12. The Beginnings of Modern Capitalism

'IN the preceding Outline we turned aside to notice the cause, extent, and effect, of that intellectual re-awakening known as the Renaissance. The reader will remember that in the two previous lessons the accumulation of values by the merchants and the creation of the proletariat occupied our attention. At the risk of repetition, and before taking up the thread of development, we would again emphasise the impossibility of considering Modern or Industrial Capitalism apart from these historical conditions of its birth.

The General Nature of Capitalism.- Capitalism or commodity production is not eternal; neither has the money relation always existed, as to-day, when practically everything has its price, i.e., its money expression of exchange value. To recapitulate: Exchange begat money; money begat capital, which is money used to make more money. Merchant’s capital functions in circulation, aiming to buy products cheap and sell dear. The usurer lent money, trading in one thing only, in order to receive later a larger sum in return.[The modern use of the word "capital" ignores these older forms]. Industrial Capital, which did not exist in England before the 16th century, unlike these preceding types, functions not in circulation but in production. While merchant’s capital indirectly exploited independent producers, industrial capital directly exploits producers who are dependent upon it. Therefore modern capital cannot have a beginning before there is a working-class dependent upon it for wages as the only way in which this class can live. Now wages are the price of labour-power and not of labour; the former is a commodity, the latter is not. (It is the difference between a faculty and a function, or the exercise of that faculty; between an eye and seeing, or an ear and hearing.) The importance of this distinction is recognised when it is understood that labour-power is the only peculiar commodity which in its consumption or exercise creates more than its value. The difference between the wages or price paid the worker for his labour-power and (after making allowance for the other necessary materials, machinery and such like) the price received by the capitalist when he sells the products of labour, is what is known in Marxian Economics as surplus value, which is the source of all rent, profit, and interest. Hoping that enough has been said to attract the reader to study "the dismal(?) science," "Economics," and to find out what a commodity is, and what measures its exchange-value, it is sufficient for us to note here that the production of surplus value which the capitalist calls profit, is the primary motive and stimulus of capitalist production.

Guild Production.—A glance at former systems of production will help us to follow the beginnings of Capitalism. When, under Feudalism, industries first arose in the towns of England they were controlled by the Guilds. The rise and fall of the Guilds were traced in Outline VII., and pp. 29 and 30 of the text-book (Gibbins) should be re-read. The breaking down of the local markets and the degeneration of the Guilds into close corporations demanded a new method of organization.

Domestic Production.—Though finer cloths were still imported from abroad, we read, even as early as the first half of the 14th century, of a manufacture of coarse cloth in England under the domestic system. But later, in the 15th century, England exported cloth in ever-increasing quantities. Thus the weavers broke away from the Guilds first. Instead of completely controlling the industry, the workmen, perhaps with an apprentice or journeyman, working at home, were supplied with their raw material by middlemen, who also took the finished products off their hands, either to sell it for use or pass it on through the next process as
the occasion required. The worsted of the Eastern counties, the broad cloths of the West, and the special manufactures of the North, were made and exported under this system of production in the 16th century. Though we see various attempts being made to introduce the manufactory system, the domestic system lasted in many industries right throughout the 17th century and on into the 18th; and its doom was only finally sealed by the Industrial Revolution. The rural nature of domestic production is revealed by the complaints of the towns against the infringements of their monopolies of trade by "divers persons dwelling in the hamlets, thorps and villages." Many of these producers were engaged in agriculture in addition to their manufacture.

The rapid development of the old and the rise of new industries cannot be understood apart from the influence exerted upon England by the immigration of the Flemings and the Huguenots. Spain, by her persecutions, in Holland in the 16th century, supplied her bitter rival with an invaluable supply of craftsmen, and, incidentally, destroyed the chief market for her own wool. The Huguenots came later. "Between 1670 and 1690, 80,000 persons came to England." The silk industry received a special impetus; and the manufacture of sail-cloth and tapestry, the art of paper-making, glass-making and watch-making and other industries were introduced. Frances loss was England’s gain.

