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Overview
The book includes biographical sketches and brief analyses of the major proponents and critics of capitalism throughout history, including Adam Smith, Thomas Malthus, Jeremy Bentham, John Stuart Mill, Karl Marx, Thorstein Veblen, Rosa Luxemburg, John Maynard Keynes, Paul Samuelson, Milton Friedman, and Eric Hobsbawm. This new edition includes a new preface and an additional chapter by the author.
Product Details
| ISBN-13: | 9781783716609 |
|---|---|
| Publisher: | Pluto Press |
| Publication date: | 07/20/2004 |
| Sold by: | Barnes & Noble |
| Format: | eBook |
| Pages: | 344 |
| File size: | 764 KB |
About the Author
Douglas Dowd was a widely respected academic and political activist. He taught at Cornell University, Johns Hopkins University, University of California, Berkeley, San Jose State University and at the University of Modena in Italy. He is the author of Capitalism and its Economics (Pluto, 2004), Inequality and the Global Economic Crisis (Pluto, 2009) and Understanding Capitalism (Pluto, 2000).
Read an Excerpt
CHAPTER 1
Birth: The Industrial Revolution and Classical Political Economy, 1750–1850
THE START OF SOMETHING BIG
Just as Medieval Europe grew out of the decayed remnants of the Roman Empire, and did so in consequence of innumerable and diverse struggles over long stretches of time and space, so did capitalism thrust its way into history over the enfeebled elements of monarchical–mercantilist Europe. But, as noted in the Prologue, capitalism could do so only in dynamic, uneven, and often explosive relationships with its siblings – colonialism, nationalism, and industrialism.
The ensuing centuries, whether viewed in quantitative or qualitative, in economic, social, cultural, political, technological or military terms, or as a set of achievements and disasters or both, made all preceding epochs seem quaint in comparison.
That the industrial revolution and robust capitalism took hold first in Britain is now rarely disputed; nor, any longer, are the reasons why it all took place there and then, and not elsewhere. The reasons are many – the appropriate resources, a long history of pre-modern industry, of involvement in global commerce and extensive colonial holdings and finally and critically, a relatively fluid social process compared to others at that time.
Capitalism lives by change, produces it as no other social formation, and needs it as no other, as Marx had seen in 1848: "Constant revolutionizing of production, uninterrupted disturbance of all social conditions ..." But its very birth required much in the way of changes, also. To understand how and why that requirement was met first in Great Britain it is pertinent to expand on generalizations made in the Prologue by comparing Britain with France – a seemingly likely competitor for becoming an industrial capitalist nation. In the event, however, France trailed Britain by more than a century.
Why Britain took the lead
A casual look at France's relevant characteristics in the seventeenth and eighteenth centuries would suggest a different outcome, for it too appeared to possess the prerequisites. In addition to being the oldest and the strongest of nation-states, France claimed a substantial empire and excellent natural resources, had a relatively large population, and it too was dotted by thriving pre-modern industries. But, a closer look – most notably that of John U. Nef, in Industry and Government in France and England, 1540–1640 (1940) – shows that France lagged behind not only Britain throughout the nineteenth century but also the as yet non-existent Germany and the new United States – not because France lacked the vital material bases for industrial capitalism, but because of the social framework and standards that led to the misuse of its advantages.
That this would be so had its roots most especially in what happened as regards the State in England but did not happen in France – and why – most pointedly in the seventeenth century. As the 1640s began, England was entering a new period of institutional transformation, which broke the ground for the socioeconomic flexibility enabling modern industry and capitalist rule to come into being. France, meanwhile, though richer and more powerful than England, was developing increased socoioeconomic rigidities. Thus, to mention "1640" in England would elicit the likely response: "Puritan Revolution." For the French the response (setting the arts aside) would focus instead on the splendor of the court and the military prowess of Louis XIV's France; and his first minister, Colbert, was the most insistent and the most coherent of all "mercantilists" – the main target of Smith's Wealth of Nations. In the very years when Britain was moving toward industrial capitalism, Napoleon was expanding east and south, through Europe and into the Mediterranean.
Seemingly unbeknownst to the French, the strengthening of British industry would also bring military superiority, on land and sea; meanwhile, the French derided them as becoming "a nation of shopkeepers." When the stodgy British defeated Napoleon at Waterloo, they also gained a growing hegemony over the economic development (among other matters) of Europe. The added strength engendered more of the same, sufficient to allow Britain to "rule the waves" – both literally and figuratively – for the rest of the century.
The Puritan Revolution has often been seen as being more "bourgeois" than "Puritan," but the division is more usefully viewed as one between traditionalists and republicans. Its main consequence (for present purposes) was the breaking up of debilitating remnants of feudalism and the codification of limits on the power of the Crown. By the mid-eighteenth century that meant more leeway for unfettered private power.
Commodification as revolution
The key element in that freeing-up process – wherein traditions of social control and stability were displaced by commercial criteria and violent change – was the "enclosure movement" of the late eighteenth century. What was being "enclosed" were the agricultural lands of Britain, whether for the grazing of sheep or the cultivation of grains.
