Editor’s Note: This post is an excerpt from my forthcoming book tentatively titled The Great Mechanism of Western Capitalism: Understanding the Relentless Nature of Capitalism. The book should be available for purchase by mid-June 2018.
Modernity set the stage. It created the mechanistic ideology, which became fundamental to the Great Mechanism. But the Great Mechanism was incomplete without the new laws of motion and the intrinsic power capitalism brought to the table. What is that power? How did it work? How did it leverage the modern differentiation and other ideas?
Capitalism is often thought of monolithically—as the large scale system that arose from modernity to replace feudalism, followed by industrialization with the invention of the steam engine. While this view is common and not altogether incorrect, it does not help us understand just exactly how capitalism came about, nor to see its peculiar laws of motion and intrinsic forces. We need to understand these forces within capitalism to understand the relentless nature of the Great Mechanism.
What Is Capitalism?
To understand capitalism, we must separate it from its historical predecessors and parallels, and for this there is no better source that Evelyn Meiskins Wood’s book, The Origins of Capitalism. According to Wood, there have been two primary confusions in understanding the origins of capitalism—commercialization and the assumption of naturalism.
Historically speaking, commercial trade has always existed, and it has existed primarily at the higher end of the exchange market. Elites traded with elites to their benefit, while the peasant classes produced for their own subsistence. If this commercialization were commensurate with capitalism, capitalism would have appeared long before it actually did. Wood cites Florence, the Dutch Empire, and France as examples of centers with tremendous trade and commercial interests, yet none of them gave birth to capitalism. The reason is simple: to be commercial is not the same as to be capitalist. Commercial success does not inherently propel a major center of commerce to become capitalist.
Alternatively, some economic historians view capitalism through a lens of assumptive naturalism—they assume that capitalism is the natural order of human affairs, and the necessary condition is to remove resistances (i.e. regulations) so that capitalism can flourish. This flawed perspective asserts that what happened in England where capitalism started wasn’t a unique departure, but rather the fruition of the natural incarnation of how things should be. Capitalism, however, is not the natural order things—it is simply a system that arose in a certain time and place under certain conditions, and which had the unique power to propel itself throughout the world over time.
So, what was historically unique about capitalism? How did it come about?
Wood describes how capitalism started in the environment of English feudalism, which in its basics wasn’t all that different from other forms of feudalism—landlords extracted rents from tenants and peasants according to the traditions and customs of the place, while the peasants and tenants accessed the land on a communal basis to provide the means of subsistence they all needed. As in all feudal societies, the landlords used whatever means available to appropriate surplus wealth from the peasantry, including extra-economic means such as political and military power.
Then, in the early 1500s, modernity began its process of differentiating economics, politics, and religion. The process initiated the creation of a stronger state in England. While traditional feudal economies provided the landed class with extra-economic military and political powers to use for wealth appropriation, in England the strengthening, centralized state was reserving those powers unto itself. The stronger central state meant that certain traditional non-economic power sources—such as military and political power—became decreasingly available to landlords for the appropriation of surplus wealth because the state controlled those means. Therefore, the landed class could only exercise economic power, which meant they had to get value out of their land using only economic means. The landlords, who no longer had extra-economic means of appropriation available to them, could only increase the value of their land through increasing its productive value as measured by the market for the goods it produced. Hence, landlords needed their land to produce more at lower cost.
As Wood describes, a market for land leases developed as landlords tried to get the most rent for their land, and markets provided them more value when compared to the customary rents.[1] Wood describes five hundred year old documentation showing the surveyors of the time providing landlords with two different values—one which resulted from customary rents, and one which could be gotten from market production of the land. The market-based value was always higher. Since they could not appropriate value by any non-economic means, they had to maximize their surplus value through productivity. The landlords had no choice but to participate in the market for leases.
When landlords subjected themselves to the market for leases, however, the traditional land use and tenancy arrangements began to disintegrate. The land used by peasants and tenants was mostly held in common and shared according to community standards. It worked well for subsistence, but not for landlords trying to extract maximum market value.
