How capitalism started, and why it still matters

A happy new year to you from Small Farm Future, and as happy as possible a Brexit. I have a busy January ahead, involving various podcasts, webinars and conference papers geared to my book (scroll down this page and you’ll find the itinerary). I also need to do some replanting in our stricken ash woodland and attend to various other farm tasks. So I may not be very active on the blog for a while. But I want to start the year with a post that continues my exploration of themes from my book, in this case lighting on Crisis #9: Political Economy (pp.53-73). These twenty pages are in many ways key to the whole book.

To reprise the title of this post, how capitalism started and why it still matters are important themes I discuss within those twenty pages. Maybe it’s necessary to define capitalism before discussing how it originated, but let me begin by defining what it isn’t. If I grow a crop or make a widget, take it to a market and sell it for money to someone who wants it, that doesn’t inherently make me a capitalist. In fact, capitalism isn’t particularly about markets or selling things. This needs stressing over and over, because powerful narratives to the contrary repeatedly fool us into supposing otherwise.

The clue to the nature of capitalism is in the name – capitalism is about making the biggest possible return on capital investment, and it’s about making this fundamental to the whole organization of society. Sometimes capitalism involves selling things in markets in pursuit of that larger aim, but often the major energies lie elsewhere. The best short definition of capitalism along these lines I’ve come across is from Wolfgang Streeck: a capitalist society is one that “secures its collective reproduction as an unintended side-effect of individually rational, competitive profit maximization in pursuit of capital accumulation”1.

And so to the first part of my essay title. How did this bizarre way of organizing affairs get started? In an influential article first published in 1976, historian Robert Brenner argued that it started in England – nowhere else – in the late 15th century, when large-scale rural landowners established competitive tenancies for relatively wealthy peasant farmers, incentivizing them to increase the profits and productivity of their farming. This, Brenner argued, was the result of a longer-term class conflict emerging from medieval contests between landlords and peasants that took the unique turn in England of an only partial victory to the peasants. In Eastern Europe, by contrast, the victory went to the landlords, whereas in France it went to the peasants, establishing different kinds of agrarian society that were only upended in later revolutions. But in England, says Brenner, and only in England, the stalemate between landlords and peasants produced – quite unintendedly on their part – a monetized, accumulative and self-transforming rural capitalist society.

Brenner’s intervention stimulated much research by agrarian historians of England, and the upshot of their enquiries was, in a nutshell, that he was wrong, and there was no simple competitive dynamic between landlord and tenant farmer – though historians usually give Brenner his due for re-energizing their field of enquiry. Brenner himself incorporated some of this revisionism into his later work, but his original formulation remains better known and more influential2.

One way in which a Brennerite view remains influential is a coarsened popular version whereby our modern capitalist ills in England are imputed to ‘the enclosure of the commons’, when profit-seeking landlords moved to stop peasants from accessing land and producing their subsistence. I’ll talk more about commons when I get to Part III of my book in this blog cycle, but the bottom line is that while the extinction of common rights did sometimes occur at the expense of peasant subsistence, enclosure was a hugely complex process, often involving peasants enclosing their own land, and the more you look in detail at its processes in the English countryside, the less clearly related they seem to the emergence of capitalism3.

All this prompts two questions. First, if capitalism didn’t arise in England through rural class conflict, then where and how did it arise? And second, why does any of this matter today? I’ll attempt a brief answer to the first question, which will lead to an answer to the second.

Very broadly, I’d suggest that capitalism arose, to quote from my own book, “out of a confluence where the great trading empires of Asia connected with the fiscal-military states of Europe and their seaborne empires that brought first precious metals and then plantation produce from the Americas into global circuits of exchange, much of it via the super-exploited labour of enslaved Amerindians and Africans” (p.62).

This alternative approach to capitalist origins was pioneered by thinkers of the left like André Gunder Frank and Immanuel Wallerstein. A couple of points to notice about it. First, it’s less Eurocentric or Anglocentric than Brenner: capitalism wasn’t the achievement of any single country or region, but resulted from relations between many – albeit relations greatly influenced by colonial domination enthusiastically prosecuted by European powers. Second, unlike the Brenner thesis, this approach makes the role of centralized states key to the emergence of capitalism. Again, despite powerful narratives to the contrary, capitalism has always been a state project – in fact, a project of commercial linkage between states. Brenner wrote an article criticizing this approach and its leading theorists for “neo-Smithian [i.e. commerce-emphasizing] Marxism”. In this, he built on a long left-wing tradition of claiming superior status through greater loyalty to the thought of Karl Marx, and of disdain for left-wing thinkers who look beyond it – a tradition that unfortunately still seems to be with us. But, unlike Brenner’s thesis, the ‘neo-Smithian’ approach now commands more general support among economic historians, leftwing and otherwise, despite ongoing disagreement about the details4.

