormal state, but the most fundamental and basic state of capitalism. Now keeping 'oversupply' in mind, let's go visit B.
Now B became bourgeois owning a shoe factory. He even employed three workers - C1,C2,C3. Resting for a day means loss so he intends to run the factory as much as possible. Because even if the factory takes a break for a day, there are fixed expenses such as wage, maintenance expense, and rent. So B ran the factory as much as possible.
Then there was a problem. As the time went on, shoes piled on in the storage and now he has nowhere to put them. Turns out everyone has shoes so they didn't want to buy them. This was a problem for B. He thought about stopping the factory, but he still had fixed expenses. Factories must keep running. This is a problem you will inevitably face if you decide to run a business.
How do we solve this? The problem is that supply is higher than demand, so there are only two logical solutions. Either lowering the supply or increasing the demand. Simple. Let's run the numbers. Let's take a look at lowering supply first. Lowering supply means stopping the factory. As I said before that's no good. It's more profitable to run the factory than paying fixed expenses. Now there's only one solution. Increasing the demand.
There are two ways we can go about this. One is pioneering new market, and the other is lowering prices to induce people to buy them. There doesn't seem to be any other options here. Of course there could be ancillary ways such as inventing new products, putting up more ads, but they aren't fundamental solutions. 'Pioneering new markets' and 'Lowering prices' seems to be the most ultimate solution.
People who inevitably faced with oversupply from Industrial revolution, in other words birth of factories, had to choose these two options. Now we will see how these two ways changed modern and contemporary period.
```
<How to solve oversupply>
(1) Pioneering new markets
(2) Lowering prices
```
Let's go take a look at pioneering new market first. To solve the overabundance of shoes in his warehouse, B decided to venture new market. He took a loan, bought a boat, loaded bunch of shoes he had in his warehouse. Then he began his long voyage. After few months of suffering he arrived at the amazon. From what he heard, people here doesn't wear shoes, so it must be a blue ocean. He used a lot of money to get here, but he might make all that back. Boat arrived at the shore, and the natives - who wore feathers on their head and lower body covered with a leaf - greeted him. B said, "I'm here to sell shoes." Leader of the natives said, "I have nothing to give." You know what, he's right. They have nothing so they can't give something in return. Then he saw a cow walking past by. B said, "Let's make it 1 cow for 5 pairs of shoes." The leader who seemingly has been waiting for this question said "I don't understand what you're saying. They're our brothers who lived thousands of years with our tribe together in mother nature, and our ancestor's spirit dwell within them. Trading brothers means trading families, and our unity of holy spirit. It is unthinkable, and will not happen. B held up a gun and shot one of the natives. Leader said, "Let's make it 7." Market was pioneered.
After that, B supplied shoes to natives and got cows in return. Then he used the cows to make more shoes, and resold them to natives. It was an effective structure. B can keep running his factories. For demand, he could just threaten the natives. Now they - although don't wear clothes - have two or three pair of shoes.
Colony-pioneering Imperialism has started.