PERSPECTIVES ON WORK.

WELFARE AND SOCIETY

SERIES EDITOR: IAN CLEGG

The
Development
of Capitalism

Si man Clarl<e
 P[RSI'ECTIVES 01'1 WORK. WELFARE AND SOCIF.TY

The Developlnent
of C�r.t�li�'n
Simon Clarh�

The Pcr.'1paclive hooklets give simple introductions,

in convenient form, to the workings of key
areas of British society, such (IS the unions,
housing, the law, together with the general
background of class-structure, capitalism,
relation to the third world. EssE,ntial data and
informed argument from a broadly left-wing
standpoint, together with book-lists for further
study. provide a unique aid for students of
economics, politics, sociology and for the
general reader.

The Development of Capitalism illl"lyses, in a

lucid and compelling way, the economic and
politic,,1 factors th"t brought into being (or
failed to bring) capitalist o rgani ; at io n of society
'

in specifk historical sitllations, togethe r with

those r"ctors that continue it in heing through
its different modifications.

ISBN 7220 7402 6 40p non-net

Sheed and Ward Ltd. 6 Blenheim St, London

WIYOSA.
Perspectives Oil work, welfare and socidy

Series editor: Ian Clegg

TilE DEVELOPMENT OF CAPITALISM

Simon Clarke

Sheed and Ward· London

iii
First published 19H
Shecd and Ward Ltcl, (j IUelllll�ill1 Street,
I,uncloll WI Y OSA
© Simon Clarke 197·1

This honk is sct in I I Oil II point Baskerville

I\lade ,mel printcd in Grc�al Britain hy
Ey re & Spollisw()odc Limited
a I G rOSH'nor Prl'ss, Pori smnllth

IV
Contents

Introduclion 1
I Early c api t ali sm 7
(I) A capitalist class 7
(2) Tlw d ecay of fcudal s ociet y 10
(3) A new class 15
(4) The rise of capitalism in England 17
(5) The failurc o f the new class to arise 20
2 Later capitalism 27
(1) The context trans formed 27
(2) Investment oppor tunities 34
(3) TIl'
l market 37
(4) Frcc labour 43
(5) Agricu ltural revolution 47
(6) The s tate 50
Bibliography 55
Introduction

In this booklet we are concerned with the developme n t

o f capi tal ism. B u t we are not concerned to st udy the
historical developme n t of capitalism in any parlicular
country. I nstead we arc concerned with the most
�eneral fea tures of the development of capi talism, and
III par ticular we arc concerned with the cond i tions
which mus t be sal is fied if capitalism is to develop at all.
If we are n o t s tudying the developmen t of capitalism
for a h istor ical purpose why are we studying i t? For
essent ially two reasons. Firs tly, and quite simply,
because the study o f the origins of capitalism can throw
considerable ligh t on the nature o f capitalism itse l f and
so on con temporary society. In this hooklet we do not
draw conclusions about the nature of capitalism,
largel y for reasons o f space, hut the reader may care to
think about the implications of the points made for the
analysis o f contemporary socie ty.
Secondly we arc interested hecause. for good or ill. a
large propor t ion o f the underdeveloped cOlin tries
today are trying to develhp their economics along
essent ially cap i talis t l ines, albeit with suhsta n l ial state
intc lven tiun. So I he historkal eltperienn" o f capitalist
development will inevi t ahly be o f vital impor tance to
an unders ta nding of the problems which sllch develop·
ment confro nts in thl' underdeveloped cou n tries. Th is
is discussed in a complementary booklet in this s(�ries.
Problems 0Igrmullt in tilt' third world.
What do we mean hy ca pitalism? We do not mean
simply production for the marke t , or even prodl\(: t ion
for profit; nor du we mean the lending of money for
interes t . These arc charactl"r is l ics, essen tially. of any
lIloney economy and , as such, are found as much in
ancie n t Rome as they are in modern Bri tain. We want
the tl'rlll ',�apitalislll' to dcsl'ribl' a particular type of
socil,ty, the typr whkh Britain, Fralln'and the United
Slales have bl'en since Ihe end .of the eighteenth
ccntmy, A Iype of snciet y in which l.he wlwle snciety is
acljuslec\ and adapted to a parlinllar Iypc of pro­
duction. This typl' of production, called l"<Jpilalist
produclioll, is that in which the labourer cloes nol own
his nU'ans of production ;lI\(l the oWlll'r of the lIIeans of
prOdUl"lioll dOl'S nol labour, '1'1,,' Iabuurer works fllr a
wa�e; Ihe oWIll'r of the means of production, of
machines ;lI1d raw malerials, sels the worla'r to work
with thl�se means of produci ion, selling till' prmluci OIl a
profit. A capitalist sm:iety. is onc dominaled by such a
typc "I' production, a sociely in which OWI1<'rs of the
mcans of production confront workers who have no
means of production in the labour marke!, in which the
former buy Ihc lahour power of the lat It,-. TedmiGllly
such a suciety is characterisl'd hy Ihe <h'minancc uf
factory production, because il is only with Ihe develop­
ment of factory production that thl' indep<'II<kut
labuurer workin� on his own an:()unl, with his own
tools, ,:all no lon�er compete with the capitalist
cmployer. Socially SUdl a society is charal�terised by
thc dominance of thc two antagonistic dasses or
capitalists and proletarians, howcver many inter­
mediate strata Illay interpose thclllsl'lves hetween the
two.
In Ihis hooklel we shall lind IIII' sourn' of om
expl.mation in e("onomic dl'wloPIIH'lIts and in political
conllicts (whit-h in turn can he explained in terms of
economic: illtl'rests). This docs not ill any way imply
th;lt lhi!; d('vdopmclIl IIf capitalislll was wholly deler­
milled by !;uch ecollomic dl'vclopmelllli, Hut it is to
claim Ihal Ihi!; devdopmellt, or the failurc of sud I
dcvelopment, can be !;atisrarturily expbillccl in sllch
terms.
This is a vicw which mallY sociologi!;IS lod,,>, wuuld
contest, usually b;lsillg themselves on thl" work of l\lax
Weber. Weber concedcd lhal the material, ;U1d partin.­
larly the ecnnomic, causcs were primary in explainin�

2
till' development of capitali!;m. But he failed to an'ept
that tlwy provided a surricient explanation. lie was
C"lmcenwd to '.:omlmt a particularly crude form of
1\1.trxist interpretation of the development of capi­
talism which wa!; then current in the GermiUl Sud a l
IkmoCfatic l'a rty and whi!"h dC 'l I ied ideology any
indl'pendent role in the historical prmTss. Weher
showl'd how the ideas of the early capitali!;t!; , the
so-called protestant ethi(', shaped IIw e arly devdop­
m ent of capitalism.
It would take a fool to claim that the ideas of the
early capitalists were wholly dc·terminecl by their
economic situation and their material intere!;ts. And it
would t ake a fool to assert tha t the way they reacted to
their !;ituation was not mediated hv lheir heliefs. nut
the vital issue is not whether the�e helief!; had any
effect on the historical proces!;, butjllst how significant
this effect was. Did the beliefs of the early capitalists
shape their behaviour in fundamental ways, or did i t
merely serve to rat ionalise actions which they would
have performed whatev('r their beliefs? \Veh('r thought
that the devdopment of capit alism by ;\ new class of
men al!;o required completely lIew ideas, ic\eas summed
up in the protestant ethic, ideas which derived in
Europe from the thought of Calvin. And he ar�lIed that
Calvin's thought could not be explained in economic
terms. lie hacked up his argument hy showing that the
oriJ,rinal (:apitalisls did indeed tend to bl' protestant s ,
.md hy a w('allh of cOlllparativc study showill� that OIH'
( 'ould find slI(lpos('d economic caus('s of capitalism in
other times and places without any capit alist devcl op­
ment, a fact he explained by the ahs('llce elsewhere of
this protestant ethic.
Wehcr has been critici!;ed on many different
grounds. Tawncy argllcd t ha t Calvin is not calvinism,
that it was (Iuitc likely that the earl y capitalists adopted
calvini!;m because it provided a userul rat innalisation or
t hcir situation, rather than that calvinists took up
capitalist enterprises. Weber fails to show how it
happened that the calvinist ideology should impel a
class t o invest in c:lpitalist ent erprise at ex:!<:tly the time
and place in world history at which that cbss had the
facilities to invest anrl at which s llch investment was
possihle and p rofit ahle . And Ihough Weber traces the
implications of the calvini�t c1oc\rilH's, he rail� 10 orfer
any explanation or Ih("l11 hi ms elf. In particular he fails
t�) explain the di I lcrcnc cs Iwl w een C,lvin and cal·
.
VIIlISIll.
Robertson has shown that, ;IS it rclatl'rlto track and
invcstment, catholic doctrine was not much difrerent
from protestant, allrl thai thc calvinist doc tri ne had
originally been directed aga in st capitalist enterprisc,
being vcry trariitioll;,lisl. Brcntanll made the same
poinl, ancl, like Pin"nne afler him, showed clearly h ow
th e rdn';mt ethic p rece ded Ih e reformalion. Yinge r has
also shown ho w calvinist doctrine could lead to
profoundly anti·capitalist heliefs. Still others h ave
denied Weber's conten t ion Iha t, for ex amp le hinduism
,

is profoundly antagonistic to capita lism.

The conclllsion can o nly be thai Weber's p oint is hy
no means established. lIowevn i m portan t il may he we

cannot, in the short space available, e n te r into a debate

with Weher's p o sit i o n We shall merely leave the rearlcr
.

to make up his o\'Vn mind. In I his hooklet we shall

explain the success or failure of capitalism to develop ill
purely material terms, ill terms of Ihe m;ltcri:ll sitllation
and material int eres t s of socia l grollPS, We shall aSSllme
that ideological factors h:lve heen secondary, that they
h ave afkcted the rorm of development or lack of
development hut not its direct ion. If I he reader judges
stich all e x p l ana ti o n 1lilsatisLldory he may care to turn
back to Weber.
The posit ion of We h e r sh ould he distingll ished
sharply from that of a lllllnh("r of Illode rn sociologists
who den y any role to material rac(ors, who explain the
development or capitalism n:clllsively in trrms or a
protestant ethic, a spirit of c apit ali sm or a logic of
industrialism. Such pur e l y idealist interpretations ex­
pla in ncither th e origin of the ideas nor the d cwl op ­

mcnl of capitalism.

4
 We have seen that the ess ential fealme of thc
capitalist mode of p r oducti on is t h at it is a system
based on thc employmcnt of propcrtylcss wagc
labourers by owners of Ihe m eans of production.
'

Clearly for stich a system to establish itself a class must

arise cndowed with sufficient capi lal to afford thc
requisite mcans of production, inclined to inv cst in thc
developmcnt of productivc entcrprises, facing pro fit·
able investment opportunities, and having sullicicnt
chcap wage labour available to it. It is thc ful fi l ment of
t he sc conditions which we shall investigate. To a
considerable extcnt thc fulfilment of thesc various
conditions constitutcs a number of differcnt aspects of
onc and the same process. It was this pr ocess which
I\'larx described as the process of primit ive acntrnu­
lation. To simpl i ry our treatmcnt of this pr oce s s we will
dea l with its different aspeCts one at a time, drawing
togcthe r the various s t rands at the end.
1
Early capitalism

(I) A CAPlTAUST CLASS

TIle first conditiun which must be sa tisfied before there

can be a beginning to capitalist develop ment is that
capital should come into the hands of a p rosp e c tive
capitalist c1a.'is. Once capitalist p r od u c tion is estab­
l ished it can develop by accumulating its profits, indeed
i t is the essence of the capitalist system that it must so
accumulate. B ut a certa in amount of capi tal is necess­
ary for capitalist production to s ta rt at all, and for a
capitalist class to be established. This capital, b ec a use it
is a precond ition of capitalist production, must come
from outside the capitalist process.
It is very impor tant to be clear thaL whaL we arc
dealing with is the beg i nning of a capitalist industrial
system, no t just of one factory organised on proto­
capitalist lines. Thus what is required is that enough
capital should come into the hands of a prospective
capitalist class to establish a certain minimum exten­
r
sion of c apit alis t rodlll:tion necessary tn found a
capitalist system 0 production. The reason for this is
simple. ·llie dynamic factor in a capitalist economy, the
factor which co mpels capitalists to reinvest their
profits rather than squandering them in consumption,
wh i ch compels them to adopt the most modern
techniques and so p rodu ce most efficiently, is not any
puritan mut ivat ion of the capitalis ts, though such an
ethic may ra tionalise their actions. II is , i nstead, the
cum pulsion imp osed by competitiun in the sys te m
i tself to maximise prorits and to accumulate c a p i tal as
.