Defoe’s description of the domestic system is quoted by Gibbins on p. 148. Capital under this system has been said to have been in its propagandist stage. More and more the middleman tended to become the employer of the domestic producers. We see this by the rise of a new system which, in the 17th and 18th centuries, became a rival of the one now under consideration.

The Manufactory.—Gibbins, speaking of this transition, says :—

"It was becoming increasingly the custom to employ a large number of workpeople together under one roof, or at least under the direction and supervision of one great
manufacturer. (And, again, on p. 155, he says) :—At first the weaver had furnished himself with warp and weft, worked it up and brought it to the market himself; but by degrees the system grew too cumbersome, and the yarn was given out by merchants to the weaver, and at last the merchant got together a certain number of looms in a town or village, and worked them under his own supervision."

In the Tudor period many industrial villages sprang up outside the old towns in order to escape the Guild restrictions. The Weaver’s Act of 1555 endeavoured to restrain this tendency by restricting the number of looms and apprentices that one man might have, but its effects were not lasting.

At first the difference between the labour of the Guild: and of the manufactory was only quantitative. But soon it would differ in quality also; composite labour became detail. The labourer performed one operation and used one special tool. The finished commodity represented not the labour of an individual, but of a group. This paved the way for the next system of production, which began about 1780.

Machinofacture.—This hardly comes within "the beginnings" of modern capitalism, and it will be treated fully in Outline 15, when the Industrial Revolution is our subject. However, it will be understood that tbe division of operations, and the simplification and specialisation of tools, in the manufactory, made possible the application of machinery driven by hitherto unused natural forces. The Industrial Revolution was the result of 200 years of evolution. While the worker, even inside the factory, was a craftsman, he still retained much of his independence; but soon the machine became more important than the man who became its servant. The class which was rich enough to become the owners of these new means of production was not the small producers, for they had not the means of purchase, and their domestic system was destroyed by this new rival, but that class of commercial capitalist, who were wealthy, and who now seized their opportunity to become capitalists proper.

From State Regulation to Laissez-Faire.—Sufficient has been said to show how gradually the rise of Capitalism took place; how by foreign and home trade it made the old systems of production inadequate; and how its power over the producers increased until it had snapped all the old relations and made the producers its dependents. About the time of Elizabeth, accumulation had proceeded far enough for industrial capital to commence. Owing to the increase of the precious metals, capital was fluid, and owing to enclosures and other factors, labour was fluid too, and free from all the old ties. The East India Company, founded about this time, was different from former companies in that it was a joint stock company. Hitherto merchants had adventured with their own money; now capital began to be more impersonal and divorced from its owners, and later capitalists exercised their "directive ability" in receiving cheques, while their "abstinence" was from work.

In dealing with Mercantile Economy we found that State monopoly and regulation of trade and production were used by the early commercial capitalist class. Like a child it needed artificial aid. Bacon voiced the spirit of his age when he laid it down that the State should ever be active in "the opening and well-balancing
-of trade, the cherishing of manufactures, the banishing of idleness, the repressing of waste and excess by sumptuary laws, the improving and husbanding of the soil, and the regulating of prices."

Out of the break-up of the little self-sufficient feudal manors and the decay of guild production, owing to its inability to supply the wider market now developed,
came the idea of the nation as a trading and industrial unit. The local market, with its narrow parochial outlook, in which the town was everything, made way for the national market ; nationalism had its beginning and the realm was set above the town. In the next Outline it will be seen how this feeling encouraged the growth of an absolute monarchy in close touch with trading interests. However, at this time national industries were protected and encouraged; English shipping was fostered by Navigation Acts; foreign imports were taxed and home exports increased in the hope of keeping the balance of trade in our favour by dumping our goods upon the foreigner; "Colonies were estates to be exploited for the benefit of the Mother- Country" —a process against which the Americans rebelled; no country was allowed to deal with another’s colonies; and trade followed the flag.

