Capitalism: A Creation Story

Capitalism is the first expansionist economic system in history. Contrary to its own myth, it did not emerge naturally and is far from being the expression of human freedom.

The usual story about capitalism is that since it gives everyone a fighting chance, it is the most natural way to go. This story notably assumes that capitalism ended feudality and shaped the way toward a free society. This chapter of Less is More shows that, on the contrary, “There was no smooth, natural ‘transition’ to capitalism, and it has nothing to do with human nature.” (Jason Hickel)

A forgotten revolution

“By the middle of the 1400s, wars were erupting between peasants and lords across Western Europe, and as the rebels’ movement grew their demands broadened. They weren’t interested in tweaking the system a bit around the edges – they wanted nothing short of revolution. According to the historian Silvia Federici, an expert in the political economy of the Middle Ages, ‘the rebels did not content themselves with demanding some restrictions to feudal rule, nor did they only bargain for better living conditions. Their aim was to put an end to the power of the lords.’”¹

While, in most cases, individual rebellions were put down, the movement nevertheless succeeded in destroying serfdom. As feudalism fell apart, free peasants began to build a cooperative society based on the principles of self-sufficiency. This greatly improved their living conditions. Some have described the period from 1350 to 1500 as “the golden age of the European proletariat.”² It is worth noting that “Once they won direct control of the land, free peasants were able to maintain a more reciprocal relationship with nature: they managed pastures and commons collectively, through democratic assemblies, with careful rules that regulated tillage, grazing and forest use.”³ That sharply contrasts with the time when lords put peasants under heavy pressure to extract from the land and forests as much as possible, driving a crisis of deforestation, overgrazing, and a gradual decline in soil fertility.

Backlash

Europe’s elites, obviously, “were irritated that commoners would only hire themselves out for short periods or limited tasks, leaving as soon as they had enough income to satisfy their needs. ‘Servants are now masters and masters servants,’ complained John Gower in Miroir de l’Omme (1380). As one writer put it in the early 1500s: ‘The peasants are too rich … and do not know what obedience means; they don’t take law into any account, they wish there were no nobles … and they would like to decide what rent we should get for our lands.’⁴ And according to another: ‘The peasant pretends to imitate the ways of the freeman, and gives himself the appearance of him in his clothes.’⁵”

As they managed the commons to their own benefit, peasants could afford to negotiate with landlords about how long they would work as well for the latter. These arrangements made it difficult for landlords to accumulate the excess wealth necessary to invest in large projects. Contrary to the usual narrative that capitalism emerged naturally from the collapse of feudalism, it was, at least in the first instance, threatened by the end of serfdom.

Landowners—nobles, the church, and the merchant bourgeoisie—fought back by fencing off collectively managed pastures, forests, and rivers sustaining rural communities. This process, known as “enclosure,” only grew in time.⁶ “Over the course of three centuries, huge swathes of Britain and the rest of Europe were enclosed and millions of people removed from the land, triggering an internal refugee crisis,” says Jason Hickel. Mass poverty appeared for the first time in human history. This is how the initial accumulation of wealth necessary for capitalism to take off happened, not—as Adam Smith would have it—because a few people worked really hard and saved their earnings.

Consequently, “With subsistence economies destroyed and commons fenced off, people had no choice but to sell their labour for wages – not to earn a bit of extra income, as under the previous regime, nor to satisfy the demands of a lord, as under serfdom, but simply in order to survive.” As the rise of capitalism also required the specific resource of labor for as much and as cheap as possible, early capitalists took the principles of serfdom to new extremes. Since profit-making became the exclusive equation of the new economic system, it logically grew on organized violence, mass impoverishment, and the systematic destruction of self-sufficient subsistence economies.

Growth as colonization

Starting at the end of the 15th century, the extension of a capitalist economy in Europe was accompanied and backed up by colonization. The latter “played a key role in the rise of European capitalism. It provided some of the surplus that ended up invested in the Industrial Revolution; it enabled the purchase of land-based goods from the East, which allowed Europe to shift its population from agriculture to industrial production; and it funded the military expansion that powered further rounds of colonial conquest.”⁷

Under the logic of growth for the sake of growth, seeking new frontiers from which to extract uncompensated value makes sense. By the end of the 19th century, “more than half of Britain’s domestic budget was funded by money appropriated from India and other colonies.”⁸ Enclosure had been a process of internal colonization, and colonization was a process of enclosure—the only difference being that Indigenous people had no rights or even a formally recognized humanity.

