The Development of Capitalism

PERSPECTIVES ON WORK. WELFARE AND SOCIETY SERIES EDITOR: IAN CLEGG

The Development of Capitalism Si man Clarl<e

P[RSI'ECTIVES 01'1 WORK. WELFARE AND SOCIF.TY

The Developlnent of C�r.t�li�'n Simon Clarh�

The Pcr.'1paclive hooklets give simple introductions, in convenient form, to the workings of key areas of British society, such (IS the unions, housing, the law, together with the general background of class-structure, capitalism, relation to the third world. EssE,ntial data and informed argument from a broadly left-wing standpoint, together with book-lists for further study. provide a unique aid for students of economics, politics, sociology and for the general reader.

The Development of Capitalism illl"lyses, in a lucid and compelling way, the economic and politic,,1 factors th"t brought into being (or failed to bring) capitalist o rgani ; at io n of society '

in specifk historical sitllations, togethe r with those r"ctors that continue it in heing through its different modifications.

ISBN

7220

7402

6

40p non-net

Sheed and Ward Ltd. 6 Blenheim St, London WIYOSA.

Perspectives Oil work, welfare and socidy Series editor: Ian Clegg TilE

DEVELOPMENT OF CAPITALISM Simon Clarke

I

Sheed and Ward· London iii

First published 19H

Shecd and Ward Ltcl, (j IUelllll�ill1 Street, I,uncloll WI Y OSA © Simon Clarke 197·1

This honk is sct in

I I Oil II point Baskerville I\lade ,mel printcd in Grc�al Britain hy Ey re & Spollisw()odc Limited a I G rOSH'nor Prl'ss, Pori smnllth IV

Contents

Introduclion I Early c api t ali sm (I) A capitalist class (2) Tlw d ecay of fcudal s ociet y (3) A new class (4) The rise of capitalism in England (5) The failurc o f the new class to arise 2 Later capitalism (1) The context trans formed (2) Investment oppor tunities (3) TIl' l market (4) Frcc labour (5) Agricu ltural revolution (6) The s tate Bibliography

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7 7 10 15 17 20 27 27 34 37 43 47 50 55

Introduction

In this booklet we are concerned with the developme n t o f capi tal ism. B u t we are not concerned to st udy the historical developme n t of capitalism in any parlicular country. I nstead we arc concerned with the most �eneral fea tures of the development of capi talism, and III par ticular we arc concerned with the cond i tions which mus t be sal is fied if capitalism is to develop at all. If we are n o t s tudying the developmen t of capitalism for a h istor ical purpose why are we studying i t? For essent ially two reasons. Firs tly, and quite simply, because the study o f the origins of capitalism can throw considerable ligh t on the nature o f capitalism itse l f and so on con temporary society. In this hooklet we do not draw conclusions about the nature of capitalism, largel y for reasons o f space, hut the reader may care to think about the implications of the points made for the analysis o f contemporary socie ty. Secondly we arc interested hecause. for good or ill. a large propor t ion o f the underdeveloped cOlin tries today are trying to develhp their economics along essent ially cap i talis t l ines, albeit with suhsta n l ial state intc lven tiun. So I he historkal eltperienn" o f capitalist development will inevi t ahly be o f vital impor tance to an unders ta nding of the problems which sllch develop· ment confro nts in thl' underdeveloped cou n tries. Th is is discussed in a complementary booklet in this s(�ries.

Problems 0Igrmullt in tilt' third world.

What do we mean hy ca pitalism? We do not mean simply production for the marke t , or even prodl\(: t ion for profit; nor du we mean the lending of money for interes t . These arc charactl"r is l ics, essen tially. of any lIloney economy and , as such, are found as much in ancie n t Rome as they are in modern Bri tain. We want

the tl'rlll ',�apitalislll' to dcsl'ribl' a particular type of socil,ty, the typr whkh Britain, Fralln'and the United Slales have bl'en since Ihe end .of the eighteenth ccntmy, A Iype of snciet y in which l.he wlwle snciety is acljuslec\ and adapted to a parlinllar Iypc of pro­ duction. This typl' of production, called l"<Jpilalist produclioll, is that in which the labourer cloes nol own his nU'ans of production ;lI\(l the oWlll'r of the lIIeans of prOdUl"lioll dOl'S nol labour, '1'1,,' Iabuurer works fllr a wa�e; Ihe oWIll'r of the means of production, of machines ;lI1d raw malerials, sels the worla'r to work with thl�se means of produci ion, selling till' prmluci OIl a profit. A capitalist sm:iety. is onc dominaled by such a typc "I' production, a sociely in which OWI1<'rs of the mcans of production confront workers who have no means of production in the labour marke!, in which the former buy Ihc lahour power of the lat It,-. TedmiGllly such a suciety is characterisl'd hy Ihe , wuuld contest, usually b;lsillg themselves on thl" work of l\lax Weber. Weber concedcd lhal the material, ;U1d partin.­ larly the ecnnomic, causcs were primary in explainin� 2

till' development of capitali!;m. But he failed to an'ept that tlwy provided a surricient explanation. lie was C"lmcenwd to '.:omlmt a particularly crude form of 1\1.trxist interpretation of the development of capi­ talism which wa!; then current in the GermiUl Sud a l IkmoCfatic l'a rty and whi!"h dC 'l I ied ideology any indl'pendent role in the historical prmTss. Weher showl'd how the ideas of the early capitali!;t!; , the so-called protestant ethi(', shaped IIw e arly devdop­ m ent of capitalism. It would take a fool to claim that the ideas of the early capitalists were wholly dc·terminecl by their economic situation and their material intere!;ts. And it would t ake a fool to assert tha t the way they reacted to their !;ituation was not mediated hv lheir heliefs. nut the vital issue is not whether the�e helief!; had any effect on the historical proces!;, butjllst how significant this effect was. Did the beliefs of the early capitalists shape their behaviour in fundamental ways, or did i t merely serve to rat ionalise actions which they would have performed whatev('r their beliefs? \Veh('r thought that the devdopment of capit alism by ;\ new class of men al!;o required completely lIew ideas, ic\eas summed up in the protestant ethic, ideas which derived in Europe from the thought of Calvin. And he ar�lIed that Calvin's thought could not be explained in economic terms. lie hacked up his argument hy showing that the oriJ,rinal (:apitalisls did indeed tend to bl' protestant s , .md hy a w('allh of cOlllparativc study showill� that OIH' ( 'ould find slI(lpos('d economic caus('s of capitalism in other times and places without any capit alist devcl op­ ment, a fact he explained by the ahs('llce elsewhere of this protestant ethic. Wehcr has been critici!;ed on many different grounds. Tawncy argllcd t ha t Calvin is not calvinism, that it was (Iuitc likely that the earl y capitalists adopted calvini!;m because it provided a userul rat innalisation or t hcir situation, rather than that calvinists took up capitalist enterprises. Weber fails to show how it happened that the calvinist ideology should impel a

class t o invest in c:lpitalist ent erprise at ex:!<:tly the time and place in world history at which that cbss had the

facilities to invest anrl at which s llch investment was possihle and p rofit ahle . And Ihough Weber traces the implications of the calvini�t c1oc\rilH's, he rail� 10 orfer any explanation or Ih("l11 hi ms elf. In particular he fails t�) explain the di I lcrcnc cs Iwl w een C,lvin and cal· . VIIlISIll. Robertson has shown that, ;IS it rclatl'rlto track and invcstment, catholic doctrine was not much difrerent from protestant, allrl thai thc calvinist doc tri ne had originally been directed aga in st capitalist enterprisc, being vcry trariitioll;,lisl. Brcntanll made the same poinl, ancl, like Pin"nne afler him, showed clearly h ow th e rdn';mt ethic p rece ded Ih e reformalion. Yinge r has also shown ho w calvinist doctrine could lead to profoundly anti·capitalist heliefs. Still others h ave denied Weber's conten t ion Iha t, for ex amp le hinduism is profoundly antagonistic to capita lism. The conclllsion can o nly be thai Weber's p oint is hy no means established. lIowevn i m portan t il may he we ,

cannot, in the short space available, e n te r into a debate with Weher's p o sit i o n We shall merely leave the rearlcr to make up his o\'Vn mind. In I his hooklet we shall .

explain the success or failure of capitalism to develop ill

purely material terms, ill terms of Ihe m;ltcri:ll sitllation and material int eres t s of socia l grollPS, We shall aSSllme

that ideological factors h:lve heen secondary, that they h ave afkcted the rorm of development or lack of development hut not its direct ion. If I he reader judges stich all e x p l ana ti o n 1lilsatisLldory he may care to turn back to Weber. The posit ion of We h e r sh ould he distingll ished sharply from that of a lllllnh("r of Illode rn sociologists who den y any role to material rac(ors, who explain the development or capitalism n:clllsively in trrms or a protestant ethic, a spirit of c apit ali sm or a logic of industrialism. Such pur e l y idealist interpretations ex­ pla in ncither th e origin of the ideas nor the d cwl op mcnl of capitalism. ­

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We have seen that the ess ential fealme of thc capitalist mode of p r oducti on is t h at it is a system based

on

thc

employmcnt

of

propcrtylcss

wagc

labourers by owners of Ihe m eans of production. Clearly for stich a system to establish itself a class must arise cndowed with sufficient capi lal to afford thc requisite mcans of production, inclined to inv cst in thc developmcnt of productivc entcrprises, facing pro fit· able investment opportunities, and having sullicicnt chcap wage labour available to it. It is thc ful fi l ment of t he sc conditions which we shall investigate. To a considerable extcnt thc fulfilment of thesc various '

conditions constitutcs a number of differcnt aspects of onc and the same process. It was this pr ocess which I\'larx described as the process of primit ive acntrnu­ lation. To simpl i ry our treatmcnt of this pr oce s s we will

dea l with its different aspeCts one at a time, drawing togcthe r the various s t rands at the end.

1 Early capitalism (I)

A CAPlTAUST CLASS

TIle first conditiun which must be sa tisfied before there can be a beginning to capitalist develop ment is that capital should come into the hands of a p rosp e c tive capitalist c1a.'is. Once capitalist p r od u c tion is estab­ l ished it can develop by accumulating its profits, indeed i t is the essence of the capitalist system that it must so accumulate. B ut a certa in amount of capi tal is necess­ ary for capitalist production to s ta rt at all, and for a capitalist class to be established. This capital, b ec a use it is a precond ition of capitalist production, must come from outside the capitalist process. It is very impor tant to be clear thaL whaL we arc dealing with is the beg i nning of a capitalist industrial system, no t just of one factory organised on proto­ capitalist lines. Thus what is required is that enough capital should come into the hands of a prospective capitalist class to establish a certain minimum exten­ sion of c apit alis t rodlll:tion necessary tn found a capitalist system 0 production. The reason for this is simple. ·llie dynamic factor in a capitalist economy, the factor which co mpels capitalists to reinvest their profits rather than squandering them in consumption, wh i ch compels them to adopt the most modern techniques and so p rodu ce most efficiently, is not any puritan mut ivat ion of the capitalis ts, though such an ethic may ra tionalise their actions. II is , i nstead, the cum pulsion imp osed by competitiun in the sys te m i tself to maximise prorits and to accumulate c a p i tal as the absolutely necessar y condition for re t a i ni ng capital i n tact, let alone expanding it. If a fact ory is not lip tu date, i ts equipment nut efficien t , then it is worthless.

