The return of the peasant: or, the history of the world in 10½ blog posts. 5. Capitalism I – Lords, peasants & merchants

Continuing my ‘history of the world’ blog cycle (a fully referenced version of the segment below is available here):

The stage is now set for the next scene in our whistle-stop tour – the emergence of capitalism. But first a quick aside. Enmeshed in a contemporary global capitalist economy as we are, it’s easy to read it back into history as some kind of inevitable culmination of past processes. But there’s no reason to think that our present was foreordained. There’s nothing wrong, I’d argue, with tracing the lineages of modern societies back into the past, as I’ve largely been doing here – so long as we don’t fall into the trap of presuming that those lineages were determined, rather than contingent. Another issue when we come to talk about the ‘global’ capitalist economy is the tendency to hero-worship those parts of the world most to the fore in driving the globalisation – particularly if we’re from those regions ourselves. Hence the question of why Europe or ‘the west’ dominated the development of the modern capitalist world system – perhaps a necessary question, but one that’s overstressed in western thought. Doubtless this is a failing of the history I’ve been serving up here. I’m inclined to justify it on the basis that, well, I’m European, and my main interest is in using some history to help elucidate where my own society might go from here. But when it comes to telling the story of how capitalism came to take over the world, I want to remind myself to proceed with caution and keep my ‘Eurocentrism’ in view. I’ll return to this point shortly.

With apologies duly made let’s get back to my European stamping grounds where the medieval figures of the king, the lord, the merchant and the peasant are waiting to see how I’m going to turn them into capitalists. I suppose first of all I need to define capitalism – a quick definition might be that capitalism is an economic system which compels the owners of capital to reinvest their surplus in order to create more capital, typically earning a 2-3% additional return per annum historically. Doubtless it’s tempting to respond by asking firstly if the owners of capital don’t use it to try to create more capital in every economic system, and secondly if a mere 2-3% return is enough to result in all the profound changes worked upon the modern world that both capitalism’s admirers and its critics allege. To which the short answers are respectively no they don’t and yes it is. A slightly longer answer to the first question is that people throughout the ages have often dreamed of worldly wealth, but not necessarily of limitlessly compounding worldly wealth, and their societies in any case contained ideologically influential critiques of that dream, which limited its reach. Only with the rise of secular priests like Bernard Mandeville and Adam Smith was money-making made a transcendent social virtue (and even Smith was pretty torn on that point). A slightly longer answer to the second point is that, over time, the logic of compound growth is such that a 2% return on investment is quite enough to turn mountains into dust, turn peasant cultivators into either slaves or CEOs, and possibly to turn the entire planet into an uninhabitable waste dump.

Let me now offer a lengthier definition of capitalism which is largely paraphrased from the writings of Wolfgang Streeck: capitalism is a ‘progressive’ society (…‘progressive’ in the sense that it aims for limitless growth of economic productivity and prosperity) that secures its collective reproduction as an unintended side-effect of individually rational, competitive profit maximization in pursuit of capital accumulation, and that puts this accumulated capital in the hands of a small minority with the legal privilege through rights of private property to dispose of it as they see fit, though this minority enjoys no other juridical privilege over other members – all are equal before the law.

Not all of the capitalist society so defined would seem strange to a medieval mind – not the private property and not the inequality, though a practical inequality squared with a formal equality might. But most of it would probably seem very strange indeed. So how, in the last half-millennium, did the king, lord, merchant and peasant of the absolutist age become the capitalist, the worker and the government official?

Needless to say, there are numerous explanations whose complexities I can barely touch on here. For simplicity’s sake, I’d suggest that most explanations tend to emphasise the role of one or another of those four medieval types (I suppose I should also nod to a fifth one, the priest, especially in the guise of an ascetic protestant renouncer).

In Robert Brenner’s influential analysis, the key figure was the lord, in England above all, where landowners further pressed the logic of medieval tenures commuted into short-term monetary leases in the context of the feudal crisis, creating pressures towards an income-maximising capitalist agriculture. The flipside of this ‘history from above’ is a ‘history from below’ which tells of the way that the rural poor were stripped of their access to land through the enclosure of the commons, turning them into a landless or near landless mass of rural labourers obliged to work for wages on the increasingly capitalist farm. But the structure of farming in early modern England is often called ‘triadic’ – the third figure in addition to the landlord and the wage labourer is variously called the ‘farmer’, ‘tenant’, ‘yeoman’ or rich peasant, and much contemporary historical writing emphasises their role in changing the nature of agriculture. Marxist orthodoxy sees this class as the newly emerging capitalist ‘bourgeoisie’, escaping from its peasant roots to contest for power with the fading feudal nobility at the expense of a poorer peasantry on its way to becoming a landless proletariat. But when you look at detailed historical studies, it becomes harder to divide people neatly into three distinct classes in this way. The historical record is full of peasants enclosing their own commons, landlords allying with peasants, yeomen allying with or becoming lords, tenants who were also landlords and so on. What seems to have happened in England is that a landowning class “unusually civilian in background, commercial in occupation and commoner in rank” interacted with a land-husbanding or peasant class that didn’t unite against it as a peasantry but became interdigitated with it in endlessly complex ways at the local level. In leftist and alternative farming circles I often hear people say that the ‘landowners’ took the land from the ‘peasants’, and there’s some truth in it. But it’s also true that peasants took the land from each other, and from themselves.

