The dictionary definition of Capitalism is: "an economic system in which the production and distribution of goods depend upon private capital and profit taking."
The definition of usury is: "the act or practice of lending money at interest."
The two are, therefore, related, in that both depend upon private capital and both engender profit.
Capital, therefore, is the potential of an accumulated stock of assets to deploy new production and surplus value. Whilst money, which was invented to provide a standard index to measure the value of things so that dissimilar assets could be exchanged, facilitates transactions by allowing the sale and purchase of things but is not, in itself, the progenitor of additional production.
As Adam Smith maintained "the gold and silver money, which circulates in any country, may very properly be compared to a highway, which, while it circulates and carries to market all the grass and corn of the country, produces itself not a single pile of either."
Both Adam Smith and Karl Marx believed that capital was the engine that powered the market economy.
For Smith, economic specialisation - the division of labour and the subsequent exchange of products in the market - was the source of increasing productivity and therefore the wealth of nations. What made this specialisation and exchange possible was capital, which Smith defined as the stock of assets accumulated for productive purposes. The more capital that was accumulated, the more specialisation became possible and the higher society's productivity would be.
Capital, therefore, was to be the magic that would enhance productivity by creating surplus value.
Inherent in the system, however, are the following :
(a) it favours the lender and not the borrower and in so doing gives disproportionate control to those who lend the money. As Karl Marx stated "the great contradiction of the capitalist system is that it creates its own demise because it cannot avoid concentrating capital in a few hands";
(b) its success depends on an ever-increasing productivity.
As property, the most stable asset, was the basis of the idea, the legality of property rights had to be established.
The substantial increase of capital in the West over the last two centuries is the consequence of gradually improving property systems. Legal property gave the West the tools to produce surplus value over and above its physical assets.
The previous landed aristocracy, whose wealth was in the property they owned, became vulnerable as soon as they turned these assets into "money" (i.e. they mortgaged their holdings for liquidity), which resulted in many cases, due to new land taxes, in loss of their holdings.
In the West, however, it has appeared a story of triumph and the only feasible way to organise a modern economy. Money, the vehicle, the artificial vehicle, of all these transactions seemed to flow with ever increasing volume. This is in fact a false picture of what is happening.
Money makes money but, in order for its potential to be realised, increased avenues for investment have constantly to be sought and if these are not found the result is economic stagnation, which is exactly what faces the West at this moment.
The possibility that the apparent triumph of capitalism could be a recipe for economic and political disaster is only now beginning to be realised although warnings of this likelihood have been voiced over two hundred years.
In the West at this moment the apparent prosperity; the burgeoning of the ever increasing "necessities" of daily life; the increase (again only apparent) of the monetary gain of those who happen to be employed, plus the vision of a brave new liberalised world and the associated notion of globalisation with no barriers to trade and financial flows, has resulted in deepening economic stagnation, despite a concerted campaign of misinformation (via a controlled press) by those vested interests that effectively dominate public opinion through political parties and mass media.
The tensions that have produced the present world financial crisis are seen to be largely endemic in the Western world since capitalism first became the dominant form of economic organisation in Europe at the time of the Industrial Revolution.
The main feature of the system has been the very strong cyclical fluctuations and the pressure to maximise profits in the interests of shareholders and financiers, which meant that employers were under far greater pressure than under the previous more or less feudal economy to cut costs during a downturn by laying off workers. This reduction in wages across the economy as a whole acted to intensify the decline in demand for goods and services and thus prolonged the downward phase of the cycle.
This was first demonstrated across Europe as a whole in the 1840s causing widespread misery and in 1848 the appearance of the Communist Manifesto of Marx and Engels seems hardly to be a coincidence.
The Depression of the 1930s was still more catastrophic in its consequences than the disaster of the previous century. This was because it produced not only a tidal wave of financial failure but also demonstrated the inability of the rudimentary social welfare systems, that had come into being after the First World War, to protect the vast numbers of newly unemployed.
Hence by the end of World War II and the post-war boom, triggered by the demand for the reconstruction of war-shattered Europe, it was recognised throughout the industrialised world that economic management wedded to financial orthodoxy was inadequate. It was therefore decreed that government policy must henceforth give priority to assuring high levels of employment, if necessary intervening to sustain the economic level through higher government spending. It was linked to a broader idealogy in which state intervention in, and interaction with, the private sector was considered not only necessary but desirable.
The modernisation of agriculture and the uncertain market for some traditional crops following the Second World War triggered massive layoffs of farm labourers on traditional estates (estates that were already heavily taxed) and unleashed vast contingents of people looking for new horizons. This same situation is now seen in the so-called "Third World" where there has been a massive emigration from the land to the cities and has created vast amounts of people living in sub-economic conditions.