1.1 Pre-capitalist Systems and the Reign of Rent
1.1.1 Why Capitalism is Better than Other Systems
All the non-capitalist economic systems lack the essential requisites that are characteristic of capitalist accumulation, including: the freedom to choose oneās own work and enrich oneself; the productive use of profit, which is largely reinvested to obtain further profit; continual increase in the division of labour, which has generated the differentiation of crafts and professions and the growth of the middle classes. These primary characteristics have in turn given rise to continuous growth in productivity and wealth, competition amongst individuals and impersonal selection of the most able as well as, in the course of time, social mobility, protection of individual rights, the guarantees of the law and freedom of speech and association.
In general the pre-capitalist systems distribute the tasks of labour amongst the various social classes, supervise their work, and at the same time exploit the poor and guarantee their survival. These systems are essentially dualistic: there is a ruling elite, controlling the production and distribution of wealth, and a mass of poorer classes which produce the wealth. The division of labour has not progressed very far amongst them, and there is scant room for individual initiative or economic freedom. Wealth tends to reproduce consistently in the same quantities (it is a simple reproduction system, as Marx put it). Thus the social structures also tend to reproduce with few changes. There is no social mobility, with some exceptions for the religious and for intellectuals. Selection of the most able is based on co-optation, and is therefore often random and arbitrary.
While these systems are static, capitalism is dynamic, but precisely for this reason it is more exposed to imbalances and failures. Thanks to capitalistic accumulation it has been possible to move on from mainly agricultural to artisan and commercial production (this stage is also common to other civilisations), and thus on to manufacture, industry and, finally, the post-industrial economy where immaterial production and the growth of human capital predominate.
The systems closest in time to capitalism are of two types: feudal, or at any rate based on latifundia, where power is concentrated mainly in the hands of the landowners, and highly centralised systems in which the elite is represented by the governing class.
1.1.2 The Feudal Economy and the Latifundium
Capitalism was born within European feudalism, but fighting the system. The feudal economy, which is to be found in many historical contexts, rests on the labour of the peasants, bound in various ways to the land (serfs), with obligatory corvƩe (unpaid work for the feudal lord or the government). The feudal economy is poor, based on rent and hoarding, not on profit.1
Often feudalism sets in because the central powers have difficulty in directly administrating vast areas, and the sovereign assigns portions of land to the trusted few to manage.2 In the system there is no clear-cut distinction between private and public property. The feudal lord is both owner and political master, oppressing the peasants but with the duty to protect and govern them. The feud is often hereditary.3
Feudalism is a form of latifundium, concentrating a large part of the land in the hands of a few families. In some cases the latifundium precedes and gives rise to the feudal structure. For example, in ancient Rome between the first and second century BC, the landowners among the noble families acquired vast quantities of slaves or servants (war spoils or ruined peasants) and monopolised agricultural production for export. The revenues were invested in the purchase of yet more land, for when agriculture is based on primitive techniques the proportion of rent depends essentially upon the dimensions of the estate; the outlay is minimal because exploitation of the land is very limited and cultivation extensive.
In other cases, the latifundium derives from the feudal system but outlasts its crisis. In south-east Germany and the whole of Eastern Europe latifundia expanded in the modern age due to the growing demand for foodstuffs in Western Europe (going through a phase of development). In Russia serfdom was abolished only in 1861, but this was not followed by effective liberation of the peasants.4 In southern Italy the feudal system was abolished in 1806ā1808 by the Napoleonic sovereigns, but the big landowners succeeded in piecing together the latifundia once again, driving the peasantsā farms to failure.5 Crisis came for the latifundia only in the 1950s, due to agrarian reform and, above all, large-scale emigration. In Portugal and Spain, the dominance of latifundia began to crumble when the countries opened up to the international economy.
Outside Europe, in the twentieth century the concentration of land in the hands of a few hundred owners still covered something between 70% and 90% of the total. Agrarian reform came to Ethiopia in 1975. In the rest of sub-Saharan Africa, as indeed in Iraq (where 1% of the population possessed 70% of the land), India, Pakistan and Indonesia the latifundium system had been reinforced under European colonisation, which often destroyed the old community economy of the villages.6 In China the system was hit by crisis only with the victory of Mao (in 1949). In the colonial countries latifundia began to crumble after the various wars of liberation in the 1960s.
In Japan the feudal system lasted for many centuries. Solidly organised and run by the great feudal lords, it was based on the military class of the samurai together with the central administration of the court nobles. Abolition, in 1871, saw the beginning of a process of reform and modernisation which came up against the opposition of the samurai with a series of revolts, but was guided by the central go...