the absolutely necessar y condition for re t a i ni ng capital

i n tact, let alone expanding it. If a fact ory is not lip tu
date, i ts equipment nut efficien t , then it is worthless.
 A cap i talis t who docs 110t continuously reinvest his
p ro fits will find tha t other capitalists, each trying to
s teal a march on the res t, arc in tro ducing newer and
more crficie n t machinery, producing more cheaply and
so undercut t ing h i m in the ma rket. His old mach inery
becomes ou t of date and, hecame it can no longer
produce e fficien tly, loses all but its scrap value. So the
c o mpet i t ive pressures o f other capitalis t producers,
a cting through t he markel , compel each capitalist
con t i nuously to i nnovate. But in order t:> innovate the
capitalist mus t h ave resources to huy new equipment,
anel these resources can only come from his pro fits.
Fa ilur e to cam su fficient pro fits to buy the latest
m achinery condemns a capital ist to facing continuo
o usly fal ling pro fi ts. The ca pitalist has tn keep nlllning
in order simply to s tand s till. If a capitalist docs not
maximise h is pro fits in the long run he ceases to be a
c ap i ta l is t . So once the capital ist system is established
q ues tions o f mo tiva t ion of capital is ts , o f puritan ethics'
are quite irrelevan t . And indeed l\'lax Weher was well
a wa re of this. lie was concern("d wi th the motiva t ion of
gi
the ori nal enl reprene urs , the men \\'ho .began to
e xtend produc t ion before capitalism eSl.lhlis hed itself
as a syste m.
The situat ion of the cap i ta l ist is (I uite un like that
faced by the lan dlord or merchant. Though economic
imp rove me nt will increase the re turns o f either, t heir
incollle docs not in any way depend on such improve­
ment for i ts very existence. For this reason landlords
and merdla n ts i n general do not seek to maximise their
econo mil- returns in the same way as the capitalis t. 'I'll('
landlord may fail to keep his estates in good repair, he
may fail to improve or conserve the land, he may stick
to o u tdated techn iques , but still the land is valuable
a n d s t i l l the rents come in. In Ihe same way the
merchant is always guaran teecl some mark-up on the
guods in which he tracles, however inefficiently he may
do so. nu t the capitalist who falls be h in d is as good a.o; a
pauper.
No w for these pressures to come to bear on a
l a pi tal ist it is necessary for the Ci,p i t alist system to be
o

extended enough. for there to be enough cap i talist

estahlisllJnents. for production t o he compet i t ive. > t o
prevent the possibility of the cap i talist si t t ing b a c k and
gelling fat on monopoly profits without anyone
cUl l i ng the ma rket from under his feet . It is only when
the system reaches such an extension that it acquires i ts
own dynamic and can truly be said to be a ca pi ta list >

syst em of product io n For the system t o reach such an

.

extension it is not enough for one moUl t o reinvest t h e

lrof i t s of his small workshop u n t i l h e even tual l y h as a
I a rge factory. It is necessary for many ractorics tn be
establ ished more or less simul taneously. and ror t h is to
happen it is nec ess ary for a substantial amoun t o r
cap i t al to be at t h e disposal o f a cltlu o f men who w i l l
esta b l ish such factories.
With the development of cap i tal ism the scale of
production s teadily increases and this means that
la te-comers have to build ractories which arc much
larger if they are to produce economicall y. Thw; a
nmntry which is to develop a ca pi talist sys tcm of
produ c tion today must find a correspondingly larger
amount of init ial c ap i t a l t han ror example eigh t eenth
century England. And because of the discont inuity in
p roduct i on which requires that production be from a
large factory the accumulation must also be more rapid
i f t he development is to be dynamic. I t is no L only
impatience which dktates t h'lt t he process of primi t ive
a("Cumul a tion be comp le t ed in years rat her t han
decades or centuries.
We may often read that the indust rial revolut ion in
England was the crea tion o r men who started w i t h
small fac tories and reinvest ed al l t hey could s o that
their wealth grew. While t his is par t i al ly trut' i t is
mislea d ing What is crucial is that t here wert' many such
o

men. each of whom s tarted w i t h a smal l fact ory. Men

had worked hard anel saved hard to aCCJuire weal t h from
t ime immemorial. B u t wh("n they had acq uir e d a
certa in amount of wl�al t h they would usc i t t o es t ab lish
themselves in the pos i t ion t o which they aspired.
usually hy huying an estale. There is no reason 10
belic"l� thai the early capitalists would have hehaved
any diIT"J"('nlly, indeed many e1icl aspire to large estates
and high social posil ion. Thl: crucial dirrerence this
lime was thai once they had slarleel Ihe process of
ac:nllllillatitlll Ihe compelilion frollllllllC'rs like Ihem,
ancl rrom imilalors following Ihem. was such thai they
c(lulcl nol slop. on pain of hankruptcy. And if they did
wish In scll Iheir factory Ih('re hael 10 he someone 10
buy il who woulcl continue il along capitalist lines.
Gradually I hl' marks of stalus rdlected the changing
nature of weallh. The lar�e eslalc hegan tn mark the
wanton allcllhc idle rather than the eSlimahle man who
had 'earned' his w(·allh. II hecame the ruk for Ihe Lmly
weal1hy to be mnsl discreet, leaving th,�ir wealth to
grow rather Ihan Ihrowin g il around.
Thus a weal c1eal of capilal had tn come into Ihe
hands of a prospeclive capilalist class, a class that
would huild faclories rather than spend lavishly on
consu mpt !Iin III' s(·,'k In establish cst at es.

(2) TilE DECA Y OF FEtJDALSOCIETY

When' such a class clid arise ill the end, it arose out of
lhe decay of feudal sClciet it'S. In order to appreciate the
condit ions fllr this emergence we must lirst look briefly
at t he r'�ll(l;ll mocle of production and part icul<trly at its
w f!lkllcss('s.
llJltimatdy Ih,' wcakness of feudal socic'ly resled on
lhe ext ITIll(' illdricien('y of Ihe feudal mode of
prodilci ion, hoi h as a sys/{'m of product ion and as a
system of (�xploitat ion. Where a parasilic, .md generally
nhsenl, lancllnrcl class appropriat ed I he agricultural
surplus there was no incc'nlive ror Ihe din'ct prodllccrli
to incrcase production or to improve techniqucs. They
knew rro m hilter experience Ihat if Ihey produced
more the' lanclowner wmlld take all or the increalie and
perhaps e\'en more. And living at or helow the
subsistence level, they lacke'd the means 10 crfect
imprnV(·l11c·nlli.J The landowner, hring no farmer,

10
tended to have neither Iheans nor inclination to compel
his serfs, workers or tenants tu make any improvement
in techniques of production. lIis only answer tn an
increase in demands made on him was to try to extort
still more from his peasants, who were already at
starvation lcvcl.
At the same time the fcudal systcm was an in·
dficient means or exploiting the peasantry. Although
overall the pcasantry were ground down harder and
harder, the incfficiel1('y of estate administration. the
customary nature of t he exactions. and the developing
political weakness of the landowner made it possiiJle in
some countries for thc richer peasant tu grow. ulti­
mately at the expense of the poorer, to impro\'c his
land and to gain from the increased productivity
himself. This was especially true of gains to be made
from nuctuating priccs. Of coursc thc landowncr was
often strong cnough and vigilant cnough to nip such
dcvelopments in the bud. But at othcr timcs he waS not,
especially whcn fat'ed at the samc timc with a rcbdlious
peasantry and with a labour shortage.
This inefficicncy of the feudal modc of product ion
becomes important when we realise that while the
income of the ruling class was virtually stationary. its
expenditure on warfare and on cxpensive living was
steadily increasing. At the same time the requirements
of the state increased even more rapidly. The reaction
to this need for increased rcvenuc was the only reactinn
possible - to incrt�ase still further the oppression nf the
peasantry. llut this further squee,,-ing uf the peasantry
served merely to rcact back on thc situation of the
landowner to make it still worse. The opprcssion of the
peasantry led to a night from the land, and to a declinc
in population growth. so leading to lahnur shortage and
still further reduced surplus and weakened landowners.
And it led to revolt. t he suppression of which absoriJed
still morc scarce resourccs.
Of course this decline was not a uniform �)r a
continuous proccss. Other ractors intervened to ameli­
orate the position. or to exacerbate the decline. But the

II
gelle .... 1 allo 101l� Lerm tendency was as descrihed. all
inevitable dedine. a stc-ady c-rosion of PoliLi('al and
econoll1i(' power. There were a Illlml)l'r or nlc-aSllres
which Ihe landowners ("ould lake 10 improve Lheir
posiliulI, and which did case Iheir silualion in a lIumher
of countries al dilTercnl linn's. In Ihe ('arly stages of
feudal decline tlll'y could ITsorl to vlClrrare and
plunder. But Ihis was a COSily, and ofIen unrl�muner'
ative, pursuil. which only s('I"vl'd lo accelerate Ihe
decline of the syslem as a whole. l';'lter they came Lo pin
their hopes on Ihe "rrowlh of Irade. The)' did this
essentially in three ways. The first was Ihrough the
plunder of ('olonies. AI this Spain was supremely
success rill and Ih(' wealth derived from her American
inleresls sl'rv('d 10 maintain thl' dass of f(�udal land,
owners long heyond their time, parlicularly hecause
they were strong enough politit :llly to dominale Ihc
-

merchanls. Secondly, Ihey could gain from Ihe e"p:m­

sinn of trade by deriving illcomc from laxes, lolls :11U1
the sale or llIono»oly privileges. The snccess of such
clll<!rpriscs played an importanl parI ill maintaining Ihe
posi tio n or l:uulowner5 ill Germany and haly, and
financing the slale in England and France. Thirdly, and
as a last resort, the landowner or the stale l"Illlld sink
into indebledness, borrowing from the urh,ln mcrchanl
class. By I he lime lhis final slage was rl'41ched the fcudal
system was ill an advanced stage of decay, hilt it was a
stagl' ultimalely rl'ached eVl'rywhere. Udon' consider­
ing its implkal ions wr mnsl l�xamilll' lllC' brrowlh of
trade and till' merchanl class.
TI1l' Illl'rdlanl class arnSl' in the lowns of Ellrope
with the improvl'lI1l'nl of COlllll1llllicalions and rebirth
ur the �Jrclitcrr:lI1ean trade ;Lo;so("ialcc\ wilh the political
stabilisat ion or feudal E . ...ope and pOlrti("ularly Ihe
reimpusition "i" cenlralised authority aftl'" the dark
agl's. There were essentially tWII dirrerent pallt'rns uf
urball dt'vclllpmcnt which had rlllldanll'lltally dirrerent
implicatiolls for the cuuntril's whidl cxperic'nced thcm.
III those ("ountries with strong 10(":11 power- and a weak
central authority Ihe towns tenclecl to pilI Ihemselves

12
under local protec t ion, which mea n t that they were
under the con trolu f the local landowning da!!s. On the
other hand in coun tries where the local poli tical
authority was relatively weak and the central au thority
stronger the towns tended to pu t themsclves IInder the
pro tec tion o f Ihe crown. The former si tllal ion parI iCII'
larly characlerist'd I taly and Germany, tilt' laller mort'
France and England.
The dirrerent nature of Ihi!! alliance in di fferent
countries sen-cd tn i ncrca!!e still fur ther the dominance
o f local powers in the former case and o f the na tional
power in the laLLer. And these power!! were nece!!!!arily
po tent ially in conrlict in a feudal society, since each
competed for a share of the fixed surplus. This connict
came ou t into the open where the monarchy managed
to establish an independent basis for pol i t ical power. In
Engl;md the crown lands gave the monarch sllch a basis
from the hegin n ing, and the same was the case i n
Tokugawa.J apan. In other coun tries the alliance (I f the
crown w i th the towns gave the crown i ts independent
posi tion (I f power, a position from which it could assert
i ts own interests against the local interes ts of the
landowners. The period of alliance between monarchy
and the urban merchant class, in whidl the monarchy
depended financially 011 loans from the merchants,
while it gra n ted pro tec t ion and monopoly privileges in
re turn, WitS the period o f absolutism, shown in its
classic form in France. This played an importa n t part in
preparing the grollnd for capi talism by u n i fy ing the
nation and the national market and by a!!serling the
au thority o f thc s t ate ovcr the whole na tion.
On Ihe other hand where the towns were IInder Ihe
sway o f the local lilndowners the loam; of the merchant
class st�rvcd to prop lip the local landowning class and
to endorse its IO('al dominance, and so strengthened
still fur ther the reJ{ionalism which necessarily impecled
the development of eapilalism.
The merchant!' had risen to their posit ions oC
strength on the basis oC the economic embarrassmen t
oC the land()wnin� class. and in the gap crea tc(1 hy the
intl'rnal divisions of fl�IHlal soci'�1 y. Bl'cause of this
weakness and I hesl' divisions Ihe landowning class was
nol ill a position to impl'de 1111' hJ'fOWlh of Ih(' merchanl
class nor assert Ihl'ir ullchall('n�ed Olulhnrity over the
tOWIlS, ,kspil(' the fael Ihat lh(' mere-himls' surplus was
d('riv('d ult illla Id y aI Ilwir l'x perlS('. Ihough foreign
pllllllkr oftl'n ,"onlrihul('d hrrl'atly 10 its incr('ase. But
the nwrchants wer(' forc('d 10 sl'('k proll'ction of the
local land(lwnl'r or t hl' sta 1(' nol only a�ainsl potelltial
rivals who might ("hallen�l' hard-won mOllopoly
posilions. bUI also agaiml Ihe oth('r ur ban classes,
particlliarly Ihe craflsl1ll'll. It did not lak(' long for the
merchanls to assume political control of the h>1..ilds, and
so 10 cOlllrol the h'llild rq�lIlalions. At first thl'
restrieliOlls represellt,'d by Ih"5(, regula! ions were in
lhl' merchants' OW11 interests, restrit:ting and controll·
ing producl ion, and so l'lilllinating competilion. But
once in powl'r 511111(' of Ilw l11l'rl"ilants reilh5ed that they
could enlarge their profits slill further by securing Ihe
products in whidl thry traded al r('duce(1 prices. And
Ihis they could only do hy Ilnillillgguild regulations­
hy employin� l ahour at low wages which had nol
completed proper apprrnticeship. OfIen �lIch labour
wOllld '-'e found ill Ihe cOlllltrY5id(', where Ihe guild
allthorilY did Ilot rUIl. Th(,merchantsccrtainly did Ilot
oppos(' gllild restriction, Ihey merely suught to operate
il to their advantage.
This devl'i0pllwnl, by which prl'viously independent
crafl produclion, carried on hy th(' craflsman with his
own tools, was sllhordinate,l to capilal, ("'11"ri('d out hy
wage l ahour ming tools and raw malerials owned hy lhl"
Jll('rThanl, Of wilh produclion soldy nmlrolled hy the
markel. rl'prl'senls lh(' wry hq;inning of capitalist
('nl(�rprise, 01" produclion by wa/-:(' la),u\If. Hut as yet
this was only a rormal d('vdo»menl; Ihe Glpitaiisl
could only ('xpluit lire work('r because (lr his monopoly
»O\vcrs. This development is first ohs('rved in Ih('
Ncthcrlall(\s and It.lly around the Ihirtc('nth ccntury, in
England not unlil lh(' fiflel'nlh cenlmy. With it an
exlcll(kd strtlg�le hetw('('n merchanl and craftsmen
over coni rol of the gu i lds and implemental ion of guild
regulations developed. In Italy and the Netherlands it
was this conflict that forced the merchant class to rely
politically on the local landowners. In Britain and
France the al l iance was bel ween the large merchant and
the state.
Although borrowing from the merchant classes
could stave off disaster for the landowners it could no t
poslpone it inde fini tely. The dehts had to be repaid or
the estates loslo So ultimatdy the resort to the loan and
the morl.gage only servt:d to weaken the landowning
class s t i l l further. Politically it derived streng th in some
countries from its a l l iance with and power in the local
towns. Somet imes landowners would themselves derive
�reat riches from t rade by this means. Bu t in those
countries in whidl the towns served only t o strengthen
the monarchy aga inst the local landowner, political
dec line for the la l l er was as rapid as econom ic. In such
countries the landowners were in no posi tion to
p revent the dirrere n t ia t ion o f the peasan t ry, which led
on Ihe one hand I () a class of i mprov i ng yeoman farmers
and on the other to a rural semi-proletariat. And when
i t s resources ran out it was in no position 10 preven t the
merchants foreclosing on the morlgages il had raised
and taking possession of the estates.