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A cap i talis t who docs 110t continuously reinvest his p ro fits will find tha t other capitalists, each trying to s teal a march on the res t, arc in tro ducing newer and more crficie n t machinery, producing more cheaply and so undercut t ing h i m in the ma rket. His old mach inery becomes ou t of date and, hecame it can no longer produce e fficien tly, loses all but its scrap value. So the c o mpet i t ive pressures o f other capitalis t producers, a cting through t he markel , compel each capitalist con t i nuously to i nnovate. But in order t:> innovate the capitalist mus t h ave resources to huy new equipment, anel these resources can only come from his pro fits. Fa ilur e to cam su fficient pro fits to buy the latest m achinery condemns a capital ist to facing continuo o usly fal ling pro fi ts. The ca pitalist has tn keep nlllning in order simply to s tand s till. If a capitalist docs not maximise h is pro fits in the long run he ceases to be a c ap i ta l is t . So once the capital ist system is established q ues tions o f mo tiva t ion of capital is ts , o f puritan ethics' are quite irrelevan t . And indeed l\'lax Weher was well a wa re of this. lie was concern("d wi th the motiva t ion of the ori nal enl reprene urs , the men \\'ho .began to e xtend produc t ion before capitalism eSl.lhlis hed itself as a syste m. The situat ion of the cap i ta l ist is (I uite un like that faced by the lan dlord or merchant. Though economic imp rove me nt will increase the re turns o f either, t heir incollle docs not in any way depend on such improve­ ment for i ts very existence. For this reason landlords and merdla n ts i n general do not seek to maximise their econo mil- returns in the same way as the capitalis t. 'I'll(' landlord may fail to keep his estates in good repair, he may fail to improve or conserve the land, he may stick to o u tdated techn iques , but still the land is valuable a n d s t i l l the rents come in. In Ihe same way the merchant is always guaran teecl some mark-up on the guods in which he tracles, however inefficiently he may do so. nu t the capitalist who falls be h in d is as good a.o; a pauper. No w for these pressures to come to bear on a

gi

l a pi tal ist it is necessary for the Ci,p i t alist system to be extended enough. for there to be enough cap i talist estahlisllJnents. for production t o he compet i t ive. > t o prevent the possibility of the cap i talist si t t ing b a c k and gelling fat on monopoly profits without anyone cUl l i ng the ma rket from under his feet . It is only when the system reaches such an extension that it acquires i ts own dynamic and can truly be said to be a ca pi ta list syst em of product io n For the system t o reach such an extension it is not enough for one moUl t o reinvest t h e lrof i t s of his small workshop u n t i l h e even tual l y h as a a rge factory. It is necessary for many ractorics tn be establ ished more or less simul taneously. and ror t h is to happen it is nec ess ary for a substantial amoun t o r cap i t al to be at t h e disposal o f a cltlu o f men who w i l l esta b l ish such factories. With the development of cap i tal ism the scale of production s teadily increases and this means that la te-comers have to build ractories which arc much larger if they are to produce economicall y. Thw; a nmntry which is to develop a ca pi talist sys tcm of o

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produ c tion today must find a correspondingly larger amount of init ial c ap i t a l t han ror example eigh t eenth century England. And because of the discont inuity in p roduct i on which requires that production be from a large factory the accumulation must also be more rapid i f t he development is to be dynamic. I t is no L only impatience which dktates t h'lt t he process of primi t ive a("Cumul a tion be comp le t ed in years rat her t han decades or centuries. We may often read that the indust rial revolut ion in England was the crea tion o r men who started w i t h small fac tories and reinvest ed al l t hey could s o that their wealth grew. While t his is par t i al ly trut' i t is mislea d ing What is crucial is that t here wert' many such men. each of whom s tarted w i t h a smal l fact ory. Men had worked hard anel saved hard to aCCJuire weal t h from t ime immemorial. B u t wh("n they had acq uir e d a certa in amount of wl�al t h they would usc i t t o es t ab lish themselves in the pos i t ion t o which they aspired. o

usually hy huying an estale. There is no reason 10 belic"l� thai the early capitalists would have hehaved any diIT"J"('nlly, indeed many e1icl aspire to large estates and high social posil ion. Thl: crucial dirrerence this lime was thai once they had slarleel Ihe process of ac:nllllillatitlll Ihe compelilion frollllllllC'rs like Ihem, ancl rrom imilalors following Ihem. was such thai they c(lulcl nol slop. on pain of hankruptcy. And if they did wish In scll Iheir factory Ih('re hael 10 he someone 10 buy il who woulcl continue il along capitalist lines. Gradually I hl' marks of stalus rdlected the changing nature of weallh. The lar�e eslalc hegan tn mark the wanton allcllhc idle rather than the eSlimahle man who had 'earned' his w(·allh. II hecame the ruk for Ihe Lmly weal1hy to be mnsl discreet, leaving th,�ir wealth to grow rather Ihan Ihrowin g il around. Thus a weal c1eal of capilal had tn come into Ihe hands of a prospeclive capilalist class, a class that would huild faclories rather than spend lavishly on consu mpt !Iin III' s(·,'k In establish cst at es. (2) TilE DECA Y OF FEtJDALSOCIETY When' such a class clid arise ill the end, it arose out of lhe decay of feudal sClciet it'S. In order to appreciate the condit ions fllr this emergence we must lirst look briefly at t he r'�ll(l;ll mocle of production and part icul
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tended to have neither Iheans nor inclination to compel his serfs, workers or tenants tu make any improvement in techniques of production. lIis only answer tn an increase in demands made on him was to try to extort still more from his peasants, who were already at starvation lcvcl. At the same time the fcudal systcm was an in· dficient means or exploiting the peasantry. Although overall the pcasantry were ground down harder and harder, the incfficiel1('y of estate administration. the customary nature of t he exactions. and the developing political weakness of the landowner made it possiiJle in some countries for thc richer peasant tu grow. ulti­ mately at the expense of the poorer, to impro\'c his land and to gain from the increased productivity himself. This was especially true of gains to be made from nuctuating priccs. Of coursc thc landowncr was often strong cnough and vigilant cnough to nip such dcvelopments in the bud. But at othcr timcs he waS not, especially whcn fat'ed at the samc timc with a rcbdlious peasantry and with a labour shortage. This inefficicncy of the feudal modc of product ion becomes important when we realise that while the income of the ruling class was virtually stationary. its expenditure on warfare and on cxpensive living was steadily increasing. At the same time the requirements of the state increased even more rapidly. The reaction to this need for increased rcvenuc was the only reactinn possible - to incrt�ase still further the oppression nf the peasantry. llut this further squee,,-ing uf the peasantry served merely to rcact back on thc situation of the landowner to make it still worse. The opprcssion of the peasantry led to a night from the land, and to a declinc in population growth. so leading to lahnur shortage and still further reduced surplus and weakened landowners. And it led to revolt. t he suppression of which absoriJed still morc scarce resourccs. Of course this decline was not a uniform �)r a continuous proccss. Other ractors intervened to ameli­ orate the position. or to exacerbate the decline. But the

II

gelle .... 1 allo 101l� Lerm tendency was as descrihed. all inevitable dedine. a stc-ady c-rosion of PoliLi('al and econoll1i(' power. There were a Illlml)l'r or nlc-aSllres which Ihe landowners ("ould lake 10 improve Lheir posiliulI, and which did case Iheir silualion in a lIumher of countries al dilTercnl linn's. In Ihe ('arly stages of feudal decline tlll'y could ITsorl to vlClrrare and plunder. But Ihis was a COSily, and ofIen unrl�muner' ative, pursuil. which only s('I"vl'd lo accelerate Ihe decline of the syslem as a whole. l';'lter they came Lo pin their hopes on Ihe "rrowlh of Irade. The)' did this essentially in three ways. The first was Ihrough the plunder of ('olonies. AI this Spain was supremely success rill and Ih(' wealth derived from her American inleresls sl'rv('d 10 maintain thl' dass of f(�udal land, owners long heyond their time, parlicularly hecause they were strong enough politit :llly to dominale Ihc merchanls. Secondly, Ihey could gain from Ihe e"p:m­ sinn of trade by deriving illcomc from laxes, lolls :11U1 the sale or llIono»oly privileges. The snccess of such clll
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under local protec t ion, which mea n t that they were under the con trolu f the local landowning da!!s. On the other hand in coun tries where the local poli tical authority was relatively weak and the central au thority stronger the towns tended to pu t themsclves IInder the pro tec tion o f Ihe crown. The former si tllal ion parI iCII' larly characlerist'd I taly and Germany, tilt' laller mort' France and England. The dirrerent nature of Ihi!! alliance in di fferent countries sen-cd tn i ncrca!!e still fur ther the dominance o f local powers in the former case and o f the na tional power in the laLLer. And these power!! were nece!!!!arily po tent ially in conrlict in a feudal society, since each competed for a share of the fixed surplus. This connict came ou t into the open where the monarchy managed to establish an independent basis for pol i t ical power. In Engl;md the crown lands gave the monarch sllch a basis from the hegin n ing, and the same was the case i n Tokugawa.J apan. In other coun tries the alliance (I f the crown w i th the towns gave the crown i ts independent posi tion (I f power, a position from which it could assert i ts own interests against the local interes ts of the landowners. The period of alliance between monarchy and the urban merchant class, in whidl the monarchy depended financially 011 loans from the merchants, while it gra n ted pro tec t ion and monopoly privileges in re turn, WitS the period o f absolutism, shown in its classic form in France. This played an importa n t part in preparing the grollnd for capi talism by u n i fy ing the nation and the national market and by a!!serling the au thority o f thc s t ate ovcr the whole na tion. On Ihe other hand where the towns were IInder Ihe sway o f the local lilndowners the loam; of the merchant class st�rvcd to prop lip the local landowning class and to endorse its IO('al dominance, and so strengthened still fur ther the reJ{ionalism which necessarily impecled the development of eapilalism. The merchant!' had risen to their posit ions oC strength on the basis oC the economic embarrassmen t oC the land()wnin� class. and in the gap crea tc(1 hy the

intl'rnal divisions of fl�IHlal soci'�1 y. Bl'cause of this weakness and I hesl' divisions Ihe landowning class was nol ill a position to impl'de 1111' hJ'fOWlh of Ih(' merchanl class nor assert Ihl'ir ullchall('n�ed Olulhnrity over the tOWIlS, ,kspil(' the fael Ihat lh(' mere-himls' surplus was d('riv('d ult illla Id y aI Ilwir l'x perlS('. Ihough foreign pllllllkr oftl'n ,"onlrihul('d hrrl'atly 10 its incr('ase. But the nwrchants wer(' forc('d 10 sl'('k proll'ction of the local land(lwnl'r or t hl' sta 1(' nol only a�ainsl potelltial rivals who might ("hallen�l' hard-won mOllopoly posilions. bUI also agaiml Ihe oth('r ur ban classes, particlliarly Ihe craflsl1ll'll. It did not lak(' long for the merchanls to assume political control of the h>1..ilds, and so 10 cOlllrol the h'llild rq�lIlalions. At first thl' restrieliOlls represellt,'d by Ih"5(, regula! ions were in lhl' merchants' OW11 interests, restrit:ting and controll· ing producl ion, and so l'lilllinating competilion. But once in powl'r 511111(' of Ilw l11l'rl"ilants reilh5ed that they could enlarge their profits slill further by securing Ihe products in whidl thry traded al r('duce(1 prices. And Ihis they could only do hy Ilnillillgguild regulations­ hy employin� l ahour at low wages which had nol completed proper apprrnticeship. OfIen �lIch labour wOllld '-'e found ill Ihe cOlllltrY5id(', where Ihe guild allthorilY did Ilot rUIl. Th(,merchantsccrtainly did Ilot oppos(' gllild restriction, Ihey merely suught to operate il to their advantage. This devl'i0pllwnl, by which prl'viously independent crafl produclion, carried on hy th(' craflsman with his own tools, was sllhordinate,l to capilal, ("'11"ri('d out hy wage l ahour ming tools and raw malerials owned hy lhl" Jll('rThanl, Of wilh produclion soldy nmlrolled hy the markel. rl'prl'senls lh(' wry hq;inning of capitalist ('nl(�rprise, 01" produclion by wa/-:(' la),u\If. Hut as yet this was only a rormal d('vdo»menl; Ihe Glpitaiisl could only ('xpluit lire work('r because (lr his monopoly »O\vcrs. This development is first ohs('rved in Ih(' Ncthcrlall(\s and It.lly around the Ihirtc('nth ccntury, in England not unlil lh(' fiflel'nlh cenlmy. With it an exlcll(kd strtlg�le hetw('('n merchanl and craftsmen

over coni rol of the gu i lds and implemental ion of guild regulations developed. In Italy and the Netherlands it was this conflict that forced the merchant class to rely politically on the local landowners. In Britain and France the al l iance was bel ween the large merchant and the state. Although borrowing from the merchant classes could stave off disaster for the landowners it could no t poslpone it inde fini tely. The dehts had to be repaid or the estates loslo So ultimatdy the resort to the loan and the morl.gage only servt:d to weaken the landowning class s t i l l further. Politically it derived streng th in some countries from its a l l iance with and power in the local towns. Somet imes landowners would themselves derive �reat riches from t rade by this means. Bu t in those countries in whidl the towns served only t o strengthen the monarchy aga inst the local landowner, political dec line for the la l l er was as rapid as econom ic. In such countries the landowners were in no posi tion to p revent the dirrere n t ia t ion o f the peasan t ry, which led on Ihe one hand I () a class of i mprov i ng yeoman farmers and on the other to a rural semi-proletariat. And when i t s resources ran out it was in no position 10 preven t the merchants foreclosing on the morlgages il had raised and taking possession of the estates.

