I just put up a some new notes on my teaching pages, a brief handout on capital and capitalism.
The goal of this isn’t, of course,to give a comprehensive overview of what capital means or what capitalism has been historically. I just want to introduce students to the basic terms and concepts that they’ll encounter in the sort of Marxist and Marx-influenced historians I assign in my economic history class — Sven Beckert, Immanuel Wallerstein, Fernand Braudel, Ellen Meiksins Wood, Eric Foner, Mike Davis, and so on.
That said, I’ve tried to write it in clear, non-technical language and keep it focused on the most fundamental concepts, so if you are looking for an eight-page introduction to how Marxists think about capital and capitalism, perhaps this will do.
If you are a teacher yourself and think this is useful, feel free to use it in your own class. And if you have thoughts about ways it could be improved or expanded, I’d love to hear them.
This is fantastic.
I would add one more criterion, under either the preconditions for capital or the list of constituent characteristics of the process called capital on the first page. This is, for want of a better term, *appropriation*: the things produced by wage labor are appropriated by the capitalist as their private property. I don’t think this ‘rule of the game’ is entailed logically by any of the others (unless one *defines* wage labor to include appropriation by the employer of the product of labor). Not sure how much this aspect of capital has been emphasized in the historical literature. One place it shows up, perhaps, is in the way in which U.S. patent law went from a device to protect the “lone inventor” to a system in which corporations automatically appropriate the inventions of their employees (cf. e.g. David Noble). Here it’s easy to imagine alternatives where something is produced by a waged employee, directed by a manager with authority over the production process, but the ‘thing’ produced is either appropriated by the employee as her private property, or not appropriated by anyone as their private property (e.g. IBM tells its employees to contribute to open source software products).
David Ellerman has some interesting writings which, while idiosyncratic (and certainly not Marxist), do draw attention to this aspect of the capital relation.
I also liked the handout a lot: it’s very clear and remarcably complete for its lenght.
I have a pair of tentative points to make:
POINT 1 capital accumulation might mean two things, either an increase in total capital or the fact that all the capital ends up in the same hands (accentration).
In the case of industrial capitalism we have accumulation in the strict sense of producing more capital, but in older non industrial economies only accentration is possible:
1) first of all, the main capital assets in pre-industrial societies is always land, and you can’t produce more land, so in this case we can only have accentration (the main capital asset is land because the surplus output in agriculture is low, which means that the great majority of people are farmers);
2) and the other form of capital is some form of financial capital, but since money isn’t really a thing but rather an accounting gimmick, financial capital overall can only be accentrated and never increased.
But a situation where capital can only be accentrated and never produced is not very stable, and will almost immediately end up in a sort of rigidly stratified society like the feudal one.
So perhaps the link between industrialisation and capitalism is stronger than what you say in the handout.
POINT 2 in many traditional societies there is a caste system of sorts; in this caste system a pure capitalism cannot develop, as the kind of competition that gives rise to capitalism makes sense when capitalists try to accumulate to be on top of other capitalists.
While historically there were many mixed systems (like atlantic slavery, as you stated, and colonialism more generally), I think that capitalism implies some conception that people are all at the same level, so that they have to compete for money to get on top. This is the reason capitalism ultimately had to destroy feudalism and ultimately even slavery, IMHO.
Yes, accumulation in the sense of using money to acquire more money is very old. What’s unique about capitalism – and what has made it world-transforming in a way that other status-games are not – is that this is done by means of acquiring control over means of production and over theproduction process.
Nice. If I had to add anything I would point to the prevalence and interdependence of mixed economies and hybrid forms. Families, for instance, as communistic – they allocate according to need and ask according to capacity; states and companies (internally) operate by command – they allocate by fiat and reward by status. Pure capitalist modes of production are not much more than a third of output, if that. They dominate ideologically (and particularly dominate in social status), but are interwoven with and dependent on other forms.
Towards the end their is a typo where you say “won” but intended “own,”
Thanks for sharing this. One question/clarification… does “capitalism” really require that owners of the means of production are seeking money for its own sake? Isn’t it clear that in reality, owners of the means of production have multiple motivations, some are motivated by money’s instrumental value for consumption of various kinds: houses, children’s inheritance, philanthropy, spreading their values, achieving fame, etc.
And isn’t it also clear that profit-maximization is sometimes traded off against non-monetary goals when they conflict?)
The answer is yes!
It is of course true that the individual human beings performing the role of “capitalist” experience all kinds of human motivations. But in order to retain their control over the means of production and their authority over the production process, they have to continually accumulate more money, which under competition means coninually reorgnaizing production to reduce money costs and increase money incomes. If they don’t do this, they cease to be capitalists. This is different from other claims on the surplus. How a feudal lord disposes of his rents normally has no bearing on whether he or she remains a feudal lord.