The result in early modern England was the demise of any kind of peasant ‘moral economy’ by the mid-17th century, a slow overturning of legislation limiting middlemen and national market integration and the spread of a larger-scale, fully commercial agriculture better able to ride market price fluctuations – one that made the feeding of the nation indeed an ‘unintended side effect’ of profit maximization in Streeck’s terms. As I’ll detail in a later post, there are in fact circumstances when a smaller-scale agriculture is better able to ride market price fluctuations – essentially when it’s primarily subsistence-oriented – but in early modern England the situation was otherwise. In some respects, the emergence of the triadic structure and of large commercial farms in England represented a crisis for the absolutist state, but the state quickly adjusted, turning itself into an aggressive fiscal-military unit with strong protectionist policies – not the only western capitalist power to build its initial economic strength through economic protectionism.

So much for the agricultural side of capitalist development in England. Another angle focuses on the merchant, and finds the key to capitalist development in his (I’d guess it was usually a ‘his’) transformation from the hated usurer of the middle ages to the heroically world-creating entrepreneur of modern times. Here, perhaps it’s worth distinguishing between the merchant capitalism that created domestic markets in England and other early capitalist powers, and the merchant capitalism of international commerce. Starting with the first, the question is how did the relatively static wealth of the medieval merchant become the vastly transformative liquid capital of a later era? Medieval merchants could be wealthy enough, to be sure – essentially by taking advantage of fragmented markets and poor transport links to pursue the age-old middleman strategy of buying cheap and selling dear in relation mostly to luxury goods. They received both grudging support from the chronically cash-strapped royal houses of the middle ages, as well as frequent repression because of the obvious political threat they posed, and the spiritual threat to Christian ideology around usury (there is, of course, a story to be told here about the oppression of Jews throughout European history). But the accumulation of merchant capital in the middle ages wasn’t central to the ‘collective reproduction’ of society in the way that the accumulation of capital was later to be, because it operated only at the margins of a society in which reproduction was based fundamentally on access to land and its productive potential. Even the physiocrats who, clustering around François Quesnay (1694-1774), arguably constituted the first systematic school of modern economic thought, considered land to be uniquely productive of value, and other forms of economic activity such as manufactures or commerce to be sterile. It was only when the ‘fictitious commodities’ of land, human labour and money were fully marketised that merchant capital could take centre stage as capital, meeting with the capitalist transformation of agriculture in a new economic settlement where agriculture, commerce and industry conjointly reproduced society as Streeck’s ‘unintended side-effect’ of profit maximization.

So part of that new settlement involved the rise of domestic manufacturing and commerce. The growth of manufacturing implies the growth of a market on the demand side for the sector’s products. The dark story to tell here is of an expropriated peasantry, turfed off the land, now forced to purchase the necessities of life from capitalist markets. But there are brighter stories, such as the one associated with the historian Jan De Vries, who raises the idea of an ‘industrious revolution’ in which ordinary households rationally chose to devote themselves to wage labour rather than agrarian subsistence, finding it easier that way to secure their subsistence – and, more than their subsistence, a hitherto unimaginable array of consumer goods besides. Of course, in the late 18th and early 19th centuries – in England above all, but not only in England – the industrious revolution became the industrial revolution, when human industrial labour combined with steam power to create consumer societies in the modern mould. Again, some historians tell a dark story of the industrial revolution as a catastrophe for working people, while others tell a brighter tale, a virtuous circle of rising productivity and rising wages. It seems clear that there was little nostalgia for agrarian life in the England of the industrial revolution era among working-class people, but by then the countryside had long been transformed into an arena of capitalist agriculture, so the choice was mostly about what kind of capitalist wage labour was preferable. There’s no doubt that some people (including some working-class people, particularly adult men) benefitted from industrialisation, but I’m not sure that anyone can easily draw up the balance sheet.