The most important result of the enclosures was the commodification of both land and labor: the transformation of countless thousands of small farms into (by 1790) giant holdings (2,000–3,000 large landlords owning 75 per cent of the cultivable acreage). "Commodification" meant that all goods and services would be up for sale; thus it also meant the elimination of traditional social protections. A major result of all this was a class of powerless, dispossessed farmers, able to survive only by "welfare" or de facto slave labor.
The resulting conditions for what had been "a bold peasantry" were considerably worse than those just noted, cruel though they were. The whole way of life of a large percentage of the population was destroyed; and though traditional rural life often (though not in all respects or always) deserved Marx's characterization of "idiocy" (to which could be added brutality), it had its virtues as well. Be that as it may, the fate of what had been rural people in the century stretching from 1750 to 1850 became for several generations a living urban hell – a hell made of cotton.
Before pursuing the important direct and indirect role of cotton in British development and the distribution of its benefits and costs, it is more than simply relevant to undertake a specific statement on the role of the State in the industrial capitalist processes of Britain. This, not only because that role was important, but because the role the State has played in the economic development of all nations has been (and remains) so generally ignored, denigrated, or denied – or simply misunderstood. Rarely is that the case for economic historians. Usually it is the case for economic theorists and the ideologues of capitalism (often the same people): one of the larger sets of "misunderstandings" prompting this book.
THE STATE: NOW YOU SEE IT, NOW YOU DON'T
All agree that what the State has or has not done has been and remains of great importance in the development of society. Beyond that simple statement, disagreement begins and becomes sharp. When has the State's role been beneficial and when harmful? When vital and when of small consequence? What is the "composition" of the State, as between public and private institutions (or even persons)? These and other such questions place an examination of the role of the State in a context of both theoretical and ideological dispute, while raising still another, analytically more intricate question. To what degree and in what ways does the relationship of the State to economic development reveal and in what ways conceal the changing structure and functions of social power?
Virtually all the debate over these highly charged questions between those who wish to minimize and those who wish to extend the State's role centers on easily discernible, specific policies: statutes, regulations, fiscal and monetary and commercial policies, subsidies, welfare, and the like. But a minimal understanding of the State's role requires that we also comprehend what the State has forced or allowed to be prevented or undone and, among other matters, what the State has been responsible for that did not appear in specific actions; that did not, often, "appear" at all.
To appreciate the complications – and the importance – of this point would of course require going well beyond what is practical here. But an initial grasp of the important confusions may be had by a study of the quote that follows, a statement made by a reputable mainstream economic historian of both Britain and Germany, W.O. Henderson. He declares of Britain that
In the age of laissez-faire the role of government in economic affairs was a passive one ... The social evils in town and countryside that followed in the wake of the Industrial Revolution might have been alleviated at an earlier date if the governing classes had been better informed about the great changes that were taking place in the mines and factories ... The government was inactive because it saw no good reason why it should do anything.
The "passivity" and "inactivity" of the "government" and "governing classes" are the key terms here. They stand in most minds for the role of the British "State" in the industrial revolution, as they did in Henderson here (and elsewhere in his writing). But, meticulous researcher that he was, he could surely have learned that "the governing classes," far from being passive and inactive, were the prime movers, and, as well, the prime beneficiaries of the "social evils" and the "great changes" of the time. Furthermore, that their "inactivity" and inability to see any "good reason" why they "should do anything" are explicable in terms of their combination of private self-interest and public power.
The government of Britain in the "age of laissez-faire" – whether in the Commons or the Lords – was made up largely of landed gentry and nobility and those (some being in the latter groups also) incipient or emerging "Whigs" whose power and aspirations centered on those dreadful and always deepening and expanding coal mines and hoped-for expanding trade (not least with colonies, where conditions were made at least as bad) and industry. Those public and private "roles," taken together (and setting aside the always weakening Crown), were then tantamount to much of what can be meant by "the State": then and there, and, in different detail, here and now.
There are surface differences between the evictions of "a once bold peasantry" from their copyholds during the Enclosures (where the agency was Parliament and the "judge" was the prime power in the locality), and the conditions in the mills and coal mines. Similarly, there were differences between British conditions and those of German and U.S. workers (among others) in their economic processes. But there is more that is common than diverse as between those conditions: in all cases, those who were the State or whose voices resounded in its figurative halls were – as they are still – prominent among those directly responsible for and profiting from those same conditions.
It seems necessary – especially in a capitalist society – repeatedly to remind ourselves that the links between economic and political power are forged of the most durable steel. Indeed, that necessity grows always stronger in the modern world: as democracy has grown, so has the need – and the ability – for those in power to develop and to use direct and indirect modes of disinformation and misinformation, and to suppress plain information regarding those links of power. The generic term for all this has become "spin," with the media its stage, TV its star performer. Of that, much more in Part II.