Anyway, if we go back to English history with this more state-centred view of capitalism in mind, it becomes easier to notice that the Tudor state took steps to protect English peasants from expropriation by aristocratic landlords. This arose less from benevolence than from conflicts between state and aristocracy over command of resources, conflicts that England’s unusually weak aristocracy generally lost. It also becomes easier to notice how the early modern English state was locked in fierce battles with other European states – the Netherlands, France, Spain, Portugal etc. – to grow its economy through imperial control of wider trade and monetary networks.

I’d argue that capitalism arose more as an unintended consequence of this emerging system of competitive states than as a consequence of rural class conflict in England specifically. A look at the English countryside from the late medieval through the early modern period does show an increasing commercialism across all classes, with more monetization, capitalization and consumerism, and I’m not suggesting this had no bearing on the state’s trajectory towards capitalism. I’d nevertheless argue that the real motor of that trajectory was in the dynamics of the state and its competitors.

Why do these events of many centuries ago and the different explanations for them matter today? Because I think we’re now living in the twilight of global capitalism, arising out of its unsustainable dynamics of capital accumulation and their consequences in terms of energy, climate, soil, water, economics, politics and other things (in other words, all the crises that I discuss in Part I of my book). This forces us to consider how our societies might transcend these unsustainable dynamics, and here the different approaches to capitalist origins push in different directions and lead their proponents to emphasize different issues. I won’t trace these differences in all their ramifications here, but I’ll conclude by homing in on a few of them which seem to me particularly important to frame politically.

It’s often said nowadays that the old divisions between left-wing and right-wing politics are breaking down, which I think is true in many ways. I find class versus state approaches to capitalist development quite helpful in thinking through this reconfiguration.

People drawn to orthodox Brennerite class-based leftism are inclined to protest – too much, in my opinion – about small-scale private property rights, petty commerce, personal economic autonomy and so on, because they regard it as prelude to or generative of capitalism. But this is only likely to be true in situations where these features are being actively coopted by growing, centralized states forging a capitalist world order. The situation we now face is more likely one of state decline, contraction and disintegration – and in those circumstances I would, on the contrary, actively champion opportunities for widespread, accessible, secure, small-scale rural property tenure and petty marketing as critical for the possibilities of a decent life.

There are, alternatively, state-centred thinkers who take a rosy view of the capitalist state’s corporatism and technological prowess, and this usually terminates on both the political left and right in a techno-fixing rearguard commitment to the large-scale corporatist status quo in the face of present challenges – which is why to my eyes the arguments of people like Matt Ridley, Steven Pinker, Mike Shellenberger, Leigh Phillips, Mark Lynas or Nick Srnicek end up looking pretty similar, despite their different self-proclaimed positionings on a left-right axis.

Then there are people who view capitalist development as a largely malign manifestation of centralized state aggrandizement, and seek more convivial and organically local forms of socioeconomic action – a camp in which I find myself. Touchstone concepts for this way of thinking include individual and local self-reliance, autonomy, liberty, rural/small town revival, petty commerce and (primarily) local mutuality. The right-wing or conservative resonances of these concepts are perhaps obvious, but so too should be the left-wing ones – particularly once we abandon the misguided notion that selling wares at local markets or having decision-making autonomy over farm property are somehow intrinsically capitalist, or that notions of “community, magic, craftsmanship, and enchantment” as discussed by Ernie in this interesting comment are intrinsically conservative or ‘reactionary’. I hope to come back to this in a future post.

Nevertheless, I continue to identify with the political left and so there are aspects of this local autonomism that I consider potentially problematic and in need of checking – namely, accumulated economic privileges between households, families and, ultimately, classes, and other differentials of social power between different kinds of people, perhaps especially between men and women, and between ‘local’ and ‘non-local’ groupings. So, within the limitations of a short and non-technical book, I go to some lengths in A Small Farm Future to address how these problematic tendencies may conceivably be checked within semi-autonomous local societies of the future in the context of contracting centralized states. An important part of this that I broach in Crisis #9 and discuss elsewhere in the book is the need to avoid the inequalities associated with extractive landlordism, to which secure and widespread rights to private property in farmland offer one solution.