(3) A N I�WC I.M;S

Bllt still this dt�cline or t he aristocracy, Ihe rise o f
com mercial activity and the merchant class. did not
surfice 10 lead 10 Ihe development of capilal ism. If it
had England wlluld cerlainly not havt: been the first
capital ist cOlln t ry. The real dlallenge to the old order
can only come from a new d'L"s. We ohviously canno t
expect the feudal landowner to havl' in it iated that
capi talist development whkh finally undermined h is
posit ion Nor did they have the resources, as their
.

income was lwavily committed to ost entatious· con·

sumptioll, political advance, feuding and warfare.
Some did make improvement s to their l'states. fol low-

15
ing the example (If the ,.,'1"owing yeomanry and of the
merchant investors or the lanel. Some even invested in
capitalist induslry once it was well estahlislll'd. Until all
hop e was losl, and oftt'll even he y one l , Ilw)' dung to the
dream of resurrecting the old order .
But what ahcml the mC'rt'hant class? We have se'en
that as early as Ihe thirtC'C'lIth ("entury this class was
investing its capital in production. Was Ihis the
bc�innil1� of capitalism? The answer is I lut it was not.
The reason, as we have already seell, is Ihat the
capitalist system only really ta kl' s off with the intro'
duction of fa(�tory produclion. It is unly with this
devcloplllent that the system "('(Iuires its own dyna m it-.
The slIhnrdination of product IO n 10 capital in thir·
teenth -century Italy aml lhe Netherlands was pili to an
end, Ihough only temporarily, with the resistann' of
the crartsmen. This suhordination depended essentially
on the merchants' desire to conlrol and restrict
production, while the clevelopment (If capit alism re·
quireel the expansion of production to sudl a level Ihal
new me lhoels hccame possihle and pro/'itahle. The
merchant saw the SOIlf('C of profil in Ilw diITcrrllce
bcLween the huying and selling price, ,md in the
exploitation of ,. monopoly situation. For the capi.
talist, profit lay in the steady expansion of produc tioll
unbounded hy any legal or administraliVl" f("llers. '1'11(.'
capitalist was concerned wilh the introduction of new
techniques of product ion. wit h transforlllatioll of the
con ditiolls of production. Thr merchant knrw nothing
of p ro dudion, and where he controllec\ it Ill' IIsecl the
tradit io n al lll et hods. though he derived sOllie advantilgl'
from concentration and rationalisation of p roduction.
He was more conce rn ed wilh acquiring and exploit ing a
mo nopoly position th"n with the relatively pelly gains
to be m ade from ec.onomi('s in prodllction. For this
rea.'Ion the transformation which made the develop.
ment of capilillism an irreversihle prn('c�� had to he
effected by a new c 1as� , a class of men more closely
engclgcd in production than was the merchant.
Although the merchant played an important part in

III
preparing IhC' ground lor GlplLanSI Ul;Vl '''I'........ ....
L, _

a ltho l lgh once Ihat development was uncil-r way, once

hi!' monopoly position wa!' undermined, he WilS likely

10 invesl in tha i developmcnt himself, if hc had not
been mined hy ii, he was nol the man to crfC'('t 11ll'
transformal ion. In fact, prt'cisdy uec:llIse the develop.
mcnt of the IIlll"ellered prodm'lion of capitalism
IIndermined his monopuly, tIll' merrhanl opposed thaI
developmcnt as stron�ly "s he was ahlc. And he
defended not only his own int l'rc sls bill thosC' of thl'
01 her dominant class of relldal sodet y, thc landowners,
and the feudal statc as well. The merchanl class is
always p arasitic.: on the dominant modc' of prodllction.
His trade is with thl' dominant classes of Ihat modl' of
production. In fC�lIdal society he sold aimosl entirely to
court and landowner, his traell' centring on luxury
gouds and military supplil's. Thc interl'st on his loans
derivcd from thc feudal state, Ihe fl'mlal landowncr and
the oppressed feudal pcasanl.
So the story of Ihe devclopmC'nt of capilalism
depencled in tlw end nn the rise 01" a new class from
illlWllg the ranks of Ihe produl'l'rs. Allhongh Ihe
merchanl class, and merchanL capital, dev"loped in a ll
feudal socicties, it was only in some thai the new class
developed, and only in a few thaL it rose to dominance.
Foremost among such countries was England.

(4) T i l E RISEOFCAPITAUSM IN ENGLAND

In England Ihe rl'udal decline slarled earlier and went

further than it did elsewhere. The wcakness of the
feudal ordl'r allowcd a new class to emerge which
would eventually play thc decisivc rolc in the inslal·
lation of capitalism. This new class had Iwo l' ss ential
sources, one a ncw stratum or capitalist farmers, the
other a new slratum of l:apitalist produc�rs. In thc
countryside the diITercntiation or lhc peasanlry and
C'feation or a class of yeoman farmers on Ihe one hand
and rural workers Oil the other took plalT (lver il long
l i m c and prc cc ckd the collapse (lr feu d a lism . Indeed it.

17
was a major agcllt (lr that cnllap�l" It is IIl1t surprising
that the aristocracy could do nothing to suppress this
dass, which mallagl'd to acquire:- all aJ.rricullural surplus
through ill' improvecl productivity, and a share or the
landlord's surplus through price changes which had thr
erfed of reducing real rellts. The f(,lIllal aris\c)(Tacy was
ddlilit at ('t1 by centurics or almost cont inuous war ran',
hy cxpcnsivl' living, hy shortage' of lahour, hy economil­
crisis. Econoll1it-ally up to its ('OIlS in clcht, politically it
raccd a rchellious tenantry and a JIIonarchy which had a
powerful ally in the urhan lI1C'rchant class.
The class of capitalist farmers steadily wew at thc
expense or the:- sImI II landholder ancl the cO.nmon lands,
which W(,rl� rndOSl'(1. Arter I Ill' gains rwm sC'alc� and the
gains rrom raLionalisation had hCl'n l'xhaustl�d ncw
techniques hegan Lo be introduced which re<)uin'd
quantities or capital. Very J.'raclually, properly capi­
talisL agriculture clevl'lopecl, driving from the lanel all
those who did not ke:-ep up, and rai�illg the rarmer over
the landowner as t hl� rl'al power on t hr lan(1. This class
not only cnntrihutccl to the clcvelopmcnt or capitalisJII
throu�h ils development or agricllltUrl', it "Jso invested
early in induslry, diverting its profits into local
manufacLure. cven selling eslatl's in CIrcler to �ct up as
industrialists. lIs deposits in the:- new hanks spreading
over Ihe countryside played an imporlant part in thc
rinancillg or capitalist rllterprisl's ill their ('arly stilges.
The weakness of the aristoC'l"ac), alslI meallt that thl:
towns es("aped their control; whik Ihc monarch,
although alliecl with the m('rehants, dicl nol control
tlwm either. Through tracle and usury a good part of
the agricultural surplus was transrerrecl rrOlll the
control 01" tlt(' landowner to thai of the melellanl. And,
liS we have secn, by the sixteenth century in Engl;ll1d
lhe:- nwrdlanl WllS using Cl part or his capitlll to finance
production. Such merchants w('re particularly thuse
olltsidcrs who wen: ('xcludecl rrulll the IUCTaliw fClH'ign
monopoly lradin� l'omp;lIli(�s and so sought alternative
ways of enril"hill� thcmselves. This product ion was able
to develop outside thl' control of the J.rt.lilds because Lhe

18
divisions bctwcen the statc, thc local landowner and
thc town left thc countryside out of the control of thc
gui l d , so manu facturc was ablc to dcvelop outside thc
town, despite opposition from the craftsmcn. On thc
whole this control by thc mcrchant was hascd on thc
monopol isation "f lcgitimate product ive act ivity hy
the gui lds and control of the markct by the merchant;
though there were a few industries in which the
merchant controlled the means of product ion thcm­
selves, and often he had a hold over the worker hy
extending h i m crcdit in timc of nced. In effcct the
merchant was appropriating thc wholc monopoly
profit for himself rathcr than sharing it with the guild
cra ftsman.
Ahhough we have shown how this suhsumplion o f
production to merchan t capital could not b e the sole
bas is for the developmcnt of capitalism it did set a
preccdent which others fol lowed. These othcrs were
drawn from Ihe ranks o f the craftsmen themselves.
Taking advantag(� of thc eradication of urhan mon­
opoly which had eventually resulted from thc
merchant's incursion into production, and which had
lo some extcnt undcrmined the posi t ion of the latter,
these richer craftsmen sough l ga i n in the only way open
to them. Not being able to cxplo i t a monopoly position
l ikc the mercha nt , they could only i ncrease thcir
wealth by increasing production and by improving the
me thods of production. At the same time the m er­
chants tried to bring production back under firm
control, to recstah l ish and consol idate thcir monopoly
positions. Cnnsc( luently a vigorous struggle for control
of the guilds developed in the seventeenth century, this
time w i th the monopoly merchants defendi ng restric­
tio n , while the aa flsman capitalists sought grcater
freedom of opcration and cxpandcd production. The
state al igned itsel f, not surpr isingly, with the mcrchant
monopolists against thc producers. At the samc timc
the feudal landecl in terests were interested i n suppress­
ing or rcstricting the cxpanding manu fact ure which was
upsctting social relations in the counlryside as well as

19
putting prrslillfe on the labour supply. It was not only
the old reudal arilltocracy which lIO supported the state.
It was joined by many or the parvenu merchantll who
had bought estates and allpired tn land:d status. And it
was oppolled by the improvin� farmers who sought rree
accelill to the marketll for their produce. It was over
thrlle and related iSlilieli that the civil war wall rought.
And from the civil war the new classes emerged
victnrioulI, despite the ract that. inevitably. they h.\(1
had to make many compromises.
Although the civil war represented a victory ror the
newer c1asli of capitalist indulltrial and agricultural
producerll who sought rree and expanding markets for
their products, the industrial revolution, the capitalillt
'take-orr', had to wait another hundred yearll. Part of
the rea.'1on for this was the fact that this class still did
not have sufficient capital in its hands. Gradually it
expanded production, and accumulated capital at the
expense of the producers it dillposllessed, the workers it
employed, and the merchants it undercut. The ex­
plosive ...rrowth of capitalism had to await the com­
pletion of this quiet accumulation of capital. For its
full nuwering it had tn await access to the capital still in
the hands or the large merchants, the proceeds above all
of the trade in goods and men with India and the
Americas. This prod Ud of the merc:lIItilist colonial
plunder only I)('came availahll' for industrial invest­
ment on a I:trge scale when the monopoly position or
the merchants was finally ulldermined.

