The Origin of Capitalism

A Longer View

Ellen Meiksins Wood

• Publisher: Verso
• Year: 2016
• Print ISBN: 9781786630681
• eBook ISBN: 9781784787790
• Topic: Politics & International Relations
• Subtopic: Economic History
• Index: Politics & International Relations

In The Origin of Capitalism, a now-classic work of history, Ellen Meiksins Wood offers readers a clear and accessible introduction to the theories and debates concerning the birth of capitalism, imperialism, and the modern nation state. Capitalism is not a natural and inevitable consequence of human nature, nor simply an extension of age-old practices of trade and commerce. Rather, it is a late and localized product of very specific historical conditions, which required great transformations in social relations and in the relationship between humans and nature.

PART I

Histories of the Transition

1

THE COMMERCIALIZATION
MODEL AND ITS LEGACY

The most common way of explaining the origin of capitalism is to presuppose that its development is the natural outcome of human practices almost as old as the species itself, which required only the removal of external obstacles that hindered its realization. This mode of explanation, or non-explanation, which has existed in many variants, constitutes what has been called the ‘commercialization model’ of economic development, and this model is arguably still the dominant one. This is so even among its harshest critics. It is not entirely absent from the demographic explanations that claim to have displaced it, or even from most Marxist accounts.

THE COMMERCIALIZATION MODEL

The traditional account – which appears in classical political economy, Enlightenment conceptions of progress, and many more modern histories – is as follows. With or without a natural inclination to ‘truck, barter, and exchange’ (in Adam Smith’s famous formulation), rationally self-interested individuals have been engaging in acts of exchange since the dawn of history. These acts became increasingly specialized with an evolving division of labour, which was also accompanied by technical improvements in the instruments of production. Improvements in productivity, in many of these explanations, may in fact have been the primary purpose of the increasingly specialized division of labour, so that there tends to be a close connection between these accounts of commercial development and a kind of technological determinism. Capitalism, then, or ‘commercial society’, the highest stage of progress, represents a maturation of age-old commercial practices (together with technical advances) and their liberation from political and cultural constraints.

Far from recognizing that the market became capitalist when it became compulsory, these accounts suggest that capitalism emerged when the market was liberated from age-old constraints and when, for one reason or another, opportunities for trade expanded. In these accounts, capitalism represents not so much a qualitative break from earlier forms as a massive quantitative increase: an expansion of markets and the growing commercialization of economic life.

But only in the West, the story goes, were these constraints comprehensively and decisively lifted. In the ancient Mediterranean, commercial society was already fairly well established, but its further evolution was interrupted by an unnatural break – the hiatus of feudalism, and several dark centuries during which economic life was again fettered by irrationalism and the political parasitism of landlordly power.

The classical explanation of this interruption invokes barbarian invasions of the Roman Empire, but a later and very influential version of this model was elaborated by the Belgian historian Henri Pirenne. Pirenne situated the rupture of the Mediterranean commercial civilization rather later, in the Muslim invasion, which, he argued, suppressed the old commercial system by closing off the Mediterranean trade routes between East and West. A growing ‘economy of exchange’, led by a professional class of merchants, was replaced by an ‘economy of consumption’, the rentier economy of the feudal aristocracy.¹

But eventually, according to both Pirenne and his predecessors, commerce revived with the growth of cities and the liberation of merchants. Here we come to one of the most common assumptions associated with the commercialization model: the association of capitalism with cities – indeed, the assumption that cities are from the beginning capitalism in embryo. In the early modern period, Pirenne argued, cities emerged with distinctive and unprecedented autonomy, cities devoted to trade and dominated by an autonomous burgher (or bourgeois) class, which was to free itself once and for all from the fetters of the old cultural constraints and political parasitism. This liberation of the urban economy, of commercial activity and mercantile rationality, accompanied by the inevitable improvements in techniques of production that evidently follow from the emancipation of trade, was apparently enough to account for the rise of modern capitalism.

All these explanations have in common certain assumptions about the continuity of trade and markets, from their earliest manifestations in exchange to their maturity in modern industrial capitalism. The age-old practice of commercial profit-taking in the form of ‘buying cheap and selling dear’ is not, in these accounts, fundamentally different from capitalist exchange and accumulation through the appropriation of surplus value.

The origin of capitalism or ‘commercial society’, then, does not in this model represent a major social transformation so much as a quantitative increment. Commerce becomes more widespread and encompasses ever more commodities. It also brings with it ever more wealth – and here, in classical political economy, we encounter the notion that commerce and the economic rationality that it engenders – the prudence and frugality of rational economic actors engaged in commercial transactions – encourages the accumulation of sufficient wealth to permit investment. This ‘previous’ or ‘primitive’ accumulation, when it reaches a critical mass, brings commercialization to fruition in a mature ‘commercial society’. This notion, ‘the so-called primitive accumulation’, would, as we shall see, become the focal point of a major shift in explaining the origin of capitalism, when Marx subjected it to critical scrutiny in Volume I of Capital.

