A Marxist History of Capitalism

Henry Heller

• Publisher: Routledge
• Year: 2018
• Print ISBN: 9781138490451
• eBook ISBN: 9781351023160
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

Henry Heller's short account of the history of capitalism combines Marx's economic and political thought with contemporary scholarship to shed light on the current capitalist crisis. It argues that capitalism is an evolving mode of production that has now outgrown its institutional and political limits.

The book provides an overview of the different historical stages of capitalism, underpinned by accessible discussions of its theoretical foundations. Heller shows that capitalism has always been a double-edged sword, on one hand advancing humanity, and on the other harming traditional societies and our natural environment. He makes the case that capitalism has now become self-destructive, and that our current era of neoliberalism may trigger a transition to a democratic and ecologically aware form of socialism.

1

MERCHANT CAPITALISM

Introduction

Capitalism as a mode of production began in England in the sixteenth century. Its expansion based itself on the increasingly generalized production and sale of market commodities. Its gains were distributed as profits, rent and wages paid in money. In succeeding centuries, it spread across the globe.

Capitalism is now the way of life of the entire world. Virtually everyone on earth is dependent on market capitalism. There is no frontier beyond its reach. The whole earth is saturated with capitalism’s commodities. All of nature has been conquered and is up for sale. We live in a culture of commodities. The institutions of the state, the legal and educational system and the media reflect and reinforce capitalism’s dominance.

Capitalism has been with us for a long time – more than 500 years. It is difficult at this point to think of a different way of living outside the reach of this now totalized reality. It has triumphed everywhere but is reaching its term. We think that capitalism by its very nature needs to expand further spatially and penetrate more deeply into society and is having increasing difficulty doing so. It is reaching its limits as a system. It is a mode of production which is coming to its end because it is locked into the militarism, imperialism and unending war that goes with national state sovereignty, insuperable economic as well as political contradictions, increasing social inequality and disintegration and unfolding ecological disasters: a rising litany of troubles to which, by virtue of its own inner dynamic, it has no political answers. As a result, we live in a world of declining opportunities and increasing fear.

Whereas earlier capitalism had been able to overcome repeated and serious crises the current build-up of problems is so great that it is highly unlikely that it can manage to do so again. Moreover, it has increasingly lost its economic and political legitimacy in the eyes of most of those who live under it but who no longer benefit from it. Decline of this mode of production has now become highly likely and might take a catastrophic form. This happened before with the fall of the Roman Empire and in the crisis of feudalism at the end of the Middle Ages. An interregnum – a time of chronic uncertainty, unexpected and unwelcome change, deep pessimism and growing popular unrest – has opened up, and its outcome – a triumphant victory for humankind through the breakthrough of socialism or a fall into a nightmare dystopia – is uncertain.

Contemporary capitalism is gripped by pessimism. This was not true in the past. Capitalism was associated with growth and once embodied hope. The early success of capitalism reflected itself in the idea of progress, i.e. the notion that human history was the story of ongoing economic and cultural advance. This sunny view had already surfaced in the Renaissance but became a popular idea only during the Enlightenment and the Industrial Revolution of the eighteenth and nineteenth centuries. The idea of progress was based on the fact that Europe, under capitalism, was developing immense forces of production that potentially could be used to improve all aspects of human life. Progress based on the indefinite expansion of capitalism became a shibboleth of European and American ideology in the nineteenth century.

Two world wars in the twentieth century and successive economic crises have tainted the idea that there can be progress under capitalism. Instead of diminishing poverty and inequality – as its apologists promised – capitalism has made these problems much worse. The level of global social inequality and poverty has never been greater. Moreover, the ecological regime on which capitalism bases itself, i.e. cheap energy, food, resources and labour, has turned on itself and is no longer sustainable.

Beginnings

The capitalist mode of production is built on the exploitation of workers by capitalists.

From start to finish it has been based on the gap between owners of property or those who control means of production – land, mines, factories, machines, etc. – and wage workers or producers who lack such ownership or control. In order to gain a livelihood, producers from the sixteenth century onwards found that they had to sell their labour power to capitalists for a wage. The capacity to labour, like wheat, wool and wood, became a commodity for sale in the market. Capitalists back then, as now, pocketed the surplus value created by the producers and realized as profit, which was then reinvested and allowed the further expansion of capital and the development of new means of production.

Inequality based on control of productive property or the absence thereof was the source of capitalism’s dynamism and also its original sin, which it has never overcome. In the face of this basic division at the heart of production advocates of capitalism eventually promised representative democracy as a sop to the fact of the undeniable tyranny of the workplace – those who worked being exploited by those who owned.