(5) TilE FAILURE OF TilE NEW CLASS TO ARISE

England. the country which was in the rorefront uf the

development of capitalism, the country in which the
new capitalist class was strongest and the old ord("r
weakest. could not develup into a capitalist country
without an (�xtendcd political strtl�gk. The condition
for success in this struggle was precisely the weakness
or the old order, a weilkness which rinds its origin in the
nature of reudalism itself hut which was exacerbated in

2()
the case of England by a number of other factors. This
weakness first allowed new methods of production and
new classes to emerge, then allowed these classes and
that production to escape the control of the dominant
classes of the old order and finally to overcome the old
order itself. D u t even in England the new class was not
completely triumphant. The civil wilr and I (i88saw it
emerge as the dom inant class, bu t an element of
merchant monopoly remained, some restrictions on
productive activity persisted, the landowner remained
a political power.
It should be scarcely surprising then that in other
countries the developmen t of capi talism suffered
setbacks or never even got off the ground. In England i t
succeeded. It succeeded t o o in France, despite the
relative weakness of the French capitalist class, and the
cont inuing power of feudal agricul ture right up to the
revolution. There the capi talist class overthrew the old
regime, against which it had been weakly struggling for
a long time, on the back of a popular rising. And even
after the rev()l ution the struggle between landowner,
financier, merchant and industrial capital ist con tinued
for a long time.
Nor should it be surprising if in those countries
where the new class'was faced with no indigenous class
of landowners, the whi te dominions and colonies,
capitalism developed relatively rapidly and easily, once
freed from colonial control. Here the new class could
arise because of the availability of ex tensive fertile
/
land, the absence of a class o f arasi tic landowners and
an abundant supply of skille and enterprising immi­
grants. I n all these countries capital could be rapidly
accumulated on the land. This process wal. made the
more crfective because the scarci ty and high price of
labour meant that the land had to be exploi ted
e fficiently and capitalistically. So when labour for hire
became more plen t i ful and wages fell, the profits to be
.
made by the earlier settlers were large.
On the o ther hand in countries like German y ,
Russia, I taly, Spain or Japan t h e n e w rising class

21
s u rre red repeated checks O i l i t s gro wt h from t h e
l a l l <iowninR ari s t ocracy and o ften t h e Il1nch a n t class
al l i e d w i t h i t. The dev d o p me n t of cap i t a l i s m i n such
c o t l n tries had to wai t for t h e r i s e of cap i t a l i s m in
B r i t a i n a n d dsewhere, w h ich t rans formed the s i t u·
ation.
I n Spai n the l a nd o w n i n g c l a ss managed to assert i ts
u n c h a l l e n ged con t rol of the towns when i t suppressed
t h e c o m m W L C 1·OS revol t of 1 5 2 0 · 2 1 . This allowed the
c l a ss and i t s stal e to enj oy the fru i t s of its p l u n der of
th e New Worl d , and t hese richcs served t o mai n t a i n the
st rClI!-,rt h o f fe udal i s m in Spa i n u n t i l the n ineteenth
cen tury. The s t re ngt h o f the landowners was also
s u ffi c i e n t to ensure that no s tratum of rich peasants
e m e rged, for any peas a n t who in c r e a se d his producl ion
knew that hc wou ld merdy fi nd his Rnt increased. This
was freqllcn tl y i n s t i t u tionalised i n Spain, as t he world
over, in sh arec ro pp in g arran gements. To t.hose who
b e l i eve in h O ll1 o o ('c01l 0 m iCIlS a sys tem whercby the
l a n dlord gains in the very short ru n at t h e expense of
m u ch gre a t er long term gains to be derived from land
im p rov e m e n t may appear very surprising. B u t i n fac t
s u c h behaviour , also charac teris t i c o f the mercha n t
who seeks a h i gh monopoly margin on a very l o w
t u rn over, is more uSllal than t he iln a ge o r t h e ra t i o n al l y
cal c u la t i ng econo m i c subject wou l d i m p l y . In the s a me
way Spain 's colonies were securc i n t h e i r relat ive
i s o l a t ion under the fi rm con t rol of the m o t h er cou n t ry
u n t i l the r i s e o r i mp e r i a l i s m in t h e n ; n c t ee n t h ccn t ury.
And then t h e i mperial powers, for t heir own polit ical
reasons, u n i ted n o t w i th t h e progressive c lasses b u t
wi t h t h e rich feudal l an d o w ne rs.
In G erman), and I t a l y the close rclat i o n bet ween
l a n d and t own preve n t ed t h e rise of a s t rong n a t i onal
s tate u n ti l the threat from ot her cap i t al i s t countries
arose in t h e n i n e t e e n t h cen t my , a n d I t meant t h a t the
developing cap i t al i s t class cou l d he domin .. ted pol i t i.
c a l l y by a powerful local a d m i n is t ra t i o n act ing ill the
i n t e r e sts o f t h e o l eI order. I n t h e Ne t h erl an cls l lle r c l l < ln t
capi tal was so powe r fu l t h a t it m a n a ge d t o preven t the

22
i m po si t i o n of tari ffs to protect d o m es t i c c a p i t a l i s t
i n d us t r y f ro m E n gl i s h compc t i t io n , a n d so cvc n t u al ly
allowcd thc l at t e r to dcs t roy i t . In decd , N e thcrlands'
merchan t cap i talis ts inves tcd in the dcvel op mcn t o f
capi talist p roduct ion i n E n gl a nd , whcre t h e r e t u rns
wc re be t t er .
In a few c o u n t r i cs , n o tably in Eastern Europc, a ncw
class emcrged , ch allc ng e d the old order, a n d h ad a
par t i al success, o n l y to fall under the w ing of fore ig n
c a p i t a l , which had supp o r t e d i t in i ts s t ruggl es. Th is
h appened i n Russia. In suc h a case t h e weak bourge o i s i e
coul d o n l y fol low t h c French c xamp le a n d rel y o n
rallying the peoplc, and above a l l t h c peasan ts, t o their
cause. Unfor tunat ely the peop l e were st ro nge r an d
m o r e ab l y led than the bourgeoisie. Thc resul t scrvcs
still as an aw ful w arnin g to those who would seck t o
m ob il i s e the pcoplc i l l t hei r ow n in t c r e s t s . I f t h e re i s
not a cl as s to carry t h c s t an d ard o f cap i t al is m , t h e n
howevcr weal t h y a cou n t ry may be, ca pi t a l ism w i l l n o t
devclop. On thc o t h e r hand i f t h e agr icu l tu r a l s ur p l us is
insufficient to p ro v i d e e no u gh c api t al to finance the
de ve lop m en t o f capi t a l i sm , no am ou nt o f t ransfer can
get the system under way. T h i s is no t j u s t a qu c st i o n o f
t e c h n i q ue or o f s o i l fe r t i l i t y , because w c are c on c e rne d
w i th the s urplus, not the pr od u c t i v i ty of agr i cu l t ure.
The production of a s urp lu s is t y p i c al o f s ys te m s o f
agriculture characterised b y pri v at c ow ncr sh i p i n land,
and this tcnds t o de pend m o re on pop u l a t i o n densi ty
t h om on fer t i l i ty. Thus where p op u lat i on is sparse an d
p riva t e ow ne rs h i p un d eve l op ed t h ere w i l l be no su rp lu s
p r o duced and no possib i l i t y o f p r im i t iv e accu m u l a t i on.
Nor would such a s o c ie t y havc cl asses t o i n s t al l
capi talism. I t is a vcry long way from lribal to capi talist
s ocie t y .
I t I� i gh t be conceivable thai a pop ul a ti on could be so
d cn se t hat , w i t h given tec h n i cal kn o wl e dg e , i t w o u l d
n o t hc po s s i bl c to p ro d u c c a surplus. ] \1 this c asc
land h o l d i ngs will be f ragmen tcd a n d i t " is all that
anyone call do 1 0 s c ratc h a l i v i ng o n h i s own small pIa L
This, perhaps, is the popular im age of I n d i a . B u t i t is far

23
from the t rII t i t : i t has been estima ted that abou t 10% of
India's n a t i on al income goes to owners of propert y and
most o f t h i s represents a/-,rr icul t ural surplus. I t is
however true that landownership in India is very
fragmented, and t here arc a very large nu mher of
people who l i ve on rent income. I n parts of Bengal
Lhere are u (> to fort y di fCerent people in receipt of
di rreren t sorts o f income from one piece or land. In this
sort oC s i t ua t i o n , where Lhe surplus is spread t h inly, a
process o C concentration of land ownership and so
concen tra t io n of surplus would be necessary prior to,
or alongside, a process of pri m i t ive aC(�umulation. Such
a conccn t ra tion of ownership would also be expec ted
to l ead to a ra t ionalisation of production and so to an
increase in s u rplus, a stronger class of landowners and
so, most l i k el y , t o an increased rate of exploitat ion.
Those c o u n tries which Caih.'d t o develop capi t al ism
failed fur d i f feren t reasons, In some, such as A frica
south of t he Sahara, t rihal society clearly offered no
prospect o f capi talist developmen t . In I ndia hy con­
tras t t h e s t rength of the dominan t (-lasses was sufficien t
to preven t a n y compe t i t or emerging. India, in the
seventec n t h and eigh teen t h centuries, was renowned as
a land o f fabulous weal th, though the wealth was
largely t h a t o f those merchan t s who monopol ised the
t rade w i t h o t h er countries. She had a rich merchant and
la ndown i n g class. Uut the merchant class was totally
subord i n a t e t o t he landowners, and tended t o hecome
absorbed i n t o i t . The econumic system on the land,
wi t h i t s ne('d for extensive irriga t ion. and the cons tan t
need for ddence against invaders from the nor t h meant
that the s ta tes were very powerful and the princes
astunishi ngly rich. Thus state and ruling class es e rfec­
t ively furmed a mono l i t h ic hlock against which any
new class that mi ght have emerged would have s t ood no
chance a t al l . I n fact no new class could ("merg(' : in the
c ountrysid(' t here was vl'ry l i l l i e prndlll"tioll for the
market , aJ most all being for res tricted exchange by
barter wi t h i n t he vil lage economy. Thus the small
producer had nei t her incen t iv(" for, nur possibility o f,

24
('xpandi ng his product ion. lie could not acquire' land,
because i t was not a com mod i t y , nor was t here lahour
to he hired. The handicraft proelucer, too, was hound
into the natural economy or the vill ..ge by t h e cas te
system. L astly the towns remained firmly a nd securdy
under the con trol of t h e state. The Indian s i t u a t ion w..s
Iypical of most of Asia.
Th('re is consider .. hle evidenl'e that, in India al leas l ,
the so calle d Asiatic m ode of produc t ion had hy ahou t
-

the six tee n th or seventeent h cen t ury given way 1 0 a

system much more like Lhat of feudal Europe. And it is
dear that the merch ant class during t hose cen t uries,
l ike its contempor.ny in Europe, was inv('s t ing i ts
capital in the rinance of production. There is some
evidence that craftsmen were alst) turning to I he
employment uf wage labour. Whether such .. devdop ­
ment would have ever led to the indigenous develop­
men t or capi talism in India nohoely can say, for hdore
it had time to nourish the Brit ish had arrived in force
and d es t roye d all indigenous indus t ry. B l l t slIch
evidence docs deal a r.. irly crushing hlow 10 Weher's
identification of t h e h indu ideology as the virt llal
an t i t hesis or the protes t ant ethic, .. nd as t h e main
reason why capi talism had failed to develop i n India. I f
i t is t rue that t he h i ndu ethi(� is ullcollducive t o I h e
development of capi tal ism, a s Weher dilimed. t h ollgh
others have contes t ed, then i ndigenol ls Indian capi­
t alist developmen t must be pre l ly concl usive e\'id('n('e
ror t he m inor si","ni ficancc or ide .. s as a call sal r.. c t or in
the developmen t o f capi t alism.
2
Later capitalism

( I ) TIlE CON TE XT TRANSFORMED

The rise of capitalism in one country transformed the

whole situation. I n countries where the prospects of
capi talist developmen t were previously apparently
remote, the capitalist mode of production came to
dominate in a mal ler of years. In Germany and Japan,
in Russia and I taly the dominan t c1a.�ses of the old
order themselves played a leading role in the develop.
ment of capitalism, using the state as their agent, as the
seal on an all iance with the class they had previously
tried to suppress.
This apparent paradox is resolved when we realise
that the risc of cap i t al ism in one country, Britain,
profoundly affected both the condi tions and the
prospects of capitalist development in other cou n tries.
Let us examine this transformation.
The growth of capitalism in Britain initially had a
twofold impat:t on the rest of the world. Firstly Britain
began to supply cheap goods to the world and, in
particular, sought markets for these goods wherever
and however she could. This meant that Britain began
to undercut indigenous handicraft producers and drive
them out of business. Often this undercu tting involved
the use of political, military and administrative
measures, especially in the colonies. Often it wa.� purely
economic. The effect of the weakeni�g or destruction
of h andicraft was to precipitate a crisis in peasan t and
feudal agriculture the world over. Peasants, who had
sough t relief from their crushing exploitative burdens
by enga� ing i n cottage industries, were forced below
the subSistence level when these were destroyed. The
result was widespread peasant unrest on the one hand
a n d a red l l c t i o n o f t h e surp ills avai lahle rl lr t he s t a t e
.lIld t h e (Io m i n a n t classes l in t h e ot her. S o t h e rise o f
ca p i t alism in England s t n lck a t t h e ("1m' of feudal and
peasan t hOi sed soci l, t i es. Secondly Brit a i n 's r'l p i d ly
i ncreasing weal t h carried with it a rapi dly i ncreasing
m i l i t a ry power. To coun t e r such pllwrr a n y p rospel"t iv('
u p po l l e n t or Bri t ain was cOll l pel ird t o ( x p an d m i l i tary
'

ex p e nd i t urr l�llOrmolisly, p i l I t ing sl ill l a rger hurdl'ns on

t h e revenue.
So the i m pac t of t he rise (If capi t a l ism in Bri t ain, and
st ill more when c api t a li sm was ex tended to other
cou i l l ries, was to precip i t a l l' pe as a n l IInn'st as handi­
cra ft was destroyed, to p re c i p i t a t e a crisis' i n t he s t a t e
rinances a s sources of revenlle declined while needs rl lr
ex pend i t ure i n cre as ed , and t o undermine the base of
the indigl'nous monopoly merchants as capi talist pro­
duct s drove I he m from I he ma rke t . To a l esser ex ten t
agricu l t ure t oo was h i l hy com pe t i l ion from I he
produc l S of capi t al ist agricul l ure elsewhere, and t o
s o m e exten t t h is a l so reduced rl'n t s. The re ac l inn to
t h is crisis in di fferen t cou n t r i e s fu nda men t a l ly det er­
m i ne d t heir subsequent econom i c and pol i t ical de­
velopmen t.
Alt hough the devdopm en t of ca p i ta li s m elsewhere
mean t t h a t product ion uni t s in l at e comers had to be
t ha t mu ch larger and more advan<-cd. re( p l i rin g t h a t
much more initial capi l al t his wa s o ffset t o so me
,

ex t en t hy two co mpens a t ing fa c t o rs Fi rs t ly, ro re i gn

.

