Primitive accumulation of capital

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In Marxist economics and preceding theories,[1] the problem of primitive accumulation (also called previous accumulation, original accumulation) of capital concerns the origin of capital, and therefore of how class distinctions between possessors and non-possessors came to be.

Adam Smith's account of primitive-original accumulation depicted a peaceful process. David Harvey summarizes Smith's description of the process in the following terms: "There were some people that were hard working and some people who were not. Some people who could be bothered, and some people who could not be bothered. And the result of that was that, bit by bit, those who were hard working, and could be bothered, accumulated some wealth. And eventually, those who could not be bothered, could not accumulate wealth, and in the end, in order to survive, preferred, actually, to give up their labor power as a commodity, in return for a living wage."[2]

It became very important in Adam Smith's account, not to bring in the state as an agent of primitive accumulation. The pillar of Smith's argument, like most classical political economists, was to let the state withdraw which would allow societies to flourish by letting laissez-faire markets allocate goods and services. James Denham-Steuart and other classical political economists, argued instead for a crucial role for the state in the origin of capitalism, holding that violence under the supervision of the state was needed in order for the original accumulation to occur.[3]

David Harvey summarized Karl Marx's description of it: primitive accumulation "entailed taking land, say, enclosing it, and expelling a resident population to create a landless proletariat, and then releasing the land into the privatized mainstream of capital accumulation".[4]

Naming and translations[edit]

The concept was initially called in different ways, and the expression of an "accumulation" which is at the origin of capitalism, began to appear with Adam Smith.[5] Smith, in his English language The Wealth of Nations spoke of a previous accumulation;[6] Karl Marx, in the German language Das Kapital, reprised Smith's expression, by translating it to German as ursprünglich (original, initial); Marx's translators, in turn, rendered it into to English as primitive.[1] James Steuart, with his 1767 work, is considered by some scholars as the greatest classical theorist of primitive accumulation.[7]

Reason for the concept[edit]

Marx showed in Das Kapital how "money is changed into capital" and "how capital generates surplus-value" forming more capital. But in doing so, he had already assumed that there exists a mass of Capital available for investment, and there already exists exploitable Labor power. He had shown how capitalist production could itself reproduce the conditions of its own existence on an ever broader scale. But, as he says, "the whole movement seems to turn into a vicious circle."

Capital is money that makes more money: value in search of Surplus value. In other words, it is money that gets reinvested. It originates in the activity of buying goods in order to resell them at a profit, and first emerges in commercial trade connecting different economic communities, whose production is not yet capitalist. The existence of usury capital, bank capital, rentier capital and merchant capital historically precedes capitalist industry.

To explain how the capitalist mode of production comes into being in the first place, Marx had to study history to locate an original accumulation that facilitated capitalist relations. Adam Smith had called this "previous accumulation" – an accumulation which did not result from capitalist production, but formed an external starting point to it.

The myths of Political Economy[edit]

In disinterring the origins of capital, Marx felt the need to dispel what he felt were religious myths and fairy-tales about the origins of capitalism. Marx wrote:

"This primitive accumulation plays in Political Economy about the same part as original sin in theology. Adam bit the apple, and thereupon sin fell on the human race. Its origin is supposed to be explained when it is told as an anecdote of the past. In times long gone-by there were two sorts of people; one, the diligent, intelligent, and, above all, frugal elite; the other, lazy rascals, spending their substance, and more, in riotous living. (...) Thus it came to pass that the former sort accumulated wealth, and the latter sort had at last nothing to sell except their own skins. And from this original sin dates the poverty of the great majority that, despite all its labour, has up to now nothing to sell but itself, and the wealth of the few that increases constantly although they have long ceased to work."

What has to be explained is how the capitalist relations of production are historically established. In other words, how it comes about that means of production get to be privately owned and traded in, and how the capitalists can find workers on the labor market ready and willing to work for them, because they have no other means of livelihood; also referred to as the "Reserve Army of Labor."