More substantially they pointed towards a continuous expansion of the material surplus beyond that achieved in the feudal or tribal modes of production under which humankind had previously lived. And capitalism did, from its beginnings, provide more material wealth at least to its primary beneficiaries, i.e. capitalist farmers, merchants, manufacturers, landlords and to the emerging territorial state. Even workers in the advanced capitalist countries saw limited economic improvement from 1880 onwards.

The unprecedented nature of this development needs to be stressed. Throughout the history of class-based societies, dating from the birth of civilization, upper classes have demanded surplus from peasant producers who formed the overwhelming majority. The goal of producers was purely defensive. It was always to ensure the simple reproduction of their way of life based on subsistence agriculture.

Consumption versus accumulation

During the long historical period that followed the beginning of civilization the aim of the upper class was to enlarge its access to economic surplus in order to increase its consumption. It was upper-class demand for more surplus and peasant resistance that created conflict and drove history forward. With the appearance of the capitalist class in the sixteenth century the goal of the upper class changed. The primary goal of this now profit-seeking class was no longer consumption but the accumulation of capital – indeed, the accumulation of capital for its own sake. The revolutionary character of this development has to be underscored. Consumption of wealth became entirely subordinate to its accumulation, the necessity of which was intrinsic to the new mode of production. That is why the debut of the capitalist mode of production in the sixteenth century represented a qualitative historical breakthrough.

Capitalists who own means of production or productive property exploit labour not because they directly coerce producers as plantation owners did under slavery or by extorting rent to access means of production as landlords did under feudalism. Capitalists exploit because they appropriate the major part of what workers produce as capitalist profit while paying the latter a mere subsistence wage for their labour. They do this by buying labour power from workers in order to produce commodities for sale from the means of production under their control. The profit that is realized in the form of capitalist money derives from the surplus value contained in commodities produced by workers. Accumulation of capital or the self-expansion of value that is the keynote of the capitalist mode takes place when profits in the form of money capital are repeatedly reinvested back into productive capital, i.e. land, tools, machines, which makes possible the production of yet more commodities for sale and their realization as more money profit.

Late medieval crisis

How did labour power or the capacity of wage earners to work become a commodity for sale? It began in the first place in Western Europe. Serfs there liberated themselves de facto and de jure from personal bondage at the end of the Middle Ages. Liberation from personal dependence became possible because the tributary or feudal mode of production experienced a major economic and political crisis. The crisis itself was a result of over-exploitation by the upper class. In reaction the peasantry and urban populations rebelled all across Western Europe. In other words, the feudal mode was undermined by an economic crisis and class war in the late Middle Ages.

Like the present decades the years between 1300–1450 were an interregnum marked by uncertainty, pessimism and unrest. The period nonetheless did see mass uprisings from below and the liberation of the mass of the population from personal dependence on overlords and a marked decline in the burden of rent. Peasants and other small producers enjoyed a temporary improvement in their condition (Hilton 1985). Some achieved enough wealth to control or rent agricultural property and to begin to hire other less well off peasants for wages.

Primitive accumulation

Indeed, from the sixteenth century onwards more and more peasant producers lost access to sufficient land or means of production to maintain themselves while these properties became the possession of landlords or rich peasants (Bryer 2006, Dimmock 2014). Whereas class war from below had extended the landholdings of the mass of producers and weakened feudalism in the fourteenth and fifteenth centuries, this dispossession of poor peasants by wealthy peasants and landlords or sixteenth-century class war from above initiated capitalism.

The loss of access to the land was often a violent and traumatic experience. This process is part of what Marx called primitive accumulation because it allowed a certain concentration of wealth but especially because it put in place the social relations that permitted the further accumulation of capital. This transformation, which began in 1500, unfolded into the nineteenth century across the face of Western Europe. England found itself in the vanguard of capitalist development. Based on the extension of these new social relations commodity production became generalized as more and more of what was produced was put on the market and increasing numbers of producers were forced to sell their labour as a commodity. By the end of the eighteenth century half the population of Western Europe were wage workers (Tilly 1983, Luccasen 2005). This meant that their labour was available to generate surplus value, creating profits for the bourgeoisie that, as a result, grew increasingly powerful as a class in the course of the early modern centuries.