cap i tal was o rten available ror indusl ri.ll inves t men t .
genemlly taking t h e rorm o r fixed in tercst lnans, o ften
govern men t guaran teed, th ough some t i mes taking I he
form of direct invest me n t . Secondly inteTllOl t ionru
compe t i t ion meant t h a t the ex tension o f the system
did not have to be so great . Foreign compe t i t ion
replal�ed domes t ic compe t i t ion in the mai n t enance of
t h e dynamic of cap i talist accllmulati;m. To regula l e
t h is foreign compet i tion, the exercise of s l Ol l e power in
the int erests of capi talist drvclopment became impera­
t ive. By t he usc of t a ri rrs mill s u h s i d ie s the sta t e had t o
m .. ke sure that the (:(Hnpe t i l ion was not sl rnng enough

28
tn s t i ne the lIew industries, wh ile not being too weak to
stimulate them.
In this way the rise o f capitalism ill Britain precipi­
tated the issue elsewhere. Whereas in England the
condi t ions of capi t alist development had matured over
cen t uries, in o t her cou n t ries t he ground had to be
prepared rapidly or not at al l , despi t e the weakness of
indigenous capi talist classes in Bri tain 's compe t i tors.
Only some count ries faced with t he rise of Bri tish
capi talism developed their own cap i t al ism . We m ust
now consider why this was the case.
We have SetOn that on the one hand in these countries
the indigenous cap i tal i s t class was weak, yet on the
other that the exercise of state power in i ts interests
was imperative i f capi talism was to develop at all. So i t
was neces:;ary for the classes o f landowners and
merchants, or at least a substantial port ion of one or
both of t hose classes, to back a class whose rise
apparently would spell their decl ine. There arc a
numher of reasons why sections of tlu-se classes took
this s tep .
Firstly, we h ave noted the crisis in s tate finances.
This crisis was twofold. Firs t , the s ta te's revenue was
threatened just when i ts expendit ure h ad t o increase.
Second, t he increase in imports upset t h e balance o f
tr:lde and t hreatened an ou t rJow of gold. T h e develop­
men t o f indigenous industry offered a solu tion t o b o t h
these problems. O n t h e one hand it offered an
opportuni ty, through taxat ion, for the state to increase
its revenue. On the o t her hand, through import
subs t i t ut ion, it offered the opportunity for correcting
the trade imbalance.
Secondly, the rise of Britain made clear the depen­
dence o f mili tary strength on economic power. Not
only on the power to finance a large military machi ne,
but also the power to make al l the m i l i tary hardware
required. Thus the developmen t of capi tal ism was the
only way of standing up to Britain militarily . ..
Th irdly, those cou n t ries wh ich did develop capi­
t al ism had already experienced some commercial-

29
isation or agrkult ure, dirferen t ia tioll or the peasa n t ry,
develop ment or la rge scale ma llu ract ure. There was the
nucleus or a cap i t a.list class already in exist ence, ,mu the
l andowning class had some expcrienn' "r agricultural
improvemenL.
Four t h l y , those COUllt ries which dt'vcll lped capi.
talism w(�re rich enough to finance a measure or
capitalis t developl11ent wi thout nll11(1lcl" dy under·
mining the posit ion or the landowning (-lasses. There
waS enou gh sU'l)lus to go around. The initial capital wall
round )liU" Lly by squeezing the peasantry, and parlly IJy
raising government loans at home and aIJroad.
Fifthl y , we have seen how important Lhe slate was
bou n d to be in rostering the develop men I or capitalis m
in these countries, and we shall re lurn 10 t his laler. Bu l
an i m portant aspect or the role o f the state was that the
domin a n t cl asses of Ihe old (mler thouAht Ihal they
wou l d he able to coni rol the rising capitalisl class
through t h eir grip on the s t ate apparatus. They didn't
believe that the capitalist class would �row strong
enough to bite the hand wh ich fed i t .
The risc o f capitalism i n Rrita in forced other
countries to lake a slighlly dirferenl path. Evell France
lIeeded subs t antial s late inlervent ion I I I help its in­
digenous capi t alisl class develop ; while :n Germany,
Italy , anti ahove all J apan the state playe;1 a leading
role. I n J apan the ea rly stages of capital isl development
had t o he financed entirely by Ihe sla le. making usc or
de ficit fin,mce and the sqlll'ezing or peasantry and
lanellonls hy innation. I I was lIot long hefore govern­
menl financial difficulties forced the sal e or govern­
Illent fina nced indus t ries 10 private C<lpi t a l. But by then
the dynamic of capita list accullllllat ion wa!l under way,
the power or the l andowners and of feudal society was
broken.
What delermined whether a parliclliar country
developed capitalism or nol? One might Ihink that the
problem was one of wea lth. After all J a pan. a relalively
rich feucl a l society, in Ofelcr 10 raise th(� relatively smal l
amoun l or capil a l needed 10 pili J apanese induslry on a

:10
sel f-sustaining basis, and in order to protect J apanese
sovereignty against only probing intTusions by the
imperialist powers, was forced t o the bri n k of s tate
insolvency and had to cut into peasan t and samurai
incomes to mell an extent that it al most fel l to
insurrections 011 more than one occasion. However the
resources diverted t o the financing o f capitalist de·
velopment represented only a small proportion of the
sur p lus available to the dominant classes in Japanese
soclet y. The financial problems were caused by the
strength, in the early years, of th e dominant classes of
the feudal order, who were converted into state
pensioneTs at great expense. It was only later that their
income could be safely eroded. In the same way,
opposition from these classes to the imposi tion of
restrictions on trade, from which they derived both
revenue and the prospect of expanded chellp supplies,
led to the ope ning o f the Japanese m arket to foreign
goods This opening would h ave been fatal to the
.

prospects o f a developing capitalism had the govern­

men t not even tually been able to impose tari ffs, though
not un t i l after an extended pol itical struggle.
What the J apanese example shows clearly is not that
a coun try had to be weal thy to resist the i ncursions o f
foreign capital a n d to clevelop a n ind i genous capi tal . I t
was not a shor tage o f capital which prevented capi talist
development in Asia or in Latin America, for the rate of
surplus extraction in both con t inent s was very large.
The problem is one of surplus being in the wrong hands
rather than b e i ng inadequ a te Whether or not capi­
.

talism develops in response to i mperial ism depends

essen t i ally Oil the balance of pol i tical and economic
power between those classes which favour the develop­
ment of capi tal i s m . because their existence is threat­
ened by imperialist capi tal , and those which favour
accommodation to imperialism .
Which classes would find themselves on which side
o f this divide? Clearly an indigenous class o f m anu- .
facturing or industrial capitalists woul d be threatened'
and would cons titute an c rfec t ive nucl eus o f oppo-

31
sltion to i m perialist incursion. Indeed it is doub t ful
whe ther capital ism could be developed without such a
nucleus. On the other hand we can expec t merchant
classes to be divided. Merchants whose monopolies or
privileges are l i kely to be undermined by foreign
capitalist compe t i t ion are l i kely to demand protect ion
of the h o m e market and resistance to imperial ism, as
are merchants who deal in products, )larlicularly
domestic handicraft products, which can he expected
to become uncompetit ive. The former are likely to be
t h e well es tablished internal merchan ts. But , no friends
of expanded production, they are likely to favour
resistance through consolidation of the old order. The
l a t ter, those who deal in peasant and h andicraft
products, are l i kely to be t he most progressive section
of the merchant class. Seeing their products becoming
u ncomp e t i tive they are l i kely to favour p ro tection i n
the first instance a n d to follow this wit h exploita tion o f
more e fficien t product ion methods s o as to put their
trade back on a firm foot ing. "("hi!; section of the
merchant class is l ikely to be s t ronges t in societies in an
advanced stage o f feudal decline. In societies where
feudaJ i s m is still strong, as Spain or Latin America, such
independen t prodll<:tion and such an independent
mercha n t class is very much weaker. ·11)(' same is true of
societies dominated by the orien tal mode o f pro·
duction.
There is another section o f the merchan t dass which
is l i kely to seek a close accommodation w i t h imperio
al ism, and which will oppose all restrictions on foreign
trade. These arc the merchants who handle such trade.
We have already seen how the Duch import.export
merchants prevented the imposi tion uf tari ffs against
the init ial t h reat o f the rise of Bri tish capi t al ism. The
same thing happened in the nineteenth centmy in Latin
America. These merchants will he most powerful in
thuse cou n tries wh ich had t"ken part in the earlier
colonial trade o f the mercan tile period - above all
Latin A merica and India.
The p osit ion of the landowning dass will also

32
depend on the type o f society. On the one hand the
landowning class may face a deterioration of its
posi tion through com petit ion from the produce of
capi talist agricul ture. This is, i n fact, only likely in
temperatr 7.ones. And it is likely to be balanced, or even
overwhel med, bv the increase in clem<U1d wh ich de·
'
veloping foreign capi talism sets lip for foodsLU ffs ancl
raw m aterials, from which landlords may well profit.
On the other hand the landowning class faces a serious
threat where peasan t handicraft production is a com·
plement to agricultural activity. This is particularly the
case i n late feudal regimes such as that of J apan . The
destruction of peasant handicraft then leads to a crisis
of agricul ture as peasants are thrust well below the
poverty line, ancl the surplus which it becomes possible
to extract from them is greatly reduced. At a sligh tly
lower, though still signi fican t , level the landowning
class stands . to gain from the greater avai lability of
foreign consumer goods, but at the expense o f foreign
poli tical domination. This lat ter is likely to be impor­
t an t in a feudal society which emphasises independence
and mili tary power.
I n general i t. is only in a late feudal socie ty that we
would expect there to be powerfully effective oppo­
sition to accommodation w i th the foreigner, though
there is l i kely to be vigorous con nict a t home and
abroad over the terms, con nict which allows the
foreigner to divide and mle. This incl ination to
accommodation is likely to be increased by two
factnrs. The first is the political and mili tary prelisure o[
the imperialist powers. In particular imperialism
tended to bolster up the merchants who handled the
in temational trade and t ended, for en tirely political
reasons, to privilege and even strengthen the l and­
owning classes. This was especially importan t i n Latin
America where the capi tal ist powers put their weigh t
behind the rest oration to power of these c1as�es in
opposition to t he urban interests after th e wars o f
independence. T h e second factor is t h a t t h e imperialist
incursions fol luwed a previous era of m ercantile

33
culonialism in wh ich classes favourable t ( I foreign
in terests had been bolstered up, and in which many
terri t ories had heen colonised. Although such cou n tries
had 110 choice when con fronted with the rise of the
capi t alist sys tem, it was precisely the societies wh ich
could he l' xpec t ed to ;\C("ommoda t e to t ha t rise which
were already colonised.
The impact of de v elo p in g capit al ism on those
cou n t ries which accommodated to i t s rise wns d early
ve ry p ro found . This impac t , and the lVay i t Olrrected Lhe
prospects for capi talist devdopmen l of the coun t ries
nuw underd e ve l op ed , is discwised in t h e bookle t
Problrnu ofgrowlll ill tI/(· third world. in this series.