To draw up that sheet, you’d have to reckon with something that’s haunted capitalist economies since the industrial revolution – the substitution of human labour by machine labour, which is typically faster, cheaper and less prone to labour disputes. Fellow farmers who own an aged tractor like me might question that last point, but there are those who argue that labour discipline rather than ‘efficiency’ has always been a key to the introduction of new technologies. I for one find this a more plausible tack than orthodox economic theory’s assumption that redundant labour will fit smoothly into another economic niche. The problem of a jobless economy increasingly exercises contemporary economic minds – particularly since automation is now diminishing white collar jobs such as law, medicine and architecture, thereby undermining the old argument that education or social ‘improvement’ is the way to get ahead in the face of a tightening unskilled job market. Indeed, technology nowadays is pushing at the boundaries of what it means to ‘discipline’ human minds or bodies, and posing troublesome questions about the very nature of being human. How that story unfolds will surely be conditioned by global energy futures as well as climate change, though debates on automation and energy seem curiously disconnected. I’d argue that this story isn’t unilineal – a more energy-constrained future won’t necessarily look like a more energy-constrained past. But perhaps that’s better framed as a historical question implicit to this essay: to what extent does energy (and, for that matter, climate) determine social forms?

9 thoughts on “The return of the peasant: or, the history of the world in 10½ blog posts. 5. Capitalism I – Lords, peasants & merchants

  1. Hi Chris,
    Re the 2% compounding interest, I have a story from when I lived in the timberlands of Northern California. My house was surrounded by second-growth Douglas firs and old-growth stumps with more than 200 rings on them even after the 25 years since they had been cut. The land had been clear-cut and then sold for rural residences. I lived there in the mid 1990’s when the timber wars were still raging. The big capitalist conglomerates were clear-cutting second and third growth trees and the environmentalists were trying to defend the remaining old-growth.

    The people you didn’t hear much about were the old families who had been doing a more or less sustainable timber harvest for the last 100 years on their privately held land. Every year they would cut 2% of the mature trees, so that over time the age of the timber settled to around 50 years old. Their acreage was definitely a commercial landscape, but still retained all the aspects of a healthy forest, because they were extracting only simple interest. The difference could not have been more dramatic between those maintained forests and the clear-cut slash piles and wreckage that supported the compound interest extraction of the big corporations.

    As I understand it, the big corporations are all gone from Mendocino County now, and their mills are closed, but the family foresters are mostly still in business, they just have to drive farther to find an operating sawmill.

    • That’s an interesting illustration – not least because both the small family owners and the big conglomerates both have private property rights, but behave very differently. Often, private property rights are justified in generalised terms as the basis for large-scale corporate capitalism on the grounds that they incentivise the kind of careful husbandry you describe for the small owners – but clearly they’re very different things, and the justification only really works on the local, small, longer-term scale. Your example of the demise of the local sawmill is also interesting. Start with a moderately sustainable local small proprietor situation along with the necessary infrastructure. Turn it into a non-local corporate affair and you get a short-term, asset-stripping bonanza – albeit one that can plausibly be described as more ‘efficient’ than the original situation. Then, when the assets are stripped, we revert to the local small proprietor situation, only with a less appropriate infrastructure and a poorer resource base.

    • It was there that I began to notice the difference between the living economy of the natural world and the dead money economy. To turn a redwood or Douglas fir into money entailed killing them. This was the first basis for the original money economy in the steep coastal parts of Northern California, before marijuana became so lucrative.

      But to get value from my little fruit orchard that was planted on the septic tank leach field downhill from the house, we wanted the trees to stay alive and bearing fruit. It was a nice system, all we imported was the electricity to pump the water that flushed the toilet.

      Thus I arrived at a really simple way of understanding the health of any economic system: A system is unsustainable in direct proportion to the amount of money it generates, and it is healthy in proportion to how much fruit it produces.

      • But that’ a limited defimitiom of a system. The system for supplying wood in a small-scale/agroforestry setting is the woodlot as a whole. While this involves harvesting individual trees, the system (woodlot) might last for centuries. I’ve visited agroforestry plots in Europe that have been in the same family since the 1600’s.
        I look forwards to what Chris has to say about what sort of society could function with reduced energy, mostly intermittent renewables with a dollop of despatchables.
        I’m designing solutions with big whack of energy efficiency mixed with ubiquitous control and sensors (AKA IoT). Seems to be working so far. It does encourage behavioural change which is a good thing IMO. And moves substantial wealth from the energy supply industry to the broader community.

        • I like Eric’s definition. To press the monetary metaphor, I guess you could say that the timber/fruit is the revenue and the woodlot/orchard is the capital. One of the problems is when the latter is just treated as a revenue stream. I suppose this leaves the issue of credit – what resources you need to have in hand to get started, which is a bit of a tricky one. But in general I’m with Eric – the powerful liquidity of money is quite dangerous, especially when it’s essentially fiat money.

