Debt, Money and Marx

Just for a bit clarification. “A far larger percentage of Wall Street’s profits is now derived from the financial sector than from industry or commerce” Factually untrue. Oil companies are the biggest money makers on this year’s Global 500, including besieged BP. Rounding out the top 10 earners are U.S. giants Microsoft and, of course, Wal-Mart.http://money.cnn.com/magazines/fortune/global500/2010/performers/companies/profits/

It is difficult to deny that David Graeber does make a valid point.  I refer to this comment of his “The whole idea of “merchant capitalism” which is supposed to characterize the period from roughly 1500 to 1750 (or even 1800 in most of Europe) has always been a puzzle. If capitalism is a system based on wage labor, then it wasn’t capitalism at all. But if so most bourgeois revolutions happened before capitalism had even appeared! If merchant capitalism is capitalism, then capitalism does not have to be based on wage labor, and certainly not free wage labor, at all. Claiming that merchant capitalism was capitalism because European elites were somehow trying to create a system that didn’t exist and there is no evidence they were even capable of imagining, seems absurd.”It seems to me that the obvious way round this problem is to reject the whole idea of merchant or mercantile capitalism.  There was merchant capital before capitalism just as there was wage labour before capitalism but neither of these things in and of themselves imply the existence of capitalism as a mode of production. Thus wage labour needs to be generalised before we can usefully talk of a capitalist mode of production Where did the idea of “mercantile capitalism” come from, I wonder? Marx himself seems to analytically separate the notion of “merchants capital” from capitalism as a mode of production. I cant seem to find any reference by him to mercantile capitalism.  Incidentally, the Oxford English Dictionary attributes  the first use of the English word “capitalism”, surprisingly enough not to Marx (who preferred to use the expression “capitalist production”),  but  William Makepeace Thackeray in his  novel The Newcomes (1855, vol. 2: p. 45),  However Makepeace seemed to have meant by this the money-making activities of financiers rather than  an economic system as such.  That may or may not be signficantIn Capital Vol. III Part IV, Marx says this:”The less developed the production, the more wealth in money is concentrated in the hands of merchants or appears in the specific form of merchants’ wealth.Within the capitalist mode of production — i.e., as soon as capital has established its sway over production and imparted to it a wholly changed and specific form — merchant’s capital appears merely as a capital with a specific function. In all previous modes of production, and all the more, wherever production ministers to the immediate wants of the producer, merchant’s capital appears to perform the function par excellence of capital.There is, therefore, not the least difficulty in understanding why merchant’s capital appears as the historical form of capital long before capital established its own domination over production. Its existence and development to a certain level are in themselves historical premises for the development of capitalist production 1) as premises for the concentration of money wealth, and 2) because the capitalist mode of production presupposes production for trade, selling on a large scale, and not to the individual customer, hence also a merchant who does not buy to satisfy his personal wants but concentrates the purchases of many buyers in his one purchase. On the other hand, all development of merchant’s capital tends to give production more and more the character of production for exchange-value and to turn products more and more into commodities. Yet its development, as we shall presently see, is incapable by itself of promoting and explaining the transition from one mode of production to another.Within capitalist production merchant’s capital is reduced from its former independent existence to a special phase in the investment of capital, and the levelling of profits reduces its rate of profit to the general average. It functions only as an agent of productive capital. The special social conditions that take shape with the development of merchant’s capital, are here no longer paramount. On the contrary, wherever merchant’s capital still predominates we find backward conditions. This is true even within one and the same country, in which, for instance, the specifically merchant towns present far more striking analogies with past conditions than industrial town”In the same chapter Marx points outThe extent to which products enter trade and go through the merchants’ hands depends on the mode of production, and reaches its maximum in the ultimate development of capitalist production, where the product is produced solely as a commodity, and not as a direct means of subsistence. What this seems be saying is that for the mode of production to be called “capitalist”  presupposes the cessation of direct production for use and the transformatioin of the products into commodities. In other words, the end of  the traditional system of usufract rights and compulsory  in-kind labour services performed by serfs  under a system of feudalism and its replacement by money rents and the employment of wage labour by tenant farmers.  In short what Marx ironically called  free wage labour.  It is when capital is invested in production that the system becomes “capitalist “and this is what to an increasing extent happened with merchant capital.  It was transformed into industrial or “productive”capital and the banking system of  “country banks” in England in the 18th century arose precisely to allow this to happen and to finance yer early proto-capitalists Prior to that you could not usefully talk about there being “capitalism”. There was merchants capital yes but as Marx suggest the extent of merchant capital and its social significance in society was limited by the extent to which direct production for use prevailed .  It required the separation of the producers from the means of production,  to which they had access,  for trade to take off in a big way i.e. with the development of a working class dependent on wage labour.and this in itself calls into question the usefulness iof the term mercantile capitalism.  Almost as a matter of logical deduction,   trade is rendered not particularly or primarily important if  producers still can directly produce for themselves (not to mention for the lord of the manor).   Therefore the very term “mercantile capitalism” can hardly be said  to capture the essence of the prevailing system. It is a contradiction in terms, if you see what I mean The period under discussion might be called a transitional period between feudalism and capitalism in which, for example, the power of monarchy  expanded greatly by comparison with the traditional powers enjoyed by the aristocracy under feudalism and so paved the way to the more centralised burueaucratic structures  that capitalism would come to depend upon as well as the growth of the nation state. You could not exactly say in this period that capitalist relations of production were dominant although they were certainly beginning to become  more pronounced particularly in England and as evinced by the growth of wage labour in both the towns and the countryside. However while merchants capital played an increasing role in this period “mercantile capitalism” is a myth. There never was such a thing for the simple reason that there never could be such a thing….