Because the landlords had no other options for appropriating surplus wealth, they used the market to their advantage. As they began to focus on productive capability for market value rather than customary rents, the land had to come out of communal tenancy—i.e., they had to privatize it in the enclosure movement. Land was gradually removed from communal tenancy through privatization (or enclosure) so it could be privately held for improved productivity and larger gains via market production.
As this transformation occurred, landlords began to favor tenants who could make the land more productive, thereby consolidating leases in the hands of the more productive farmers, most of whom had to use wage labour to achieve that productivity. Less productive tenants and peasants—as measured in market terms—lost their land to those who consolidated because of their success.[2] [3]
Without common land access, these people lost the ability to generate their own means of subsistence, and they began to migrate to cities or to become farm laborers. In other words, they were compelled to enter the labor market one way or the other—not of their own free will, but because it was the only way to survive.[4] Most of them migrated to cities.
This rural-to-urban migration led to the growth of the cities and to demand for cheap goods. At the same time, the state began to develop a market infrastructure that tied the country together in a single market. This made trade easier, but it also transported a market concept that could be used to ascertain value. Hence, the system needed to create goods for a mass market—far different than any economy had ever done before. Capitalists, both urban and rural, began to produce for the new mass markets, and the dispossessed former peasants and tenant farmers obtained whatever wage labor they could find so as to purchase the goods they needed instead of growing, crafting, or processing what they needed.
This dependency on wage labor was unique to capitalism. The capitalist mode of production dispossesses people from the means of survival, thereby coercing them into market participation. “Until the production of the means of survival and self-reproduction is market dependent, there is no capitalist mode of production,”[5] says Wood.
Finally, the new labor—both urban and rural—was sold in a market for labor, where competition drove wages (and therefore income) down, and many workers had to compete against slaves. All workers were compelled to participate, yet wages were driven downward. Many people barely survived. Some didn’t. But they had no alternative. Market participation became an existential compulsion, far from the free market “choices” capitalism espouses today.
This story of the origins of capitalism reveals the forces that power the Great Mechanism. It reveals that people are not free to “engage opportunity,” the way capitalism claims. Instead, capitalism is comprised of compulsory markets which determine access to necessities, and even to the means of production themselves. Intrinsic to the logic and the capitalist “laws of motion,” are the quest for profit, the labor theory of value, improvement of labor productivity, and market forces—all notions that still guide the market and capitalist system of business today. All of it was right there in the very beginning of the capitalist economic system, which developed from unique circumstances in social, political, military, and even religious circumstances of 16th Century England.
[1] Wood… p 69. P69: “We need a form of history that brings this specificity into sharp relief, one that acknowledges the difference between commercial profit-taking and capitalist accumulation, between the market as an opportunity and the market as an imperative, and between transhistorical processes of technological development and the specific capitalist drive to improve labour productivity.”
[2] Wood p60. P60: “peasants elsewhere and at other times had availed themselves of market opportunities, but English farmers were distinctive in their degree of subjection to market imperatives.”
[3] Wood pg 60. P60, assessing Brenner: “the distinctive dynamics of capitalism come into play when producers become market dependent, and therefore subject to the imperatives of competition, which happens even without their complete separation from the means of production, when their access to the means of subsistence becomes dependent on the market.”
[4] Wood pg 58. P58: “Brenner’s differentiation of the English peasantry (the ‘rise of the yeoman’), which eventually ended in a polarization between capitalist farmers and propertyless labourers, has to do with the new economic logic that subjected English farmers to the imperatives of competition in unprecedented ways and degrees. This logic was imposed on farmers whether or not they consistently employed wage labor. It applied even when the tenant was himself, or together with his family, the direct producer. The effect was to increase pressures on less productive farmers and to drive them off the land, while more successful farmers acquired more land.”
[5] Wood, p 140-141