          • Just to follow up on the timber as capital. In the 1980s some ‘investors’ realized that the capital of timber companies (standing forests and land) was under-priced (not reflected in price of shares). Several old timber companies who had been raising trees in multi-decade rotations for many years, were purchased with borrowed money, the entire timber stock was liquidated as fast as possible and the land sold off, with the investors pocketing a nice profit on the sale of company assets. This liquidation prompted the the timber wars that Eric mentions, all up and down the US west coast.

            When I first moved back to the Pacific Northwest in the 1970s, the tail end of a similar process was happening, but on a much smaller scale. Small parcels of second growth timber had thick covers of trees that had become large enough to be highly sought after, but this fact was not recognized by many of the land owners. At that time it was possible to find and purchase a parcel of timber land from such an owner, sell the timber and recover more than enough money to pay back the cost of the original purchase, giving the purchaser free land, albeit without the timber.

            My wife and I purchased some recently logged land very cheaply (since the previous owner had already been well compensated by the timber sale). We were delighted to do so, since the alder, maple and cedar were left standing due to their low market value at the time. We built a house and gradually developed a pretty little homestead, with a garden, pasture and nascent fruit orchard. So, we got some advantage out of the capital liquidation process, but I don’t know whether that kind of side effect happens very often.

            We would probably still be on that homestead today except for the nearby construction, during the height of the cold war, of what was reported to be the number one strategic military target in the world. That scared us into moving to Hawaii in the mid 1980s where we repeated the house building and garden/orchard establishing process.


          • An interesting story, thanks. I guess your more recent choice of home has put you more in the firing line of your government’s latest nuclear imbroglio, though perhaps it’s not quite so threatening as the 1980s situation.

  2. I appreciate your acknowledging of ‘Eurocentrism’ but in this case what you are describing seems to me a typical (and obviously contingent) English case. The rentier-owner, farmer-manager-capitalist, wage-laborer class formation seems to be rare case in a lot of places.

    The story of the ‘how capitalism came to take over the world’, is a bit uncritically accepted. J.K. Gibson-Grahma in their book Postcapitalist Politics shows us that what we call capitalism (as you have defined above) is only a small component of the actual economy in a lot of places, including, surprisingly, even in the West. I would also suggest you to have a look at a book called, America Beyond Capitalism. I think what we can say, however, is that capitalist elements emerged over time while many non-capitalist forms of economy continue to remain part of it.

    It is important to keep this in mind because otherwise we succumb to this uncritically accepted narrative and thereby erase so many parts of our making a living is erased from the vies. Wallerstein and Smith’s household centered approach is also a bit useful in this regard. In other words, the world is capitalist and a lot more, and it is partially capitalist in its multifarious forms and ever-changing avatars, populated with bizzarely diverse, contingent, and dynamic actors.

    Related to both the points above is the curious absence of the rise of this vast body of scientific practices, and vastly complex institutional ensembles we call ‘the states.’ These were not simply epiphenomena of the particular economic configurations, but active shapers of the emerging reality. I think the twentieth century approach of defining the world into certain ‘system’ a priori has clouded our vision of these immensely complex, variable, contingent, and spatio-temporally always specific realities.

    Having said all this, I am greatly enjoying your posts and I always wait for the next installments. Thanks so much.

    • Thanks for that, Anil. Maybe some of these issues will become clearer after the next instalment, which considers capitalism in a broader global commercial-colonial context – it’s not always obvious how to steer different elements of the story through a linear text. The focus on English agrarian capitalism here stems largely from the fact that Robert Brenner and associates like Ellen Meiksins Wood emphasise it as the key to the development of global capitalism – it’s been a very influential argument, albeit one that I think is ultimately unpersuasive. I agree with you that English agriculture was unusual, though, and for that reason I should probably have introduced a more comparative element here, at the risk of making the essay even longer. Perhaps I’ll try to do that in future.

      In relation to your points about ‘capitalism taking over the world’, I think there’s a risk of conflating a number of different things here. Certainly, one can argue that there are many aspects of economic life even in the most capitalist of places that can’t be described as capitalist (David Graeber is also good on this). One can also question whether capitalism is a uniquely European invention, and suggest that there were incipient forms of it in other parts of the world such as China, Japan, India and Arabia in the early modern period. But I think it’s harder to dispute that, a la Wallerstein, the early modern period saw a major global colonial-commercial expansion with Europe at its heart based on capitalist accumulation that created a truly global ‘world system’ for the first time. It’s true that people lived and continue to live their lives in the context of many other social and economic logics, but one feature of capitalism is its ability to co-opt such logics to its own – few people in the world over the last century or two have been untouched by the economic logic of capital that I outline in the post above. I acknowledge there’s a danger of defining ‘capitalism’ with too broad a brush and making it too all-encompassing – on the other hand, I’d argue that capitalism as defined in the post above has been a most encompassing phenomenon, and we need to reckon with that fact.

      I agree with your point about states as active shapers of the emerging reality – this is something I talk about more in instalment #7.

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