Marx's case history[edit]

Karl Marx's discussion of primitive accumulation in part eight of Das Kapital, Vol. 1 has become a cornerstone of the Marxian critique of 'bourgeois' political economy (in German: ursprüngliche Akkumulation, literally "original accumulation" or "primeval accumulation"). Its purpose is to help explain how the capitalist mode of production came into being. According to Marx, before there could be money with which to make more, i.e. capital, an original accumulation must take place. This might take the form of resource extraction, conquest and plunder, and/or enslavement.

As Marx writes:

"The discovery of gold and silver in America, the extirpation, enslavement and entombment in mines of the indigenous population of that continent, the beginnings of the conquest and plunder of India, and the conversion of Africa into a preserve for the commercial hunting of black-skins, are all things which characterize the dawn of the era of capitalist production. These idyllic proceedings are the chief moments of primitive accumulation."[8]

In a case history of England, Marx looks at how the serfs became free peasant proprietors and small farmers, who were, over time, forcibly expropriated and driven off the land, forming a property-less proletariat.

He also shows how more and more legislation is enacted by the state to control and regiment this new class of wage workers. In the meantime, the remaining farmers became capitalists, operating more and more on a commercial basis.

The link between primitive accumulation and colonialism[edit]

At the same time as local obstacles to investment in manufactures are being overcome, and a unified national market is developing with a nationalist ideology, Marx sees a strong impulse to business development coming from world trade:

"The discovery of gold and silver in America, the extirpation, enslavement and entombment in mines of the aboriginal population, the beginning of the conquest and looting of the East Indies, the turning of Africa into a warren for the commercial hunting of black-skins, signaled the rosy dawn of the era of capitalist production. These idyllic proceedings are the chief moments of primitive accumulation. On their heels treads the commercial war of the European nations, with the globe for a theatre. It begins with the revolt of the Netherlands from Spain, assumes giant dimensions in England's Anti-Jacobin War, and is still going on in the opium wars against China, &c. The different moments of primitive accumulation distribute themselves now, more or less in chronological order, particularly over Spain, Portugal, Holland, France, and England. In England at the end of the 17th century, they arrive at a systematical combination, embracing the colonies, the national debt, the modern mode of taxation, and the protectionist system. These methods depend in part on brute force, e.g., the colonial system. But, they all employ the power of the state, the concentrated and organized force of society, to hasten, hot-house fashion, the process of transformation of the feudal mode of production into the capitalist mode, and to shorten the transition. Force is the midwife of every old society pregnant with a new one. It is itself an economic power." (chapter 31, emphasis added).[9]

Primitive accumulation and privatization[edit]

According to Marx, the whole purpose of primitive accumulation is to privatize the means of production, so that the exploiting owners can make money from the surplus labour of those who, lacking other means, must work for them.

Marx says that primitive accumulation means the expropriation of the direct producers, and more specifically "the dissolution of private property based on the labor of its owner... Self-earned private property, that is based, so to say, on the fusing together of the isolated, independent laboring-individual with the conditions of his labor, is supplanted by capitalistic private property, which rests on exploitation of the nominally free labor of others, i.e., on wage-labor." (chapter 32, emphasis added).

Chapter Thirty-Two: Historical Tendency of Capitalist Accumulation

The social relations of capitalism[edit]

Capitalism is a system of social relations, in which capitalists are fully human actors, and workers are exploited. Primitive accumulation precedes capitalism in providing the accumulation of wealth and resources to induce less fortunate people to enter into a highly unequal relationship with a capitalist. In the last chapter of Das Kapital, Vol. 1, Marx illustrates the social conditions necessary for capitalism with a comment about Edward Gibbon Wakefield's theory of colonization:

"...Wakefield discovered that in the Colonies, property in money, means of subsistence, machines, and other means of production, does not as yet stamp a man as a capitalist if there be wanting the correlative – the wage-worker, the other man who is compelled to sell himself of his own free-will. He discovered that capital is not a thing, but a social relation between persons, established by the instrumentality of things. Mr. Peel, he moans, took with him from England to Swan River, West Australia, means of subsistence and of production to the amount of £50,000. Mr. Peel had the foresight to bring with him, besides, 3,000 persons of the working-class, men, women, and children. Once arrived at his destination, 'Mr. Peel was left without a servant to make his bed or fetch him water from the river.' Unhappy Mr. Peel, who provided for everything except the export of English modes of production to Swan River!"

