Review: The Origins of Capitalism

The book The Origins of Capitalism by Ellen Meiksins Wood provides a compelling history of capitalist analysis. The story, in a nutshell, says that nearly all accounts, both for and against capitalism, have failed to really understand the generation process of capitalism, and because of that historical misunderstanding they misapprehend what capitalism is. In this concise review, I will try to summarize the main thread of Wood’s argument, specifically with an eye toward an analysis of capitalism rather than as an evaluation of historical accuracy. Towards that end, I will not challenge any assumptions of the author but accept her account of capitalism, what it means, and how it acts. Finally, I will attempt to locate this account within my own work.

Wood spends a good deal of time elaborating the competing views she hopes to overcome, all of which can be boiled down to some version of Adam Smith’s origin story with its emphasis on “man’s propensity to truck, barter, and trade.” This story reveals capitalism to be something of a natural evolution of human instinct, being gradually unfettered by political and religious control and exploitation. Once these fetters were finally dispensed with, the economy became liberated, and human beings were finally free to do what they really wanted to do all along, become capitalists. In this sense, capitalism is simply an extension of the innate desire for human beings to employ the things they own to their own advantage.

She makes several good arguments for why this explanation is erroneous, which I will not bother to recount here. Instead, I want to focus on her alternative account that finds capitalism as developing in English agriculture. In my interpretation, it is a misread to claim that Wood is arguing that capitalism is born out of English agrarian society. Rather, I believe she is arguing that when a proto-capitalist model of property relations came to be applied to the necessities of life as occurred during the supplantation of traditional agrarian society during feudalism, the only means of living were altered for everyone and a new system with its own logic and imperatives took over. This was against the resistance of the people who would come to adopt it, namely peasants.

Rather than the traditional tail of fetters being removed, the story Wood tells shows how the powers of economic exploitation simply were shifted from direct control by lords to seize profits from the relatively independent peasant producers to one where the exploitation was formalized in the property relations with the lords established as “owners” and the peasants as “tenants” or “farmers”. The only remaining role then for the state in such a system is to enforce the property relations as a whole, making economic relations quasi-independent of political activity. This separation masks the coercion, making it feel more “natural” or “free”, rather than the obvious and direct political oppression involved in feudal systems. Such a system, Wood suggests, changes the mode of exploitation from extra-economic means to purely economic ones, and at the same time changes the incentives for lords from one of squeezing peasants to maximizing the productivity of farmers and employees. This effect accounts for both the success of capitalism in replacing nearly all other forms of economic relations and for capitalism’s intense classism, colonialism, racism, sexism, and so forth. Without its political element, it is not clear who may be exploited and so the exploitation is filtered through some or several forms of identity politics.

In general, I think Wood’s reading is accurate although I don’t claim to know the intricacies of the agrarian argument she bases it on. What I take from Wood’s analysis is simply the fact that the defining characteristic of capitalism is its ability to separate exploitation from the political sphere. This fits with the very nature of oppression, which, roughly defined, is characterized by apparent freedom and opportunity with the subtle reality being one of limited options and forced choices. With this understanding in play, capitalism is not established by private property or markets for its exchange. Those elements may be associated with a great many economic systems. Capitalism is then a particular way of preserving classism without recourse to draconian political force.

On the upside, assuming Wood is correct here, capitalism offers humanity the first glimpse of economic freedom from direct political control. This is indeed the achievement that capitalist apologists have long used to justify the system. The failing of capitalism lies not in its divorce from political oversight, but in its continued adherence to the principles of classism and exploitation. The goal of any socialist regime worthy of the name would be to devise a way to surgically eliminate that element while preserving the freedom for self-determination and individuality that comes with economic independence.

In my own work, that goal is met by the abolition of the form of rent. The form of rent is the particular facet of capitalism that allows one to make money from ownership without relinquishing the rights of ownership. It is, in my opinion, the “Pandora’s box” of capitalism, through which all the evils enter. Without the form of rent, especially manifest in profit, interest, and rent, capitalism ceases to be exploitative, and without its exploitative element, capitalism isn’t capitalism at all. In Wood’s understanding capitalism is the exploitation of labor without direct political means; so, no exploitation, no capitalism. No matter whatever elements of capitalism remain, including private property and markets, without the form of rent it ceases to be capitalist and becomes, for lack of a better term, libertarian socialism.