( 2 ) I NVESTMENT OPI'O RTlINITIES

We have discussed t he process hy which a prospective

cap i talis t class emerged in some societies, and was
preven t ed from emergi n g in ot hers. We h av e discussed
how, in those so c ieties , such a class got its hOlnds on a
share of the s u rp lu s produced, ull i ma lcly on the land.
We have also seen how t h is new class could be expected
to be orientated t owards ex p andin g p roduction . Th is
orien tation we deduced not frolll any ideolo gy , and
protestant ethic, such a class may have had or may have
adop t ed from o u tside , hut from i ts previous class
experience and i ts curren t dOlss interests. B u t we have
not yet shown that t h e opport uni ty for p ro fitable
productive invest ment was there . I t is not enou gh for a
class to be favourable to t h e exp a nsi nll of p roduction,
or even to have t he reso urce s to c rfe c t t h is expansion, if
such an expansion could no t be e x pec ted to be
p rofi tab l e .
In England t he transfer of capi tal from the old
la nded aristocr acy and m o nopolis t i c merchants pro­
ceeded for a long time, and i ndeed was accomplished
long be fore the development o f a ca p i talist industrial
system. For t h is capital to li nan c e the explosive
development of the system of produc t i on it is necess­
ary for prod u ctive inves t ment to he more p ro fi table

34
and secure than other outlets for investible resources.
In the first place this means that more profitable
outlets must either dry up or be closed by the state.
Thus for cxa10ple scventeenth century Holland was a
richer mercan tile country than England, but the rate of
profit in trade and finance was so hi �h that there was no
chance o f investment in productIve industry. Latcr
English capitalists drew off much Dutch financial
capital to finance the development of capitalism in
England. In England too there were ample oppor­
tunities for trade based on the monopoly position of
the big merchant companies. Indeed it has been argued
that the profi t ability of the triangular tr'1de based on
slave trading delayed the development or capitalism by
half a century.
In a mone tarised country characterised b y peasant
agriculture very high profits can ue made by merchants
who deal not in high priced luxury goods, but in taking
the produce of the peasan ts to market. Since each
peasant only produces '1 small output , the development
of the market and i ts ex tensiun beyond the village
means that the specialised merchant has very consider­
able economies relative to the individual peasan t. Soon
such merchants come to effectively monopolise trade,
and vie with the landlords in exploiting the peasants.
Not only do these traders make sllustantial profits by
trading in peasant products, there are also enormous
pro fi t s to be made from making short-tenn loans to
des titute peasant s. And once the peasants are in deb t,
they are bound to the merchant-usurer for life. The
capital to finance this business tends to come from
local landlords and from urban merchant capi tal.
In poor agricultural countries enormous returns are
to ue made from speculation in food crops. As soon as a
shortage is feared, prices of food crops skyrocket. Thus
the hoarder is as hated as the moneylender. And in
countries with li t tle or no e fficient administration huge
profits cail be made from corruption. In some countries
bribery is accep ted ;lS a form of investment. A man'may
pay rent for ajob rather than receive a salary because he

35
can earn so mud} in hrihes. And for any mnch ant or
entrepre n e u r brihes arc a normal item of ('osts. Largc
fortunes may he expcnded in sceking polit ical office
for the con t rol over some arca of governmc n t expcndi­
t ur c o r liccnsing. Smuggling can offer enormous
re t urns. The same, i t must bc remem bered, was true o f
Engl a n d hdore t h e indust rial revolllt ion as is t rue o f
today 's u nd c rdcvelopcd coun trics.
I f capi t al ism is to gct orr the J.,fTolind the statc must
s tcp i n an d curb t hcsc act ivi t ics. This is not only a
ql1cs LiclIl o f purging t he administration - i f the
oppor t u n i t ies arc there a way will bl' found. I t is also
essc n t ial t hat the oppor t u n i t ies should bc seal cd ofr.
P"rticularly i mport ant in the un derdcvel o ped world is
the curb ing o f the "et ivi t ies of usurcr-merchants. To do
this al l t h a t is rcqu ired is the cstablish mcn t of
agricu l t u ral acdit schcmcs, and co-opcrat ive marketing
a rrange men t s. Uut thcir cs tahlish mcnt is casier saiu
than done. For the mos t powerful men in the co u n t ry­
sidc are t h osc sallll' w\II rer-merchants, al lied wi t h t he
hmdlords who themselves invcs t in usurious activi tics.
l11Us again we rcturn to t hc poli t ical qucstlO n . I n the
sa m e way merchants with sccure munopol y positions
wi l l make ccrtain t ha t any a t tempt to undermine that
pos i t i o n wil l bc must vigorously oppose d .
Part icularly i mpur t a n t nuwa days as an outlct for
runds in the un uerdeveloped cOlin t ries is forcign
inves t me n t in thc dcvelopcd cou n t rics. Thc a t trac t ion
o f [ureihrtl i nvcst men t is not so much a hi gh rate uf
re tum as the sl'cllrity. This is part icularly the c asc in
coun tries in wh ich thc currency is unstable and
i nfla tiun endcmic, or whcrc there is a dangcr of
revolu t i o.n and so cxpropriat ion of thc wea l t hy. It is
also a t t ra c t ivc fur landowning dasscs who arc l ikely to
be face d w i th a re runn ing class of pro sp ec t ive capi­
tal i s ts, who may seck t u ex propri a t c thc ec; ta l cs, and
who h ave IlO d csire t o help the dcvclopmen t o f thl'
capi t al i s t syslcm which spells ru in ror l h e m. Anotlwr
i m p or ta n t ou t lc t for inves t a hll' funcls is spcculat i vc
urban p ro perty deve lopment . cspecially in Lat i n
America, where every ci t)' boasts beau ti ful skyscrapers.
In general only the developm en t of (:api talism i tsetr,
by which the free now of capit al eCJual ises the rate o f
return i n di fferent branches, can elim inate a l l these
unproductive investment ou tlets. Unfortunately, as we
have seen, the existence of these outlets inhibits
(,api talist devdopmen t . Once more we see that the state
has to tak e an active part in openin � "I' protected
olltlets, suppressing corruption, and limit ing the ex­
ploi tat ion o f the exposed peasantry.

(3) Ti l E MA R KET

Provided that al ternative .uses for capital are either not

particularly profi tahle or can only absorb a limi ted
amount o f cap i tal, we can say as a general rule that
industrial investment will be prori table as long as it has
access to a large, stable and expanding market.
The crea tion of the m arke t for the products of
capitalism is as vi tal a condi tion of cilpitalist (lcvelop­
ment ac; is the avail ability of capital, and Lhe twn lend
to go very m uch together in the process of pri m i t ive
accumulation. It is important to understand the nature
of th is development clearly. It is often assumed that the
extension of the market is synonymous w i th an
increase i n national income. Th is is ex tremely m islead­
ing. Indeed in the ini t ial stages of the creation of the
home market for capital ism , national income more
orten than not actual ly fell. Much more important th.m
increasing wealth is the dec:l ine of natural ecollomy.
The d i r rerent iation o f the peasantry implies that some
peasants become wage labourers while o t h ers develop
production for the market. The concentration o f
handicraft i n t h e towns leads t o t h e development o f
wage labour and monetised trade insteacl o f barter. 111e
decline o f feudal estates leads to the rise of wage labour
and money rent at the ex pense of forced labour and
rent in k ind. Thus the most important factor in
generating a home market is the separation o f the
peasant from the land and the craftsman from his tools
su t h a t produ ction fur the marke l , and correspondingly
working for wages, repla(�e suhsislenc(' production. We
have already seen I h is process at work in the process o f
pri m i tive accllmulat i o n as a n im;eparahe aspect of i t .
Expansion o f t h e market i s of ('ourse part l y a
sel f-gen('fa t i n� process. A!'. t Ilt· role o f t he market
i ncre'lses, d i s t rihut inn i mproves, so reclueing the costs
of mark" t i ug and furt her undermi n i ng !'.uh!'.istence
product iOI l . Supplies hecome mort" secure and prices
more stahle, so less risk is att ach"d to the ahandon ment
of suhsish'n c e production, which is of course not the
case if suppli es arc u ll!'.table. Increased Inolletisatiun,
and s t a hil i ty o f prices, means t hat ren ts arc more l i kely
to he i n money terms th.m in kind, and wag(' labour
b ecomes m o re pro l"i t ahle rda t ive to serfdom or share­
cropping. This soon leads to the development of a frecr
market i n l a ne l. A l l t his rcacts hack on the process of
prim i t i ve accumulat ion. Land is easier 1 0 huy, poor
peasa n t s more willing tn lOdl. Wag(' lahour becomes
more ava i l a ble, and as the market e x p a nds t he gains
from the divi�ion of lahour and concen trat ion of
p roduct ion i ncrease. Thus t he whole process is cumu­
lat ive. A n d as it goes nn , as ycoman fanners and
manllfact urers st ilr t to emerg(' , new (kmands make
themselves fcl t for agricult ural tools ami equipmen t ,
for han dicraft machi nes, and for cnnsllmpt inn goods
for tlw n('w mi ddle class. Thus t h e devel opme n t of
mallu fad u re pro!,rrcsses cumula t ively until t he market
grows to h,' la rge enough to induce and thell t o sus tain
the d,'vt'i f l p m ellt o f iarge machine produ ction, of
faclory i n d llst r y , whose economics make t hn!'.e o f the
division o r I"hom l ook pal l ry .
Wi t h t hese rac tories t h e inexorahle plOcess or
capi lalist acnllnl l i a t ioll is under way. D i f ferent forms
or p roduct ion - !'.uhsist encc, handicra ft , p l l lli n g Ollt
and m an u fact urt', no longer persist side by side. The
new rorm of cap i t ali!'.t prmillct ion rapidly IIndrrnlts
th(' old ror ms and t a kes over t lwir ma rket s. J us t as
rapidly it cont i nlles t o c�x p anc1 t h e market . SlIh!'.ist ence
prod u c t ion is rl i m i n a t ed, com municat ion!'. improvrc1.
wage labour generalised. Most impur tant of all an
enormous new market is created: the market for means
uf production. It is this d r mand for means uf pro·
duction which plays a leading role in t he init ial
e x pl osive developm e n t o f capi talism. One n('ed only

think of t he enormoull impact of the grow th of t h e

railways un t h e developmen t of Bri tish capi talism .
Though t he home market is quan t i tat ively crucial,
capi t al ism also needs access to a fureign market tn be
able to develop. The signi ficance u f the foreign market
is not primarily quan t i tative , for trade must in the long
ntn be in overall balance; a foreign market can only be
exploi trd if t h e domestic cou n t ry buys in re t urn. Thus
quan t i tat ively, foreign trade can only give a temporOlry
fillip to cOlpi talist development . The great import ance
of [oreign trade is a qualitative importance , [or i t is a
fundamen t al charOlderillt ic o f capi talism that i L
develops unevenly: lIom e industriell nm a h ead and need
a larger market than C'1Il be provided domes tically. I f
there is no foreign marke t on whit.:h L o dispose of the
surp l us product ion the resul L will be recession which
will spread from the leading sectur to the economy as a
whule, and capi talism will not be able to develop. The
uneven devel upmt'n t o f capi tal ism ill an economic
[ea t ure of capi talist development, and not a technical
0111.'. Uut we can sec t h a t , vi tal as the foreign market is,
crucial as i t h a s been in the development o [ capi talism
Olnd i t ll con tinuing grow th, i t cannot sen'e in the long
lerm to replace the development of the home market ;
hecause in t he long t erm t rade m llst be in quan t i t ative
balance.
The import ance o f t he foreign market in the early
sl ages of capi tal ist development varies from cnu n t ry to
coun t ry. If there is relat ively well developed handicraft
production and a rich and large economy the new
cap i t alist sector cal l do w i t hout a foreign m arket in the
carly st ages. This was most notably the case with
American cap i talism , but i t was also t ru e o[ Germany
and, to a ICl'l'er eXlcll t , J apan. For England Oil the other
h;mcl the foreign m;\rkcL was c ru c ial in ge l l ing capitalist
production orr t hc ground in the rirst place. Hut
h owevcr much capi talism managcs to do wi t h out. a
forciJ.,'11 market in t h e emly stages its uncven Ikvdop·
men t necessi t ates resorl 1 0 foreign 1l.1 arkel s as soon as
i n t ernal marke t s have been cleaned up by the e1imi·
nation o f pe\ ly product ion and perhaps i mports too. I n
t h e s a m e way the forciJ.,'11 markc·t may play a leading
role in launching a capit ali:c;t ckvclopmcn l , but il can
n e ver prov i de I he ha:c;is for a sU!itaincd /,IT owth.
We can see t his clearly in the ligh t of the limi ted
post ·war development of I he third world. For this
develo p ment has been very largd y import suhst i t u ting.
or e x p ort led. Tha t is to say it has depended not on any
expansion of the home ma rkel , bu t :c;ubsti t u t ion of
domes tic products for foreign imports and a small
incursioll i n t o the foreign marke t . But th is prov i des no
basis for development al a H . Unless the home marke t is
developed at the same time. it is nO I a cu mul a t ive
process. Once suhst i l u t ion i:c; more or le s :c; complete t he
ecollomy fall:c; hack into s t agnal ion. wit h under used
and incfricicn l plants ahsorhin g \'as t resources ll Iukr
t h e prot e ction of high t ari ff harriers.
We h ave presen t ed t h e developmen t of the home
market as th ough once the process of prim i t ive
accumulation is under way i t , and I hen t he capi talist
system, sweep all oh:c;tacles be fore t hem. This i:c; of
course not in fac t the tmth. Though t he economic logic
of the proces:c; i:c; an inevitahle clImulat ive developmen t
we have already seen that the success of the prncess o f
p rim i t i ve accumulat ion dep end:c; wry much on poli t ical
factors. We have seen how the dominant c1as:c;es of the
older order ca n preven t t he emergence o f a new class. In
thc same way they can prevent the d evelopmen t of t h e
home market . And indeecl to them t he lal l er i s even
more important than t he former. for it is l h rough the
installat ion o f exclusively markct rdation in the
countryside, and I he development o f capital i s t
rclllt ions i n agriclI l tllJ"e. that their posi t ion as feudal
aristocracy an d associ" t ed merch:lIlt c ·\ass is finally
undermined. I f they are p olitically s t rong enough the ,

