This is the fourth section of a review paper I just finished writing for a directed studies course on the history of capitalism.
Read part one here, part two here and part three here.
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Ideology and Institutions of Capitalism
Wood and Polanyi on state-building, intervention, improvement and colonialism
Both Wood and Polanyi devote a considerable amount of time to the relationship between capital and the state in capitalism’s early development. A particularly compelling account comes with Wood’s discussion of the “division of labour” between England’s monarchical state and its aristocratic ruling class in early state-building efforts (p. 172). Noting again that the crucial feature of 16th and 17th century English politics was a relatively powerful centralizing state headed by a monarchy with a growing monopoly on legitimate political violence (ie., powers of coercive expropriation from direct producers), a symbiotic relationship between the state and ruling classes emerged in which the aristocratic classes limited themselves to purely economic forms of expropriation from direct producers and the state maintained order and enforced a property system benefitting large landholders.
This is precisely the type of interventionism to which Polanyi refers when he points out that markets have never been free. Either by slowing down or speeding up the rate of social and economic change (or even attempting both simultaneously), the state has always been a central actor in the transformation to and maintenance of a market society (Ruggie’s observations about “horizontal policy incoherence” confirms the truth of this to the present day). As Polanyi points out, “there was nothing natural about laissez-faire; free markets could never have come into being merely by allowing things to take their course” (p. 145). During the height of liberal interventions in establishing a market economy in the 1830s and 40s, policies were enacted that simultaneously restricted state function and repealed legislation that was seen to interfere with the free functioning of the market, while at the same time increasing the administrative function of the state – in essence, creating a centralized bureaucracy focused on managing social and economic forces in such a way that the market remained as “free” as possible. This effort, paradoxically, required an enormous amount of “adjustment” and intervention – Polanyi points out that “administrators had to be constantly on the watch to ensure the free working of the system” (p. 147). Of course, much could be said here about the parallels to late 20th century structural adjustment and privatization policies under neo-liberalism.
Such massive projects of state-building and economic reform could not be undertaken without a powerful ideological underpinning that “closely fitted the society that was emerging” (Polayni, p. 120). Early on, this came in the concept of “improvement,” which both Wood and Polanyi recognize to be the cornerstone of capitalism’s social property relations and liberal economic ethic. Wood details, in particular, the ways in which the idea of improvement was invoked to legitimate the elimination of traditional customs and habits that interfered with emerging 17th century social property relations. The political philosopher John Locke was, of course, the key figure of this era, and his conception of natural right to property as derived from the productive use of land for profit was instrumental in the dispossession of masses of subsistence peasants in the English countryside during the enclosure movement, not to mention in colonial land grabs, genocide and slavery (Wood, p. 107, 158). Thus, the idea of private property emerged as perhaps the most violent and salient forces in capitalism’s early history – that unimproved land was waste, that private property rights could (and, indeed, ought) to result from expropriation and productive use of “unimproved” land for profit (according to the English standards of productivity of the day), and further, that property title was not just private, but also exclusive (Wood, p. 108-111).
As is evident from this discussion, the ethic of improvement was a powerful force not only in the early transformation of social property relations that saw the destruction of traditional common land use customs in England, but also in the colonial imperialism that followed early domestic capitalism. Again, Polanyi and Wood focus on different dynamics relating to capitalist colonialism, but their key points are complementary. Wood points to the early example of Ireland as the first historical example of a specifically capitalist type of imperialism. Wood shows how, unlike other imperialist projects, which relied primarily upon extra-economic forces of expropriation and control, England’s colonization of Ireland worked to transform the pre-existing social property relations, and replaced them with distinctly capitalist landlord-tenant relations, settling huge areas of productive Irish land with English farmers and waged labourers. The result was a new type of imperialism, one that could operate even in the absence of direct domination – what she calls “perhaps world’s first structural adjustment programs” (Wood, p. 155).
Similarly, Polanyi suggests that a key feature of colonialism is the destruction of indigenous social relations, drawing an analogy between the 18th century industrial capitalism and colonialism in the common strategy of “smashing up … social structures in order to extract the elements of labour from them.” On a related point, Polanyi argues that the threat of starvation is of key importance in the formation of a labour market: “to this end their traditional institutions must be destroyed, and prevented from reforming, since, as a rule, the individual in primitive society is not threatened by starvation unless the community as a whole is in the same predicament” (171). This is a direct reference to Joseph Townsend’s 1786 “Dissertation on the Poor Laws,” in which can be found another core idea underpinning economic liberal ideology – that the “improvidence of the poor was a law of nature, for servile, sordid, and ignoble work would otherwise not be done” (Polanyi, p. 123). Indeed, Polanyi identifies the 19th century abolition of outdoor relief and reform of the Poor Laws as the crucial step solidifying England’s first true labour market, and thus the advent of industrial capitalism as a social system (p. 87).
Conclusion: A City Built on Fault Lines
The purpose of this paper (and in fact, the entire reading list of this course), is to begin to construct an understanding of the history of capitalism from “the foundations up,” so to speak. The first two books on the reading list sketched out the historical conditions surrounding the emergence and early development of capitalism. Although, as Wood claims, “how we understand the history of capitalism has a great effect on how we understand the thing itself” (p. 34), I think that locating the precise moment of capitalism’s emergence is less important than understanding the fundamental principles that shaped its emergence and early development. Wood and Polanyi differ on their assessment of the “prime mover” of capitalism, but I don’t see their ideas as mutually incompatible. Wood offers a compelling account of the transformation of social property relations and the emergence of market imperatives during an early period of agrarian capitalism which created the conditions in which the emergence of machine in early industrial capitalism led to what Polanyi understood as the market society. Although each located a major historical rupture some 150 years apart and referred to it as “the origin of capitalism,” it would be more accurate, in my view, to see these as major events in a long continuous process that might be likened to plate tectonics.
The idea of capitalism is a useful signifier to mark the specific social, cultural, economic and political mechanisms of a phase of human history that has triggered enormously complex problems. These problems have been a long time in the formation, as Polanyi’s prescient 1944 remarks demonstrate. In an era defined not by not the freedom that Polanyi so hopefully called for, but by a permanent war against “terror,” a culture based on fear and consumption, and a reckless collision course with irreversible global warming, it is almost heartbreaking to read the optimism in Polanyi’s final chapters. An industrial society “can afford to be both just and free,” he writes (p. 265). Certainly, we’ve seen some extension of certain types of justice and freedom since Polanyi wrote these words, but I wonder what he’d say about the ongoing economic imperialism affecting most of the world’s developing nations, or the excessive and growing imbalance between the consumers and the producers of the world.
But as Wood rightly points out (and certainly Polanyi would agree), the principles of justice and freedom cannot equally apply to all under the logic of capitalism: “The expansion of capitalist imperatives throughout the world has regularly reproduced the effect that it had at the beginning within its country of origin: dispossession, extinction of customary property rights, the imposition of market imperatives, and environmental destruction” (p. 194). Put short, capitalism as such cannot be a force for justice and freedom, but rather must be dismantled or transformed in the same way that it dismantled and transformed earlier social relations.
If there is one certainty that the long history of capitalism demonstrates, it is this: deep internal contradictions and tensions ensure that it is subject to periodic ruptures. And like residents of a city built on a fault line know well, each minor tremor reminds us of two things. First, although the ground we walk on is not entirely to be trusted, we are safe for the time being. Second, the big one is coming.
References
Polanyi, Karl. (1944 [2001]). The Great Transformation: The Political and Economic Origins of Our Time. Beacon Press: Boston.
Wood, Ellen Meiksins. (2002). The Origin of Capitalism: A Longer View. Verso: London.