 Ellen Meiksins WoodWish folk would check their typography before posting :)http://monthlyreview.org/1998/07/01/the-agrarian-origins-of-capitalism

  Actually there have been longstanding arguments, at least since the Dobb-Sweezy debate, going on through the Brenner debate and the Wood book you mention, about the relative importance of rural British class relations, and international merchant capital, in the origins of what has come to be known as “capitalism” (remember Marx himself never used this term, but referred instead to the “capitalist mode of production” – which meant he didn’t have to deal with the question of whether merchant capitalism is capitalism, as merchant capital was simply capital, but just not engaged in a capitalist mode of production per se.) But saying that capitalism is wage labor and wage labor emerged from British rural society and therefore capitalism emerged from British rural society is just a circular argument that doesn’t resolve the questions I raised. It just comes up with a rhetorical way to sidestep it.   The question is: the financial apparatus which we now identify with “capitalism” – that is, the actual form that capital takes in relations between capitalists – did not arise from handling the profits from wage labor, but, mainly rather, from handling the profits of military and colonial ventures, and the production of commodities through slavery, forced labor, and debt peonage. For much of the history of what we now call capitalism, whatever the organization of English landed estates might have been, this is what was mainly happening. What’s more this system did not simply go away when factories and wage labor did appear on a mass scale. For instance: as in the previous period, so today, the money that capitalists actually use in trading with one another is actually monetized forms of government war debt. If the establishment of that kind of central banking system was merely the product of some transitional phase, why has it stayed with us so doggedly. Why has the amount of debt peonage, forced labor, and other forms of unfree labor short of actual legal chattel slavery not seriously declined but if anything increased during the last two hundred years?     What I am suggesting is that the role of sheer violence in creating and maintaining the system might be vastly understated.  

A reader has drawn our attention to an article “Marx at 193” that appeared in the London Review of Books by John Lancester on 5 April and asked for our comments. Among other things Lanchester claims that Marx never used the word “capitalism”:

I’m not sure how significant this is. After all, language like everything else changes, but I suppose it could tell us what Marx would have meant by the word had he used it rather than the term he did use, i.e. the capitalist mode of production. In other words, capitalism is a way of producing things, based, as he explained, on the production of commodities by wage-labour.

 Yes, agreed, DJP – and Marx doesn’t even use “law of value” more than once or twice. I’ve argued extensively that the LTV is true as a broad philosophical point – value is always the way our creative and/or productive activity becomes meaningful to us by being socially recognized through some concrete material form – but will never work as a theory of prices because it’s not meant to be. So the “transformation problem” is kind of missing the point, Massimo de Angelis talks about this very lucidly in his book The Beginning of History where he notes among other things that thinking there even _could_ be a theory of prices based exclusively on the LTV means you’re ignoring the role of political struggle at every point in the process.