(3) A N I�WC I.M;S Bllt still this dt�cline or t he aristocracy, Ihe rise o f com mercial activity and the merchant class. did not surfice 10 lead 10 Ihe development of capilal ism. If it had England wlluld cerlainly not havt: been the first capital ist cOlln t ry. The real dlallenge to the old order can only come from a new d'L"s. We ohviously canno t expect the feudal landowner to havl' in it iated that capi talist development whkh finally undermined h is posit ion Nor did they have the resources, as their income was lwavily committed to ost entatious· con· sumptioll, political advance, feuding and warfare. Some did make improvement s to their l'states. fol low.

15

ing the example (If the ,.,'1"owing yeomanry and of the merchant investors or the lanel. Some even invested in capitalist induslry once it was well estahlislll'd. Until all hop e was losl, and oftt'll even he y one l , Ilw)' dung to the dream of resurrecting the old order . But what ahcml the mC'rt'hant class? We have se'en that as early as Ihe thirtC'C'lIth ("entury this class was investing its capital in production. Was Ihis the bc�innil1� of capitalism? The answer is I lut it was not. The reason, as we have already seell, is Ihat the capitalist system only really ta kl' s off with the intro' duction of fa(�tory produclion. It is unly with this devcloplllent that the system "('(Iuires its own dyna m it-. The slIhnrdination of product IO n 10 capital in thir· teenth -century Italy aml lhe Netherlands was pili to an end, Ihough only temporarily, with the resistann' of the crartsmen. This suhordination depended essentially on the merchants' desire to conlrol and restrict production, while the clevelopment (If capit alism re· quireel the expansion of production to sudl a level Ihal new me lhoels hccame possihle and pro/'itahle. The merchant saw the SOIlf('C of profil in Ilw diITcrrllce

bcLween the huying and selling price, ,md in the exploitation of ,. monopoly situation. For the capi. talist, profit lay in the steady expansion of produc tioll unbounded hy any legal or administraliVl" f("llers. '1'11(.' capitalist was concerned wilh the introduction of new techniques of product ion. wit h transforlllatioll of the con ditiolls of production. Thr merchant knrw nothing of p ro dudion, and where he controllec\ it Ill' IIsecl the tradit io n al lll et hods. though he derived sOllie advantilgl' from concentration and rationalisation of p roduction. He was more conce rn ed wilh acquiring and exploit ing a mo nopoly position th"n with the relatively pelly gains to be m ade from ec.onomi('s in prodllction. For this rea.'Ion the transformation which made the develop. ment of capilillism an irreversihle prn('c�� had to he effected by a new c 1as� , a class of men more closely engclgcd in production than was the merchant. Although the merchant played an important part in

III

preparing IhC' ground lor GlplLanSI Ul;Vl '''I'........ .... a ltho l lgh once Ihat development was uncil-r way, once hi!' monopoly position wa!' undermined, he WilS likely 10 invesl in tha i developmcnt himself, if hc had not been mined hy ii, he was nol the man to crfC'('t 11ll' transformal ion. In fact, prt'cisdy uec:llIse the develop. mcnt of the IIlll"ellered prodm'lion of capitalism IIndermined his monopuly, tIll' merrhanl opposed thaI developmcnt as stron�ly "s he was ahlc. And he defended not only his own int l'rc sls bill thosC' of thl' 01 her dominant class of relldal sodet y, thc landowners, and the feudal statc as well. The merchanl class is always p arasitic.: on the dominant modc' of prodllction. His trade is with thl' dominant classes of Ihat modl' of production. In fC�lIdal society he sold aimosl entirely to court and landowner, his traell' centring on luxury gouds and military supplil's. Thc interl'st on his loans derivcd from thc feudal state, Ihe fl'mlal landowncr and the oppressed feudal pcasanl. So the story of Ihe devclopmC'nt of capilalism depencled in tlw end nn the rise 01" a new class from illlWllg the ranks of Ihe produl'l'rs. Allhongh Ihe merchanl class, and merchanL capital, dev"loped in a ll feudal socicties, it was only in some thai the new class developed, and only in a few thaL it rose to dominance. Foremost among such countries was England. L,

_

(4) T i l E RISEOFCAPITAUSM IN ENGLAND In England Ihe rl'udal decline slarled earlier and went further than it did elsewhere. The wcakness of the feudal ordl'r allowcd a new class to emerge which would eventually play thc decisivc rolc in the inslal· lation of capitalism. This new class had Iwo l' ss ential sources, one a ncw stratum or capitalist farmers, the other a new slratum of l:apitalist produc�rs. In thc countryside the diITercntiation or lhc peasanlry and C'feation or a class of yeoman farmers on Ihe one hand and rural workers Oil the other took plalT (lver il long l i m c and prc cc ckd the collapse (lr feu d a lism . Indeed it.

17

was a major agcllt (lr that cnllap�l" It is IIl1t surprising that the aristocracy could do nothing to suppress this dass, which mallagl'd to acquire:- all aJ.rricullural surplus through ill' improvecl productivity, and a share or the

landlord's surplus through price changes which had thr erfed of reducing real rellts. The f(,lIllal aris\c)(Tacy was ddlilit at ('t1 by centurics or almost cont inuous war ran', hy cxpcnsivl' living, hy shortage' of lahour, hy economil­

crisis. Econoll1it-ally up to its ('OIlS in clcht, politically it raccd a rchellious tenantry and a JIIonarchy which had a powerful ally in the urhan lI1C'rchant class. The class of capitalist farmers steadily wew at thc

expense or the:- sImI II landholder ancl the cO.nmon lands, which W(,rl� rndOSl'(1. Arter I Ill' gains rwm sC'alc� and the

gains rrom raLionalisation had hCl'n l'xhaustl�d ncw techniques hegan Lo be introduced which re<)uin'd quantities or capital. Very J.'raclually, properly capi­

talisL agriculture clevl'lopecl, driving from the lanel all those who did not ke:-ep up, and rai�illg the rarmer over the landowner as t hl� rl'al power on t hr lan(1. This class not only cnntrihutccl to the clcvelopmcnt or capitalisJII

throu�h ils development or agricllltUrl', it "Jso invested early in induslry, diverting its profits into local manufacLure. cven selling eslatl's in CIrcler to �ct up as industrialists. lIs deposits in the:- new hanks spreading over Ihe countryside played an imporlant part in thc

rinancillg or capitalist rllterprisl's ill their ('arly stilges. The weakness of the aristoC'l"ac), alslI meallt that thl: towns es("aped their control; whik Ihc monarch, although alliecl with the m('rehants, dicl nol control tlwm either. Through tracle and usury a good part of the agricultural surplus was transrerrecl rrOlll the control 01" tlt(' landowner to thai of the melellanl. And,

liS we have secn, by the sixteenth century in Engl;ll1d

lhe:- nwrdlanl WllS using

Cl

part or his capitlll to finance

production. Such merchants w('re particularly thuse olltsidcrs who wen: ('xcludecl rrulll the IUCTaliw fClH'ign

monopoly lradin� l'omp;lIli(�s and so sought alternative

ways of enril"hill� thcmselves. This product ion was able

to develop outside thl' control of the J.rt.lilds because Lhe

18

divisions bctwcen the statc, thc local landowner and thc town left thc countryside out of the control of thc gui l d , so manu facturc was ablc to dcvelop outside thc town, despite opposition from the craftsmcn. On thc whole this control by thc mcrchant was hascd on thc monopol isation "f lcgitimate product ive act ivity hy the gui lds and control of the markct by the merchant; though there were a few industries in which the merchant controlled the means of product ion thcm­ selves, and often he had a hold over the worker hy extending h i m crcdit in timc of nced. In effcct the merchant was appropriating thc wholc monopoly profit for himself rathcr than sharing it with the guild cra ftsman. Ahhough we have shown how this suhsumplion o f production to merchan t capital could not b e the sole bas is for the developmcnt of capitalism it did set a preccdent which others fol lowed. These othcrs were drawn from Ihe ranks o f the craftsmen themselves. Taking advantag(� of thc eradication of urhan mon­

opoly

which

had

eventually

resulted

from

thc

merchant's incursion into production, and which had lo some extcnt undcrmined the posi t ion of the latter, these richer craftsmen sough l ga i n in the only way open to them. Not being able to cxplo i t a monopoly position l ikc the mercha nt , they could only i ncrease thcir wealth by increasing production and by improving the me thods of production. At the same time the m er­ chants tried to bring production back under firm control, to recstah l ish and consol idate thcir monopoly positions. Cnnsc( luently a vigorous struggle for control of the guilds developed in the seventeenth century, this time w i th the monopoly merchants defendi ng restric­ tio n , while the aa flsman capitalists sought grcater freedom of opcration and cxpandcd production. The state al igned itsel f, not surpr isingly, with the mcrchant monopolists against thc producers. At the samc timc the feudal landecl in terests were interested i n suppress­ ing or rcstricting the cxpanding manu fact ure which was upsctting social relations in the counlryside as well as

19

putting prrslillfe on the labour supply. It was not only the old reudal arilltocracy which lIO supported the state. It was joined by many or the parvenu merchantll who had bought estates and allpired tn land:d status. And it was oppolled by the improvin� farmers who sought rree accelill to the marketll for their produce. It was over thrlle and related iSlilieli that the civil war wall rought. And from the civil war the new classes emerged victnrioulI, despite the ract that. inevitably. they h.\(1 had to make many compromises. Although the civil war represented a victory ror the newer c1asli of capitalist indulltrial and agricultural producerll who sought rree and expanding markets for their products, the industrial revolution, the capitalillt 'take-orr', had to wait another hundred yearll. Part of the rea.'1on for this was the fact that this class still did not have sufficient capital in its hands. Gradually it expanded production, and accumulated capital at the expense of the producers it dillposllessed, the workers it employed, and the merchants it undercut. The ex­ plosive ...rrowth of capitalism had to await the com­ pletion of this quiet accumulation of capital. For its full nuwering it had tn await access to the capital still in the hands or the large merchants, the proceeds above all of the trade in goods and men with India and the Americas. This prod Ud of the merc:lIItilist colonial plunder only I)('came availahll' for industrial invest­ ment on a I:trge scale when the monopoly position or the merchants was finally ulldermined. (5) TilE FAILURE OF TilE NEW CLASS TO ARISE England. the country which was in the rorefront uf the development of capitalism, the country in which the new capitalist class was strongest and the old ord("r weakest. could not develup into a capitalist country without an (�xtendcd political strtl�gk. The condition for success in this struggle was precisely the weakness or the old order, a weilkness which rinds its origin in the nature of reudalism itself hut which was exacerbated in 2()

the case of England by a number of other factors. This weakness first allowed new methods of production and new classes to emerge, then allowed these classes and that production to escape the control of the dominant classes of the old order and finally to overcome the old order itself. D u t even in England the new class was not completely triumphant. The civil wilr and saw it emerge as the dom inant class, bu t an element of merchant monopoly remained, some restrictions on productive activity persisted, the landowner remained a political power. It should be scarcely surprising then that in other countries the developmen t of capi talism suffered setbacks or never even got off the ground. In England i t succeeded. It succeeded t o o in France, despite the relative weakness of the French capitalist class, and the cont inuing power of feudal agricul ture right up to the revolution. There the capi talist class overthrew the old regime, against which it had been weakly struggling for a long time, on the back of a popular rising. And even after the rev()l ution the struggle between landowner, financier, merchant and industrial capital ist con tinued for a long time. Nor should it be surprising if in those countries where the new class'was faced with no indigenous class of landowners, the whi te dominions and colonies, capitalism developed relatively rapidly and easily, once freed from colonial control. Here the new class could arise because of the availability of ex tensive fertile land, the absence of a class o f arasi tic landowners and an abundant supply of skille and enterprising immi­ grants. I n all these countries capital could be rapidly accumulated on the land. This process wal. made the more crfective because the scarci ty and high price of labour meant that the land had to be exploi ted e fficiently and capitalistically. So when labour for hire became more plen t i ful and wages fell, the profits to be . made by the earlier settlers were large. On the o ther hand in countries like German y , Russia, I taly, Spain or Japan t h e n e w rising class

