it was unfixed, variable rents responsive to market imperatives that in England stimulated the development of commodity production, the improvement of productivity, and self-sustaining economic development. In France, precisely because peasants typically enjoyed possession of land at fixed and nominal rents, no such stimulus existed. It was, in other words, not the opportunities afforded by the market but rather its imperatives that drove petty commodity producers to accumulate....The same process created a highly productive agriculture capable of sustaining a large population not engaged in agricultural production, but also an increasing propertyless mass that would constitute both a large wage-labour force and a domestic market for cheap consumer goods - a type of market with no historical precedent. This is the background to the formation of English industrial capitalism.--Ellen Meiksins Wood (1999 [2017] The Origin of Capitalism: A Longer view, 102-103
Meiksins Wood (whose book I warmly recommend) relies on a distinction between commerce and capitalism. Commerce is historically ubiquitous; whereas capitalism originated once, relatively recently in human history (in the English countryside). The former is characterized by voluntary exchanges in which people buy low and sell dear and occurs primarily in (what we may call) arbitrage opportunities. While societies in which commerce exists are durable, their growth potential is limited. The latter occurs from necessity, that is survival, in which in order to survive people engage in ever cheaper and more efficient production of their factor. Growth in capitalism is, in principle, open-ended bounded at some limit by Earth's resources (and internal instability). Crucially, in a capitalist system everybody, or all factors, experiences structural domination by the market: "compulsion lies at the heart of the new economic dynamic." (138)
Meiksins Wood explores the question of the origin of capitalism in order to (use her terminology) denaturalize it (cf. p. 74). In particular, she attacks the idea, which she repeatedly associates with Adam Smith and the phrase associated with him, 'truck, barter, and exchange' (11, 21, 28 75, 193), that there is an "economic man" whose shackles (e.g., feudalism, slavery, trade-protection, etc.) simply need to be undone in order for capitalism to emerge naturally. The idea behind this thought can be found in a famous passage in the Wealth of Nations (hereafter WN): "all systems either of preference or of restraint, therefore, being thus completely taken away, the obvious and simple system of natural liberty establishes itself of its own accord."
For Meiksins Wood, capitalism emerges, as it happens (but this is less important) under a certain version of feudalism, in which, and this is important, term-limit leases are introduced in agriculture and the price of these leases are determined by an estimation by surveyors of the value of that land after improvement (a key word) in light of prevailing, or at the least the abstract perception of prevailing, market conditions. I quote two representative passages: "As for the tenants, they were increasingly subject not only to direct pressures from landlords but also to market imperatives that compelled them to enhance their productivity." (100) And "We can watch the development of a new mentality by observing the landlord's surveyor as he computes the rental value of land on the basis of some more or less abstract principle of market value, and measures it explicitly against the actual rents being paid by customary tenants." (101) These new kind of leases create the "rupture" (8) that generates the "laws of motion" associated with capitalism "that uniquely compel people to enter the market, to reinvest surpluses and to produce 'efficiently' by improving labour productivity - the laws of competition, profit maximization, and capital accumulation." (16)
Some other time, perhaps, I'd like to discuss her fascinating treatment of Thomas More and, especially, Locke. And the role of the state in facilitating the growth of capitalism. For now I want to note that one need not be Marxist to appreciate her effort. Determining the historical origin and naire of capitalism is fascinating and undoubtedly sheds some light on the possibilities, if any, of articulating alternatives or changes to it. This is so, even if one were to reject the commerce vs capitalism distinction. So, for example, if one has a liberal mindset, the relevant distinction is within capitalism: one between mercantilism and commerce (or liberalism). And the liberal is willing to grant that mercantilism is historically prior (albeit not, perhaps, conceptually).
