108 Stephen Hymer The international economy played two vital roles.(1)It com- mercialized the domestic economy,that is,converted the feudal self-sufficient economy into an economy producing commodities for the market,thus concentrating land holdings and freeing labor.(2)It fos- tered the accumulation of capital in a few hands.National rivalry-the competitive zeal of European nations to possess themselves of the products of Asia and the treasures of America,and the colonial sys- tem-was a basic propelling force,giving the nascent capitalist class a wider market and the chance to make a fortune.In this mercantilist age, gold became the ultimate aim.It was an age when foreign trade was a basic means of accumulating capital,that is,liquidity,and to obtain gold was to obtain the power to become a capitalist in a market system where a plentiful supply of labor for hire was emerging. If in the first world economy (sixteenth and seventeenth century), foreign commerce created industry under the symbiosis of capital and crown,in the second world economy (late-nineteenth and early- twentieth century),industry created commerce.The industrial revolu- tion and the export of manufactured goods created a system of in- ternational specialization based on different levels of capitalist devel- opment.Cheap commodities were the heavy artillery to batter down even the Great Wall of China,figuratively speaking.However,some countries,now called developed,were able to resist British penetration by erecting national tariff barricades against the destructive force of British heavy industry.Again state power was necessary to institute capitalism by (a)creating a supply of labor for industry,and (b) protecting,subsidizing,and otherwise fostering the concentration of capital in a class willing to use it for manufacturing,investment,and associated activities. With the spread of industry and the growth of multi-centered capital- ism,the role of the state,or rather its methods,changed again.First,it continued to protect national capital from foreigners (hence imperialism, trade wars,subsidies,and so forth),thus creating an environment which led to two wars and a depression instead of the peace and prosperity liberal ideology promised.Second,it assumed more and more the task of coordinating capitalism at a level above that of the market in order to reduce the instability and wastes of unplanned competition through such means as banking and railroad regulation,antitrust legislation,regulation of hours of work,and counter-cyclical policy and planning.Third,it had to socialize labor into continued acceptance of capitalism through educa- tion,trade unions,unemployment compensation,social security,and so forth,which improved the welfare of labor while retaining the capitalist base. This content downloaded from 202.120.14.154 on Mon,04 Jan 2016 03:31:29 UTC All use subject to JSTOR Terms and Conditions108 Stephen Hymer The international economy played two vital roles. (1) It com￾mercialized the domestic economy, that is, converted the feudal self-sufficient economy into an economy producing commodities for the market, thus concentrating land holdings and freeing labor. (2) It fos￾tered the accumulation of capital in a few hands. National rivalry-the competitive zeal of European nations to possess themselves of the products of Asia and the treasures of America, and the colonial sys￾tem-was a basic propelling force, giving the nascent capitalist class a wider market and the chance to make a fortune. In this mercantilist age, gold became the ultimate aim. It was an age when foreign trade was a basic means of accumulating capital, that is, liquidity, and to obtain gold was to obtain the power to become a capitalist in a market system where a plentiful supply of labor for hire was emerging. If in the first world economy (sixteenth and seventeenth century), foreign commerce created industry under the symbiosis of capital and crown, in the second world economy (late-nineteenth and early￾twentieth century), industry created commerce. The industrial revolu￾tion and the export of manufactured goods created a system of in￾ternational specialization based on different levels of capitalist devel￾opment. Cheap commodities were the heavy artillery to batter down even the Great Wall of China, figuratively speaking. However, some countries, now called developed, were able to resist British penetration by erecting national tariff barricades against the destructive force of British heavy industry. Again state power was necessary to institute capitalism by (a) creating a supply of labor for industry, and (b) protecting, subsidizing, and otherwise fostering the concentration of capital in a class willing to use it for manufacturing, investment, and associated activities. With the spread of industry and the growth of multi-centered capital￾ism, the role of the state, or rather its methods, changed again. First, it continued to protect national capital from foreigners (hence imperialism, trade wars, subsidies, and so forth), thus creating an environment which led to two wars and a depression instead of the peace and prosperity liberal ideology promised. Second, it assumed more and more the task of coordinating capitalism at a level above that of the market in order to reduce the instability and wastes of unplanned competition through such means as banking and railroad regulation, antitrust legislation, regulation of hours of work, and counter-cyclical policy and planning. Third, it had to socialize labor into continued acceptance of capitalism through educa￾tion, trade unions, unemployment compensation, social security, and so forth, which improved the welfare of labor while retaining the capitalist base. This content downloaded from 202.120.14.154 on Mon, 04 Jan 2016 03:31:29 UTC All use subject to JSTOR Terms and Conditions