I (i88

/

21

s u rre red repeated checks O i l i t s gro wt h from t h e l a l l
22

i m po si t i o n of tari ffs to protect d o m es t i c c a p i t a l i s t

i n d us t r y f ro m E n gl i s h compc t i t io n , a n d so cvc n t u al ly allowcd thc l at t e r to dcs t roy i t . In decd , N e thcrlands'

merchan t cap i talis ts inves tcd in the dcvel op mcn t o f capi talist p roduct ion i n E n gl a nd , whcre t h e r e t u rns wc re be t t er . In a few c o u n t r i cs , n o tably in Eastern Europc, a ncw class emcrged , ch allc ng e d the old order, a n d h ad a par t i al success, o n l y to fall under the w ing of fore ig n c a p i t a l , which had supp o r t e d i t in i ts s t ruggl es. Th is h appened i n Russia. In suc h a case t h e weak bourge o i s i e coul d o n l y fol low t h c French c xamp le a n d rel y o n rallying the peoplc, and above a l l t h c peasan ts, t o their cause. Unfor tunat ely the peop l e were st ro nge r an d m o r e ab l y led than the bourgeoisie. Thc resul t scrvcs still as an aw ful w arnin g to those who would seck t o m ob il i s e the pcoplc i l l t hei r ow n in t c r e s t s . I f t h e re i s not a cl as s to carry t h c s t an d ard o f cap i t al is m , t h e n howevcr weal t h y a cou n t ry may be, ca pi t a l ism w i l l n o t devclop. On thc o t h e r hand i f t h e agr icu l tu r a l s ur p l us is insufficient to p ro v i d e e no u gh c api t al to finance the

de ve lop m en t o f capi t a l i sm , no am ou nt o f t ransfer can get the system under way. T h i s is no t j u s t a qu c st i o n o f t e c h n i q ue or o f s o i l fe r t i l i t y , because w c are c on c e rne d w i th the s urplus, not the pr od u c t i v i ty of agr i cu l t ure. The production of a s urp lu s is t y p i c al o f s ys te m s o f agriculture characterised b y pri v at c ow ncr sh i p i n land, and this tcnds t o de pend m o re on pop u l a t i o n densi ty t h om on fer t i l i ty. Thus where p op u lat i on is sparse an d p riva t e ow ne rs h i p un d eve l op ed t h ere w i l l be no su rp lu s p r o duced and no possib i l i t y o f p r im i t iv e accu m u l a t i on. Nor would such a s o c ie t y havc cl asses t o i n s t al l capi talism. I t is a vcry long way from lribal to capi talist s ocie t y . I t I� i gh t be conceivable thai a pop ul a ti on could be so d cn se t hat , w i t h given tec h n i cal kn o wl e dg e , i t w o u l d n o t hc po s s i bl c to p ro d u c c a surplus. ] \1 this c asc land h o l d i ngs will be f ragmen tcd a n d i t " is all that anyone call do 1 0 s c ratc h a l i v i ng o n h i s own small pIa L This, perhaps, is the popular im age of I n d i a . B u t i t is far

23

from the t rII t i t : i t has been estima ted that abou t 10% of India's n a t i on al income goes to owners of propert y and most o f t h i s represents a/-,rr icul t ural surplus. I t is however true that landownership in India is very fragmented, and t here arc a very large nu mher of people who l i ve on rent income. I n parts of Bengal Lhere are u (> to fort y di fCerent people in receipt of di rreren t sorts o f income from one piece or land. In this sort oC s i t ua t i o n , where Lhe surplus is spread t h inly, a process o C concentration of land ownership and so concen tra t io n of surplus would be necessary prior to, or alongside, a process of pri m i t ive aC(�umulation. Such a conccn t ra tion of ownership would also be expec ted to l ead to a ra t ionalisation of production and so to an increase in s u rplus, a stronger class of landowners and so, most l i k el y , t o an increased rate of exploitat ion. Those c o u n tries which Caih.'d t o develop capi t al ism failed fur d i f feren t reasons, In some, such as A frica south of t he Sahara, t rihal society clearly offered no prospect o f capi talist developmen t . In I ndia hy con­ tras t t h e s t rength of the dominan t (-lasses was sufficien t to preven t a n y compe t i t or emerging. India, in the seventec n t h and eigh teen t h centuries, was renowned as a land o f fabulous weal th, though the wealth was largely t h a t o f those merchan t s who monopol ised the t rade w i t h o t h er countries. She had a rich merchant and la ndown i n g class. Uut the merchant class was totally subord i n a t e t o t he landowners, and tended t o hecome absorbed i n t o i t . The econumic system on the land, wi t h i t s ne('d for extensive irriga t ion. and the cons tan t need for ddence against invaders from the nor t h meant that the s ta tes were very powerful and the princes astunishi ngly rich. Thus state and ruling class es e rfec­ t ively furmed a mono l i t h ic hlock against which any new class that mi ght have emerged would have s t ood no chance a t al l . I n fact no new class could ("merg(' : in the c ountrysid(' t here was vl'ry l i l l i e prndlll"tioll for the market , aJ most all being for res tricted exchange by barter wi t h i n t he vil lage economy. Thus the small producer had nei t her incen t iv(" for, nur possibility o f,

24

('xpandi ng his product ion. lie could not acquire' land, because i t was not a com mod i t y , nor was t here lahour to he hired. The handicraft proelucer, too, was hound into the natural economy or the vill ..ge by t h e cas te system. L astly the towns remained firmly a nd securdy under the con trol of t h e state. The Indian s i t u a t ion w..s Iypical of most of Asia. Th('re is consider .. hle evidenl'e that, in India al leas l , the so calle d Asiatic m ode of produc t ion had hy ahou t the six tee n th or seventeent h cen t ury given way 1 0 a system much more like Lhat of feudal Europe. And it is dear that the merch ant class during t hose cen t uries, l ike its contempor.ny in Europe, was inv('s t ing i ts capital in the rinance of production. There is some evidence that craftsmen were alst) turning to I he employment uf wage labour. Whether such .. devdop ­ ment would have ever led to the indigenous develop­ men t or capi talism in India nohoely can say, for hdore it had time to nourish the Brit ish had arrived in force and d es t roye d all indigenous indus t ry. B l l t slIch evidence docs deal a r.. irly crushing hlow 10 Weher's identification of t h e h indu ideology as the virt llal an t i t hesis or the protes t ant ethic, .. nd as t h e main reason why capi talism had failed to develop i n India. I f i t is t rue that t he h i ndu ethi(� is ullcollducive t o I h e development of capi tal ism, a s Weher dilimed. t h ollgh others have contes t ed, then i ndigenol ls Indian capi­ t alist developmen t must be pre l ly concl usive e\'id('n('e ror t he m inor si","ni ficancc or ide .. s as a call sal r.. c t or in the developmen t o f capi t alism. -

2 Later capitalism ( I ) TIlE CON TE XT TRANSFORMED The rise of capitalism in one country transformed the whole situation. I n countries where the prospects of capi talist developmen t were previously apparently remote, the capitalist mode of production came to dominate in a mal ler of years. In Germany and Japan, in Russia and I taly the dominan t c1a.�ses of the old order themselves played a leading role in the develop. ment of capitalism, using the state as their agent, as the seal on an all iance with the class they had previously tried to suppress. This apparent paradox is resolved when we realise that the risc of cap i t al ism in one country, Britain, profoundly affected both the condi tions and the prospects of capitalist development in other cou n tries. Let us examine this transformation. The growth of capitalism in Britain initially had a twofold impat:t on the rest of the world. Firstly Britain began to supply cheap goods to the world and, in particular, sought markets for these goods wherever and however she could. This meant that Britain began to undercut indigenous handicraft producers and drive them out of business. Often this undercu tting involved the use of political, military and administrative measures, especially in the colonies. Often it wa.� purely economic. The effect of the weakeni�g or destruction of h andicraft was to precipitate a crisis in peasan t and feudal agriculture the world over. Peasants, who had sough t relief from their crushing exploitative burdens by enga� ing i n cottage industries, were forced below the subSistence level when these were destroyed. The result was widespread peasant unrest on the one hand

a n d a red l l c t i o n o f t h e surp ills avai lahle rl lr t he s t a t e .lIld t h e (Io m i n a n t classes l in t h e ot her. S o t h e rise o f ca p i t alism in England s t n lck a t t h e ("1m' of feudal and peasan t hOi sed soci l, t i es. Secondly Brit a i n 's r'l p i d ly i ncreasing weal t h carried with it a rapi dly i ncreasing m i l i t a ry power. To coun t e r such pllwrr a n y p rospel"t iv(' u p po l l e n t or Bri t ain was cOll l pel ird t o ( x p an d m i l i tary ex p e nd i t urr l�llOrmolisly, p i l I t ing sl ill l a rger hurdl'ns on t h e revenue. So the i m pac t of t he rise (If capi t a l ism in Bri t ain, and st ill more when c api t a li sm was ex tended to other cou i l l ries, was to precip i t a l l' pe as a n l IInn'st as handi­ cra ft was destroyed, to p re c i p i t a t e a crisis' i n t he s t a t e rinances a s sources of revenlle declined while needs rl lr ex pend i t ure i n cre as ed , and t o undermine the base of the indigl'nous monopoly merchants as capi talist pro­ duct s drove I he m from I he ma rke t . To a l esser ex ten t agricu l t ure t oo was h i l hy com pe t i l ion from I he produc l S of capi t al ist agricul l ure elsewhere, and t o s o m e exten t t h is a l so reduced rl'n t s. The re ac l inn to t h is crisis in di fferen t cou n t r i e s fu nda men t a l ly det er­ m i ne d t heir subsequent econom i c and pol i t ical de­ '

velopmen t. Alt hough the devdopm en t of ca p i ta li s m elsewhere mean t t h a t product ion uni t s in l at e comers had to be t ha t mu ch larger and more advan<-cd. re( p l i rin g t h a t much more initial capi l al t his wa s o ffset t o so me ex t en t hy two co mpens a t ing fa c t o rs Fi rs t ly, ro re i gn cap i tal was o rten available ror indusl ri.ll inves t men t . genemlly taking t h e rorm o r fixed in tercst lnans, o ften govern men t guaran teed, th ough some t i mes taking I he form of direct invest me n t . Secondly inteTllOl t ionru compe t i t ion meant t h a t the ex tension o f the system did not have to be so great . Foreign compe t i t ion replal�ed domes t ic compe t i t ion in the mai n t enance of t h e dynamic of cap i talist accllmulati;m. To regula l e t h is foreign compet i tion, the exercise of s l Ol l e power in the int erests of capi talist drvclopment became impera­ t ive. By t he usc of t a ri rrs mill s u h s i d ie s the sta t e had t o m .. ke sure that the (:(Hnpe t i l ion was not sl rnng enough ,

.