As we now return to Britain's industrial revolution, and the disruption and horrors thus entailed for the largest part of the population, we may note in passing that the absence of democracy in that period very much simplified the tasks of the State at home. Within Britain, the use of force was perennial, with violence only intermittently necessary; abroad, both force and violence were the routine tasks of the State, if there was to be an expanding British Empire.
EMPEROR COTTON
The wool trade had been important in England since medieval times. Its production and trade grew in importance as the eighteenth century progressed; by its end, wool had long been vital to British economic strength. But with the emergence of the modern factory system, signaled by the first factory in 1815, cotton more than took wool's place. In the eighteenth century, wool production was not located in factories (as we understand the term) but in rural homes – "cottage industry" – usually as an integral complement of an agricultural family's work.
In the first years of the eighteenth century, the spinning wheel and the handloom were the technology of wool production. That the weaving was more efficient than the spinning (with the gap widening from the 1730s on) stimulated the invention of the spinning jenny; by the 1760s the "water frame" had been invented; in the 1780s the jenny and the water frame were combined in the "mule." That development effectively made cottage industry a thing of the past, bringing water-powered wool mills into being. Weaving, having fallen behind in efficiency, then developed the power loom as the nineteenth century opened. Watt's workable steam engine had been devised by 1776, and by 1815 that was combined with the mule and the power loom for cotton textiles to become the world's first modern factory.
The foregoing is an instance of capitalism's fusion with industrialization; all along that way, colonialism and nationalism were also doing their part. Wool was "grown" in English acres; cotton came from British colonies – first from the slave plantations of the British West Indies, then from their counterparts in North America – as, surprisingly, did most of the markets. As Hobsbawm points out,
Until 1770 over ninety per cent of British cotton exports went to colonial markets ... mainly to Africa. The vast expansion of exports after 1750 gave the industry its impetus; between then and 1850 cotton exports multiplied ten times over. Cotton thus acquired its characteristic link with the underdeveloped world, which it retained and strengthened through all the various fluctuations of fortune. (1968, 41)
The first cotton factory using steam power, as noted, was not created until 1815. Following upon that, the cotton industry became the principal motive force of the industrial revolution – and, thus, of Britain's commercial, financial, and military dominance of the world, for many decades.
Hell on earth
The working conditions and wages of that first and of ensuing mills – to say nothing of coal mines and other new industries – were simply dreadful: "satanic," as the poet William Blake put it. But at least, by then, there was work. The dispossessed rural families from the mid-eighteenth to the second quarter of the nineteenth century mostly had no work. In consequence, as the industrial revolution took hold in Britain in the early nineteenth century, something like half of its population were not only very poor and powerless, its men, women, and children were quite simply demoralized: a social disaster now being repeated (in larger numbers) in today's "emerging economies."
The "choices" of a substantial portion of the population were few and stark: to work 12–14 hours a day for a wage barely allowing survival, or to be effectively imprisoned in a "workhouse" or mine or mill (husbands and wives and children separated from each other – like slaves – often permanently), or to starve.
But that picture is taken from a distance. Moving closer, we see children (aged four to ten years) working in the cotton mills, where their small hands could manipulate thread and spindle better than adults. Alongside small women, we see them working in coal mines, pulling what we might call "kiddy-carts" of coal through tunnels that could be smaller in diameter (and thus less costly) than those for a full-grown man. That such women and children, once in the mines might never escape from them alive (or un-abused), was of course common. As the Hammonds remarked, referring to Britain's role in the slave trade as the industrial revolution evolved:
the steam engine was invented too soon for the happiness of man; it was too great a power to put in the hands of men who still bought and sold their helpless fellow creatures.
In the world of ideas, then as now, there were advocates of lunging industrial capitalism who possessed the moral ingenuity to cheer it on, no matter what. One such in industrialism's infancy was Jeremy Bentham, whose "utilitarianism" and "science of moral arithmetic" will be discussed below. Bentham, referring to small children, argued that the new industrial technology of the cotton mills demonstrated that "infant man, a drug at present so much worse than worthless, may be endowed with an indubitable and universal value" (Stark, 1954). An early instance of what is now called "tough love."
(Continues…)
Excerpted from "Capitalism and its Economics"
by .
Copyright © 2004 Douglas Dowd.
Excerpted by permission of Pluto Press.
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Table of Contents
Preface to new editionPrologue
PART I. 1750-1945
1. Birth – The Industrial Revolution and Classical Political Economy, 1750-1850
2. Maturation – Global Capitalism and Neoclassical Economics, 1850–1914
3. Death Throes – Chaos, War, Depression, War Again; Economics in Disarray, 1914–1945
PART 2. 1945-2000
4. Resurrection – Global Economy II and Crisis; Hopeful Stirrings in Economics. 1945–1975
5. New World Order – Globalisation and Financialisation; and Decadent Economics, 1975–2000
6. The Unfolding Crises of the 21st Century
Epilogue
Bibliography
Name Index
Subject Index