40
ways in which they can preven t this dl'vciopmen t arc
many - legal or non-legal. For example they can
prohibi t till' tran s fer of land, they can stn�ngthen
cond i tions of nOll-wage lalwur, they can regulate
mmlll facturc and trade_
Part icularly import,l I l t in the early s tages of the
development o f the market is the oven-l im ing of local
barriers to free alld generalised tracling wh ich arc
charac teristic of pre-capi t alist socie t ies_ The local
landowners or merchan ts' gui lds cOll tnil t he local
markets, levying taxes on t hose merchallts whom they
permi t to tr..de i n t he markcts, and raising to\ls on
goods pa.'i sing through their domain. These local
con trols must clcarly bl' broken clOWIl before a national
markc t can develop_ And the breaking down of thcse
con trols will havc to be a pol i t ical act o f t he central
governmen t , allied wi th thl' large monopoly ml'rchan ts,
against the local powers o f the l arge landowners_ Th is
cen tralisation of pol i t kal authori t y , and destru c t ion of
local barriers t o t racle and com municat ion, was ;Ill
c X l rcmdy imporlan l aspec t or the struggle be twcell lhc
aristocracy and the monarchy allied to till' big mer­
chants in the period of absol u t ism_ On the o ther hand
this itscl I' raises new barriers in thc nat ional monopolies
whosc aim remains to res trict the market_ The develop­
men t of the market must therefore depend on the
overthrow of t hese merchants and their mOll(lpoly
prac t i ces_ Thus again we come up against the pol i tical
ohst"de to lhe developmen t of cap i t al ism - the classes
a l l ached to the old order.
We saw above t h a t the trans fl'r of surplus I'rom t he
old c1assl's to a Ill'W one can be ci rcum\,cn ted if the
dominan t classes o f the old order themselves inst igate
the develop men t of cap i t alism, through the "gency o f
the state. While t h is solves t he problem o f t h e origin o f
the finance to launch capi talist production, sooner o r
later thl' prohlem o f tlH� h o m e market arises. For the
proccss or primi t ive aCnll1l ulatiol1 is the process of thc
crcation of the hume marke t . And i f this is hy-passed iil
the init i'll st ages uf capi talist developmen t , it is not long

4· 1
hefore I he developing capi l a l i !> 1 syslem faces the
p rohlem of a s t u n t ed home ma rke t , For a wh i l e it \';\ 1 1
clevelop o n t he hasis 0 (' t ht' res l ric l ed ru ral marke t ,
t ill" urhan markl' t , perhaps ron'ign I rade, and ahove
a l l t he pro d l l ct ion of nwans of prodllct ion, B u t
soo ller o r Ial er I he rising cap i t a i i s l cl ass i s going 1 0
seck I he ov(� r l h row o f fl'lIIlal rl" i a t ions in t he coull t ry­
side. nol jusl 10 expand I I\(" Iwnw markel , h u t also to
secure illl increased 1;I I>our supply a mi develop agri­
cu l l url', t hus cheapening foocl and lowering wa�es, I n
I h is w a y t h e al lianrc h d ween la ndowner ,lIlel capi­
tal i !> 1 soon hreaks down. generally OVl'r qucs t ions Slid.
as l ahour law, lanel law and I hl' pricing of agricu l t ur a l
�oods, T h i s con fl i c t h a d an i mport a n t part to play in
the cil-velop mcn l o f fascism in I i aly and Gcrmany,
Thc s t un l ed growth of I he hO llle market also mealls
t ha t I II(' cap i l a l i !> l s sCI'k forC'igJl m:lI'kets ('or I he i r
p rodllct s a l l I he more ('nCl"gl,t ical ly, T h u s i t is 110
chann' I 'hellollll'l\on t h a i I l aly, C ;ermany and J apan
h ave been I he 1lI0 s t ('J1 ('rgl' l k, t h ough not I h e most
slICC('SSfl l l . imperialist powers. �() the apparen t ly
peaceful revolu l ion from ahov,' wrough t ill I hose
cOllJ1tries ill which the landowning class plays a
leading roll' in t h e developJllent of cap i l al ism serves
o n l y to pos l pone I he h i l l er poli t ical dash wh ich is
incv i t ahle,
In I he coun l ries wh il'h fa iled 10 develop l'ap i t a l ism,
the fai lure 10 develop a h o me market ill Ihe elld came
dowII to the s t a t i c social anel prodllct ive rela t ions in
the cou n t ryside : t hosl' same ('())ldit iolls whit-h
i mpecll'd Ihe process of primi I i ve accu m u l a tion, /\
s u hsist('IH,(, sys l e m o f ilgricull ure prcvai led, wi l lt I hc
mass of the pop u l a l ion having access 10 I h e land
t h rough t ri hal coopl'ra l in', shan" cropping, or (�s l a l e
sys l l'ms o r produci i o n , Such a syst ell1 was ma i n ta i nC'd
bccause w i l h poor cOll1 l11unica l ions. and low pro­
clUe! ivit y , sllpplies of llIarkd a hk goods and so prkcs
Wl'rl' l'x l n'mel y crra l it'. Thus all)' l"Olll m i l mell I I I I t ill'
market was f(lol h a rdy, Whl'rc allY I hrca l til I he
s y s t e m arose I here w('re always t hC' rural nwrchall ts
and landlords to do all in in thrir pl lwer t i l suppress
it.
The underdeveloped world had to wai t for the
arrival o f imperialism t o see t he po t en t ial o f their
markets developed. When it came, this dcvdopment
was in the in terests nflt o f indigenous capital hu t of
imperialism. The rapidity w i t h which the market was
develnp(�d tes t i fies, however, to the immense power
of developed cap i t al ism to cre a t e i t s own market once
it is orr the grou nd. But each individual market
represented for i m perial capi tal only a part o f the
whole. Thus the exploi tat ion o f the empire helped to
rocket England to preem inence by boost ing the
dom inan t industries, first tex t i les, then railway
equipmen t , a t j u s l the right time, allowing them to
expand without any barriers. Taken separately i t is
doub t fu l whet her any one of these, singly, could have
provided a sol id enough base for the developmen t of
capi talism. For, lar�cly for pol i t ical rcasom, imperial
cap i t ol l left the sodal and product ive relat ion!i in the
coun tryside much <IS t he y werc, illde(�d evcn st rength·
enecl t h e m . thus holding hack the ("umulative develop·
men t of the marke t.

(4) F R E E LA BO U R

I n t h e in troduction w e defined capi tal ism a s a m ode

o f production based on the employment of wage
labour. For capi tal ism to be ahle to develop i t is
absol u t ely essen t ial that there should b(� adequate
lahour fort hcoming at a low enough wage to m ake i ts
emp loymen t profi table. Of course wage labour can be
recrui t ed in any society, if the employer is prepared
to pay a price for i t . B u t the profi tab i l i t y of
capi tal ism depends on i ts abi lity 1 0 recrui t a large
quantity of labour at it Inw wage. So it is an essential
precondi tion of cap l lalist development that t here
shuuld be a force of free labour availahle to the
developin � capi talists. And this is unequivocally a
precondi tloll of capi talist development - wit hou t

43
cheap labour nobody can invest profi t ably.
The freedom o f labour is a freedom from personal
ties to the employer, freedom from access to the
land, freedom from ownership of any means o f
product i o n , s o freedom from a n y means of earning a
living except wage labour. It is freedom to be a wage
slave, wh ich is freedom of a sor t . For the develop­
men t of a large force of cheap wage labour it is
essen t i al t h a t labour should not have access to the
land or t o independent small product ion. This
develop m e n t is an absolutely fundamental aspect of
that same process o f primit ive accumulation which
concen t ra t es capital in t he hands of the prospective
capi talist class and wh ich develops the home market.
The requ i rement t h a t a force o f free labour be
created means th at this process of primitive accumu­
lation can n o t be a simple transfer of res('urces from
one class t o another, i t must also represent a concen­
tration of wealth in the hands of the capitalist class as
corollary to an impoverishmen t of the prospective
working class, a class recruited from the nlra! poor,
whose previous access to the land is denied, and from
the p e t ty producers, whose means of production are
appropriated by force or in set tlemen t of debt , or
rendered obsolete by new types of tool. This re­
quireme n t also means t ha t the process of primi tive
accumula tion must indeed be primitive, must precede
the development o f capitalism, even if ini tial growth
is i mport-substitut ion and investment by a former
merchant class.
One very importan t reason why merchant capi t al
canno t play the leading role in the init ial develop­
men t of cap i t al ism is thaI its accllJ1llllaticJIl of capital
is purely at the expense of the landowners' surplus. I t
does no t represen t a dispossession o f the petty
producer, and so does not appear as culminat ion o f a
process wh ich creates along with the capital its
necessary complemen t , the supply o f cheap labour.
So any sllbsllmpt ion of manufacture to merch ant
capital is by this fact alone necessarily limi t ed.

44
 The creation of a free labour force in England was
the product of a long history of enclosure of common
land, eviction of the small peasant and consolidation
o f landholdings, strong craft regulations, the in­
debtedness of independent smal l producers and
(,xtremely harsh laws agains t begging, vagrancy and
idleness. Only after a strong force " of free labour has
been formed is labour available at a low enough wage
to make industrial development profitable ; for it is
well k nown thai an independent peasant or craft smen
will go on working on his own account rather than
for wages so long as he can possibly keep himsel f alive
by his own labour. The scarci ty of such hlbour in the
colonies o f wh i te seulement because o f the free
availability of land was an importan t factor in re­
tarding the developm en t of capitalism in those
countries_
Clearly in count ries still characteris('d by em
economic system in which labour is tied to the land
and the landowner by personal ties of dependence, or
in which production is still conducted within the
confines o f a natural economy, rree labour will not be
available to work for a wage wherever and whenever
required. And precisely such economic systems were
characteristic or those coun tries which are
undeveloped today.
Once the process of cap i talist development gets
under way all the bonds which t ie the worker or
peasant to the land or to his tools are rapidly
dissolved and the force of free labour is con tinuously
being enlarged as an integral part of the cumulative
process o f capi talist expansion. As machinery is in­
stalled and factories drive handicraft producers out of
business, as capi talist farms bankrupt small producers,
the labour force is steadily enlarged. Later large
ractories drive smal ler ones out of business in tum
and the accum ulat ion of capi tal in this way auto­
matical l y frees the labour to feed its further develop-
ment. (
The developmen t of the force of free labour in the

45
proccss 0 1" primi l ive accumulation is ruugh t against
vcry !i I HlJlgly hoth hy landlords and hy merchants
aUachcd 1 0 I hc old re�ime. The I;mdlord orten
depcn,ls foJ' Ihe dlcalllwSS or his lahour on the fad
that his workers or lenants can cngagc in pelty
productioll on I he side. The dcstruction of such pel ly
product ion means I ha l wages 1 0 Ihe I.mdowncr will
rise, or tha i his rents will fall. Al\(I the hreaking of
links with thc land makes thc peasant fn:e to move
from placc to placc. Previously his small plot and his
access to the com mo n land tied thc pe.lsant to the
cstatc and so scrved to keep his wOlge down. Out
capitalism needs a mohile lahour force un encumbcrcd
by such ties.
The merchant ton is opposcd to the development
o f free labour and the loss of guild authority which
had enabled him to rcst riel product ion. And he is
oppused to a dcvelopIIH'nt which destroys the indc­
pcnclellt Jl<' l l y produccr, from whosc prodUl"ls he had
made substant ial profits ,mel on loans 1 0 whom he
eantcd enormous ra t cs of interest .
. 111Cse s l fll!U{lcs hetween rising capitalism and
mcrdlllllt and lando w ner we have alrcady cxamined.
'nlCY focuscd on the authority of thc statc in thc
countryside as against that or I hc landowner, thcy
focuscd on the control and authority or thc guilds,
and they focuscd on the law or labour and of
bagabondagc. In this wholc process thcre fore thc
s t atc playcd a vital rolc.
Thc cxpansio n of tltc labour forcc has always hccn
a problem for capitalism cvcn whcn its developmcnt
is undcr way. '11lis is becausc, cspeci ally in those
countrics in which capitOllist developmcnt was
fostcred by thc statc, thc transforma tion of thc
countrysidc was n o t crfcctcd, as it was in Britain,
be fore the dcvelopmcnt o f cap i l Cllist industry. And
once thc dcvelopmcnt got IInclcr way thc ncw
capitalist dass, in its political weaknc!i!i, was furccd tn
rely for polit ical suppor t on thc pcasant and indepcn­
dent small produccr. For this rcason nu'asurcs wcre

46
takcn to prevent them from succumbing to market
fon·es. This in turn restricted both the growth of the
market at home and l i m i ted the available reserve of
free labour. It is only recently, under fascism in I taly
and Germany, Hilder dc Gaulle i n France that grcat
steps havc becn takcn to liquidate the peasantry in
con tinen tal Europc. It is a problcm the J aprulese arc
just facing up to. This samc need for poli t ical support
constitutcs part of thc explanation for the ex tremc
proliferation of the bureaucracy, particularly in Lat in
countries.
Thc creation of-1 hc force o f frec labour in thosc
countries which accommodated to the risc of
capi talism elsewhere by opening up their markcts was
carried out by forcign capital. The import of foreign
products destroycd handicraft product ion, thc
monetarisation of thc cconomy and the political
support giv(�n the landowncrs thrcw millions o rr thc
land. But this dcvelopmcnt was not to the advantagc
of an indigcnous capi t alist class, but to that o f
forei (;llers. In this way i m pcrialism fostcrcd a l opsided
prinutive accumulation ill those COUll tries now under­
developcd. I t crcatcd a market and a labour forcc b u t
destroycd t h c c1a.o;s wh ich could havc takcn advantage
of t h is and Icd a capi talist develop ment, dom inated
the state which could have assisted such a class, and
stripped the country of the invcstible surplus. 'fllis
process is examined ill the companion booklet
['mulr-ms (if gruwth ;71 the t h ird world.