28

tn s t i ne the lIew industries, wh ile not being too weak to stimulate them. In this way the rise o f capitalism ill Britain precipi­ tated the issue elsewhere. Whereas in England the condi t ions of capi t alist development had matured over cen t uries, in o t her cou n t ries t he ground had to be prepared rapidly or not at al l , despi t e the weakness of indigenous capi talist classes in Bri tain 's compe t i tors. Only some count ries faced with t he rise of Bri tish capi talism developed their own cap i t al ism . We m ust now consider why this was the case. We have SetOn that on the one hand in these countries the indigenous cap i tal i s t class was weak, yet on the other that the exercise of state power in i ts interests was imperative i f capi talism was to develop at all. So i t was neces:;ary for the classes o f landowners and merchants, or at least a substantial port ion of one or both of t hose classes, to back a class whose rise apparently would spell their decl ine. There arc a numher of reasons why sections of tlu-se classes took this s tep .

Firstly, we h ave noted the crisis in s tate finances. This crisis was twofold. Firs t , the s ta te's revenue was threatened just when i ts expendit ure h ad t o increase. Second, t he increase in imports upset t h e balance o f tr:lde and t hreatened an ou t rJow of gold. T h e develop­ men t o f indigenous industry offered a solu tion t o b o t h these problems. O n t h e one hand it offered an opportuni ty, through taxat ion, for the state to increase its revenue. On the o t her hand, through import subs t i t ut ion, it offered the opportunity for correcting the trade imbalance. Secondly, the rise of Britain made clear the depen­ dence o f mili tary strength on economic power. Not only on the power to finance a large military machi ne, but also the power to make al l the m i l i tary hardware required. Thus the developmen t of capi tal ism was the only way of standing up to Britain militarily . .. Th irdly, those cou n t ries wh ich did develop capi­ t al ism had already experienced some commercial-

29

isation or agrkult ure, dirferen t ia tioll or the peasa n t ry, develop ment or la rge scale ma llu ract ure. There was the nucleus or a cap i t a.list class already in exist ence, ,mu the l andowning class had some expcrienn' "r agricultural improvemenL. Four t h l y , those COUllt ries which dt'vcll lped capi. talism w(�re rich enough to finance a measure or capitalis t developl11ent wi thout nll11(1lcl" dy under· mining the posit ion or the landowning (-lasses. There waS enou gh sU'l)lus to go around. The initial capital wall round )liU" Lly by squeezing the peasantry, and parlly IJy raising government loans at home and aIJroad. Fifthl y , we have seen how important Lhe slate was bou n d to be in rostering the develop men I or capitalis m in these countries, and we shall re lurn 10 t his laler. Bu l an i m portant aspect or the role o f the state was that the domin a n t cl asses of Ihe old (mler thouAht Ihal they wou l d he able to coni rol the rising capitalisl class through t h eir grip on the s t ate apparatus. They didn't believe that the capitalist class would �row strong enough to bite the hand wh ich fed i t . The risc o f capitalism i n Rrita in forced other countries to lake a slighlly dirferenl path. Evell France lIeeded subs t antial s late inlervent ion I I I help its in­ digenous capi t alisl class develop ; while :n Germany, Italy , anti ahove all J apan the state playe;1 a leading role. I n J apan the ea rly stages of capital isl development had t o he financed entirely by Ihe sla le. making usc or de ficit fin,mce and the sqlll'ezing or peasantry and lanellonls hy innation. I I was lIot long hefore govern­ menl financial difficulties forced the sal e or govern­ Illent fina nced indus t ries 10 private C
the dynamic of capita list accullllllat ion wa!l under way, the power or the l andowners and of feudal society was broken. What delermined whether a parliclliar country developed capitalism or nol? One might Ihink that the problem was one of wea lth. After all J a pan. a relalively rich feucl a l society, in Ofelcr 10 raise th(� relatively smal l amoun l or capil a l needed 10 pili J apanese induslry on a

:10

sel f-sustaining basis, and in order to protect J apanese sovereignty against only probing intTusions by the imperialist powers, was forced t o the bri n k of s tate insolvency and had to cut into peasan t and samurai incomes to mell an extent that it al most fel l to insurrections 011 more than one occasion. However the resources diverted t o the financing o f capitalist de· velopment represented only a small proportion of the sur p lus available to the dominant classes in Japanese soclet y. The financial problems were caused by the strength, in the early years, of th e dominant classes of the feudal order, who were converted into state pensioneTs at great expense. It was only later that their income could be safely eroded. In the same way, opposition from these classes to the imposi tion of restrictions on trade, from which they derived both revenue and the prospect of expanded chellp supplies, led to the ope ning o f the Japanese m arket to foreign goods This opening would h ave been fatal to the prospects o f a developing capitalism had the govern­ men t not even tually been able to impose tari ffs, though .

not un t i l after an extended pol itical struggle. What the J apanese example shows clearly is not that a coun try had to be weal thy to resist the i ncursions o f foreign capital a n d to clevelop a n ind i genous capi tal . I t was not a shor tage o f capital which prevented capi talist development in Asia or in Latin America, for the rate of surplus extraction in both con t inent s was very large. The problem is one of surplus being in the wrong hands rather than b e i ng inadequ a te Whether or not capi­ talism develops in response to i mperial ism depends essen t i ally Oil the balance of pol i tical and economic power between those classes which favour the develop­ ment of capi tal i s m . because their existence is threat­ ened by imperialist capi tal , and those which favour accommodation to imperialism . Which classes would find themselves on which side o f this divide? Clearly an indigenous class o f m anu- . facturing or industrial capitalists woul d be threatened' and would cons titute an c rfec t ive nucl eus o f oppo.

31

sltion to i m perialist incursion. Indeed it is doub t ful whe ther capital ism could be developed without such a nucleus. On the other hand we can expec t merchant classes to be divided. Merchants whose monopolies or privileges are l i kely to be undermined by foreign capitalist compe t i t ion are l i kely to demand protect ion of the h o m e market and resistance to imperial ism, as are merchants who deal in products, )larlicularly domestic handicraft products, which can he expected to become uncompetit ive. The former are likely to be t h e well es tablished internal merchan ts. But , no friends of expanded production, they are likely to favour resistance through consolidation of the old order. The l a t ter, those who deal in peasant and h andicraft products, are l i kely to be t he most progressive section of the merchant class. Seeing their products becoming u ncomp e t i tive they are l i kely to favour p ro tection i n the first instance a n d to follow this wit h exploita tion o f more e fficien t product ion methods s o as to put their trade back on a firm foot ing. "("hi!; section of the merchant class is l ikely to be s t ronges t in societies in an advanced stage o f feudal decline. In societies where feudaJ i s m is still strong, as Spain or Latin America, such independen t prodll<:tion and such an independent mercha n t class is very much weaker. ·11)(' same is true of societies dominated by the orien tal mode o f pro· duction. There is another section o f the merchan t dass which is l i kely to seek a close accommodation w i t h imperio al ism, and which will oppose all restrictions on foreign trade. These arc the merchants who handle such trade. We have already seen how the Duch import.export merchants prevented the imposi tion uf tari ffs against the init ial t h reat o f the rise of Bri tish capi t al ism. The same thing happened in the nineteenth centmy in Latin America. These merchants will he most powerful in thuse cou n tries wh ich had t"ken part in the earlier colonial trade o f the mercan tile period - above all Latin A merica and India. The p osit ion of the landowning dass will also

32

depend on the type o f society. On the one hand the landowning class may face a deterioration of its posi tion through com petit ion from the produce of capi talist agricul ture. This is, i n fact, only likely in temperatr 7.ones. And it is likely to be balanced, or even overwhel med, bv the increase in clem
33

culonialism in wh ich classes favourable t ( I foreign in terests had been bolstered up, and in which many terri t ories had heen colonised. Although such cou n tries had 110 choice when con fronted with the rise of the capi t alist sys tem, it was precisely the societies wh ich could he l' xpec t ed to ;\C("ommoda t e to t ha t rise which were already colonised. The impact of de v elo p in g capit al ism on those cou n t ries which accommodated to i t s rise wns d early ve ry p ro found . This impac t , and the lVay i t Olrrected Lhe prospects for capi talist devdopmen l of the coun t ries nuw underd e ve l op ed , is discwised in t h e bookle t Problrnu ofgrowlll ill tI/(· third world. in this series. ( 2 ) I NVESTMENT OPI'O RTlINITIES We have discussed t he process hy which a prospective cap i talis t class emerged in some societies, and was preven t ed from emergi n g in ot hers. We h av e discussed how, in those so c ieties , such a class got its hOlnds on a share of the s u rp lu s produced, ull i ma lcly on the land. We have also seen how t h is new class could be expected to be orientated t owards ex p andin g p roduction . Th is orien tation we deduced not frolll any ideolo gy , and protestant ethic, such a class may have had or may have adop t ed from o u tside , hut from i ts previous class experience and i ts curren t dOlss interests. B u t we have not yet shown that t h e opport uni ty for p ro fitable productive invest ment was there . I t is not enou gh for a class to be favourable to t h e exp a nsi nll of p roduction, or even to have t he reso urce s to c rfe c t t h is expansion, if such an expansion could no t be e x pec ted to be p rofi tab l e . In England t he transfer of capi tal from the old la nded aristocr acy and m o nopolis t i c merchants pro­ ceeded for a long time, and i ndeed was accomplished long be fore the development o f a ca p i talist industrial system. For t h is capital to li nan c e the explosive development of the system of produc t i on it is necess­ ary for prod u ctive inves t ment to he more p ro fi table

34

and secure than other outlets for investible resources. In the first place this means that more profitable outlets must either dry up or be closed by the state. Thus for cxa10ple scventeenth century Holland was a richer mercan tile country than England, but the rate of profit in trade and finance was so hi �h that there was no chance o f investment in productIve industry. Latcr English capitalists drew off much Dutch financial capital to finance the development of capitalism in England. In England too there were ample oppor­ tunities for trade based on the monopoly position of the big merchant companies. Indeed it has been argued that the profi t ability of the triangular tr'1de based on slave trading delayed the development or capitalism by half a century. In a mone tarised country characterised b y peasant agriculture very high profits can ue made by merchants who deal not in high priced luxury goods, but in taking the produce of the peasan ts to market. Since each peasant only produces '1 small output , the development of the market and i ts ex tensiun beyond the village means that the specialised merchant has very consider­ able economies relative to the individual peasan t. Soon such merchants come to effectively monopolise trade, and vie with the landlords in exploiting the peasants. Not only do these traders make sllustantial profits by trading in peasant products, there are also enormous pro fi t s to be made from making short-tenn loans to des titute peasant s. And once the peasants are in deb t, they are bound to the merchant-usurer for life. The capital to finance this business tends to come from local landlords and from urban merchant capi tal. In poor agricultural countries enormous returns are to ue made from speculation in food crops. As soon as a shortage is feared, prices of food crops skyrocket. Thus the hoarder is as hated as the moneylender. And in countries with li t tle or no e fficient administration huge profits cail be made from corruption. In some countries bribery is accep ted ;lS a form of investment. A man'may pay rent for ajob rather than receive a salary because he