In this respect, I share a Brennerite concern about extractive landlordism, which I think is a bad thing – but I don’t think it’s a thing that’s inherently generative of capitalism. So while any just, post-capitalist local politics must address local class formation and conflicts around things like landlordism, the connections between local producers and the larger state are ultimately more to the point in how those class conflicts play out, as analyzed in Part IV of my book5. As per recent discussions on this site, I’d suggest that recourse to an analytical language of class derived from older state/producer formations that have now largely passed into history (‘the peasantry’, ‘the proletariat’, ‘the (petty) bourgeoisie’ etc.) lack coherence unless they’re plausibly linked to the new and unprecedented terrain of state/producer relations that’s emerging in the contemporary world: capital decline, state decay and retrenchment, mass migration, pervasive ecological disruption and so forth. My book presses the view that ‘the peasantry’ may be one of the few such categories to retain some relevance in this emerging world.

I’m wary of political traditions that propose the centralized state as the major safeguard against problems like local landlordism or patriarchy, especially in view of its declining reach. I’m warier still of political traditions that regard the state as an instrument of ‘the people’, or of a sub-set of the people regarded by the tradition as particularly worthy or important, such as ‘the working class’. As I see it, the state is no less, and often much more, capable of acting the rapacious landlord, predatory bandit or chauvinist paterfamilias as any smalltime landholder, and this view colours much of my analysis in Parts III and IV of the book.

But we’ll come to that presently. For now I’ll simply conclude by saying that the difficulties of constructing just societies out of the wreckage of global capitalism in the present historical moment seem virtually insurmountable, but they’re just a little less insurmountable if we can specify accurately the nature of capitalism, its origins and the implications for what comes next.


  1. Wolfgang Streeck. 2016. How Will Capitalism End, pp.58-9.
  2. Brenner’s contributions and early responses to it are collected in T. Aston & C. Philpin’s The Brenner Debate (Cambridge, 1985). His later work includes Merchants and Revolution (Princeton, 1993). Other assessments, contestations and counternarratives to his earlier writing on English agrarian class structures include Jane Whittle (Ed) Landlords and Tenants in Britain, 1440-1660 (Boydell, 2013) – especially the essay therein by David Ormrod; Christopher Dyer A Country Merchant, 1495-1520 (Oxford, 2012); J. Blaut Eight Eurocentric Historians (Guilford, 2000); Henry Heller The Birth of Capitalism (Pluto, 2011).
  3. See, for example, Robert Allen Enclosure and the Yeoman (Oxford, 1992); J. Yelling Common Field & Enclosure in England 1450-1850 (Macmillan, 1977).
  4. Robert Brenner. 1977. The origins of capitalist development: a critique of neo-Smithian Marxism. New Left Review 104: 25-93; Immanuel Wallerstein. 1974. The Modern World System; Ronald Findlay & Kevin O’Rourke. 2007. Power & Plenty; Heller op cit.; Blaut op cit.
  5. Neglect of this same issue has, incidentally, been a major rallying point for critics of Brenner: see Blaut op cit.; Heller op cit. This raises some interesting issues that I hope to pursue in future posts – perhaps especially in relation to rural sociologist Max Ajl’s interesting recent writings on war and nationalism.

34 thoughts on “How capitalism started, and why it still matters

  1. Thanks for this Chris. I was very interested in the book section about commons, and you continue the iconoclastic critiques here.

    Back in the late 90s I owned a café-pizzeria, and Leigh Phillips and his friends were occasional customers. I many, many times had to explain that business and capitalism were not the same thing.

    I think you have articulated such an important difference between “growing, centralized states forging a capitalist world order [and] state decline, contraction and disintegration”

    In my work I often point out the mainstream pattern, fully embodied by technoleftists. It goes like this:

    “What we are doing is not working. Let’s do the *exact same* thing, only Bigger, Faster, and Harder!”

    This might work in a world with expanding fossil fuels and without a contracting atmospheric waste dump, but it sure doesn’t now.

    If what you are doing doesn’t work, it might be because it just doesn’t work.

  2. Ha!

    Maybe the way to explain the difference between owning a pizzeria vs. Capitalism would be to insist that Leigh Phillips compensate you for the pizza using something of value other than money. That would have two benefits: it would highlight the simple trade transaction, as well as the fact that most of us (intellectuals especially) have little of value to offer besides money.

    “Okay Leigh, in exchange for this pizza, how about you expound some wisdom for a few minutes.”

    That never happens.

    “…malign manifestation of centralized state aggrandizement…”

    It seems to me that capitalism works by networks of contracts, whether they be loans, or title deeds, or corporate charters. Those contracts are only as valuable as the ability to enforce them. Which requires courts and laws, and ultimately a corps of armed thugs to threaten anyone who questions their authority. The State.