“How a feudal lord disposes of his rents normally has no bearing on whether he or she remains a feudal lord.”
I think it does. If a lord continually spent more than his rents brought in he could end up in debtor’s prison. He might have to borrow against revenues and give the lender the right to farm his rent collections, tolls and fees, thus losing control over those surpluses. He might have to sell land or a mill, losing authority over those assets and the peasants who work them. He might lose his castle if he can’t afford mercenaries to defend it because he dissipated his rental income, or spent his money on greyhounds instead of warhorses. He might even have to marry a bourgeois heiress. Those things happened to noblemen all the time. They had a lot of downward mobility.
I think pretty much every economic system has the idea that people need to make investments to augment productive resources, and that if they dissipate resources instead they are going to lose them and all their authority and status as well. The feudal system knew about profit and loss and bankruptcy, those aren’t concepts unique to capitalism.
It seems like the characteristics you highlighted as idiosyncrasies of capitalism are pretty basic to any rational economy.
If they are to be rational, investments should be made with an eye to profitable return, which means m’ greater than m, but also c’ greater than c—use value grows along with monetary valuation.
And every rational economy is going to divert some profit into upgrading production processes with an eye towards yet more m’ (= more c’).
And realistically, people who show they can profitably organize production, whether capitalists or commissars, are going to get more authority to organize production.
So what’s the point of singling out capitalism on those grounds? Are there rational economic systems that would reject those premises?
Maybe you covered that point when you said that other systems share certain features of capitalism without quite being capitalist. But in the like-capitalism-but-not-actually-capitalist category you included small business, large bureaucratic corporations, mercantile trading, the financial sector, non-profits and the state, which is just about everything. That makes me wonder how relevant your classic-capitalist model is to a modern economy.
I won’t quarrel with how you’ve clarified and systematized Marxism, but it kind of reminds me that Marxism doesn’t bear up well under clarification and systematization.
In the feudal system proper, feudal lords didn’t get a rent but services in terms of corvées.
Therefore, they didn’t have mercenary armies either.
This changed after the year 1000 when commerce increased again (for example all the brouhaha about John the landless was that he wanted to go from a corvée system to a rent system).
As commerce increased so did finance.
So it seems to me you proved Marxism correct “a contrario”.
I meant that finance too increased after the year 1000 and therefore also bankruptcies were uncommon before, as people largely didn’t have commercial debt.
“In the feudal system proper, feudal lords didn’t get a rent but services in terms of corvées. Therefore, they didn’t have mercenary armies either. This changed after the year 1000 when commerce increased again (for example all the brouhaha about John the landless was that he wanted to go from a corvée system to a rent system).”
Well, “the feudal system proper,” i.e. quasi-contractual systems of reciprocal rights and obligations linking lords and vassals and peasants, had barely begun in the year 1000. And systems of corvée labor and payment in kind were rapidly being replaced by feudal money rents and fees before and during Lackland’s reign in the 12th century, he just capitalized on that development. Many lords faced bankruptcy from Lackland’s taxes, so they were painfully focused on the balance of money rents, and hence farm productivity, against outgoing expenses and taxes, and their survival as landlords depended on keeping that balance in the black.
Unless you’re arguing that feudalism was dying and capitalism was in full bloom in the 12th century, you have to acknowledge that the feudal system proper understood investment for profit, and that authority over resources and production hinged on profits. Again, those are basic concepts in any rational economy.
Will-
We don’t need to worry about extreme claims. The relevant point is that whether Lady Margaret Beaufort remained the Countess of Richmond and Derby has very little to do with how she spent the revenue from her estates last year, nor was frugal use of her revenues going to get her any more titles in any reliable way. Mostly all that mattered was who her father was; after that were her relationships with the king and other important nobles. It’s a very different situation from someone in apomparable position today. (Tho conversely, Michael Bloomberg’s wealth will suffer much less from a failed run for the president than his Tudor equivalent would have.)
The point again isn’t that there is no connection between market transactions and the sources of wealth and status, just that they are much more weakly articualted. And they’re not articulated at all with the production process, which is carried out by the tenants of the estate exactly the same whoever their overlord happens to be.
“And they’re not articulated at all with the production process, which is carried out by the tenants of the estate exactly the same whoever their overlord happens to be.”
No, feudal lords actively managed their estates to make production more profitable. That’s what enclosures were all about, for example. Starting in the 13th century, some lords realized they could charge much higher rents by running the peasants off the commons, or evicting a tenant, and grazing sheep on the land instead, because wool brought higher profits.
Lords managed their estates because they needed money to pay their bills to maintain their feudal status. For example, they were often under very precisely articulated feudal obligations to provide their lieges with specified contingents of soldiers when required. If they couldn’t afford to outfit the troops, or pay a scutage in lieu, they could lose their lordships.
