Re: origins of capitalism

From: Howard Engelskirchen (hengels@ZOOM-DSL.COM)
Date: Sun Jul 13 2003 - 19:59:06 EDT

Re: origins of capitalismHi Rakesh,

Many thanks for your post and the references.  They are excellent.  Apologies also for the time it has taken me to reply.

The problem I wanted to pose in the context of the origins debate was the problem presented for legal history of accounting for the general enforcement of promises.  Why did this happen in England in the mid-16th century and not somewhere before?  I confused the issue by my reference to the tendency to reduce the costs of circulation to zero.  I'll come back to that.

There were definitely forms of development of consensual contract in the late middle ages -- instruments like bills of exchange were at once a product of the expansion of trade and reciprocally facilitated trade's expansion.

But these developments were always within specific commercial contexts.  The evolution of consensual sale within the market towns of the 12th and 13th centuries is another important example.  The question that needs explaining is how the practice of enforcing consensual agreements got extended in mid-16th century England to the enforcement of promises generally.  What accounts for the practice of accepting any agreement two people might make as suitable for enforcement?

I think you were correct to question my use of the tendency to reduce circulation costs to zero as an answer.  This phenomenon can explain, and I think it does, why promises are (1) enforced and (2) significant in the capitalist mode of production, but it does not explain how the enforcement of promises is generalized.

Perhaps the answer here is a bit like Marx's explanation of why Aristotle could not discover the source of equality in exchange -- he could not grasp the equality of human labor because labor in the ancient world was unfree.

The analogy is relevant in this sense.  Modern contract, the form that emerged in outline in 16th century England, presupposes the autonomy of the persons who contract.  Plainly this reflects the autonomy of commodity producers, as Marx explains in the first paragraph of Capital's second chapter, and the autonomy of commodity producers in turn is critical to the characterization of the product as a commodity.  On the one hand by entering exchange the commodity producer relinquishes autonomy -- he or she gives up something -- but, on the other hand, since the other party to the purchase or sale doesn't simply take the thing needed, but bargains for it, exchange also serves to constitute the autonomy of the person who enters exchange.  Actually, this is already in Hegel.  By recognizing the ownership of the other, and by dealing with the other only on the basis of reciprocal consent, each through the act of exchange constitutes the autonomy of the other.  This is reflected in the legal norms governing the transaction.

Now Aristotle.  It is impossible in pre-capitalist social formations where labor is unfree for the recognition of autonomy in exchange to be generalized -- recall that a slave was defined in the ancient world (and a married woman for much of the modern one) as a person excluded from exchange.  Thus, just as it is impossible to recognize the equality of human labor where labor is unfree, so too it was impossible for pre-capitalist jurisprudence to recognize the autonomy of persons generally where the majority of the population was unfree.

Here is the significance in this regard of the collapse of serfdom in Europe in the 14th and 15th centuries and of the emergence of a relatively free peasantry of petty producers.  This development laid the foundation for extending the concept of autonomy to any person.

But two dissolutions are required for this to happen, not just one.  A free peasantry emerged from the dissolution of feudal bonds.  But this in itself is not enough to vest the practice of promising with any legal significance.  That is, supposing a foundation present for extending the recognition of autonomy to any person, if in practice promising is of little significance, then there will not be sufficient impetus for such a major legal development.  Brenner shows, for example, that in France, as a result of class struggle, free peasants were able to resist pressures subversive to their reproduction and were able to maintain their hold on small parcels of land.  The result was that they were not subordinated to a market dynamic -- they worked to ensure their subsistence independent of the market.  The dynamic that made circulation a barrier to production, something promise could overcome, had little force in this context.

A second dissolution was required, and this is the one given primary emphasis by Marx:  there must be a dissolution of the bonds connecting the direct producer to the means of production.  You are a thousand times right to emphasize the coercive forms which were essential to this, and, as well, to highlight the small emphasis given to the point in Wood's account.  Parenthetically, King Lear indicates how profound the social upheaval at issue was to 16th century England.  Not only was the expulsion of feudal retainers a factor, but also landlords succeeded, as they did not in France, in forcing peasants off the land, and, through enclosures, in putting in place a new concept of property as private and exclusive -- on this Wood's brief account is good.  The result  was a large class of the dispossessed driven to labor by the bloody legislation against the expropriated.  This meant that the autonomy of contract had to extend, in at least limited form, to the free wage laborer.  Also important, the free laborer now found his or her means of subsistence on the market,. and this meant participation in the informally consensual transations of the market in a qualitatively different way.

Thus the generalization of promise and the universalization of autonomy implied must be the result of a confluence of these two factors: (1) the dissolution of the bonds of serfdom and the creation of a free peasantry, and (2) the dissolution of the bonds connecting the direct producer to the means of production and the creation, by force, of the formally free wage laborer.  

The significance of competition for leases probably can't be too much emphasized in regard to the question posed for a couple of reasons.  First, if the leases are modern and contractual in form rather than feudal, this may well presuppose already the transition we're trying to explain.  As Marx shows, money rent does not need to reflect a transformation of feudal relations of lordship and domination.  Also, Brenner shows in his NLR piece that the competition for leases in France led to a squeezing of the peasantry, not capitalist development.

You pulled my coat about the relationship between production and circulation, and I think properly so.  At III, 337 Marx writes "the real science of modern economy only begins when the theoretical analysis passes from the process of circulation to the process of production" (last paragraph of Ch 20).  Still, the discussion in the Grundrisse of circulation and its costs -- a discussion, by the way, which immediately follows the section on Pre-Capitalist Economic Formations -- emphasizes the way in which circulation is a moment of the total process of production.  That is, given the dynamic of capitalist production -- especial the struggle for relative surplus value, as Brenner emphasizes -- then the costs of circulation will be a barrier to production.  ALL forms of credit enter at this point:

"Circulation time is a barrier  only to the realization of value and to that extent to value creation.  It is a barrier which does not arise from production in general but which is specific to production based on capital.  Its transcendence -- or the struggle against it -- therefore belongs to the specific economic development of capital and provides the impulse for the development of its forms in credit, etc." (28 MECW 467).

"Provides the impulse" is the point that  caught my attention.  In the same discussion he points out that credit does not develop to any significant extent in earlier modes of production because it does not arise directly from the nature of the process of production.  And at 468 he points out that circulation time is not itself a productive force of capital but a barrier to its productive force posited by the specific nature of capital itself.  In sum, once you have the dynamic of capitalist production in place, then the barrier posed by circulation time arises from the imperatives of the production process itself, and, to this extent transcending it is a drive impelled by production itself.  So I don't think explaining promise as responsive to the tendency to drive the costs of circulation to zero is an example of holding theoretical analysis hostage to the process of circulation.

Also, coming back to the original problem, this is relevant from page 468:  "But if circulation were obstructed, if the farmer could not sell his wheat quickly enough, e.g. to hire workers again, production would be stopped."  Even more significantly, production would be stopped if the famer were not able to hire workers because they made do well enough as vagabonds.  Hence, as you emphasize, the overriding significance of the bloody legislation against the expropriated.


  ----- Original Message ----- 
  From: Rakesh Bhandari 
  Sent: Monday, July 07, 2003 3:02 PM
  Subject: Re: origins of capitalism

  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
    >    tid=HN681.S597_266-68_017.gif

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