Historical Capitalism

With Capitalist Civilization

Immanuel Wallerstein

• Publisher: Verso
• Year: 2014
• ISBN:
  9781781689684
• Topic: Economía
• Subtopic: Historia económica

In this short, highly readable book, the master of world-systems theory provides a succinct anatomy of capitalism over the past five hundred years. Considering the way capitalism has changed and evolved over the centuries, and what has remained constant, he outlines its chief characteristics. In particular, he looks at the emergence and development of a world market, and of labor; in doing so, he argues that capitalism has brought about immiseration in the Global South. As long as they remain within a framework of world capitalism, Wallerstein concludes, the economic and social problems of developing countries will remain unresolved.
Historical Capitalism, published here with its companion essay Capitalist Civilization, is a concise, compelling beginners' guide to one of the most challenging and influential assessments of capitalism as a world-historic mode of production.

HISTORICAL CAPITALISM

Introduction

This book had its immediate origin in two successive requests. In the autumn of 1980, Thierry Paquot invited me to write a short book for a series he was editing in Paris. He suggested as my topic ‘Capitalism’. I replied that I was, in principle, willing to do it, but that I wished my topic to be ‘Historical Capitalism’.

I felt that much had been written about capitalism by Marxists and others on the political left, but that most of these books suffered from one of two faults. One variety were basically logico-deductive analyses, starting from definitions of what capitalism was thought to be in essence, and then seeing how far it had developed in various places and times. A second variety concentrated on presumed major transformations of the capitalist system as of some recent point in time, in which the whole earlier point of time served as a mythologized foil against which to treat the empirical reality of the present.

What seemed urgent to me, a task to which in a sense the whole corpus of my recent work has been addressed, was to see capitalism as a historical system, over the whole of its history and in concrete unique reality. I, therefore, set myself the task of describing this reality, of delineating precisely what was always changing and what had not changed at all (such that we could denote the entire reality under one name).

I believe, like many others, that this reality is an integrated whole. But many who assert this view argue it in the form of an attack on others for their alleged ‘economism’ or their cultural ‘idealism’ or their over-emphasis on political, ‘voluntaristic’ factors. Such critiques, almost by their nature, tend to fall by rebound into the sin opposite to the one they are attacking. I have therefore tried to present quite straightforwardly the overall integrated reality, treating successively its expression in the economic, political, and cultural-ideological arenas.

Shortly after I agreed in principle to do this book, I received an invitation from the Department of Political Science at the University of Hawaii to give a series of lectures. I seized the opportunity to write this book as those lectures, given in the spring of 1982. The first version of the first three chapters was presented in Hawaii, and I am grateful to my lively audience for their many comments and criticisms which enabled me to improve the presentation considerably.

One improvement I made was to add the fourth chapter. I realized in the course of the lectures that one problem of exposition persisted: the enormous subterranean strength of the faith in inevitable progress. I realized too that this faith vitiated our understanding of the real historical alternatives before us. I, therefore, decided to address the question directly.

Finally, let me say a word about Karl Marx. He was a monumental figure in modern intellectual and political history. He has bequeathed us a great legacy which is conceptually rich and morally inspiring. When he said, however, that he was not a Marxist, we should take him seriously and not shrug this aside as a bon mot.

He knew, as many of his self-proclaimed disciples often do not, that he was a man of the nineteenth century, whose vision was inevitably circumscribed by that social reality. He knew, as many do not, that a theoretical formulation is only understandable and usable in relation to the alternative formulation it is explicitly or implicitly attacking; and that it is entirely irrelevant vis-à-vis formulations about other problems based on other premisses. He knew, as many do not, that there was a tension in the presentation of his work between the exposition of capitalism as a perfected system (which had never in fact existed historically) and the analysis of the concrete day-to-day reality of the capitalist world.

Let us, therefore, use his writings in the only sensible way—that of a comrade in the struggle who knew as much as he knew.

1.
The Commodification of Everything:
Production of Capital

Capitalism is first and foremost a historical social system. To understand its origins, its workings, or its current prospects, we have to look at its existing reality. We may of course attempt to summarize that reality in a set of abstract statements, but it would be foolish to use such abstractions to judge and classify the reality. I propose therefore instead to try to describe what capitalism has actually been like in practice, how it has functioned as a system, why it has developed in the ways it has, and where it is presently heading.

The word capitalism is derived from capital. It would be legitimate therefore to presume that capital is a key element in capitalism. But what is capital? In one usage, it is merely accumulated wealth. But when used in the context of historical capitalism it has a more specific definition. It is not just the stock of consumable goods, machinery, or authorized claims to material things in the form of money. Capital in historical capitalism does of course continue to refer to those accumulations of the efforts of past labour which have not yet been expended; but if this were all, then all historical systems back to those of Neanderthal man could be said to have been capitalist, since they all had some such accumulated stocks that incarnated past labour.