There also tends to be another common theme in these histories of capitalism: the bourgeois as agent of progress. We have become so used to the identification of bourgeois with capitalist that the presuppositions secreted in this conflation have become invisible to us. The burgher or bourgeois is, by definition, a town-dweller. Beyond that, specifically in its French form, the word was once conventionally used to mean nothing more than someone of non-noble status who, while he worked for a living, did not generally dirty his hands and used his mind more than his body in his work. That old usage tells us nothing about capitalism, and is likely to refer to a professional, an officeholder, or an intellectual no less than to a merchant. The convergence of ‘capitalist’ and ‘bourgeois’ was implanted in Western culture by means of conceptions of progress that joined British economic development with the French Revolution, in a composite picture of historical change. In the slippage from town-dweller to capitalist via the merchant that occurs in the later uses of ‘bourgeois’, we can follow the logic of the commercialization model: the ancient town-dweller gives way to the medieval burgher, who in turn develops seamlessly into the modern capitalist. As a famous historian has sardonically described this process, history is the perennial rise of the middle classes.

This is not to say that all historians who subscribe to such models have failed to acknowledge that capitalism represents a historic break or transformation of one kind or another. It is true that some have tended to find not just trade but a bit of capitalism itself almost everywhere, especially in Greek and Roman antiquity, always just waiting to be released from extraneous impediments. But even they have generally insisted on a major shift from the economic principles of feudalism to the new rationality of ‘commercial society’ or capitalism. People have often talked, for example, about the transition from a ‘natural’ economy to a money economy, or even from production for use to production for exchange. Yet if there is a major transformation in these historical accounts, it is not in the nature of trade and markets themselves. The change is rather in what happens to the forces and institutions – political, legal, cultural, and ideological, as well as technological – that have impeded the natural evolution of trade and the maturation of markets.

If anything, in these models it is feudalism that represents the real historic rupture, interrupting the natural development of commercial society. The resumption of commercial development, beginning in the interstices of feudalism and then breaking through its constraints, is treated as a major change in the history of Europe, but it appears as a resumption of a historical process that was temporarily – if drastically and for a rather long time – deflected. These assumptions tend to have another important corollary, namely that towns and trade were by nature antithetical to feudalism, so that their growth, however it came about, undermined the foundations of the feudal system.

But if feudalism had derailed the progress of commercial society, according to these explanations, the intrinsic logic of the market never significantly changed. From the beginning, it involved rationally self-interested individuals maximizing their utilities by selling goods for profit whenever the opportunity presented itself. More particularly, it involved an increasing division of labour and specialization, requiring ever more elaborate networks of trade, and, above all, ever-improving productive techniques to cut costs and enhance commercial profits. This logic could in various ways be thwarted. It could even be more or less completely submerged – so that, for example, feudal lords could suppress it, appropriating wealth not by engaging in profitable exchange or encouraging the improvement of productive techniques but rather by exploiting forced labour, squeezing surpluses out of peasants by means of superior power. But in principle, the logic of the market remained ever the same: always an opportunity to be taken whenever possible, always conducive to economic growth and the improvement of productive forces, always bound eventually to produce industrial capitalism, if left free to work out its natural logic.

In other words, the commercialization model made no acknowledgement of imperatives specific to capitalism, of the specific ways in which the market operates in capitalism, of its specific laws of motion that uniquely compel people to enter the market, to reinvest surpluses and to produce ‘efficiently’ by improving labour productivity – the laws of competition, profit-maximization, and capital accumulation. It follows that adherents of this model saw no need to explain the specific social property relations and the specific mode of exploitation that determine these specific laws of motion.

There was, in fact, no need in the commercialization model to explain the emergence of capitalism at all. It assumed that capitalism had existed, at least in embryo, from the dawn of history, if not in the very core of human nature and human rationality. People, it assumed, given the chance, have always behaved according to the rules of capitalist rationality, pursuing profit and in its pursuit seeking ways to improve labour-productivity. So history in effect had proceeded by the laws of capitalist development, in a process of economic growth sustained by developing productive forces, albeit with some major interruptions. If the emergence of a mature capitalist economy required any explanation, it was to identify the barriers that have stood in the way of its natural development, and the process by which those barriers were lifted.

There is, of course, a major paradox here. The market was supposed to be an arena of choice, and ‘commercial society’ the perfection of freedom. Yet this conception of the market seems to rule out human freedom. It has tended to be associated with a theory of history in which modern capitalism is the outcome of an almost natural and inevitable process, following certain universal, transhistorical, and immutable laws. The operation of these laws can, at least temporarily, be thwarted, but not without great cost. Its end product, the ‘free’ market, is an impersonal mechanism that can to some extent be controlled and regulated, but that cannot finally be thwarted without all the dangers – and the futility – entailed by any attempt to violate the laws of nature.