But there came a time when Capitalism could walk alone without these aids; when home industries needed no protection and the benefits of free and unregulated trade were proclaimed; when colonies were looked upon as "white elephants," and competition and the law of supply and demand were thought to satisfactorily fix prices; and when restrictions of all kinds were regarded as injurious and a policy of laissez-faire or "go as you please" was adopted. In the world market now opened the flag was not necessary to trade. The first warlike period of Capitalism was followed by the peaceful period.

It was in Adam Smith’s Wealth of Nations that these new feelings found expression. Issued in 1776, the book at once attracted notice, and by its attacks upon the absurdities of monopolies and restrictions, hastened the death of the mercantile notions. The Repeal of the Corn Laws in 1846 was the final triumph of the policy therein advocated. In his book the benefits of the division of labour were shown, and it was maintained that men, in following their own individual self-interest, would thus greatly benefit the whole community. One writer summarised the doctrine as follows:— "Man’s self-love is God’s Providence."

The full maturity of Capitalism and its effects upon the workers are outside the present Outline. Enough here to notice that by the beginning of the 18th century Capitalism in its manufacturing stage is already equipped with a Credit System and a National Debt, the latter, of course, owned collectively, being especially useful in spreading the cost of wars over centuries and providing a sure investment for wealth possessors.[While the cost of the present conflict is being met by £90 from loans and £10 from taxation out of every £100 spent, the reader will recognise that this system is not yet out of date.] The restraints which had to be placed upon the effects of laissez-faire and rampant individualism will also receive future attention.

Wars for Markets and Empires. - Marx speaks about "the commercial war of the European nations, with the globe for a theatre, treading upon the heels of the idyllic proceedings which signalised the rosy dawn of the era of capitalist production." Gibbins (Chap. V. Period IV.) shows very clearly the commercial nature of the wars of the 17th and 18th centuries. Time, the father of Truth, has enabled him to see deeper reasons for these wars than religious animosity and the cutting off of Captain Jenkins’ ear. And it must be remembered that commercial supremacy in that period meant industrial supremacy. Markets were won before they were supplied. England fought for "her place in the sun" against her older-established rivals, Spain, Portugal, and Holland. It is common knowledge how the Elizabethan mariners determined to have a share in the plunder of the New World, and how Spain, irritated by these attempts, dispatched the Armada. Luckily "God blew with His winds and they were scattered."

Cromwell declared war not only against Spain but also against Holland. The latter war was continued after the Restoration. ["From 1650 to 1674," writes Townsend Warner, "the Dutch were our 'natural enemies,' and the furious fighting in
the Channel between Blake, Monk, and the Duke of York on the one side, and Von Tromp and De Ruyter on the other was really a struggle for the carrying trade and dominion in the East. Chatham said later that he would conquer America in Germany, but it might have been said with equal truth that in the end of the 17th century we were warring for the East Indies in the Channel."] Holland failed through lack of economic staying power, and the battle was left to the two larger rivals, France and England. The reader can furnish himself with details of the 18th century wars from the chapters given, and these later wars were not only for trade but for occupation as well; he will discover by what means Canada, India, Australia, New Zealand, and the Cape were won, and why so much of the world’s map is painted red. The end of the 18th century, after many wars, saw England the supreme colonial power of the world, the victor of the seas; and the owner of immease markets needing a supply. The resulting Industrial Revolution thus originated and stimulated will be dealt with after we have seen how this growth of economic power, which we have here traced reflected itself npon the political field.

Booxs.—Gibbins: the whole of Period IV. should be carefully studied for full details, missing from this general Outline, of the growth of mining, iron, pottery, weaving, cotton, and other industries, of the growing volume of trade, and of how these developments reacted upon agriculture. Warner, Chaps. XL and XVIII, for similar details, and Chap. XIV. for 18th century trade wars. Marx, Vol. I., Chap. XXXI, Genesis of The Industrial Capitalist. Boudin, Socialism and War.'

From A Worker Looks At History, by Mark Starr.