Re: origins of capitalism

From: Rakesh Bhandari (rakeshb@STANFORD.EDU)
Date: Mon Jul 07 2003 - 15:02:33 EDT

Hi Howard,
Bills of exchange and discounting generally which became quite
sophisticated in the Italian City States and Amsterdam reduced
circulation costs and time (there seem to have been roughly
equivalent institutions in Mughal India developed by Parsis,Jains and
others).  If the attempt to reduce circulation time follows from
production having become actually dependent on market exchange, then
what explains the development of sophisticated (social) technologies
for the reduction thereof in 'economies' which do not count as
capitalist at least by Ellen Wood's criteria (see her criticism of
Jan DeVries' thesis about the capitalist and modern nature of the
Dutch Republic)? Perhaps there was more dependence of production on
the market outside of rural England than Wood's account recognizes? I
must say that it is difficult to understand how "agrarian capitalism"
could have developed in England without the honing of the complex
merchant operations which the English inherited.

Given your criticism of Pashakunis'emphasis on circulation at the
expense of production, I expected you to emphasize the legal change
required for the English system of competitive leases at the heart of
the Brenner-Wood thesis and for the compulsion of proletarian labor
in early capitalism (statutes which pinned down labourers in the
country side, the use of criminal and vagabondage law to force labor,
the legal accomodation of slavery, and the legality of
impressment--see of course Michael Perelman's work as well as Paul
Lovejoy and Nicholas Rogers, ed. Unfree Labour in the Development of
the Atlantic World).

Marx's truly brilliant (ch. 28, KI)  insight was that this early
capitalist system of extra economic coercion was needed longer than
usually thought and lived on in the laws even after it had become
anachronistic--that is, after the peasantry had been expropriated,
millions of slaves had been incorporated, the cultural inhibitions
against proletarian labor had worn down, and production had become
less labor intensive.  See for example Karen Orren's Belated
Feudalism on the persistence of employer rights against the mobility
and freedom of wage labor up until the New Deal in the US! She may of
course confuse early capitalist vestiges in the law with only
formally feudal ones. To make another point:  we have here an example
of how Marx theorized the uneven temporal rhythms in the different
realms of society (see Daniel Bensaid's Marx for Our Times on the non
reductionist and non progressivist elements in Marx's theory of time
and history--the different social realms are temporally out of joint,
so obvious in general economic crises when the development of
proletarian politics and culture may lag far behind).

Yours, Rakesh

>Hi Rakesh,
>Many thanks for the materials on the origins/eurocentrism debate.  There is
>a fundamental question presented in this connection that so far as I am
>aware has not been explicitly raised.  I'll state the question and then
>explain it.
>Roman Law developed a law of contracts but never developed a theory or
>practice supporting the general enforcement of promises.  That is, promises
>could be enforced for particular transactions or if quite specific formal
>steps were taken, but a contract in Rome would never be enforced just
>because one person and another exchanged promises.  This happened in England
>in the mid-16th century and counts as an authentically world historic
>change.  Did such development occur in India or China or elsewhere?  My
>impression is that it did not.  If so, what accounts for the difference?
>Why was 16th century England able to accomplish what Rome and the rest of
>the world were not?
>Plainly commodity production in any form requires at least some primitive
>form for enforcing promises.  We assume the autonomy of persons who enter
>exchange.  The interests of parties on either side of a bargain are at the
>moment of agreeing coincident.  So they make an exchange.  But suppose the
>performance of one party or the other takes time.  Say goods have to be
>delivered next week or I want to pay tomorrow.  If one of the performances
>must be delayed for whatever reason, then, given their reciprocal
>indifference to one another, unless there are institutions to enforce
>promises, such bargains cannot be made.  But unless such bargains can be
>made, production for exchange must be very narrowly constrained.
>That is, the flowering and full development of commodity production, the
>ability of commodity production to become the universal and dominant form of
>production, requires a framework for the general enforcement of promises and
>this requires something more than whatever characterizes even highly evolved
>forms of market exchange.  If it were just markets that were at issue, then
>the thing would have happened in Rome.  So what was it about England in the
>mid 16th century that made the difference?
>The question can be approached from another direction -- what explains the
>enforcement of promises in the capitalist mode of production?  One writer
>suggests that increased industrial and market activity in the late 18th
>century meant a greater need for legal protection for careful planning.
>Horwitz suggests that promises became important for allocating risks during
>this same period -- futures contracts became a device to insure against
>price fluctuations and to facilitate speculation.  But probably neither of
>these explanations captures persuasively what was distinctive about England
>in the mid-16th century.
>A theoretical explanation rooted in Marx would undoubtgedly look to what
>Marx identifies in the Grundrisse as the tendency to reduce the costs of
>circulation to zero.  Time spent in circulation is time lost to production.
>So there is a tendency that operates to reduce the metamorphoses of
>circulation to the ideal limit of zero, and there is no more efficient way
>to do that than by promising.  If the producer produces to the buyer's order
>no time is spent idly in the market at all.
>Putting this point together with the question above suggests that
>enforcement of promises will become legally significant when production is
>specifically for exchange and, more particularly, when the dynamic of
>production for exchange has developed to the point that time spent in
>circulation is a barrier to it.  This doesn't happen, for example, in
>connection with days set aside for market in the medieval world, or where,
>as in the ancient world, social reproduction does not finally depend on
>market exchange.
>The Wood/Brenner thesis makes this point:  what differentiated English
>development was not simply the flowering of market exchange, but that
>production became dependent on exchange.  Perhaps that dependence alone is
>enough to make time spent idly in circulation a barrier.  Or perhaps there
>were specific forms of production in English development that tended to
>chafe more intensely at the barrier posed by circulation.
>In any event it seems clear that a successful resolution of the origins
>debate would need to include an explanation of the emergence of the general
>enforcement of promises.
>I raised some of these points without reference to the Wood/Brenner thesis
>in a piece on the legal doctrine of consideration in 27 Seton Hall Law
>----- Original Message -----
>From: "Rakesh Bhandari" <rakeshb@STANFORD.EDU>
>Sent: Wednesday, July 02, 2003 12:57 PM
>Subject: origins of capitalism
>>  Eurocentric Anti-Eurocentrism by Ellen Meiksins Wood
>>  The Trouble With Capitalism in One Country Theories Capitalist
>>  Origins: A Comment by Christopher McAuley
>>  Colonialism, Capitalism and Eurocentrism: What Made Capitalism Win?
>>  Closing the Circle of Violence by Peter Drucker
>>  predating this important debate by five years:
>>  Capitalism in History by Irfan Habib
>  >

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