Capital, vol. I, ch. 33, at www.marxists.org.

This is indicative of Marx's more general fascination with settler colonialism, and his interest in how "free" lands --or, more accurately, lands seized from indigenous people--, could disrupt capitalist social relations.

Ongoing primitive accumulation[edit]

"Orthodox" Marxists see primitive accumulation as something that happened in the late Middle Ages and finished long ago, when capitalist industry started. They see primitive accumulation as a process happening in the transition from the feudal "stage" to the capitalist "stage".

However, this can be seen as a misrepresentation of both Marx's ideas and historical reality, since feudal-type economies exist in various parts of the world, even in the 21st century.

Marx's story of primitive accumulation is best seen as a special case of the general principle of capitalist market expansion. In part, trade grows incrementally, but usually the establishment of capitalist relations of production involves force and violence; transforming property relations means that assets previously owned by some people are no longer owned by them, but by other people, and making people part with their assets in this way involves coercion.

In his preface to Das Kapital Vol. 1, Marx writes "The country that is more developed industrially only shows, to the less developed, the image of its own future". The less developed countries also face a process of primitive accumulation, it is an ongoing process of expropriation, Proletarianization and Urbanization.

Because it is a fundamental tool of capitalist initiation and restoration, and because the rate of profit always begins to fall, sooner or later, primitive accumulation hits us all. Marx comments that "if, however, the German reader shrugs his shoulders at the condition of the English industrial and agricultural labourers, or in optimist fashion comforts himself with the thought that in Germany things are not nearly so bad, I must plainly tell him, "De te fabula narratur ! (the tale is told of you!)".

Marx was referring here to the expansion of the capitalist mode of production (not the expansion of world trade), through expropriation processes. He continues, "Intrinsically, it is not a question of the higher or lower degree of development of the social antagonism that results from the natural laws of capitalist production. It is a question of these laws themselves, of these tendencies working with iron necessity towards inevitable results."

The way that the process by which foreign economic communities are subordinated to the laws of motion of capital is "primitive accumulation": the plunder or Privatization of the commons and the Proletarianization of the working population.

Ernest Mandel & David Harvey's theories[edit]

Ernest Mandel's theory of primitive accumulation[edit]

Ernest Mandel offers a Marxian theory which differs from orthodox Marxism stage theory. In his theory, primitive accumulation is part of the uneven and combined development of capitalism on a world scale.

Because business start-ups, forcible expansion of capitalist markets, and expropriation of peasants are going on all the time, primitive accumulation is also a process which happens all the time. The orthodox Marxism overlooked this social trend, possibly because they were fixated on Marx's story about English peasants being thrown off the land, rather than studying the facts of world history.

Mandel surveys the history of capitalist development from the early Middle Ages, and distinguishes between primitive accumulation of money capital and primitive Industrial capitalism. According to Mandel, one does not necessarily lead to the other. He calculates that the transfer of value to Europe from the slave trade and colonial robbery between 1500 and 1750 amounted to a sum of capital larger than the total capital invested in European industries in the year 1800.

The predicament of the "developing countries", Mandel says, expresses a double tragedy. Not only did they pay the price for the international concentration of capital; they also had to overcome industrial backwardness in a world economy already dominated by the industrial goods of the advanced countries.

So, while the world market boosted industrialization between the 16th and 19th centuries in Europe, North America and Japan, by about 1900 the same world market became an obstacle or brake to the industrialization of the third world, which mostly could not compete with Europe, North America and Japan. Some "intermediate" countries (e.g. settler colonies) did industrialize, but typically in a one-sided way; many of the industrial goods were produced for export.