What distinguishes the historical social system we are calling historical capitalism is that in this historical system capital came to be used (invested) in a very special way. It came to be used with the primary objective or intent of self-expansion. In this system, past accumulations were ‘capital’ only to the extend they were used to accumulate more of the same. The process was no doubt complex, even sinuous, as we shall see. But it was this relentless and curiously self-regarding goal of the holder of capital, the accumulation of still more capital, and the relations this holder of capital had therefore to establish with other persons in order to achieve this goal, which we denominate as capitalist. To be sure, this object was not exclusive. Other considerations intruded upon the production process. Still, the question is, in case of conflict, which considerations tended to prevail? Whenever, over time, it was the accumulation of capital that regularly took priority over alternative objectives, we are justified in saying that we are observing a capitalist system in operation.

An individual or a group of individuals might of course decide at any time that they would like to invest capital with the objective of acquiring still more capital. But, before a certain moment in historical time, it had never been easy for such individuals to do this successfully. In previous systems, the long and complex process of the accumulation of capital was almost always blocked at one or another point, even in those cases where its initial condition—the ownership, or amalgamation, of a stock of previously unconsumed goods in the hands of a few—existed. Our putative capitalist always needed to obtain the use of labour, which meant there had to be persons who could be lured or compelled to do such work. Once workers were obtained and goods produced, these goods had to be marketed in some way, which meant there had to be both a system of distribution and a group of buyers with the wherewithal to purchase the goods. The goods had to be sold at a price that was greater than the total costs (as of the point of sale) incurred by the seller, and, furthermore, this margin of difference had to be more than the seller needed for his own subsistence. There had, in our modern language, to be a profit. The owner of the profit then had to be able to retain it until a reasonable opportunity occurred to invest it, whereupon the whole process had to renew itself at the point of production.

In fact, before modern times, this chain of processes (sometimes called the circuit of capital) was seldom completed. For one thing, many of the links in the chain were considered, in previous historical social systems, to be irrational and/or immoral by the holders of political and moral authority. But even in the absence of direct interference by those who had the power to interfere, the process was usually aborted by the non-availability of one or more elements of the process—the accumulated stock in a money form, the labour-power to be utilized by the producer, the network of distributors, the consumers who were purchasers.

One or more elements were missing because, in previous historical social systems, one or more of these elements was not ‘commodified’ or was insufficiently ‘commodified’. What this means is that the process was not considered one that could or should be transacted through a ‘market’. Historical capitalism involved therefore the widespread commodification of processes—not merely exchange processes, but production processes, distribution processes, and investment processes—that had previously been conducted other than via a ‘market’. And, in the course of seeking to accumulate more and more capital, capitalists have sought to commodify more and more of these social processes in all spheres of economic life. Since capitalism is a self-regarding process, it follows that no social transaction has been intrinsically exempt from possible inclusion. That is why we may say that the historical development of capitalism has involved the thrust towards the commodification of everything.

Nor has it been enough to commodify the social processes. Production processes were linked to one another in complex commodity chains. For example, consider a typical product that has been widely produced and sold throughout the historical experience of capitalism, an item of clothing. To produce an item of clothing, one typically needs at the very least cloth, thread, some kind of machinery, and labour-power. But each of these items in turn has to be produced. And the items that go into their production in turn have also to be produced. It was not inevitable—it was not even common—that every subprocess in this commodity chain was commodified. Indeed, as we shall see, profit is often greater when not all links in the chain are in fact commodified. What is clear is that, in such a chain, there is a very large and dispersed set of workers who are receiving some sort of remuneration which registers on the balance-sheet as costs. There is also a far smaller, but also usually dispersed, set of persons (who are furthermore usually not united as economic partners but operate as distinct economic entities), who share in some way in the ultimate margin that exists in the commodity chain between the total costs of production of the chain and the total income realized by the disposal of the final product.

Once there were such commodity chains linking multiple production processes, it is clear that the rate of accumulation for all the ‘capitalists’ put together became a function of how wide a margin could be created, in a situation where this margin could fluctuate considerably. The rate of accumulation for particular capitalists, however, was a function of a process of ‘competition’, with higher rewards going to those who had greater perspicacity of judgement, greater ability to control their work-force, and greater access to politically-decided constraints on particular market operations (known generically as ‘monopolies’).

This created a first elementary contradiction in the system. While the interest of all capitalists, taken as a class, seemed to be to reduce all costs of production, these reductions in fact frequently favoured particular capitalists against others, and some therefore preferred to increased their share of a smaller global margin rather than accept a smaller share of a larger global margin. Futhermore, there was a second fundamental contradiction in the system. As more and more capital was accumulated, more and more processes commodified, and more and more commodities produced, one of the key requirements to maintain the flow was that there be more and more purchasers. However, at the same time, efforts to reduce the costs of production often reduced the flow and distribution of money, and thus inhibited the steady expansion of purchasers, needed to complete the process of accumulation. On the other hand, redistributions of global profit in ways that could have expanded the network of purchasers often reduced the global margin of profit. Hence individual entrepreneurs found themselves pushing in one direction for their own enterprises (for example, by reducing their own labour costs), while simultaneously pushing (as members of a collective class) to increase the overall network of purchasers (which inevitably involved, for some producers at least, an increase in labour costs).