Above, I suggested that it is not unfair (to Meiksins Wood and Smith) to see Adam Smith as the proper target of Meiksins Wood's analysis. Even so, while reading her book I had the recurring thought that Smith had anticipated her in a key respect. This is not strange because as many authors have noted that despite the pin factory example, Smith seems almost ignorant of the industrial revolution (if he notices it at all), and focuses quite a bit of attention on land rents. For, in fact, Smith calls attention to the very leases singled out by Meiksins Wood, and he concludes his discussion of them: "Those laws and customs so favourable to the yeomanry, have perhaps contributed more to the present grandeur of England than all their boasted regulations of commerce taken together." (Wealth of Nations, 3.2.14, p. 392)
The three features Smith singles out are [i] "When such farmers have a lease for a term of years, they may sometimes find it for their interest to lay out part of their capital in the further improvement of the farm; because they may sometimes expect to recover it, with a large profit, before the expiration of the lease." & [ii] since the time of Henry VII, the protection of the tenants' value in improved land by "the action of ejectment" which allowed legal remedy of recovery against premature. (WN 392; in the next paragraph, Smith notes that some such law was introduced in Scotland already in 1449)
Before I get to the third feature, I want to stress this is not a side comment, in Smith's analysis. I offer two kinds of evidence. First, when Smith formally analyzes 'rents of land' in (WN 1.11) he describes variable, fixed-term leases of agricultural capitalism described by Meiksins Woods as the exemplary kind: landlords "In adjusting the terms of the lease, the landlord endeavours to leave him [the tennant] no greater share of the produce than what is sufficient to keep up the stock from which he furnishes the seed, pays the labour, and purchases and maintains the cattle and other instruments of husbandry, together with the ordinary profits of farming stock in the neighbourhood. This is evidently the smallest share with which the tenant can content himself without being a loser, and the landlord seldom means to leave him any more." (WN 1.11.1, 160). Throughout the chapter, Smith makes clear that these leases drive productivity and that they represent a conflictual model (and, but I explore this some other time, in some ways even violate our sense of fairness and justice).
Second, Smith praises the Physiocrats (or "Oecenemists"), when in their plans to eliminate French famine and to have French agriculture catch up with English standards, they emulate British practices: "it has been in consequence of their representations, accordingly, that the agriculture of France has been delivered from several of the oppressions which it before laboured under. The term during which such a lease can be granted, as will be valid against every future purchaser or proprietor of the land, has been prolonged from nine to twenty-seven years. The antient provincial restraints upon the transportation of corn from one province of the kingdom to another, have been entirely taken away, and the liberty of exporting it to all foreign countries, has been established as the common law of the kingdom in all ordinary cases. (WN 4.9.38, 678);
So, Smith both knows that the paradigmatic cases of rent, which are crucial to the analytic core of his system, are themselves historically conditioned by institutional factors and not eternal pre-existing forms of exchange.* And it is this paradigmatic case that drives commercial development as he sees it. So, why has this not been emphasized (even missed by friends and critics of Smith). This gets me to the third point.
In explaining the downfall of feudalism and monastic estates, Smith emphasizes [iii] that foreign commerce developed vain, new tastes in landlords, who, in order, to increase revenue from their holdings set in motion the kinds of leases which form the backbone of what Meiksins Wood calls agricultural capitalism. In fact, scholars love to quote the passage, which emphasizes the political effects, of the rise of agricultural capitalism:
The expensive vanity of the landlord made him willing to accept of this condition; and hence the origin of long leases...The tenants having in this manner become independent, and the retainers being dismissed, the great proprietors were no longer capable of interrupting the regular execution of justice, or of disturbing the peace of the country. Having sold their birth-right, not like Esau for a mess of pottage in time of hunger and necessity, but in the wantonness of plenty, for trinkets and baubles, fitter to be the play-things of children than the serious pursuits of men, they became as insignificant as any substantial burgher or tradesman in a city. A regular government was established in the country as well as in the city, nobody having sufficient power to disturb its operations in the one, any more than in the other. (WN 3.4.13-15, p. 421; elsewhere Smith makes the same claim about the demise of feudal, monastic landholding: "But this increase of rent could be got only by granting leases to their tenants, who thereby became in a great measure independent of them.")
Scholars and critics have loved to focus on the moral psychology and providential morality tale, even theodicy, immanent in [iii], which Smith himself attributes to Hume. But there is no doubt that Smith has the very same explanation [i-iii] of the origin of commerce as a social stage in the four stages of development as Meiksins Wood. (Well not entirely the same because she downplays the significance of the existence of foreign trade.) It is in what she calls the slow development of agricultural capitalism made possible by a certain kind of variable but secure lease that Smith sees the great source of England's wealth. These leases represent the (improving) reproductive potential of the tenant and the discipline of the market-place.
So, while I think it is correct to say that Smith also propagated the rhetorical seeds of the naturalized version of the origin of capitalism, he is crystal clear about the origin and significance of agricultural capitalism. None of the above is meant to deny that Meiksins Wood and Smith offer different interpretations of the wider moral significance of agricultural capitalism (Smith thinks it generates a new kind of interdependent independence; Meiksins Wood a new kind of structural domination), but about these matters some other time more.
*"By convention chapters 1-7 are the analytic core of Smith's system. So, here's evidence for my claim from there: "In settling the terms of the lease, the landlord and farmer endeavour, according to their best judgment, to adjust that rate, not to the temporary and occasional, but to the average and ordinary price of the produce." (WN I.7.18, 76) Here the surveyor's activity is presupposed. (As I often note, Smith's analytical core only applies to one of the stages of development.)
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