    And since you mention the exploitation of the New World in context of the beginnings of capitalism, it is worth noting that from the very beginning the European stance toward New World people and resources was State sanctioned theft. The development of capitalism came a little later, and didn’t change the fundamental character of the interchange, it only made the pillage more efficient.


  3. I think I have a slightly more positive attitude toward states than you do; perhaps because I recognise that I have had so much benefit, in my own life, from state-enabled education and health care. Perhaps there are situations where economies of scale are just that (rather than the false economies of colonialism, burning fossil fuels, or financialisation).

    Which isn’t to say that a more localised structure wouldn’t work better! I mentioned education above but I am far from convinced that industrial model schooling is the best we can do. On the other hand I simply haven’t seen a better system than the NHS (though forty years of neoliberalism haven’t done it any favours, either).

  4. Chris wrote, “…this usually terminates on both the political left and right in a techno-fixing rearguard commitment to the large-scale corporatist status quo in the face of present challenges”

    A political cartoon from Ted Rall illustrates the ongoing commitment to the corporatist status quo in “Biden’s Diverse Cabinet”:

    Corporatist Pro-War Black Male
    Corporatist Pro-War Latinx Cis Male
    Corporatist Pro-War Biracial Female
    Corporatist Pro-War Disabled Native American Females
    Corporatist Pro-War Buddhist Gender Fluid Pacific Islander
    Corporatist Pro-War Nearly Deceased White Male

    Pro-war leanings are troubling, regardless of the source (corporatist, nationalist, imperialist…) Ongoing wars could preclude local economies and self-provisioning agriculture.

    I’m looking forward to reading the future posts Chris mentioned in Note 5.

    • War pulled the west out of the last depresion in many ways , it bailed out the banks , governments bought militaty equipment and most pressing to governments it got rid of the hot heads that would have fermented rebelion and got them killed in war .

  5. War pulled the west out of the last depresion in many ways , it bailed out the banks , governments bought militaty equipment and most pressing to governments it got rid of the hot heads that would have fermented rebelion and got them killed in war .

  6. I always thought, as Wikepedia defines it, that “in financial economics, capital refers to any asset used to make money, as opposed to assets used for personal enjoyment or consumption”. I can’t see that the scale of the held asset has much to do with whether it’s capital or not.

    A blacksmith would treat his anvil, his forge, his tools and the building that housed them as capital assets. The blacksmith uses capital assets to make money. Similarly, a locomotive manufacturer would consider his foundry, forges, presses, cranes, metalworking equipment and the building that houses them as capital assets used to make money. I see a huge difference is scale, but not really one of kind.

    If it’s not the scale of the asset that defines capitalism, then perhaps it’s that “the role of centralized states (is) key to the nature and emergence of capitalism”. Owners of large-scale and small-scale capital assets might both depend on state-enforced rules of private property and private markets to protect their businesses from involuntary appropriation by others and to allow access to those markets so they can sell the items produced by using their capital. I know capitalism means assets are used for private profit, otherwise it would be socialism, but is a state really necessary for private profit to exist?

    I can imagine small-scale capitalism surviving without much in the way of state support at all. Peasants using an ox and plow on their land are on one end of the capitalist spectrum whether or not they get much protection or support from a state or not. If they sell their produce at a village market, why aren’t they “intrinsically” capitalists? It seems to me that if money and tools exist, capitalism will be unavoidable, even if only petit capitalism.

    So, I don’t think capitalism or the state are necessarily at the root of our predicament, it’s the size, number and power of our tools. Too many productive assets will destroy the ecosphere no matter how they come into existence and no matter who owns them. A hoe and a bulldozer are both capital and they both do the same thing, but one is far more dangerous than the other.

    • but is a state really necessary for private profit to exist? ”
      depends on the size of the state , looking at the murder rates of american cities some form of state intervention is very nessisary .
      From the days of fighting over the carcas of a wooly mamoth untill today there has allways been people with enough authority to enforce agreed laws / keep the peace .

    • Capital (that in my book I call durable capital goods) is different from capitalism. (The word capital also refers to money, but this is confusing and should not be included in these definitions.) Capitalism is an approach to living through investment in durable capital goods, which are used for producing consumer goods, or their associated services or even more durables. Unfortunately this kind of investment includes the natural resources too, as described below. Capitalism in society is contained within those people who have found the power of ability to borrow and to invest a lot, so as to make it seem that they are rich, when in fact they probably owe as much as they own.

      Since we all wish to become wealthy we respect this name as being applicable to our whole society along with the concept of a free-market, for sharing the produce. The trouble with capitalism is that it bunches into monopolies, which are due to the ability for the capitalists to include in their ownership many valuable and useful natural resources such as land. These capitalists speculate in the land values and make its access more costly bu withholding some of it out of use in their speculation of its growing value. This growth is mostly due to the improvements in the infrastructure which our taxes pay for.