The economics of capitalism has thus been governed by the rational intent to maximize accumulation. But what was rational for the entrepreneurs was not necessarily rational for the workers. And even more important, what was rational for all entrepreneurs as a collective group was not necessarily rational for any given entrepreneur. It is therefore not enough to say that everyone was pursuing their own interests. Each person’s own interests often pushed them, quite ‘rationally’, to engage in contradictory activities. The calculation of real long-term interest thereby became exceedingly complex, even if we ignore, at present, the degree to which everyone’s perceptions of their own interests was clouded over and distorted by complex ideological veils. For the moment, I provisionally assume that historical capitalism did in fact breed a homo economicus, but I am adding that he was almost inevitably a bit confused.

This is however one ‘objective’ constraint which limited the confusion. If a given individual constantly made errors in economic judgement, whether because of ignorance, fatuity, or ideological prejudice, this individual (firm) tended not to survive in the market. Bankruptcy has been the harsh cleansing fluid of the capitalist system, constantly forcing all economic actors to keep more or less to the well-trodden rut, pressuring them to act in such a way that collectively there has been even further accumulation of capital.

Historical capitalism, is, thus, that concrete, time-bounded, space-bounded integrated locus of productive activities within which the endless accumulation of capital has been the economic objective or ‘law’ that has governed or prevailed in fundamental economic activity. It is that social system in which those who have operated by such rules have had such great impact on the whole as to create conditions wherein the others have been forced to conform to the patterns or to suffer the consequences. It is that social system in which the scope of these rules (the law of value) has grown ever wider, the enforcers of these rules ever more intransigent, the penetration of these rules into the social fabric ever greater, even while social opposition to these rules has grown ever louder and more organized.

Using this description of what one means by historical capitalism, each of us can determine to which concrete, time-bounded, space-bounded integrated locus this refers. My own view is that the genesis of this historical system is located in late-fifteenth-century Europe, that the system expanded in space over time to cover the entire globe by the late nineteenth century, and that it still today covers the entire globe. I realize that such a cursory delineation of the time-space boundaries evokes doubts in many minds. These doubts are however of two different kinds. First, empirical doubts. Was Russia inside or outside the European world-economy in the sixteenth century? Exactly when was the Ottoman Empire incorporated into the capitalist world-system? Can we consider a given interior zone of a given state at a given time as truly ‘integrated’ into the capitalist world-economy? These questions are important, both in themselves, and because in attempting to answer them we are forced to make more precise our analyses of the processes of historical capitalism. But this is neither the moment nor place to address these numerous empirical queries that are under continuing debate and elaboration.

The second kind of doubt is that which addresses the very utility of the inductive classification I have just suggested. There are those who refuse to accept that capitalism can ever be said to exist unless there is a specific form of social relation in the workplace, that of a private entrepreneur employing wage-labourers. There are those who wish to say that when a given state has nationalized its industries and proclaimed its allegiance to socialist doctrines, it has, by those acts and as a result of their consequences, ended the participation of that state in the capitalist world-system. These are not empirical queries but theoretical ones, and we shall try to address them in the course of this discussion. Addressing them deductively would be pointless however as it would lead not to a rational debate, but merely to a clash of opposing faiths. We shall therefore address them heuristically, arguing that our inductive classification is more useful than alternative ones, because it comprehends more easily and elegantly what we collectively know at present about historical reality, and because it affords us an interpretation of this reality which enables us to act more efficaciously on the present.

Let us therefore look at how the capitalist system actually has functioned. To say that a producer’s objective is the accumulation of capital is to say that he will seek to produce as much of a given good as possible and offer it for sale at the highest profit margin to him. He will do this however within a series of economic constraints which exist, as we say, ‘in the market’. His total production is perforce limited by the (relatively immediate) availability of such things as material inputs, a work-force, customers, and access to cash to expand his investment base. The amount he can profitably produce and the profit margin he can claim is also limited by the ability of his ‘competitors’ to offer the same item at lower sales prices; not in this case competitors anywhere in the world market, but those located in the same immediate, more circumscribed local markets in which he actually sells (however this market be defined in a given instance). The expansion of his production will also be constrained by the degree to which his expanded production will create such a price-reducing effect in the ‘local’ market as to actually reduce the real total profit realized on his total production.

These are all objective constraints, meaning they exist in the absence of any particular set of decisions by a given producer or by others active in the market. These constraints are the consequence of the total social process that exists in a concrete time and place. There are always in addition of course other constraints, more open to manipulation. Governments may adopt, may already have adopted, various rules which in some way transform economic options and therefore the calculus of profit. A given producer may be the beneficiary or the victim of existing rules. A given producer may seek to persuade political authorities to change their rules in his favour.

How have producers operated so as to maximize their ability to accumulate capital? Labour-power has always been a central and quantitatively significant element in the production-process. The producer seeking to accumulate is concerned with two different aspects of labour-power: its availability and i...