Free labour

In so far as exchange using money and the possession of commodities became the general form of the relation between people the notion of the equivalence and equality of all kinds of concrete labour or the notion of value gradually developed over the course of the early modern period. Already implicit in the sixteenth century in the Protestant theologian Martin Luther’s concepts of the priesthood of all believers and all labour as a divine calling, a belief in the natural equality of humanity was strongly entrenched in public opinion by the end of the eighteenth century and became a popular prejudice during the French Revolution. Among political economists in the late eighteenth and early nineteenth centuries studying the development of capitalism the equivalence of all kinds of labour crystallized into the concrete abstraction value. The idea of value was deployed most famously in the economic thought of Karl Marx. Purchase of labour power (the capacity to labour) in the market, he argued, was critical to creating new value. In other words, value is a thing that is both real and an abstraction that developed historically as capitalism gradually blossomed and then came to be conceptualized as such by political economists. Marx saw that it was the extraction and self-expansion of value that was key to the accumulation of capital that was revealing itself dramatically in his own lifetime in the form of the Industrial Revolution. Indeed, value in expansion and movement is the leitmotif of the history of capitalism. Its growing inertia today is a signal of capitalism’s crisis.

The struggle for social equality that marked the early modern period and the French Revolution was actually intensifying during Marx’s lifetime. It took the form of the struggle for the rights of free labour and against serfdom and slavery. The affirmation of the rights of free labour, or the legal and unrestricted right to offer one’s labour for sale as a market commodity, allowed the expansion of value and played an important role in the agenda of the bourgeois revolutions that marked the first part of the nineteenth century (Drescher 2002, Morris 1996: 32–3). The establishment of the legal freedom of labour meant freedom from the personal dependence on a master characteristic of a slave or a serf and as such marked a real advance in human freedom. Socially and economically it blocked the forcing of producers back into a relation of direct dependence and compelled the capitalist to obtain labour power by buying it in the market in exchange for money. This allowed the transformation of concrete labour into labour power and the latter into value. The creation of value without the personal freedom to sell one’s labour power is unthinkable.

The world market

As we have seen, capitalism began in much of Western Europe at the beginning of the sixteenth century while gradually centring itself in Holland and England. While capitalist agriculture and manufacture concentrated in these two states the second main feature of capitalism took the form of a world market and developed simultaneously alongside the spread of independent wage labour in Western Europe. The expanding world market was based on the global circulation of gold and silver, which allowed the realization of surplus value through the capitalist production and sale of capitalist manufactures worldwide and the transformation of coerced or non-capitalist surplus labour (slavery, indentured labour, serfdom) into commodities (sugar, tobacco, wheat) being sold for money (Manning 2002, Pomeranz and Topik 1999, Flynn 1996).

From its inception capitalism was a world system. The whole of the emerging inter-European and global commodity trading system depended on the existence of world money or gold and silver produced, for the most part, in Peru and Mexico. The availability of money was essential not only to the exchange of commodities but also to the developing process of capital accumulation as it was the only way that the cycle of capital accumulation could complete itself and finance its own further expansion. Given that the source of this world money essential to capitalism was non-European regarding capitalism as an exclusively European creation makes no sense.

Uneven development

The capitalist world developed unevenly. Some places became focal points of capitalist production and exchange while other places were relegated to the margins and dependent on the centre. In a process of uneven development, the accumulation of capital in the centre came at the expense of dependent areas consisting of the Global South, the Middle East and Eastern Europe, which provided markets for European manufactures and cheap food and raw materials based on coerced labour.

In the social formation of the early modern period the capitalist mode increasingly predominated economically but the feudal, slave and hunting and gathering modes co-existed with it and were linked to it. In this context serfdom and slavery actually grew stronger in the context of an advancing capitalism. The wheat, sugar and furs produced in these non-capitalist regions became capitalist commodities as they were absorbed into the overall capitalist system dominated by wage labour. Indigenous populations in North America, for example, continued to organize their communities based on hunting and gathering, but they supplemented their livelihood by selling furs in exchange for money, using the latter to buy European commodities such as flints, gunpowder, rifles, knives, cooking utensils, cloth and other tools produced in France and England.

The development of capitalism accordingly tended to concentrate capital in England and Holland, while other areas such as Eastern Europe, the Mediterranean, including the Ottoman Empire, West Africa and Latin America became economically subordinate to the states of the Northwest Atlantic seaboard. As a result of early capitalist development the feudal or tributary mode of production based on landlord exploitation of peasants at first became stronger and was entrenched in the ...

Table of contents

• Cover Page
• A Marxist History of Capitalism
• Title
• Copyright
• Contents
• Preface
• Introduction
• 1 Merchant Capitalism
• 2 The Political Economy of Capitalist Transition
• 3 Ascendant Capitalism (1789–1980)
• 4 Neoliberalism (1980–2018)
• 5 Towards Socialism
• Index