As capitalism had created a mass production system in Europe, the solution to sell and thus perpetuate itself was two-fold. By destroying self-sufficient economies, the enclosures created not only a mass of workers but a mass of consumers as well. By implementing asymmetric trade rules, local industries in the colonies were wiped out, and another market was created for Europe’s mass-produced goods.⁹

The paradox of artificial scarcity

The paradox of scarcity under the economic growth imperative shaped itself up when, in Europe, dispossessed people who remained in rural areas found themselves subjected to a new economic regime. “They were back once again under the rule of landlords, but this time in an even worse position: at least under serfdom they had secure access to land; now they were granted only temporary leases on it. And these weren’t just ordinary leases. They were allocated on the basis of productivity. . . . Those who fell behind in this race would lose their tenancy rights and face starvation. This put peasants in direct competition with one another, with their own kin and neighbours, transforming what had been a system of collective co-operation into one organised around desperate antagonism.”

In cities, competition among refugees from enclosures drove down the cost of labor, destroying the guild system that had previously protected the livelihood of skilled craftsmen. As production was no longer about satisfying needs or providing local sufficiency but increasing the profits of the owning class, people’s lives were now governed by the imperative of intensifying productivity and maximizing output.

Taking a step back, John Locke, the English landowner and philosopher, “admitted that enclosure was a process of theft from the commons, and from commoners, but he argued that this theft was morally justifiable because it enabled a shift to intensive commercial methods that increased agricultural output.¹⁰ Any increase in total output, he said, was a contribution to the ‘greater good’ – the betterment of humanity. The same logic was used to justify colonisation, and invoked by Locke himself to defend his claims to American lands. Improvement became the alibi for appropriation.”

“Improvements” and “greater good” did materialize for those who owned the means of production, not for workers. This was by design. “The essential point to grasp here,” explains Jason Hickel, “is that the emergence of the extraordinary productive capacity that characterises capitalism depended on creating and maintaining conditions of artificial scarcity.”¹¹

This point did not go unnoticed by early capitalists, who saw enclosure as a tool for enhancing the “industry” of the masses. “‘Our forests and great commons make the poor that are upon them too much like the Indians,’ wrote the Quaker John Bellers in 1695; ‘[they are] a hindrance to industry, and are nurseries of idleness and insolence’. Lord John Bishton, author of a 1794 report on agriculture in Shropshire, agreed: ‘The use of common lands operates on the mind as a sort of independence.’ After enclosure, he wrote, ‘the labourers will work every day in the year, their children will be put out to labour early,’ and ‘that subordination of the lower ranks of society which in the present time is so much wanted would be thereby considerably secured.’ In 1771 the agriculturalist Arthur Young noted that ‘everyone but an idiot knows that the lower classes must be kept poor, or they will never be industrious.’”

The great separation

Early capitalists not only had to find ways to compel people to work for them, but they also needed a global frame of thinking to pursue their aims. Everyone’s beliefs about themselves and the world at large had to support the strict hierarchy of power necessitated by capitalism.

In animist cultures, where there is a kinship of all beings in nature, people fish, hunt, gather, and farm, but instead of doing it in a spirit of extraction, they do it in a spirit of reciprocity. Anthropologists see this as more than a cultural trait; it is a fundamental way of envisioning mankind—an ontology of inter-being. Opposed to this view is that of a creation destined for man under the transcendental auspices of their divine creator, and where nature has consequently no intrinsic value. Treating nature as a mere commodity, the capitalist logic could only favor the second interpretation of what the living world is about.

The first expression of modern science fully supported this idea of a strict hierarchy between God, man, and nature. For Francis Bacon (1561-1626)—the Englishman celebrated as the “father of modern science”—nature should be seen not as a mother but as a “common harlot” whom man must subjugate. “Nature must be ‘bound into service’ and made into a ‘slave,’ ‘forced out of her natural state and squeezed and moulded’ for human ends.”