AFTER THE CLASSIC COMMERCIALIZATION MODEL

There have been various refinements of the basic commercialization model, from Max Weber to Fernand Braudel.² Weber certainly did not fail to see that a fully developed capitalism emerged only in very specific historical conditions and not in others. He was more than willing to see some kind of capitalism in earlier times, even in classical antiquity. But he did, after all, set out to distinguish Europe from other parts of the world, and he did, of course, emphasize the uniqueness of the Western city and European religion, especially in order to explain the unique development of Western capitalism. The point, however, is that he always tended to talk about the factors that impeded the development of capitalism in other places – their kinship forms, their forms of domination, their religious traditions, and so on – as if the natural, unimpeded growth of towns and trade and the liberation of towns and burgher classes would by definition mean capitalism. Weber also, it should be added, shares with many others the assumption that the development of capitalism was a trans-European (or Western European) process – not only that certain general European circumstances were necessary conditions for capitalism but that all of Europe, for all its internal variations, followed essentially one historical path.

More recently, there have been frontal attacks on the commercialization model in general and the Pirenne thesis in particular, which is now generally out of favour. Among the most recent and influential of these has been the demographic model, which attributes European economic development to certain autonomous cycles of population growth and decline. But however vehemently the old model has been challenged, it is not really clear that the fundamental presuppositions of the demographic explanation are as far removed from the commercialization model as its exponents claim.

The underlying premise of the demographic model is that the transition to capitalism was determined by the laws of supply and demand.³ Those laws might be determined in more complicated ways than the commercialization model could account for. They might have less to do with the social processes of urbanization and growing trade than with complex cyclical patterns of population growth and decline, or Malthusian blockages. But the transition to capitalism is still a response to the universal and transhistorical laws of the market, the laws of supply and demand. The nature of the market and its laws is never really questioned.

The demographic model certainly challenges the primacy of expanding trade as a determinant in European economic development. It may not even deny, at least explicitly, that the capitalist market is qualitatively different from, and not just quantitatively larger and more inclusive than, markets in non-capitalist societies. But neither does it represent a frontal challenge to that convention, and in effect takes the convention for granted.

Another influential explanation has sometimes been associated with ‘world systems’ theory, especially where it intersects with ‘dependency’ theory, according to which economic development in a ‘world’ economy is largely determined by an unequal exchange between regions, between ‘core’ and ‘periphery’, and especially the exploitation of the colonial (and post-colonial) world by imperial powers.⁴ According to some applications of this theory, capitalism originated in the context of such a ‘world’ economy, which emerged in the early modern period, if not before, when vast trading networks covered the globe. A central theme here is that even the most advanced civilizations of the non-European world, whose commercial and technological development far exceeded that of Europe on the eve of its breakthrough to a mature capitalism, were blocked by these imbalances. While their accumulation of wealth was impeded by uneven exchange and imperial exploitation, the European beneficiaries of these unequal relations accumulated disproportionately and were therefore able to make the final leap to capitalism, especially in its industrial form, by investing their accumulated wealth.

It has also been suggested by major advocates of the world systems theory that the West had certain other advantages. In particular, the fragmented state-form of feudalism and the nation states that followed it, while encouraging the development of a trade-based division of labour, did not act as a drag on commerce and accumulation. By contrast, the imperial states of the great non-European civilizations sapped commercial wealth and prevented its reinvestment.

This account has much in common with the old commercialization model. The extent of trade is the index of capitalist development, which arises from the growth of commercial activity and the ‘primitive accumulation’ that follows from it. Economies develop in a capitalist direction to the extent that the expansion of trade and the accumulation of commercial wealth is free from impediments. Just as the old model treated the emergence of ‘commercial society’ as a more or less natural process in the absence of obstacles, this world systems theory to a significant extent shares that view or simply inverts it: if some already well-developed economies failed to produce a mature capitalism, it was because they were thwarted by obstacles put in their way.

In yet another variation on the old commercialization theme, it has been suggested that capitalism was the result of an incremental process in which, as the centre of commercial gravity shifted from one European locale to another – from the Italian city-states to the Netherlands or the cities of the Hanse, and from Spanish colonial expansion to other imperialisms, culminating in the British Empire – each built upon the accomplishments of the last, not only expanding the reach of European trade but ...

Table of contents

• Cover Page
• Halftitle Page
• Title Page
• Copyright Page
• Contents
• Acknowledgements
• Introduction
• Part I: Histories of the Transition
• Part II: The Origin of Capitalism
• Part III: Agrarian Capitalism and Beyond
• Conclusion
• Notes
• Index