(5) AG RICULT U R A L REVOLUTION

We havc looked at t he process of prim it ivc accum u­

lation from a number of apparen tly quitc d i fferent
points of view only to find that the different develop·
men ts arc only m.pccts o f one and the same funda­
mental process. And we have also sccn that this
process is a process o f changc above al l i n the social
relations in thc countryside. Capitalism can dcvelop
to a limi tcd extcnt on thc basis merely of reform in

47
the c o u n t ryside. o f an alliance hcl wecn nlriU land·
owners and urban capi l alists. bUI for this develop·
ment to be sustained relationl'i in the countryside
m u s t in the end be transformed. In tho5c poorcr
coun tries in which most of the product is appro·
priated hy the landownin g class or by rural merchan t s
closely a t tached to this class. only the m05t ten tative
begi n n i ngs of capi t al i s t form5 of product ion arc
possib l e be fore a revolu tion in the countryside
becomes an inescapahle necessi ty.
It should be dear that the agricul tural revolu tion
t o w h ich we re fer here is not to he interp retcd in the
sense of a t ransforma t ion o f the l<-,chniqiles of pro·
duc t i o n in t he count ryside, hut ral her in the sensc of
a social revolution, a transformation of SOciiU
rela t i o n s in the countryside, hy which the surplus
e x t racted from peasan ts or agTicul t ural workers can
be devoted to productive use by a clas5 of capital ists.
111is diversion i tsel f may take place directly through
t h e devel opment of capitalist agricul l ur e , or i t may
take p lace through the agency of the s t a te , using i ts
powers to lax and subsidise, or t h rough i t s con t rol of
prices.
Of course t h is social revolution in the coun tryside
is most li kely to be accompanied by a t ransformation
i n t h e t echniques of production and so an increase
b o t h in tot al production and in the surplus which is
made availablc. Hut thi5 technical trans forma tion is
i t s e l f subordinat e to the social t randormation
. which
al o n e makes it pos5ihle.
We have seen that one and t he same movement
tran s fers resources from a sterile class to one which
will i n vest them product ivcly. I I i mproves i!gricu l t ural
produc t ivit y so as t o increase the smplus available for
invcs t ml' n t , so as to cheapen food and thus the O)st
o f wage i<lbour. This ('� tends the market in the
cou n t ryside for t he product 5 o f consumer goods and,
above al l , capital goods industries, and finally hreaks
the t ics betwecn the Iabollrl'r and his tOC't5 or his
l a n d . so creat i.lIg a force or fr('c labour.

48
 We have already seen what it vi lal eklllen t the
agrarian revul ut ion wa.'i in those coun tries ill wh ich
cap i talism developed. In t he- early dcvelopers, partinl­
larl y England, a technical transformatiun uf agri­
cul ture tu sume ex t en t preceded a social rcvolu tion
which occurred only gradually and relal ivcly
peacefully. B u t once a capi tal ist competi tor h ad
arisen, in the form of England, othcr countries could
not afford to let the agrarian revolu tion slowly
mature, and so a social revolution in Ihe- countryside
was made the agent of technical t ransformation. Th is
is dearest in the case o f .J apan. And i t is the prospcct
which faces any country hoping to develop in toclay's
world, csp(�cially if the landowning class and i l s allies
arc powerful e nough to preven t the technical develop·
ments to which we have rdt"rrec1.
The development of capi talism in Englanc1 to some
exten t had i t s roo ts in changes i n the countryside, so
that the social revolu tion there was accomplished
graduall y w i t h t he aid of a growing class o f capi talist
farmers indigenous to the countryside. This can n o t be
the case ror any ("oUnlry developing capital ism today ;
which means that thc agrarian revolut ion has to be
accomplished, su tn speak, from ou tside. Thus i t must
rely on the lise of pol i t ical methods of e ffec ting the
social revolution; it m us t rely on the state machine.
So we can see why England was excep t i onal in that
the state played a relatively smaIl direct pol i tical role
in the devclopment of capi talism , and t he t ransfer o r
s l a l e power from t h e old landowning dasses to t he
new c<lpi tal ist class set the seal on an already
accomplished social transformation. In Fralll"C on I h e
o ther h a n d a polit ical revolu t ion , which transferred
power to the rising capi talist class, WiL'i a necessary
preludc to the transformation of the social rcla t ions
in the c()u n t rysic1e, which was c rfected pol i t ically.
And in the cases o f Germany and J apan the s t a te
p layed an even more import ant and more direct role.
Clearly the rolc of the s t ate in the development of
capi talism is not something to be ignored.

49
( G ) T H E STATE

A t s o m e p oi n t t h e cOl l q l l (' s t of s t a te (lower in I h e

i n t ne s t s of the ri s i n g c l p i i a i i s l cl ass b e comes
essen l ia l . Thc poin t £I I wh ich a pol i t i.-.d revol u t i o n
hccolll es vi t al de p e n d s O i l a ll1 1 mhc-r o f fa c l o r s . L e i 1 1 5
fi rst d i s cuss t h e rolc o f the s l ;l l e i n t h r' d evd op mc n t
o f cap i t a l i s m .
I I i s cle a r t h a t a p o wn ru l \;tn<\O '.,yni n g class i n
l l l l ch ;t1 l c n gecl con t rol o f t he s t a t e c a n , k c ep a very f i r l l l
gri p (Ill t he e c ono m y or t h e ('o u n t ry and so can
pre\'e n t a ca p i t <l l is l class from r i s i n g t o c h a l k n ge i t .
We have seen a l r (' a d y I Hl w I l l (' S pa n is h b n downing
class s m a s hed I. h e CO IJ1I1 1IPI'O.\' rev l O l t . We h ave also
see n t ll l i the s trengt h o f t he [ n d i a n 1;l 1 l d o wl l i n g class
was p ro ba h l y su fficient t o l ] ;l ve prevel l t e d sma l l
m a n u fac l u re from d ev el o p i n g i n l o Iargc sca l c
m a n u facture h a d no l c o m pe t i l i o n . from Bri tai n
p a r t i c u l a rl y , donc so for t h e m .
Bu t i t is n o t on ly as a d i rect i mpedi men t t h il t t h e
s l a t e i s signi fican t , fo r i t is t h e s t a te wh ich cod i fies
an e l a d m i n i s t ers t h e la w. The type o f b w which
capi t al ism requires for il s dev e l op ment is ve ry
d i f feren t from that appro p ria tc, for exam p le, t n a
fe u d al society. The most i mp o r l a n t changes in t h e
law a re I h ose re l a t i ng , n o t u n e xpected l y , t o property
on I he one hand and lahour on the o lher. For
exam p l e it is n e c e ss a r y t o I h e devel opmen l of
capi l al i s m tha t I I sury he marie lega l . I t is cssC'n t i al I h a l
t h e fe u clal i d e a o r propert y ;]s heing som e t hi n g socia l ,
entai l i n g social o h l i g a t io n s , he r c p b c e d by' the
ca p i t ai i s l idea of propert y a s heing priva t e and f reel y
assil4ll a h le, e n ta i l i n g r i gh t s h u t no obl iga t ions. I I is
cssen l i al t h a t t here be l a ws 1 0 compel l 'copk 1 0 wor k ,
t h a i i s to say, l a ws agai n s t V:l h'Tancy, ;Ind l aws which
perm i t the rem oval o f la bourns fro m I heir m e a n s of
p ro d u c t io n so as I () ere;),t e a force of rr('(' lahollr.
M a n ), of I h csc l egal c h a nge s can he accolllplished
wi t h ou t t h c cap i t al i s t class ac t ua l l y t a k i n g st ate
powC'r i n t o i l s own h an ds. I n ch'ed I h i s must h a ppen

50
sl ll ce th ey ·1fe necessary pn:con d i t i o n s for Ihe
dev d o p m e l l t o f a cap i talist class. There is n o paradox
h ere, for I h e s e changes a r c a l so c h anges requi red for
the devel o pm en t o f mercan tilism, 2 that i s to say an
e x t ensive sys l em o f t rade. Such a sys t e m of trade ,
d o m i na ted by large m er c han t s , is something wh ic h
can grow up \'!i Lh i n th e bounds o f, a n d can be
perfecLly conge n i a l t o . feudal soc i e t y. I t is cssen t ial l y
in th i s way t ha t I he developmen t of mcrcan t ilc
cap i talism i �: a necessary prelude to the developm en t
of i nd us t ri al ca p i t al ism . since it is at o l l e and t h e same
time cap i tal i s t ic i l l i t s fi na n c i ng a n d yet not a t a l l
antago n i s t i c to the old o nk r . Las t l y , as we hav e seen

it is e n ti re l y through t he i n tcrmedi ary form or

merchan t s' p ro fi t thai t he la l ld owners' sur p l u s i s
t rans fe rr e d t o t h e rising c a p i tal i s t cbss.
The sam e is t ru e (If o t h e r functiol l s wh i ch the s t a t e
m ust per form for ca pi ta l ism . F o r CXtU11ple thc
s u pp r e s s io n of .local barriers to trade a nd the c r eati on
o f a n at ional marke t. is an cssen t i al pre l i m in a ry t u th e
d e v elo p me n t o f indus trial c a pi t a l ism . b u t one lIsual ly
accu m pl i s h e d by t he absol ute mon archy in al l i ance
with the big m e r c h a n t s . I n this case I h c c h ange is
cl ea rly agai n s t t h c in terests o f t h e local landowners,
but the an tago l l i s t ic i n teres t is ex p re ssed i n thc
pcrson n o t of c a pi tal i s t s but of the king . I n t h e
cou ntri e s !lOW underdeveloped these s a m e c h anges
had as agr n t n o t an absol ut e m onarchy b u t
i m perial is m , b u t t he ch a nges a rc t he same and arc
essential .
Once capi lalism beg i n s t u deve l op i n Olle coun try
the d eve l opmcn t of c api t al ism i l l o t h ers d ep c n ds on
t i l e s t ate pro t ec t ing their home marke t from the
i ndust ry o f thc fi rst cOlll er. And t h i s i s a co nd i t i un
wh ich d e pen ds 0 1 1 the state ac t in g del iberately i n t h e
i n t e rest s of t h e cap i t al i s t class. The m os t im porta n t
d i f ference bc:Lwcen t hose cOllll t ries which dcvelop e d
cal 'i lalism a l ld those w h i c h did /lot l ies prec i sely in
the di f f eren t reac t iolls o f t he i r rul i ng classes to the
rise o f ca pi tal is m el sewhere ami the im pac t of

51
imperialism nn their own (" ou n l r i e s . Those oHlnl ries
which sUl"Cessfu lly a c l ed to pro t ec t their markets
from i m peri a l ism managed in I he en d 1 0 develop a
c a pitalis t sys t em. Those countries which did not,
whose rul i ng classes greeted i m pe r i a l is m with open
arms , did not d eve lop c a pit a lis m .
But, as was the case in Germany and Ita l y , it is
poss ib l e fClr I he 1'lI1downing class to p ro t e c t the home
markct, a n d so p e rmi t the' c\evdop nlt"nt of capit al i sm ,
without handin g ovcr s t ate power to t hc capi t aJist
class, he(' a u s (' in s ome C"ircu l11s lan('(.'s i t is also in their
intcres ts t o rt�sist imperialist innlrsions into th(�ir
domestk e(,( JI1( 1my . But this cOlllpromise' I lepended
on v ery s p ed ric historical ci rnlJnstance� imd i t
dc p end ed on t here h e in g a l a n d o wni ng class
s u ffi c ien tl y we alt hy t o be ahle to a f ford t o com­
promise.
What the s l a t e ca n n o t do while it is in the hands o f
t h e land u wn i n g class and its al lies i s 1 0 fostcr thc
social rcvolu tion in the count ryside, the re vo l u t i o n
which undnmincs lhc social and econumic power of
thc lariduwning class_ Thus there comes a p oin t at
which compromise ceases to be po ssih le , at which the
ca p i talis t class has ope n ly to op po se the l a ndowning
class and sci;r.c thc state po we r from it as a necessary
pre li mi nary to undermining the social and ,�con()mic
power of the landowncrs. In thuse c(luntries in which
thc s tate playcd a major rol e in fostering the' d eve lop ­
mcnt of c a p i t a lism on the hasis of such a com­
p ro mise , the transfer o f power from one class t o
anothcr was fi n al l y compleled in the pcriod o f
fascism.
A last (ll Iint abou t t hc naturc of the capit alist s tat e
as it a ffects the development o f ('apitalism is tha t it is
absolutely essential that, whi l e represen t i ng the
capitalist class as a whole, the state should n ot be
under the control o f par t icu l a r cap i t al is t s . For we
have seen that the developmen t and the dynamic of
capi talism d(�pcn d s essent ial l y on its competi tive
nature. n u t i f p a r t i cu lar groups with access to t he

52
state apparatus manage to senlre for themselves
ahsolutely monopol istic posi tions t hey cease to b e
impelled cont inual ly to invest in new t echniques. t o
expand production a n d t o seek n e w m arkets. and a
s!agnant system or production which is a mere
parody or ca p i tal i s m , w i t h all its ral l l ts and none or
its progressive cbaracteristicss. resul ts. Th is is a
par t i cular danger when ll11'rC'hant capi t al is ('n t ering
product ivc en te'llTiscs.
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