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In Marxian economics and preceding theories,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.
Marxian economics, or the Marxian school of economics, is a heterodox school of economic thought. Its foundations can be traced back to the critique of classical political economy in the research by Karl Marx and Friedrich Engels. Marxian economics comprises several different theories and includes multiple schools of thought, which are sometimes opposed to each other, and in many cases Marxian analysis is used to complement or supplement other economic approaches. Because one does not necessarily have to be politically Marxist to be economically Marxian, the two adjectives coexist in usage rather than being synonymous. They share a semantic field while also allowing connotative and denotative differences.
In economics, capital consists of assets that can enhance one's power to perform economically useful work. For example, in a fundamental sense a stone or an arrow is capital for a caveman who can use it as a hunting instrument, while roads are capital for inhabitants of a city.
Adam Smith's account of primitive-original accumulation depicted a peaceful process, in which some workers laboured more diligently than others and gradually built up wealth, eventually leaving the less diligent workers to accept living wages for their labour.Karl Marx rejected this explanation as "childishness," instead stating that, in the words of David Harvey, 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 privatised mainstream of capital accumulation". This would be accomplished through violence, war, enslavement, and colonialism.
Adam Smith was a Scottish economist, philosopher and author as well as a moral philosopher, a pioneer of political economy and a key figure during the Scottish Enlightenment, also known as ''The Father of Economics'' or ''The Father of Capitalism''. Smith wrote two classic works, The Theory of Moral Sentiments (1759) and An Inquiry into the Nature and Causes of the Wealth of Nations (1776). The latter, often abbreviated as The Wealth of Nations, is considered his magnum opus and the first modern work of economics. In his work, Adam Smith introduced his theory of absolute advantage.
Karl Marx was a German philosopher, economist, historian, sociologist, political theorist, journalist and socialist revolutionary.
David W. Harvey is a British-born Marxist economic geographer and Distinguished Professor of anthropology and geography at the Graduate Center of the City University of New York (CUNY). He received his PhD in geography from the University of Cambridge in 1961. Harvey has authored many books and essays that have been prominent in the development of modern geography as a discipline. He is a proponent of the idea of the right to the city.
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.Smith, in his English language The Wealth of Nations spoke of a previous accumulation, although he never actually refers to accumulation as previous accumulation in "The Wealth of Nations"; 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 English as primitive. James Steuart, with his 1767 work, is considered by some scholars as the greatest classical theorist of primitive accumulation.
An Inquiry into the Nature and Causes of the Wealth of Nations, generally referred to by its shortened title The Wealth of Nations, is the magnum opus of the Scottish economist and moral philosopher Adam Smith. First published in 1776, the book offers one of the world's first collected descriptions of what builds nations' wealth, and is today a fundamental work in classical economics. By reflecting upon the economics at the beginning of the Industrial Revolution, the book touches upon such broad topics as the division of labour, productivity, and free markets.
Das Kapital, also called Capital. A Critique of Political Economy by Karl Marx is a foundational theoretical text in materialist philosophy, economics and politics. Marx aimed to reveal the economic patterns underpinning the capitalist mode of production in contrast to classical political economists such as Adam Smith, Jean-Baptiste Say, David Ricardo and John Stuart Mill. While Marx did not live to publish the planned second and third parts, they were both completed from his notes and published after his death by his colleague Friedrich Engels. Das Kapital is the most cited book in the social sciences published before 1950.
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. Such childishness is every day preached to us in the defence of property."
Political economy is the study of production and trade and their relations with law, custom and government; and with the distribution of national income and wealth. As a discipline, political economy originated in moral philosophy, in the 18th century, to explore the administration of states' wealth, with "political" signifying the Greek word polity and "economy" signifying the Greek word "okonomie". The earliest works of political economy are usually attributed to the British scholars Adam Smith, Thomas Malthus, and David Ricardo, although they were preceded by the work of the French physiocrats, such as François Quesnay (1694–1774) and Anne-Robert-Jacques Turgot (1727–1781).
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."
Relations of production is a concept frequently used by Karl Marx and Friedrich Engels in their theory of historical materialism and in Das Kapital. It is first explicitly used in Marx's published book The Poverty of Philosophy, although Marx and Engels had already defined the term in The German Ideology.
In economics and sociology, the means of production are physical and non-financial inputs used in the production of economic value. These include raw materials, facilities, machinery and tools used in the production of goods and services. In the terminology of classical economics, the means of production are the "factors of production" minus financial and human capital.
Labour economics seeks to understand the functioning and dynamics of the markets for wage labour.
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:
International finance is the branch of financial economics broadly concerned with monetary and macroeconomic interrelations between two or more countries. International finance examines the dynamics of the global financial system, international monetary systems, balance of payments, exchange rates, foreign direct investment, and how these topics relate to international 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.— Capital, Volume I , chapter 31, emphasis added.
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" (emphasis added).
In the last chapter of Capital, Volume I , Marx described the social conditions he thought 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!
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.
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"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". [ citation needed ]
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. 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."
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 would not 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 no one: 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 folklore (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,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.
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. Liberals believe that capitalism has no internal flaws or contradictions; only outside threats. To liberals, 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).
Capitalism is an economic system based on the private ownership of the means of production and their operation for profit. Characteristics central to capitalism include private property, capital accumulation, wage labor, voluntary exchange, a price system and competitive markets. In a capitalist market economy, decision-making and investments are determined by every owner of wealth, property or production ability in financial and capital markets, whereas prices and the distribution of goods and services are mainly determined by competition in goods and services markets.