      If we could better share the advantages that land ownership brings (by the introduction of a single tax on the rent as Henry George proposed in his book Progress and Poverty in 1879), then capitalism would not create so much concentrated power and the gap between the rich and the poor would be greatly reduced.

      • Thanks David. Much to agree with there. The consumer goods side of it is certainly important, but as you point out speculative land value (and economic rent more generally) is also critical once commodification is ramified. Land value tax is an interesting one … I have some misgivings about it, but will be posting about it presently.

  7. Responses:

    Thanks for that intriguing autobiographical snippet, Ruben. My mind is boggling at the thought of you discussing capitalism with Leigh Phillips over a pizza.

    On which note, for me the thought experiment of Leigh adequately paying his dues by expounding his wisdom for a length of time gets stuck in the hopeless dualism that the time period would either have to be very short or very long. On balance I think I’d rather just have his money 🙂

    Agree with Eric concerning capitalism as networks of contracts. As to capitalism and colonialism, I think the relation is complex but deeply intertwined. Capitalism didn’t emerge fully formed in its present guise, but its formative years were steeped in colonialism … and so are its declining years.

    To Kathryn’s comments, let me clarify that I’m not inherently opposed to any kind of centralization of political function. The problem is that the main current that centralization has followed in recent global history is an ultimately destructive capitalist one, and it’s become very difficult for any kind of state political project to swim against it. The development of health, welfare and education services raises interesting ambiguities: on the one hand, they’ve typically arisen from opposition to the worst tendencies of capitalist immiseration when counter-capitalist reformers have got some traction within the modern state (as with Beveridge & Bevan in postwar Britain), on the other hand there are numerous ways in which they’re coopted into further cycles of capital accumulation/immiseration. More on that in future posts, I hope.

    To Steve and Diogenese on war – yes I think this is a big issue, and if waning capitalist states succeed in mobilizing their societies widely for war then we can say goodbye to a small farm future for the time being to any but a lucky few, or perhaps a desperate many. I’m not convinced that a World War III would lead to the vast postwar economic growth and globalization that followed World War II, however. And thanks for the cartoon, Steve!

    To Joe’s comments, as I see it if we define capitalism as the private possession of capital then almost every human society stretching back probably beyond the origins of Homo sapiens might conceivably be described as capitalist, and the concept loses utility. Although the difference between a blacksmith & a locomotive manufacturer as owners of capital could be regarded as only a matter of degree, I’d suggest that to assemble the amount and kinds of capital necessary to build locomotives requires social structures and modes of thinking that are qualitatively different from those of an agrarian society in which blacksmiths get on with being blacksmiths. To my mind what’s really distinctive about capitalism is that it creates processes of persistent social transformation such that bulldozers must largely replace hoes and multinational manufacturing corporations must largely replace blacksmiths, and those processes aren’t adequately captured in the notion that both blacksmiths and industrial corporations are owners of private capital.

    I find Streeck’s definition so useful because it draws attention to the nature of these processes in capitalist societies, rather than to the ownership of private capital which is ubiquitous in many societies. To capitalize (appropriately enough) the key terms: a capitalist society SECURES ITS COLLECTIVE REPRODUCTION as an UNINTENDED SIDE-EFFECT of individually rational, competitive profit maximization in PURSUIT of capital ACCUMULATION.

    Or to put it in Biblical terms, people often say that ‘money is the root of all evil’ whereas I believe the correct quotation from I Timothy 6:10 is ‘the love of money is the root of all evil’, which gets closer to the spirit of my argument. Capitalist societies are ones that organise people en masse willingly or otherwise around the ‘love of money’ – and I analyze this here not so much as a moral failing (though I think it is that) but as a sociological and historical trend.

    • I agree that “love of money” is what makes little captalism grow dangerously big, but I have a hard time seeing “love of money” as an ephemeral attitude that has to be nutured and organized by societies. I see it as one of the default characteristics of human nature. People have to go to a great deal of organizational effort to combat it, usually through religious institutions, but they obviously haven’t been up to the task.

      I would certainly agree with those who argue that there is no good reason to celebrate “love of money”, like neoliberal economists do, but if the environmental damage of big capitalism hasn’t made it obvious by now how dangerous it is, I can’t think of any political argument that will. Moral arguments failed long ago. I think we are stuck with it for a bit longer.