35

can earn so mud} in hrihes. And for any mnch ant or entrepre n e u r brihes arc a normal item of ('osts. Largc fortunes may he expcnded in sceking polit ical office for the con t rol over some arca of governmc n t expcndi­ t ur c o r liccnsing. Smuggling can offer enormous re t urns. The same, i t must bc remem bered, was true o f Engl a n d hdore t h e indust rial revolllt ion as is t rue o f today 's u nd c rdcvelopcd coun trics. I f capi t al ism is to gct orr the J.,fTolind the statc must s tcp i n an d curb t hcsc act ivi t ics. This is not only a ql1cs LiclIl o f purging t he administration - i f the oppor t u n i t ies arc there a way will bl' found. I t is also essc n t ial t hat the oppor t u n i t ies should bc seal cd ofr. P"rticularly i mport ant in the un derdcvel o ped world is the curb ing o f the "et ivi t ies of usurcr-merchants. To do this al l t h a t is rcqu ired is the cstablish mcn t of agricu l t u ral acdit schcmcs, and co-opcrat ive marketing a rrange men t s. Uut thcir cs tahlish mcnt is casier saiu than done. For the mos t powerful men in the co u n t ry­ sidc are t h osc sallll' w\II rer-merchants, al lied wi t h t he hmdlords who themselves invcs t in usurious activi tics. l11Us again we rcturn to t hc poli t ical qucstlO n . I n the sa m e way merchants with sccure munopol y positions wi l l make ccrtain t ha t any a t tempt to undermine that pos i t i o n wil l bc must vigorously oppose d . Part icularly i mpur t a n t nuwa days as an outlct for runds in the un uerdeveloped cOlin t ries is forcign inves t me n t in thc dcvelopcd cou n t rics. Thc a t trac t ion o f [ureihrtl i nvcst men t is not so much a hi gh rate uf re tum as the sl'cllrity. This is part icularly the c asc in coun tries in wh ich thc currency is unstable and i nfla tiun endcmic, or whcrc there is a dangcr of revolu t i o.n and so cxpropriat ion of thc wea l t hy. It is also a t t ra c t ivc fur landowning dasscs who arc l ikely to be face d w i th a re runn ing class of pro sp ec t ive capi­ tal i s ts, who may seck t u ex propri a t c thc ec; ta l cs, and who h ave IlO d csire t o help the dcvclopmen t o f thl' capi t al i s t syslcm which spells ru in ror l h e m. Anotlwr i m p or ta n t ou t lc t for inves t a hll' funcls is spcculat i vc urban p ro perty deve lopment . cspecially in Lat i n

America, where every ci t)' boasts beau ti ful skyscrapers. In general only the developm en t of (:api talism i tsetr, by which the free now of capit al eCJual ises the rate o f return i n di fferent branches, can elim inate a l l these unproductive investment ou tlets. Unfortunately, as we have seen, the existence of these outlets inhibits (,api talist devdopmen t . Once more we see that the state has to tak e an active part in openin � "I' protected olltlets, suppressing corruption, and limit ing the ex­ ploi tat ion o f the exposed peasantry. (3) Ti l E MA R KET Provided that al ternative .uses for capital are either not particularly profi tahle or can only absorb a limi ted amount o f cap i tal, we can say as a general rule that industrial investment will be prori table as long as it has access to a large, stable and expanding market. The crea tion of the m arke t for the products of capitalism is as vi tal a condi tion of cilpitalist (lcvelop­ ment ac; is the avail ability of capital, and Lhe twn lend to go very m uch together in the process of pri m i t ive accumulation. It is important to understand the nature of th is development clearly. It is often assumed that the extension of the market is synonymous w i th an increase i n national income. Th is is ex tremely m islead­ ing. Indeed in the ini t ial stages of the creation of the home market for capital ism , national income more orten than not actual ly fell. Much more important th.m increasing wealth is the dec:l ine of natural ecollomy. The d i r rerent iation o f the peasantry implies that some peasants become wage labourers while o t h ers develop production for the market. The concentration o f handicraft i n t h e towns leads t o t h e development o f wage labour and monetised trade insteacl o f barter. 111e decline o f feudal estates leads to the rise of wage labour and money rent at the ex pense of forced labour and rent in k ind. Thus the most important factor in generating a home market is the separation o f the peasant from the land and the craftsman from his tools

su t h a t produ ction fur the marke l , and correspondingly working for wages, repla(�e suhsislenc(' production. We have already seen I h is process at work in the process o f pri m i tive accllmulat i o n as a n im;eparahe aspect of i t . Expansion o f t h e market i s of ('ourse part l y a sel f-gen('fa t i n� process. A!'. t Ilt· role o f t he market i ncre'lses, d i s t rihut inn i mproves, so reclueing the costs of mark" t i ug and furt her undermi n i ng !'.uh!'.istence product iOI l . Supplies hecome mort" secure and prices more stahle, so less risk is att ach"d to the ahandon ment of suhsish'n c e production, which is of course not the case if suppli es arc u ll!'.table. Increased Inolletisatiun, and s t a hil i ty o f prices, means t hat ren ts arc more l i kely to he i n money terms th.m in kind, and wag(' labour b ecomes m o re pro l"i t ahle rda t ive to serfdom or share­ cropping. This soon leads to the development of a frecr market i n l a ne l. A l l t his rcacts hack on the process of prim i t i ve accumulat ion. Land is easier 1 0 huy, poor peasa n t s more willing tn lOdl. Wag(' lahour becomes more ava i l a ble, and as the market e x p a nds t he gains

from the divi�ion of lahour and concen trat ion of

p roduct ion i ncrease. Thus t he whole process is cumu­ lat ive. A n d as it goes nn , as ycoman fanners and manllfact urers st ilr t to emerg(' , new (kmands make themselves fcl t for agricult ural tools ami equipmen t , for han dicraft machi nes, and for cnnsllmpt inn goods for tlw n('w mi ddle class. Thus t h e devel opme n t of mallu fad u re pro!,rrcsses cumula t ively until t he market grows to h,' la rge enough to induce and thell t o sus tain the d,'vt'i f l p m ellt o f iarge machine produ ction, of faclory i n d llst r y , whose economics make t hn!'.e o f the division o r I"hom l ook pal l ry . Wi t h t hese rac tories t h e inexorahle plOcess or capi lalist acnllnl l i a t ioll is under way. D i f ferent forms or p roduct ion - !'.uhsist encc, handicra ft , p l l lli n g Ollt and m an u fact urt', no longer persist side by side. The new rorm of cap i t ali!'.t prmillct ion rapidly IIndrrnlts th(' old ror ms and t a kes over t lwir ma rket s. J us t as rapidly it cont i nlles t o c�x p anc1 t h e market . SlIh!'.ist ence prod u c t ion is rl i m i n a t ed, com municat ion!'. improvrc1.

wage labour generalised. Most impur tant of all an enormous new market is created: the market for means uf production. It is this d r mand for means uf pro· duction which plays a leading role in t he init ial e x pl osive developm e n t o f capi talism. One n('ed only think of t he enormoull impact of the grow th of t h e railways un t h e developmen t of Bri tish capi talism . Though t he home market is quan t i tat ively crucial, capi t al ism also needs access to a fureign market tn be able to develop. The signi ficance u f the foreign market is not primarily quan t i tative , for trade must in the long ntn be in overall balance; a foreign market can only be exploi trd if t h e domestic cou n t ry buys in re t urn. Thus quan t i tat ively, foreign trade can only give a temporOlry fillip to cOlpi talist development . The great import ance of [oreign trade is a qualitative importance , [or i t is a fundamen t al charOlderillt ic o f capi talism that i L develops unevenly: lIom e industriell nm a h ead and need a larger market than C'1Il be provided domes tically. I f there is no foreign marke t on whit.:h L o dispose of the surp l us product ion the resul L will be recession which will spread from the leading sectur to the economy as a whule, and capi talism will not be able to develop. The uneven devel upmt'n t o f capi tal ism ill an economic [ea t ure of capi talist development, and not a technical 0111.'. Uut we can sec t h a t , vi tal as the foreign market is, crucial as i t h a s been in the development o [ capi talism Olnd i t ll con tinuing grow th, i t cannot sen'e in the long lerm to replace the development of the home market ; hecause in t he long t erm t rade m llst be in quan t i t ative balance. The import ance o f t he foreign market in the early sl ages of capi tal ist development varies from cnu n t ry to coun t ry. If there is relat ively well developed handicraft production and a rich and large economy the new cap i t alist sector cal l do w i t hout a foreign m arket in the carly st ages. This was most notably the case with American cap i talism , but i t was also t ru e o[ Germany and, to a ICl'l'er eXlcll t , J apan. For England Oil the other h;mcl the foreign m;\rkcL was c ru c ial in ge l l ing capitalist

production orr t hc ground in the rirst place. Hut h owevcr much capi talism managcs to do wi t h out. a forciJ.,'11 market in t h e emly stages its uncven Ikvdop· men t necessi t ates resorl 1 0 foreign 1l.1 arkel s as soon as i n t ernal marke t s have been cleaned up by the e1imi· nation o f pe\ ly product ion and perhaps i mports too. I n t h e s a m e way the forciJ.,'11 markc·t may play a leading role in launching a capit ali:c;t ckvclopmcn l , but il can n e ver prov i de I he ha:c;is for a sU!itaincd /,IT owth. We can see t his clearly in the ligh t of the limi ted post ·war development of I he third world. For this develo p ment has been very largd y import suhst i t u ting. or e x p ort led. Tha t is to say it has depended not on any expansion of the home ma rkel , bu t :c;ubsti t u t ion of domes tic products for foreign imports and a small incursioll i n t o the foreign marke t . But th is prov i des no basis for development al a H . Unless the home marke t is developed at the same time. it is nO I a cu mul a t ive process. Once suhst i l u t ion i:c; more or le s :c; complete t he ecollomy fall:c; hack into s t agnal ion. wit h under used

and incfricicn l plants ahsorhin g \'as t resources ll Iukr

t h e prot e ction of high t ari ff harriers. We h ave presen t ed t h e developmen t of the home market as th ough once the process of prim i t ive accumulation is under way i t , and I hen t he capi talist system, sweep all oh:c;tacles be fore t hem. This i:c; of course not in fac t the tmth. Though t he economic logic of the proces:c; i:c; an inevitahle clImulat ive developmen t we have already seen that the success of the prncess o f p rim i t i ve accumulat ion dep end:c; wry much on poli t ical factors. We have seen how the dominant c1as:c;es of the older order ca n preven t t he emergence o f a new class. In thc same way they can prevent the d evelopmen t of t h e home market . And indeecl to them t he lal l er i s even more important than t he former. for it is l h rough the installat ion o f exclusively markct rdation in the countryside, and I he development o f capital i s t rclllt ions i n agriclI l tllJ"e. that their posi t ion as feudal aristocracy an d associ" t ed merch:lIlt c ·\ass is finally undermined. I f they are p olitically s t rong enough the ,

