Capital Blockade

  

Ever heard the talking heads on news say "economic sanctions?" If so, this is what they mean. If not, this is still what they mean.

More than a slap on the wrist, but short of declaring a war, countries use capital blockades to penalize other countries who are being naughty (like, say, invading Crimea...or detonating nukes...or sponsoring terrorism...you know, naughty). By freezing assets, forbidding investment, or otherwise limiting/restricting capital from flowing into offending nations' economies, the hope is that the target of the capital blockade will act right in order to avoid fiscal pain.

Related or Semi-related Video

Finance: What is collateral?98 Views

00:00

Karl Marx was a fiercely bearded German economist and philosopher.

00:07

seriously look at beard .fierce. with the help of his equally bushy pal Friedrich [Marx pictured]

00:12

angles Marx wrote a little book that would have enormous influence on the

00:16

Russian revolutionaries of the early 20th century. that book of course was

00:21

called Little House on the Prairie. it's just making sure you're with us. it

00:26

was actually called the communist manifesto. so let's break it down .the

00:30

world according to Marx suffers because of social classes. well in the Western

00:34

world we started with feudalism as the class system .if you were a king life was

00:39

groovy. if you were a serf and not so much. feudalism crashed and burned and

00:45

capitalism rolled in with its booze huazi and proletariat classes. well

00:49

according to the Communist Manifesto capitalism was much much much worse than

00:54

feudalism. why ?because the booze huazi or owners are the means of production who [communist manifesto pictured]

00:59

embraced capitalism would do anything to make a dollar.

01:02

this included dehumanizing abusing and manipulating the proletariat or worker

01:07

class who toiled on their behalf. so Marx and Engels believed that capitalism

01:12

caused enormous suffering and hardship in the modern world. furthermore it

01:16

caused corruption because the government was essentially in cahoots with the

01:19

bourgeoisie. thanks to the unfairness inherent in capitalism Marxism states

01:24

that the proletariat and bourgeoisie will forever be butting heads .more

01:28

importantly that tension will eventually result in a revolution of the masses. and

01:33

just what would that revolution look like? well Marx and Engels had a few

01:37

ideas .there would be no private ownership of land. there would be no

01:42

inheritance rights. the state would control the means of communication and

01:46

transport .and instead of laboring in factories kids would go to school where

01:50

they'd get a free education. the communist manifesto posits that Marxism

01:55

would succeed where other forms of socialism had failed because communists

01:59

would always put the proletariat first. furthermore other forms of socialism

02:04

were nothing more than programs for small reforms .if the ship of the worker [different ships with different forms of government written on sails]

02:08

was going to be set right full-blown an all-out revolution was needed.

02:13

and that's what Marxism was all about. Marx and Engels like to think that

02:17

Germany would be ground zero for the proletariat takeover.

02:20

they probably rolled over in their graves when Hitler came to power, but

02:24

never fear the Communist Manifesto was a home run for one group. da the Russians.

02:29

at the turn of the 20th century there were two divisions of the Russian social

02:34

democratic Labour Party .the Bolsheviks and the Mensheviks many of whom had been

02:39

kicked out of Russia for being naughty revolutionaries spent about a decade

02:42

meeting in pubs in London. over a nice warm pint they'd argue about whose

02:47

interpretation of Marxism was correct and what the best method for taking over

02:52

Russia was .well frankly we would have picked somewhere tropical for our

02:55

communist revolution but well to each his own. while the Mensheviks and [Castro pictured]

02:58

Bolsheviks both wanted Russia to ditch capitalism and the Czar their

03:02

medium-term goals were quite different. well the Mensheviks wanted to work with

03:06

Russian officials already in office to build a kind of democratic system that

03:11

would make Russia a better place for everyone. Bolsheviks wanted to burn it

03:15

all down. well if you're wondering where Vladimir Lenin is and all this wonder no

03:19

more it was at the head of the Bolsheviks. he thought the Mensheviks

03:22

were wusses and that Russia's communist government would need to be small and

03:27

tightly controlled so that the masses wouldn't rebel. anywho after all those

03:32

years of plotting abroad the Mensheviks and Bolsheviks finally saw an

03:35

opportunity to get things going in 1917. and viva la revolucion. but that's for [mob of Russians protest]

03:41

another video. what, you thought we'd give you all the fun stuff right now?

Up Next

Finance: What is working capital?
268 Views

A company’s ability to cover its short-term debts with its current liquid assets, which can be cash, inventory, and accounts receivables, is desc...

Finance: What is a Current Asset?
16 Views

What is a Current Asset? A current asset is any asset a company has that could be sold for cash value within a year if it were to be liquidated. It...

Finance: What is a Hard Asset?
12 Views

What is a Hard Asset? A hard asset is a specific type of asset listed on a company’s balance sheet. It is an actual physical piece of property th...

Find other enlightening terms in Shmoop Finance Genius Bar(f)