The integration of developing countries into the world market occurred mainly on the initiative of the Western powers, in a way consistent with their interests. This created a hierarchy of nations in the international division of labour.

Because local demand was lacking in the third world, and because investors were unwilling to create colonial competition for the home country, investments focused mainly on agriculture and extraction of minerals for export.

At best, the outcome of all this was half-industrialization, and an economy which does not adequately serve the needs of the local population. There was plenty capital and unemployed labour, but little possibility for local industrial development benefiting the local population.

Mandel concluded that because the third world bourgeoisie mostly doesn't really care about developing the country, workers and peasants must take state power and carry out the necessary economic changes.

David Harvey's theory of accumulation by dispossession[edit]

David Harvey expands the concept of "primitive accumulation" to create a new concept, "accumulation by dispossession", in his 2003 book, "The New Imperialism". Like Mandel, Harvey claims that the word "primitive" leads to a misunderstanding in the history of capitalism; that the original, "primitive" phase of capitalism is somehow a transitory phase that need not be repeated once commenced. Instead, Harvey maintains that primitive accumulation ("accumulation by dispossession") is a continuing process within the process of capital accumulation on a world scale. Because the central Marxian notion of crisis via "over-accumulation" is assumed to be a constant factor in the process of capital accumulation, the process of "accumulation by dispossession" acts as a possible safety valve that may temporarily ease the crisis. This is achieved by simply lowering the prices of consumer commodities (thus pushing up the propensity for general consumption), which in turn is made possible by the considerable reduction in the price of production inputs. Should the magnitude of the reduction in the price of inputs outweigh the reduction in the price of consumer goods, it can be said that the rate of profit will, for the time being, increase. Thus:

"Access to cheaper inputs is, therefore, just as important as access to widening markets in keeping profitable opportunities open. The implication is that non-capitalist territories should be forced open not only to trade (which could be helpful) but also to permit capital to invest in profitable ventures using cheaper labour power, raw materials, low-cost land, and the like. The general thrust of any capitalist logic of power is not that territories should be held back from capitalist development, but that they should be continuously opened up." (Harvey, The New Imperialism, p.139).

Harvey's theoretical extension encompasses more recent economic dimensions such as intellectual property rights, privatization, and predation and exploitation of nature and folk lore.

Privatization of public services puts enormous profit into capitalists' hands. If it belonged to the public sector, that profit wouldn't have existed. In that sense, the profit is created by dispossession of peoples or nations. Destructive industrial use of the environment is similar because the environment "naturally" belongs to everyone, or to noone: factually, it "belongs" to whoever lives there.

Multinational pharmaceutical companies collect information about how herb or other natural medicine is used among natives in less-developed country, do some R&D to find the material that make those natural medicines effective, and patent the findings. By doing so, multinational pharmaceutical companies can now sell the medicine to the natives who are the original source of the knowledge that made production of medicine possible. That is, dispossession of foklore (knowledge, wisdom, practice) through intellectual property rights.

David Harvey also argues that accumulation by dispossession is a temporal or partial solution to over-accumulation. Because accumulation by dispossession makes raw materials cheaper, the profit rate can at least temporarily go up.

Harvey’s interpretation has been criticized by Brass (2011)[citation needed], who disputes the view that what is described as present-day primitive accumulation, or accumulation by dispossession, entails proletarianization. Because the latter is equated by Harvey with the separation of the direct producer (mostly smallholders) from the means of production (land), Harvey assumes this results in the formation of a workforce that is free. By contrast, Brass points out that in many instances the process of depeasantization leads to workers who are unfree, because they are unable personally to commodify or recommodify their labour-power, by selling it to the highest bidder.