      Fossil fuels have enabled big capitalism to become truly gargantuan. I think we are just going to have to let the fuel run out or the negative environmental feedback shut it down. We are lucky that fossil fuels are a one-shot deal. If we survive these few fossil-fueled centuries, future societies will never have to worry about big capitalism ever again, at least on a global scale. If we have a future, it’s guaranteed to be a small farm future.

      • I read that the catholic church in england were one of the first to demand money instead of goods for payment of the tythes , pesants had no option but pay in coin so they had to sell goods for coin or be turned off their rented farms , money became one of the necesities of life .

    • Yes, Christian Capitalists are certainly a contradiction, even though nobody seems to want to acknowledge it.

      I prefer: “Evil is the root of all money.”

      And to Joe’s discussion of blacksmiths and locomotive factories, the scale is important, but also the focus.
      The blacksmith owns property for the purpose of making things that she trades for her living.
      The owner(s) of the locomotive factory own property for the purpose of making money.

      Consider Tesla, Inc. How much of Elon Musk’s wealth has come from the manufacture of cars?
      Most of his wealth has come from manipulation of various contractual relationships. The cars are a byproduct, or a public relations ploy.

    • I’d argue that money in itself means little, but it’s an intermediate resource for something that I’d agree with Joe is a default human characteristic, namely worldly status. A problem with money is that its quantitative character permits fantasies of endlessly compounding status, even more so with the availability of abundant cheap energy.

      But, as I discuss in my book, critique of worldly status – of people putting on airs and graces – is another default human characteristic. This, in part, is a moral argument that I agree with Joe has failed to stop capitalism – but that’s partly because the proponents of capitalism have been historically successful at presenting capitalism, or the love of money, or ‘development’, as a moral positive. This is getting harder to pull off, and critique of worldly status claims is not going to disappear – indeed its counter-narrative to the capitalist story is visibly strengthening in present times, and my book in part is about how to build upon it. However, I fear Joe is right that it may not be equal to the task before us right now in preventing various disastrous outcomes of big capitalism.

      Then we get into questions about whether post-capitalist agrarian futures would be small farm futures (ie. widely shared property rights) or might be large farm futures with widespread agrarian labour coercion. I don’t see this as a global near-term likelihood, but possibly a longer term one. Even in that unfortunate eventuality, the critique of worldly status will still assert itself, so I don’t think the possibility of a small farm future with a different kind of status order of the sort I discuss in Chapter 16 of the book can ever be discounted. But it’s a hard and uncertain road. Contesting all attempts to build status hierarchies will be key to making it less uncertain.

      I agree with Eric’s comments – which encroach into the subject of my next post, so perhaps we can pick them up further there …?

      • I wonder if this goes back to the gold standard…

        I think there was a massive change with fossil fuels, since before that everything that was made had to be made with muscle power at some point. This is a powerful limit on wealth.

        The amount of surplus that can be generated using oil has transformed what is possible for capital accumulation.

        But with the gold standard, money had to be related back to reality is some vague way. That has entirely been lost.

        This is basis for my argument that a Universal Basic Income would be bad for the environment—poor people would spend it on real things that must come from the ecosphere.

        The wildly rich on the other hand, do not spend all their money. It doesn’t even exist, largely, it is just numbers in a computer.

        It is easy to get megarich if all you are doing is multiplying numbers. Converting those numbers into real goods would not be straightforward.

        • The wildly rich on the other hand, do not spend all their money. It doesn’t even exist, largely, it is just numbers in a computer.

          We have to be careful here. For example, if I have enormous wealth in the form of government bonds (type doesn’t matter) it is likely that the money I lent the government has been spent on lots of things that use resources, like roads and other infrastructure, support of government employees and supplies for government agencies, like the military.

          Wealth held in the form of coporate shares is also directly related to the resource use of the corporation, in a way that is very similar to government resource use.

          I’m not saying that every bit of money is directly assigned to the physical world, the Fed can create billions in new money every day, but before too long even newly created money gets spent on something.

          Most of the money not in circulation is in the federal reserve and other banking institutions. My understanding is that federal reserve assets and liabilities are not “owned” by any individual. Bank reserves are “owned” by the owners of the bank, but they only get paid via dividends from profits; they can’t just take the money.

          But your larger point is correct. A lot of wealth is held in forms that are not very resource intensive. Examples include art, antiques, jewelry (to some extent depending on what it’s made from), precious metals and real estate in expensive locations (such that its price doesn’t really reflect the resource intensity of the real estate). If all that wealth were converted to money, which was then distributed to the poor, resource use would rise rapidly as they spent the money.

          It would be interesting to see resource intensity per dollar spent per income percentile. I took a quick look on line but couldn’t find anything.