The French philosopher René Descartes (1596-1650) justified this position by arguing that natural phenomena can be understood clearly and distinctly only if they are considered mechanical interactions. He thus gave scientific authority to the idea of nature as fundamentally lifeless. With this first expression of modern science, adds Jason Hickel, “Whatever ethical constraints remained against possession and extraction had been removed, much to the delight of capital. Land became property. Living beings became things. Ecosystems became resources.” This cultural trait of the Western world has remained to this day.

From a scientific standpoint, however, it hardly makes sense. Thinking that he had unveiled the one and only method of positive knowledge that could ever be, Descartes confused truth and validity. Far from being a direct reading into reality, conceptual knowledge is built. To deepen the understanding of natural phenomena, various methods and approaches were progressively applied in the following centuries. Medicine, biology, or ecology, among others, do not contradict Descartes’ mechanistic model but are validated beyond its inner limits.

The body as “raw material”

It was not only nature that needed to be reigned in but labor, too. During the revolutionary period at the end of the Middle Ages, peasants’ work depended on weather and seasons, festivals, and feast days. In other words, people sought to work for what they needed to enjoy life. “All told, holiday leisure time in England took up probably one-third of the year. And the English were apparently working harder than their neighbours. The ancien régime in France is reported to have guaranteed fifty-two Sundays, ninety rest days and thirty-eight holidays. In Spain, travellers noted that holidays totalled five months per year.”¹² Jason Hickel concludes that “Peasant lifeways were incompatible with the kind of labour that was required for capital accumulation.”

Once Europe started to fill up with “paupers” and “vagabonds” in the wake of the enclosure movement, states began to introduce laws forcing people to work. The first Vagabonds Act was passed by England’s King Henry VIII in 1531, making it a criminal offense to survive by begging or hawking. During the following centuries, such laws not only assuaged elite fears that a growing underclass could become a political threat; they also accustomed people to the idea that work was to be considered a whole way of life. Values moved toward the assumption that idleness is a sin and productivity a virtue. This also implied that poor people had had it coming; their lack of virtue—not that they were dispossessed in the first place—was the reason for their predicament.

These ethics of self-discipline and self-mastery became central to capitalism’s culture. This is why, after five centuries of cultural reprogramming, it is rarely pointed out that the value of work is only in the human enrichment it makes possible, not in labor itself. Toiling was made a virtue by those on the right side of the profit-seeking apparatus.

1. Silvia Federici, Caliban and the Witch, p. 46.
2. See Fernand Braudel, Capitalism and Material Life<, 1400-1800 (New York: Harper and Row, 1967), pp. 128ff; Karl Marx, Capital Vol. 1.
3. See Carolyn Merchant, The Death of Nature: Women, Ecology, and the Scientific Revolution (1981).
4. In Christopher Dyer, A redistribution of income in 15th century England, Past and Present No. 39, 1968, p. 33.
5. In John Hatcher, England in the aftermath of the Black Death, Past and Present No. 144, 1994, p. 17.
6. See Guy Standing, Plunder of the Commons (Penguin, 2019), and Thompson, E.P. (1964) The Making of the English Working Class. New York: Random House.
7. Timothy Walton, The Spanish Treasure Fleets (Florida: Pineapple Press, 1994); Kenneth Pomeranz, The Great Divergence: China, Europe, and the Making of the Modern World Economy (Princeton University Press, 2009). For more on this history, and relevant sources, see The Divide, by Jason Hickel.
8. Utsa Patnaik, Agrarian and Other Histories (Tulik Books, 2018); Jason Hickel, How Britain stole $45 trillion from India, Al Jazeera, 2018; Gurminder Bhambra, “Our Island Story”: The Dangerous Politics of Belonging in Austere Times, in Austere Histories in European Societies (Routledge, 2017).
9. See, for instance, B.R. Tomlinson, Economics: The Periphery, In The Oxford History of the British Empire (1990).
10. John Locke, The Second Treatise of Government, 1689.
11. For more on this history of scarcity, see Nicholas Xenos, Scarcity and Modernity (Routledge, 2017).
12. Juliet Schor, The Overworked American: The Unexpected Decline of Leisure (Basic Books, 2008).