14 - The emergence of African capitalism

Summary

This chapter examines the long precolonial African economic history up to 1850. It encompasses the time both before and after the rise and fall of the Atlantic slave trade. The chapter addresses the importance of the market as an institution in precolonial Africa. Karl Polanyi and others have argued that precolonial prices were set not by market forces but by custom or command, but despite North's fear that the claims of substantivism were unfalsifiable, Robin Law and others have documented that markets did exist according to formal definitions. The chapter discusses the literature on domestic markets in precolonial Africa. While there were markets with responsive prices in precolonial Africa, a full-fledged capitalist market system implies factor markets for labor, land, and capital as well as markets for final consumption goods and services. The expansion of external contacts from sporadic contacts led to formal colonization of majority of continent by European powers in the late nineteenth century.