          • Bank reserves are “owned” by the owners of the bank, but they only get paid via dividends from profits; they can’t just take the money.

            That is correct so long as individual share holders their actually hold their shares. One could choose to sell shares (take some money) – in which case the buyer of the shares becomes either a new owner or an owner with a larger interest in the Bank. The Bank’s ledger has to reflect a certain level of reserves… which can move in relation to the liabilities of the day. Joe is right about the reserve account’s not being a source for owners to take from (unless liabilities are significantly reduced and properly accounted).

            Liabilities and risk also need to be considered in the money and capitalism conversation; this is the reason banks have to have reserve accounts in the first place. If a loan is bad and is not repaid, the lender has an issue (a loss). Make too many bad loans, accumulate too many losses, and you (theoretically) go bankrupt. The government might bail you out… a wrinkle for another conversation.

            But where liabilities and risk are significant in a small farm future is in the unpredictability of weather, pathogens and other pests, health and welfare of workers, and suitability of storage mechanisms. A box full of fresh carrots on Monday might be worth a few pounds… but if not consumed right away, or handled well those same carrots will have lost much value by Saturday. Further complicating the carrot grower’s planning is how many carrots to plant in the first place (what market potentials may materialize – what weather, pests, etc. will she be faced with). With favorable conditions and thus too many carrots – a box of carrots is worth less than anticipated (the opposite condition – too few carrots is an opportunity for the successful carrot grower, but ultimately a serious situation for the poorest member(s) of society who find themselves priced out of the carrot market. Nothing mysterious in that – but the way humans work around risks and liabilities is certainly a significant issue for any size of farm future. You can bank on that.

          • Joe wrote, “Wealth held in the form of corporate shares is also directly related to the resource use of the corporation, in a way that is very similar to government resource use.”

            Mostly not, I’d say, because while corporations can get funding from an initial public offering (IPO) of their shares, most of the wealth held in stocks is the result of share price appreciation beyond the IPO value. This shareholder wealth is thus largely disconnected from the resource use of the corporation.

            For example, if someone bought $1,000 of stock at Netflix’s IPO in 2002, today those shares would be worth more than $400,000. Netflix got only about $1,000 of that market value (wealth) to spend on resources.

    • Mobilising societies …… just look how easy it is to lock down countries , convince people to wear masks , convincing sheep that somone somewhere is their enemy will be easy .
      Today is far and away difrent than 1940 , there is no supply of cheap easy to get energy and war would burn up what we have faster .The ” market ” is allready overloaded with ” toys ” .

    • I wonder whether the Biblical concept of usury is worth looking at; it is certainly what drives a lot of financialised markets.

      Similarly I wonder whether the concept of a recurring Jubilee year is something that might have relevance. Debts are written off and land ownership reset. (I would want to be very careful of the gritty details of the latter — if there is an “owner” to which ownership can revert at all.)

  8. I look forward to reading your book. I am interested in how you see the global-local intersection as any human groups also is in competition with other human groups, and their states and corporations. In my own work with colleagues at the P2P Foundation, we focus on cosmo-local strategies, combining local production with planetary shared knowledge communities (planetary guilds), which also build their own institutions at a trans-local and trans-national scale (‘the fifth magisterium of the commons’)

    • Thanks Michel – I’ll be interested in your thoughts on the book once you’ve read it. I don’t say much specifically about cosmo-local strategies in the book, focusing mostly on the issues around creating deep localisms within the penumbra of waning nation-states, although I do discuss the need to retain public spheres which perhaps relates to your point about trans-local institutions. I agree that the political intersections between localisms are important – I’ll try to take a dive into your work on this and think about it…

  9. One interesting coment was that in Japan there are only a very small handful of employees on salaries of over £1 million relative to most developed nations.

    Clearly there can be different ‘social’ ways of organising things

    • They were organised by the US militarycontrol after the 2’nd world war the us military wrote japans constitution and most corporate law .

      • Diogenese – I believe John onto something in his comment. Can you point to specific points in the Japanese Constitution or in their corporate law that directly circumscribes the salaries for high level managers in Japanese corporations?

        I currently work inside a US company that is owned by a Japanese corporation. And while I don’t speak Japanese (beyond a handful of words) – I have witnessed their behaviors toward each other and toward the world beyond their borders. I’m of the belief that most of what their culture (and their business practices) presents to us today is based on far older tendencies than a 1947 post-war constitution would prescribe.