On the upside, money bought a lot of feudal titles. If you had enough money to outfit a company of soldiers that wins a battle for the king, you’re likely to be rewarded with some pretty sweet titles and estates.
The larger point is that every economic system is concerned with endless accumulation, because that’s implicit in the notion of positive returns on investment; and it means endless accumulation of money wherever money exists. And every economic system bases authority on the profitable husbanding of resources (money-denominated wherever money exists). It’s not tenable to identify those two features as the unique Platonic essence of capitalism, because they are ubiquitous.
It sounds like you’re defining capitalism and capitalists as an ideal type. Ideal types are models, and like George Box said: All models are wrong, but some are useful. Even useful models, can easily be misused.
It’s unclear to me why it’s helpful to define capitalism so narrowly as to exclude a business owner that maximizes profits with the hope to retire as soon as they’ve acquired enough money to maintain their lifestyle. But don’t feel obliged to try to convince me here in the comments. Thanks for sharing!
Well yes.
As I say in the notes:
Historically, we can find many cases that satisfy some but not all of these conditions. People sometimes debate which of these cases are “really” capitalism, but there’s no need to get too worried about these debates. It’s simpler to think of a core or pure concept of cap- italism and various real world cases that never completely fit the concept, but get more or less close to it.
Capitalism is a tricky beast to define.
Economic systems have to invest and at least gain back that investment in increased returns to function – this is no more than a re-statement of the fact that everything has to eat to live. An animal ‘invests’ in knowledge of its surroundings, of its predators and prey, of shelter, mates and so on.
IMHO, capitalism is about the dominant role of money wealth, both in prestige and social standing and in production. A medieval lord had to ‘invest’ in social relations – especially his kin network but also more widely, in prestige (dress, display), in martial and other reputation, in the loyalty of his retainers and dependents. Rome kept a wall between wealth and power (wealth was land and rents and clients; power was military position – as Marx astutely observed, in Rome the army was the proletariat). One could multiply he examples.
Over the last two centuries money has tended to push more and more on alternative structures. It remains a hybrid (families, states etc as I noted above), but money is dominant as never before – for now.
@Will Boisvert
I see that Wikipedia gives the beginning of feudalism in the 9th century, but the economic system on which feudalism was based (that Wikipedia calls manoralism) is much older and started in the late Roman empire.
Feudalism was basically just a legal ratification of manoralism.
If we look at manoralism, that is the correct perspective for the argument of the OP, it started around the 4th century and became more peaked around the year 1000.
After the year 1000, the increase in commerce and the increased urbanization changed substantially the economy, and we have the first instances of urban proletariat (see for example the Ciompi revolt), however this was true only in the cities, the mayority of the population were farmers and their life didn’t change much.
If we look only at the cities, we can indeed see the decomposition of the feudal system and the birth of the capitalist/mercantile system after the year 1000, but it was a very long process. The double entry bookkeeping for example was reintroduced in Italy in the 13th century through the Arabs, for example. So while certainly capitalism wasn’t in full bloom just after the year 1000, we can trace its beginning in the centuries following that year. We can discuss exactly when but I’d say that by the year 1300 capitalism had already begun, although it wasn’t already dominant.
MR2, If you want to define capitalism as money + commerce + bookkeeping, that’s OK with me; I kind of agree.
But that’s not really how JW defines capital. He specifically puts into the category of not-really-capital things like “finance capital, or money lenders,” “merchant capital or trade,” and “craft or artisan production.” These three sectors were the main forms of the capitalism that you say was coming on the scene in 1300, the sectors that innovated bookkeeping, for example. But JW explicitly says those sectors are not capitalist under the definition of capital that he’s working from.
That’s part of the problem I have with his discussion of capitalism. The distinctions he’s drawing between what does and doesn’t count as capital seem arbitrary and meaningless, and devoid of analytic payoff.
At a more basic level, he’s identifying the fundamental principles of capitalism as 1) the drive to accumulate money through the production process, and 2) that authority over production rests on that accumulation. And he’s saying that those principles of authority based on accumulation are a unique feature of capitalism that didn’t apply to, say, feudal lords.
(That’s not right in the case of feudal lords. We know that feudal lords in the year 1200 were preoccupied with accumulating money to maintain their land holdings and authority; I think you’ll find the same was true in the 4th century, too.)
In general, those principles just aren’t unique to capitalism. I think every economic system, whether it has money and commerce or not–feudalism, communism, Bronze Age shepherds who want their flocks to multiply—recognizes the logic of accumulation (which will be money-denominated if money exists), and grants authority to those who can reliably accumulate. That logic is implicit in the very concept of positive returns to investment, which is economic rationality itself.
(Again, I don’t have a problem with JW’s account if it’s meant purely as a description of what Marxists believe rather than an endorsement.)