Anti-capitalism encompasses a wide variety of movements, ideas and attitudes that oppose capitalism. Anti-capitalists, in the strict sense of the word, are those who wish to replace capitalism with another type of economic system.
Private property is a legal designation for the ownership of property by non-governmental legal entities. Private property is distinguishable from public property, which is owned by a state entity; and from collective property, which is owned by a group of non-governmental entities. Private property can be either personal property or capital goods. Private property is a legal concept defined and enforced by a country's political system.
Accumulation by dispossession is a concept presented by the Marxist geographer David Harvey, which defines the neoliberal capitalist policies in many western nations, from the 1970s and to the present day, as resulting in a centralization of wealth and power in the hands of a few by dispossessing the public and private entities of their wealth or land. These neoliberal policies are guided mainly by four practices: privatization, financialization, management and manipulation of crises, and state redistributions.
Capital accumulation is the dynamic that motivates the pursuit of profit, involving the investment of money or any financial asset with the goal of increasing the initial monetary value of said asset as a financial return whether in the form of profit, rent, interest, royalties or capital gains. The process of capital accumulation forms the basis of capitalism, and is one of the defining characteristics of a capitalist economic system.
Simple commodity production is a term coined by Frederick Engels to describe productive activities under the conditions of what Marx had called the "simple exchange" of commodities, where independent producers trade their own products. The use of the word "simple" does not refer to the nature of the producers or of their production, but to the relatively simple and straightforward exchange processes involved.
A theory of capitalism describes the essential features of capitalism and how it functions. The history of various such theories is the subject of this article.
In Marxian economics, economic reproduction refers to recurrent processes. Michel Aglietta views economic reproduction as the process whereby the initial conditions necessary for economic activity to occur are constantly re-created. Marx viewed reproduction as the process by which society re-created itself, both materially and socially.
Criticism of capitalism ranges from expressing disagreement with the principles of capitalism in its entirety to expressing disagreement with particular outcomes of capitalism.
Rentier capitalism is a Marxist term currently used to describe the belief in economic practices of monopolization of access to any kind of property, and gaining significant amounts of profit without contribution to society. The origins of the term are unclear; it is often said to be used in Marxism, yet the very combination of words rentier and capitalism was never used by Karl Marx himself.
Marxian class theory asserts that an individual’s position within a class hierarchy is determined by their role in the production process, and argues that political and ideological consciousness is determined by class position. A class is those who share common economic interests, are conscious of those interests, and engage in collective action which advances those interests. Within Marxian class theory, the structure of the production process forms the basis of class construction.
Throughout modern history, a variety of perspectives on capitalism have evolved based on different schools of thought.
In Marxist theory and Marxian economics, the immiseration thesis is derived from Karl Marx's analysis of economic development in capitalism, implying that the nature of capitalist production stabilizes real wages, reducing wage growth relative to total value creation in the economy, leading to worsening alienation in the workplace.
In Karl Marx's critique of political economy and subsequent Marxian analyses, the capitalist mode of production refers to the systems of organizing production and distribution within capitalist societies. Private money-making in various forms preceded the development of the capitalist mode of production as such. The capitalist mode of production proper, based on wage-labour and private ownership of the means of production and on industrial technology, began to grow rapidly in Western Europe from the Industrial Revolution, later extending to most of the world.
Surplus value is a central concept in Karl Marx's critique of political economy. "Surplus value" is a translation of the German word "Mehrwert", which simply means value added, and is cognate to English "more worth". Surplus-value is the difference between the amount raised through a sale of a product and the amount it cost to the owner of that product to manufacture it: i.e. the amount raised through sale of the product minus the cost of the materials, plant and labour power. Conventionally, value-added is equal to the sum of gross wage income and gross profit income. However, Marx uses the term Mehrwert to describe the yield, profit or return on production capital invested, i.e. the amount of the increase in the value of capital. Hence, Marx's use of Mehrwert has always been translated as "surplus value", distinguishing it from "value-added". According to Marx's theory, surplus value is equal to the new value created by workers in excess of their own labor-cost, which is appropriated by the capitalist as profit when products are sold.
In Marxist theory, the socialist mode of production, also referred to as lower-stage of communism or simply socialism as Karl Marx and Friedrich Engels used the terms socialism and communism interchangeably, refers to a specific historical phase of economic development and its corresponding set of social relations that emerge from capitalism in the schema of historical materialism. The Marxist definition of socialism is an economic transition where the sole criterion for production is use-value and therefore the law of value no longer directs economic activity. Marxist production for use is coordinated through conscious economic planning while distribution of products is based on the principle of "to each according to his contribution". The social relations of socialism are characterized by the proletariat effectively controlling the means of production, either through cooperative enterprises or by public ownership or private artisanal tools and self-management so that social surplus goes to the working class and hence society as a whole.
Crisis theory, concerning the causes and consequences of the tendency for the rate of profit to fall in a capitalist system, is now generally associated with Marxist economics.
In the theoretical works of Karl Marx and Friedrich Engels and subsequent Marxist writers, socialization is the process of transforming the act of producing and distributing goods and services from a solitary to a social relationship and collective endeavor. With the development of capitalism, production becomes centralized in firms and increasingly mechanized in contrast to the pre-capitalist modes of production where the act of production was a largely solitary act performed by individuals. Socialization occurs due to centralization of capital in industries where there are increasing returns to scale and a deepening of the division of labor and the specialization in skills necessary for increasingly complex forms of production and value creation. Progressive socialization of the forces of production under capitalism eventually comes into conflict with the persistence of relations of production based on private property; this contradiction between socialized production and private appropriation of the social product forms the impetus for the socialization of property relations (socialism).
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