40

ways in which they can preven t this dl'vciopmen t arc many - legal or non-legal. For example they can prohibi t till' tran s fer of land, they can stn�ngthen cond i tions of nOll-wage lalwur, they can regulate mmlll facturc and trade_ Part icularly import,l I l t in the early s tages of the development o f the market is the oven-l im ing of local barriers to free alld generalised tracling wh ich arc charac teristic of pre-capi t alist socie t ies_ The local landowners or merchan ts' gui lds cOll tnil t he local markets, levying taxes on t hose merchallts whom they permi t to tr..de i n t he markcts, and raising to\ls on goods pa.'i sing through their domain. These local con trols must clcarly bl' broken clOWIl before a national markc t can develop_ And the breaking down of thcse con trols will havc to be a pol i t ical act o f t he central governmen t , allied wi th thl' large monopoly ml'rchan ts, against the local powers o f the l arge landowners_ Th is cen tralisation of pol i t kal authori t y , and destru c t ion of local barriers t o t racle and com municat ion, was ;Ill

c X l rcmdy imporlan l aspec t or the struggle be twcell lhc

aristocracy and the monarchy allied to till' big mer­ chants in the period of absol u t ism_ On the o ther hand this itscl I' raises new barriers in thc nat ional monopolies whosc aim remains to res trict the market_ The develop­ men t of the market must therefore depend on the overthrow of t hese merchants and their mOll(lpoly prac t i ces_ Thus again we come up against the pol i tical ohst"de to lhe developmen t of cap i t al ism - the classes a l l ached to the old order. We saw above t h a t the trans fl'r of surplus I'rom t he old c1assl's to a Ill'W one can be ci rcum\,cn ted if the dominan t classes o f the old order themselves inst igate the develop men t of cap i t alism, through the "gency o f the state. While t h is solves t he problem o f t h e origin o f the finance to launch capi talist production, sooner o r later thl' prohlem o f tlH� h o m e market arises. For the proccss or primi t ive aCnll1l ulatiol1 is the process of thc crcation of the hume marke t . And i f this is hy-passed iil the init i'll st ages uf capi talist developmen t , it is not long 4· 1

hefore I he developing capi l a l i !> 1 syslem faces the p rohlem of a s t u n t ed home ma rke t , For a wh i l e it \';\ 1 1 clevelop o n t he hasis 0 (' t ht' res l ric l ed ru ral marke t , t ill" urhan markl' t , perhaps ron'ign I rade, and ahove a l l t he pro d l l ct ion of nwans of prodllct ion, B u t soo ller o r Ial er I he rising cap i t a i i s l cl ass i s going 1 0 seck I he ov(� r l h row o f fl'lIIlal rl" i a t ions in t he coull t ry­ side. nol jusl 10 expand I I\(" Iwnw markel , h u t also to secure illl increased 1;I I>our supply a mi develop agri­ cu l l url', t hus cheapening foocl and lowering wa�es, I n I h is w a y t h e al lianrc h d ween la ndowner ,lIlel capi­ tal i !> 1 soon hreaks down. generally OVl'r qucs t ions Slid. as l ahour law, lanel law and I hl' pricing of agricu l t ur a l �oods, T h i s con fl i c t h a d an i mport a n t part to play in the cil-velop mcn l o f fascism in I i aly and Gcrmany, Thc s t un l ed growth of I he hO llle market also mealls t ha t I II(' cap i l a l i !> l s sCI'k forC'igJl m:lI'kets ('or I he i r p rodllct s a l l I he more ('nCl"gl,t ical ly, T h u s i t is 110 chann' I 'hellollll'l\on t h a i I l aly, C ;ermany and J apan h ave been I he 1lI0 s t ('J1 ('rgl' l k, t h ough not I h e most

slICC('SSfl l l .

imperialist

powers.

�()

the apparen t ly

peaceful revolu l ion from ahov,' wrough t ill I hose cOllJ1tries ill which the landowning class plays a leading roll' in t h e developJllent of cap i l al ism serves o n l y to pos l pone I he h i l l er poli t ical dash wh ich is incv i t ahle, In I he coun l ries wh il'h fa iled 10 develop l'ap i t a l ism, the fai lure 10 develop a h o me market ill Ihe elld came dowII to the s t a t i c social anel prodllct ive rela t ions in the cou n t ryside : t hosl' same ('())ldit iolls whit-h i mpecll'd Ihe process of primi I i ve accu m u l a tion, /\ s u hsist('IH,(, sys l e m o f ilgricull ure prcvai led, wi l lt I hc mass of the pop u l a l ion having access 10 I h e land t h rough t ri hal coopl'ra l in', shan" cropping, or (�s l a l e sys l l'ms o r produci i o n , Such a syst ell1 was ma i n ta i nC'd bccause w i l h poor cOll1 l11unica l ions. and low pro­ clUe! ivit y , sllpplies of llIarkd a hk goods and so prkcs Wl'rl' l'x l n'mel y crra l it'. Thus all)' l"Olll m i l mell I I I I t ill' market was f(lol h a rdy, Whl'rc allY I hrca l til I he s y s t e m arose I here w('re always t hC' rural nwrchall ts

and landlords to do all in in thrir pl lwer t i l suppress it. The underdeveloped world had to wai t for the arrival o f imperialism t o see t he po t en t ial o f their markets developed. When it came, this dcvdopment was in the in terests nflt o f indigenous capital hu t of imperialism. The rapidity w i t h which the market was develnp(�d tes t i fies, however, to the immense power of developed cap i t al ism to cre a t e i t s own market once it is orr the grou nd. But each individual market represented for i m perial capi tal only a part o f the whole. Thus the exploi tat ion o f the empire helped to rocket England to preem inence by boost ing the dom inan t industries, first tex t i les, then railway equipmen t , a t j u s l the right time, allowing them to expand without any barriers. Taken separately i t is doub t fu l whet her any one of these, singly, could have provided a sol id enough base for the developmen t of capi talism. For, lar�cly for pol i t ical rcasom, imperial cap i t ol l left the sodal and product ive relat ion!i in the coun tryside much
enecl t h e m . thus holding hack the ("umulative develop· men t of the marke t. (4) F R E E LA BO U R I n t h e in troduction w e defined capi tal ism a s a m ode o f production based on the employment of wage labour. For capi tal ism to be ahle to develop i t is absol u t ely essen t ial that there should b(� adequate lahour fort hcoming at a low enough wage to m ake i ts emp loymen t profi table. Of course wage labour can be recrui t ed in any society, if the employer is prepared to pay a price for i t . B u t the profi tab i l i t y of capi tal ism depends on i ts abi lity 1 0 recrui t a large quantity of labour at it Inw wage. So it is an essential precondi tion of cap l lalist development that t here shuuld be a force of free labour availahle to the developin � capi talists. And this is unequivocally a precondi tloll of capi talist development - wit hou t 43

cheap labour nobody can invest profi t ably. The freedom o f labour is a freedom from personal ties to the employer, freedom from access to the land, freedom from ownership of any means o f product i o n , s o freedom from a n y means of earning a living except wage labour. It is freedom to be a wage slave, wh ich is freedom of a sor t . For the develop­ men t of a large force of cheap wage labour it is essen t i al t h a t labour should not have access to the land or t o independent small product ion. This develop m e n t is an absolutely fundamental aspect of that same process o f primit ive accumulation which concen t ra t es capital in t he hands of the prospective capi talist class and wh ich develops the home market. The requ i rement t h a t a force o f free labour be created means th at this process of primitive accumu­ lation can n o t be a simple transfer of res('urces from one class t o another, i t must also represent a concen­ tration of wealth in the hands of the capitalist class as corollary to an impoverishmen t of the prospective working class, a class recruited from the nlra! poor, whose previous access to the land is denied, and from the p e t ty producers, whose means of production are appropriated by force or in set tlemen t of debt , or rendered obsolete by new types of tool. This re­ quireme n t also means t ha t the process of primi tive accumula tion must indeed be primitive, must precede the development o f capitalism, even if ini tial growth is i mport-substitut ion and investment by a former merchant class. One very importan t reason why merchant capi t al canno t play the leading role in the init ial develop­ men t of cap i t al ism is thaI its accllJ1llllaticJIl of capital is purely at the expense of the landowners' surplus. I t does no t represen t a dispossession o f the petty producer, and so does not appear as culminat ion o f a process wh ich creates along with the capital its necessary complemen t , the supply o f cheap labour. So any sllbsllmpt ion of manufacture to merch ant capital is by this fact alone necessarily limi t ed.

44

The creation of a free labour force in England was the product of a long history of enclosure of common land, eviction of the small peasant and consolidation o f landholdings, strong craft regulations, the in­ debtedness of independent smal l producers and (,xtremely harsh laws agains t begging, vagrancy and idleness. Only after a strong force " of free labour has been formed is labour available at a low enough wage to make industrial development profitable ; for it is well k nown thai an independent peasant or craft smen will go on working on his own account rather than for wages so long as he can possibly keep himsel f alive by his own labour. The scarci ty of such hlbour in the colonies o f wh i te seulement because o f the free availability of land was an importan t factor in re­ tarding the developm en t of capitalism in those countries_ Clearly in count ries still characteris('d by em economic system in which labour is tied to the land and the landowner by personal ties of dependence, or in which production is still conducted within the

confines o f a natural economy, rree labour will not be available to work for a wage wherever and whenever required. And precisely such economic systems were characteristic or those coun tries which are undeveloped today. Once the process of cap i talist development gets under way all the bonds which t ie the worker or peasant to the land or to his tools are rapidly dissolved and the force of free labour is con tinuously being enlarged as an integral part of the cumulative process o f capi talist expansion. As machinery is in­ stalled and factories drive handicraft producers out of business, as capi talist farms bankrupt small producers, the labour force is steadily enlarged. Later large ractories drive smal ler ones out of business in tum and the accum ulat ion of capi tal in this way auto­ matical l y frees the labour to feed its further development. ( The developmen t of the force of free labour in the

45

proccss 0 1" primi l ive accumulation is ruugh t against vcry !i I HlJlgly hoth hy landlords and hy merchants aUachcd 1 0 I hc old re�ime. The I;mdlord orten depcn,ls foJ' Ihe dlcalllwSS or his lahour on the fad that his workers or lenants can cngagc in pelty productioll on I he side. The dcstruction of such pel ly product ion means I ha l wages 1 0 Ihe I.mdowncr will rise, or tha i his rents will fall. Al\(I the hreaking of links with thc land makes thc peasant fn:e to move from placc to placc. Previously his small plot and his access to the com mo n land tied thc pe.lsant to the cstatc and so scrved to keep his wOlge down. Out capitalism needs a mohile lahour force un encumbcrcd by such ties. The merchant ton is opposcd to the development o f free labour and the loss of guild authority which had enabled him to rcst riel product ion. And he is oppused to a dcvelopIIH'nt which destroys the indc­ pcnclellt Jl<' l l y produccr, from whosc prodUl"ls he had made substant ial profits ,mel on loans 1 0 whom he eantcd enormous ra t cs of interest .

. 111Cse

s l fll!U{lcs

hetween

rising

capitalism

and

mcrdlllllt and lando w ner we have alrcady cxamined. 'nlCY focuscd on the authority of thc statc in thc countryside as against that or I hc landowner, thcy focuscd on the control and authority or thc guilds, and they focuscd on the law or labour and of bagabondagc. In this wholc process thcre fore thc s t atc playcd a vital rolc. Thc cxpansio n of tltc labour forcc has always hccn a problem for capitalism cvcn whcn its developmcnt is undcr way. '11lis is becausc, cspeci ally in those countrics in which capitOllist developmcnt was fostcred by thc statc, thc transforma tion of thc countrysidc was n o t crfcctcd, as it was in Britain, be fore the dcvelopmcnt o f cap i l Cllist industry. And once thc dcvelopmcnt got IInclcr way thc ncw capitalist dass, in its political weaknc!i!i, was furccd tn rely for polit ical suppor t on thc pcasant and indepcn­ dent small produccr. For this rcason nu'asurcs wcre

46

takcn to prevent them from succumbing to market fon·es. This in turn restricted both the growth of the market at home and l i m i ted the available reserve of free labour. It is only recently, under fascism in I taly and Germany, Hilder dc Gaulle i n France that grcat steps havc becn takcn to liquidate the peasantry in con tinen tal Europc. It is a problcm the J aprulese arc just facing up to. This samc need for poli t ical support constitutcs part of thc explanation for the ex tremc proliferation of the bureaucracy, particularly in Lat in countries. Thc creation of-1 hc force o f frec labour in thosc countries which accommodated to the risc of capi talism elsewhere by opening up their markcts was carried out by forcign capital. The import of foreign products destroycd handicraft product ion, thc monetarisation of thc cconomy and the political support giv(�n the landowncrs thrcw millions o rr thc land. But this dcvelopmcnt was not to the advantagc of an indigcnous capi t alist class, but to that o f forei (;llers. In this way i m pcrialism fostcrcd a l opsided prinutive accumulation ill those COUll tries now under­ developcd. I t crcatcd a market and a labour forcc b u t destroycd t h c c1a.o;s wh ich could havc takcn advantage of t h is and Icd a capi talist develop ment, dom inated the state which could have assisted such a class, and stripped the country of the invcstible surplus. 'fllis process is examined ill the companion booklet

['mulr-ms

(if gruwth ;71 the t h ird world.