Schumpeter's critique of Marx's theory[edit]

The economist Joseph Schumpeter disagreed with the Marxist explanation of the origin of capital, because Schumpeter did not believe in exploitation. In liberal economic theory, the market returns to each person the exact value she added into it; capitalists are just people who are very adept at saving and whose contributions are especially magnificent, and they do not take anything away from other people or the environment. Liberalists believe that capitalism has no internal flaws or contradictions; only outside threats. To liberalists, the idea of the necessity of violent primitive accumulation to capital is particularly incendiary. Schumpeter wrote rather testily:

"[The problem of Original Accumulation] presented itself first to those authors, chiefly to Marx and the Marxists, who held an exploitation theory of interest and had, therefore, to face the question of how exploiters secured control of an initial stock of 'capital' (however defined) with which to exploit – a question which that theory per se is incapable of answering, and which may obviously be answered in a manner highly uncongenial to the idea of exploitation" (Joseph Schumpeter, Business Cycles, Vol. 1, New York; McGraw-Hill, 1939, p. 229).

Schumpeter argued that imperialism was not a necessary jump-start for capitalism, nor is it needed to bolster capitalism, because imperialism pre-existed capitalism. Schumpeter believed that, whatever the empirical evidence, capitalist world trade could in principle just expand peacefully. If imperialism occurred, Schumpeter asserted, it has nothing to do with the intrinsic nature of capitalism itself, or with capitalist market expansion. The distinction between Schumpeter and Marx here is subtle. Marx claimed that capitalism requires violence and imperialism—first, to kick-start capitalism with a pile of booty and to dispossess a population to induce them to enter into capitalist relations as workers, and then to surmount the otherwise-fatal contradictions generated within capitalist relations over time. Schumpeter's view was that imperialism is an atavistic impulse pursued by a state independent of the interests of the economic ruling class.

"Imperialism is the object-less disposition of a state to expansion by force without assigned limits... Modern Imperialism is one of the heirlooms of the absolute monarchical state. The "inner logic" of capitalism would have never evolved it. Its sources come from the policy of the princes and the customs of a pre-capitalist milieu. But even export monopoly is not imperialism and it would never have developed to imperialism in the hands of the pacific bourgeoisie. This happened only because the war machine, its social atmosphere, and the martial will were inherited and because a martially oriented class (i.e., the nobility) maintained itself in a ruling position with which of all the varied interests of the bourgeoisie the martial ones could ally themselves. This alliance keeps alive fighting instincts and ideas of domination. It led to social relations which perhaps ultimately are to be explained by relations of production but not by the productive relations of capitalism alone." (Joseph A. Schumpeter: The Sociology of Imperialism, 1918).

See also[edit]

Notes[edit]

  1. ^ a b Perelman, p.25 (ch. 2 )
  2. ^ David Harvey, class 12, time range 20:00–22:00
  3. ^ David Harvey, class 12, time range 22:00–23:00
  4. ^ David Harvey (2005), ch. 4 "Accumulation by Dispossession", pp.149, 145–6
  5. ^ Smith 1776, 2.3 (Book Two, Of the Nature, Accumulation, and Employment of Stock., Introduction) quote: "... the accumulation of stock must, in the nature of things, be previous to the division of labour..."
  6. ^ Karl Marx's Capital, vol I Ch. 26, states "The whole movement, therefore, seems to turn in a vicious circle, out of which we can only get by supposing a primitive accumulation (previous accumulation of Adam Smith) preceding capitalistic accumulation; an accumulation not the result of the capitalistic mode of production, but its starting point." referring to Adam Smith's Wealth, Bk II introduction, "This accumulation must, evidently, be previous to his applying his industry for so long a time to such a peculiar business."
  7. ^ Perelman, p.170 (ch. 7 )
  8. ^ Karl Marx. Capital, vol. 1, "Chapter XXXI, Genesis of the Industrial Capitalist," in Marx/Engels Collected Works, vol. 35 (London: Lawrence & Wishart, 2005), 738. http://www.marxists.org/archive/marx/works/1867-c1/ch31.htm.
  9. ^ http://www.marxists.org/archive/marx/works/1867-c1/ch31.htm

References[edit]