  10. off topic ( well, kind of on topic) alert:
    Don’t know how many here are aware of the gang at this website:

    But they are sniffing about on the same trail as here, in my opinion. Yes, (one more bookmark??) there is only so much time to read, but there are some insights and leads to further resources to be had here. Wry humor sprinkled about is a bonus. A bit more focus on the political than the sustainable/food side of things, but definitely concerned with some of the down sides of centralized power structures.

  11. Quick response to some of the above points.

    Agree with some of Ruben’s comment, but I think research generally shows rich individuals as well as rich countries to have outsize carbon footprints – at present I only have Chancel & Piketty’s paper to hand where I think they say average consumption-based emissions in N America are 22.5 tCO2e/capita whereas for the top 1% of US earners it’s 318 tCO2e/capita – I think Sam Bliss & Giorgos Kallis have also written on this somewhere. Generally, I think a more equal distribution of wealth & income between & within countries would be good for emissions and other environmental outcomes. But I also have my doubts about various aspects of UBI. Aaron Benanav’s book that I’ll talk about in my next post is quite good on the topic.

    Thanks John on Japan – an interesting case in many ways that I’d like to learn more about. I’ll be at a conference there next week where I hope to do so … though unfortunately only online…

    And thanks for the link, Steve – I’ll take a look. Front porch republicanism and similar approaches are looking increasingly worthy of attention to me…

    …whereas the disturbing scenes from Washington DC and some of the state capitols are suggesting to me that the republicanism of the GOP and some of its leading figures is looking increasingly unworthy of the name. My prayers are for peace…

  12. Regardless of its (murky) origins I believe the important question is really if there can be a market economy without capitalism? Many seem to believe so, but I nevers saw a coherent presentation or any case from history of such a creature.

    Obviously, this doesn’t mean that the existence of markets mean that there will be capitalism. But the existance of markets is not the definition of market economy as litte as the existance of money or property is the definition of capitalism. If we define a market economy as one where markets is the main distribution and allocation mechanism (for goods, many but not all service, labour, land etc) and where there is private property, profit and competition I fail to see how such an economy will not very rapidly become also capitalist, if it were not already at the onset. Which is also why the market, today, the main capitalist institution regardless if its origin is there or in state-big man collusion.

    IF such a market economy forbids the accumulation of capital, then perhaps it could keep being a market economy without becoming capitalist, but it is hard to see how such a society could look like. The sharp heritance and gift taxes you propose in your book is of course a step in that direction, but certainly no enough.

    Markets without competition, or with extreme regulation of competition, is clearly another thing, but that is not an market economy. And the difference between such markets and a planned economy is not that big. After all also the Soviet Unions had market where people bought the stuff they needed. Because the price was regulated – and low – queing and not wealth was the way to determine who should get what (not counting the nomenklatura of course).

  13. Thanks for the further comments. Nothing to add really about banking & Japan, but thanks for the debate.

    To Gunnar’s points, it seems we agree that there’s a distinction between market societies (including money and private property) & capitalist societies.The former preceded the latter by millennia, so it seems plain to me that they don’t inherently lead to capitalism. But the pressing question now is whether it’s possible to de-escalate capitalist societies into market societies. The answer to that has to be yes to some extent, because it’s something that governments have long done and still do. But they don’t do it enough to challenge the systemic logic of capital. As I see it, this logic revolves around monopoly, economic rent and a strong focus on gaining monetary returns to capital. These could be eliminated by a government or governments, but only with widespread political support – including support from key powerbrokers (such support would probably require a cultural or religious framing, linking to Kathryn’s comment). Or they could become non-functional with the elimination or partial elimination of centralized governments. In my book, I discuss (briefly) both scenarios. Neither of them seem especially likely just at the moment, but in the long-term I think the latter is more likely and does afford some opportunities for creating more sustainable and equitable local societies (which is not the same as saying I think that’ll happen widely). More likely in the short-term, I think, as mentioned in my book and in a recent post, is a broadly fascist or ‘fortress north’ approach sustaining capitalism in the rich countries – but that kind of politics isn’t stable and doesn’t address the underlying frailities that are driving it, so it doesn’t preclude small farm societies emerging in the longer term. Some good news to end with, then!

    • Perhaps I wasn’t clear enough. In my view a market society (or a market economy) as outlined in my comment is intrinsically capitalist – which is not to say that markets are capitalist (as little as money). I can’t see any examples of market societies in the past, if you define them as I did with markets being the main mechanism for distribution of goods, services, land etc.

      I believe state or class are secondary in this discussion as the market imperatives of competition, accumulation, profit-maximization, and increasing labor productivity will – inevitably – create capitalism, if it wasn’t already capitalist.

      In essence I think the commodification of everything is both an essential feature of capitalism and a root cause for many of the ten crises you mention in the book.

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