(5) AG RICULT U R A L REVOLUTION We havc looked at t he process of prim it ivc accum u­ lation from a number of apparen tly quitc d i fferent points of view only to find that the different develop· men ts arc only m.pccts o f one and the same funda­ mental process. And we have also sccn that this process is a process o f changc above al l i n the social relations in thc countryside. Capitalism can dcvelop to a limi tcd extcnt on thc basis merely of reform in

47

the c o u n t ryside. o f an alliance hcl wecn nlriU land· owners and urban capi l alists. bUI for this develop· ment to be sustained relationl'i in the countryside m u s t in the end be transformed. In tho5c poorcr coun tries in which most of the product is appro· priated hy the landownin g class or by rural merchan t s closely a t tached to this class. only the m05t ten tative begi n n i ngs of capi t al i s t form5 of product ion arc possib l e be fore a revolu tion in the countryside becomes an inescapahle necessi ty. It should be dear that the agricul tural revolu tion t o w h ich we re fer here is not to he interp retcd in the sense of a t ransforma t ion o f the l<-,chniqiles of pro· duc t i o n in t he count ryside, hut ral her in the sensc of a social revolution, a transformation of SOciiU rela t i o n s in the countryside, hy which the surplus e x t racted from peasan ts or agTicul t ural workers can be devoted to productive use by a clas5 of capital ists. 111is diversion i tsel f may take place directly through t h e devel opment of capitalist agricul l ur e , or i t may take p lace through the agency of the s t a te , using i ts

powers to lax and subsidise, or t h rough i t s con t rol of

prices. Of course t h is social revolution in the coun tryside is most li kely to be accompanied by a t ransformation i n t h e t echniques of production and so an increase b o t h in tot al production and in the surplus which is made availablc. Hut thi5 technical trans forma tion is i t s e l f subordinat e to the social t randormation which . al o n e makes it pos5ihle. We have seen that one and t he same movement tran s fers resources from a sterile class to one which will i n vest them product ivcly. I I i mproves i!gricu l t ural produc t ivit y so as t o increase the smplus available for invcs t ml' n t , so as to cheapen food and thus the O)st o f wage i
48

We have already seen what it vi lal eklllen t the agrarian revul ut ion wa.'i in those coun tries ill wh ich cap i talism developed. In t he- early dcvelopers, partinl­ larl y England, a technical transformatiun uf agri­ cul ture tu sume ex t en t preceded a social rcvolu tion which occurred only gradually and relal ivcly peacefully. B u t once a capi tal ist competi tor h ad arisen, in the form of England, othcr countries could not afford to let the agrarian revolu tion slowly mature, and so a social revolution in Ihe- countryside was made the agent of technical t ransformation. Th is is dearest in the case o f .J apan. And i t is the prospcct which faces any country hoping to develop in toclay's world, csp(�cially if the landowning class and i l s allies arc powerful e nough to preven t the technical develop· ments to which we have rdt"rrec1. The development of capi talism in Englanc1 to some exten t had i t s roo ts in changes i n the countryside, so that the social revolu tion there was accomplished graduall y w i t h t he aid of a growing class o f capi talist farmers indigenous to the countryside. This can n o t be the case ror any ("oUnlry developing capital ism today ; which means that thc agrarian revolut ion has to be accomplished, su tn speak, from ou tside. Thus i t must rely on the lise of pol i t ical methods of e ffec ting the social revolution; it m us t rely on the state machine. So we can see why England was excep t i onal in that the state played a relatively smaIl direct pol i tical role in the devclopment of capi talism , and t he t ransfer o r s l a l e power from t h e old landowning dasses to t he new c
49

( G ) T H E STATE A t s o m e p oi n t t h e cOl l q l l (' s t of s t a te (lower in I h e i n t ne s t s of the ri s i n g c l p i i a i i s l cl ass b e comes essen l ia l . Thc poin t £I I wh ich a pol i t i.-.d revol u t i o n hccolll es vi t al de p e n d s O i l a ll1 1 mhc-r o f fa c l o r s . L e i 1 1 5 fi rst d i s cuss t h e rolc o f the s l ;l l e i n t h r' d evd op mc n t o f cap i t a l i s m . I I i s cle a r t h a t a p o wn ru l \;tn<\O '.,yni n g class i n l l l l ch ;t1 l c n gecl con t rol o f t he s t a t e c a n , k c ep a very f i r l l l

(Ill t he e c ono m y or t h e ('o u n t ry and so can pre\'e n t a ca p i t
We have seen a l r (' a d y I Hl w I l l (' S pa n is h b n downing class s m a s hed I. h e CO IJ1I1 1IPI'O.\' rev l O l t . We h ave also see n t ll l i the s trengt h o f t he [ n d i a n 1;l 1 l d o wl l i n g class was p ro ba h l y su fficient t o l ] ;l ve prevel l t e d sma l l

m a n u fac l u re from d ev el o p i n g i n l o Iargc sca l c m a n u facture h a d no l c o m pe t i l i o n . from Bri tai n p a r t i c u l a rl y , donc so for t h e m . Bu t i t is n o t on ly as a d i rect i mpedi men t t h il t t h e s l a t e i s signi fican t , fo r i t is t h e s t a te wh ich cod i fies an e l a d m i n i s t ers t h e la w. The type o f b w which capi t al ism requires for il s dev e l op ment is ve ry d i f feren t from that appro p ria tc, for exam p le, t n a fe u d al society. The most i mp o r l a n t changes in t h e law a re I h ose re l a t i ng , n o t u n e xpected l y , t o property on I he one hand and lahour on the o lher. For exam p l e it is n e c e ss a r y t o I h e devel opmen l of capi l al i s m tha t I I sury he marie lega l . I t is cssC'n t i al I h a l t h e fe u clal i d e a o r propert y ;]s heing som e t hi n g socia l , entai l i n g social o h l i g a t io n s , he r c p b c e d by' the ca p i t ai i s l idea of propert y a s heing priva t e and f reel y assil4ll a h le, e n ta i l i n g r i gh t s h u t no obl iga t ions. I I is cssen l i al t h a t t here be l a ws 1 0 compel l 'copk 1 0 wor k , t h a i i s to say, l a ws agai n s t V:l h'Tancy, ;Ind l aws which perm i t the rem oval o f la bourns fro m I heir m e a n s of p ro d u c t io n so as I () ere;),t e a force of rr('(' lahollr. M a n ), of I h csc l egal c h a nge s can he accolllplished wi t h ou t t h c cap i t al i s t class ac t ua l l y t a k i n g st ate powC'r i n t o i l s own h an ds. I n ch'ed I h i s must h a ppen

50

sl ll ce

th ey

·1fe

necessary

pn:con d i t i o n s

for

Ihe

dev d o p m e l l t o f a cap i talist class. There is n o paradox h ere, for I h e s e changes a r c a l so c h anges requi red for the devel o pm en t o f mercan tilism, 2 that i s to say an e x t ensive sys l em o f t rade. Such a sys t e m of trade , d o m i na ted by large m er c han t s , is something wh ic h can grow up \'!i Lh i n th e bounds o f, a n d can be perfecLly conge n i a l t o . feudal soc i e t y. I t is cssen t ial l y in th i s way t ha t I he developmen t of mcrcan t ilc cap i talism i �:

a

necessary prelude to the developm en t

of i nd us t ri al ca p i t al ism . since it is at o l l e and t h e same time cap i tal i s t ic i l l i t s fi na n c i ng a n d yet not a t a l l

antago n i s t i c to the old o nk r . Las t l y , as we hav e

seen

i n tcrmedi ary form or la l ld owners' sur p l u s i s t rans fe rr e d t o t h e rising c a p i tal i s t cbss. The sam e is t ru e (If o t h e r functiol l s wh i ch the s t a t e m ust per form for ca pi ta l ism . F o r CXtU11ple thc s u pp r e s s io n of .local barriers to trade a nd the c r eati on o f a n at ional marke t. is an cssen t i al pre l i m in a ry t u th e d e v elo p me n t o f indus trial c a pi t a l ism . b u t one lIsual ly accu m pl i s h e d by t he absol ute mon archy in al l i ance with the big m e r c h a n t s . I n this case I h c c h ange is cl ea rly agai n s t t h c in terests o f t h e local landowners, but the an tago l l i s t ic i n teres t is ex p re ssed i n thc pcrson n o t of c a pi tal i s t s but of the king . I n t h e cou ntri e s !lOW underdeveloped these s a m e c h anges had as agr n t n o t an absol ut e m onarchy b u t i m perial is m , b u t t he ch a nges a rc t he same and arc essential . Once capi lalism beg i n s t u deve l op i n Olle coun try the d eve l opmcn t of c api t al ism i l l o t h ers d ep c n ds on it is e n ti re l y through merchan t s' p ro fi t thai

t he t he

t i l e s t ate pro t ec t ing their home marke t from the i ndust ry o f thc fi rst cOlll er. And t h i s i s a co nd i t i un wh ich d e pen ds 0 1 1 the state ac t in g del iberately i n t h e i n t e rest s of t h e cap i t al i s t class. The m os t im porta n t d i f ference bc:Lwcen t hose cOllll t ries which dcvelop e d

cal 'i lalism a l ld those w h i c h did /lot l ies prec i sely in the di f f eren t reac t iolls o f t he i r rul i ng classes to the rise o f ca pi tal is m el sewhere ami the im pac t of

51

imperialism nn their own (" ou n l r i e s . Those oHlnl ries which sUl"Cessfu lly a c l ed to pro t ec t their markets from i m peri a l ism managed in I he en d 1 0 develop a c a pitalis t sys t em. Those countries which did not, whose rul i ng classes greeted i m pe r i a l is m with open arms , did not d eve lop c a pit a lis m . But, as was the case in Germany and Ita l y , it is poss ib l e fClr I he 1'lI1downing class to p ro t e c t the home markct, a n d so p e rmi t the' c\evdop nlt"nt of capit al i sm ,

without handin g ovcr s t ate power to t hc capi t aJist class, he(' a u s (' in s ome C"ircu l11s lan('(.'s i t is also in their intcres ts t o rt�sist imperialist innlrsions into th(�ir domestk e(,( JI1( 1my . But this cOlllpromise' I lepended on v ery s p ed ric historical ci rnlJnstance� imd i t dc p end ed on t here h e in g a l a n d o wni ng class s u ffi c ien tl y we alt hy t o be ahle to a f ford t o com­ promise. What the s l a t e ca n n o t do while it is in the hands o f t h e land u wn i n g class and its al lies i s 1 0 fostcr thc social rcvolu tion in the count ryside, the re vo l u t i o n which undnmincs lhc social and econumic power of thc lariduwning class_ Thus there comes a p oin t at which compromise ceases to be po ssih le , at which the ca p i talis t class has ope n ly to op po se the l a ndowning class and sci;r.c thc state po we r from it as a necessary pre li mi nary to undermining the social and ,�con()mic power of the landowncrs. In thuse c(luntries in which thc s tate playcd a major rol e in fostering the' d eve lop ­ mcnt of c a p i t a lism on the hasis of such a com­ p ro mise , the transfer o f power from one class t o anothcr was fi n al l y compleled in the pcriod o f fascism. A last (ll Iint abou t t hc naturc of the capit alist s tat e as it a ffects the development o f ('apitalism is tha t it is absolutely essential that, whi l e represen t i ng the capitalist class as a whole, the state should n ot be under the control o f par t icu l a r cap i t al is t s . For we have seen that the developmen t and the dynamic of capi talism d(�pcn d s essent ial l y on its competi tive nature. n u t i f p a r t i cu lar groups with access to t he

52

state apparatus manage to senlre for themselves ahsolutely monopol istic posi tions t hey cease to b e impelled cont inual ly to invest in new t echniques. t o expand production a n d t o seek n e w m arkets. and a s!agnant system or production which is a mere parody or ca p i tal i s m , w i t h all its ral l l ts and none or its progressive cbaracteristicss. resul ts. Th is is a par t i cular danger when ll11'rC'hant capi t al is ('n t ering product ivc en te'llTiscs.

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