CHAPTER V.
THE ESSENCE AND ORIGIN OF CAPITAL ACCUMULATION.
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Before we start examining the main features of the present economic system it is important that we consider first what constitutes a capital, and what have been the most important factors in its accumulation and rapid development during the last four centuries.
Adam Smith (l723 1790) in his analysis of Capitalism explains that capital is a previously accumulated stock of goods and commodities being employed to produce more commodities.
Capital stock is anything which has the potential of commanding or buying labour. For example one could accumulate enough food, clothing, tools, or their equivalent value in money to maintain or pay one worker to work and produce commodities for one year; this stock of materials or money can command a quantity of labour, but it produces nothing to his owner if it is left idle. This capital can produce a profit and grow only by the employment of labour to produce commodities that can be sold for profit on the market.
For simplicity sake, without entering into philosophical arguments, we could say that capital is a quantity of previously accumulated materials, or their equivalent value in money, being used in production. This should be enough for the scope of this analysis.
Let us now have a brief look at the origins of capital and the main reasons for its rapid development during the last three centuries.
In his analysis of the capitalist system (An Inquiry Into The Nature And Causes of The Wealth of Nations), Adam Smith is mainly concerned with the explanation of its natural laws and mechanism as they had evolved. But he makes a few statements which leave no doubts about what he thought was the origin of capital accumulation.
He simply states that before the division of labour and further accumulation of capital "there must be a previous accumulation of stock." He states that previous to the appropriation of the land and accumulation of stock the produce of labour belong wholly to the laborers, they had no masters or landlords to share it with, but
"....this original state of things could not last beyond the first introduction of the appropriation of land and accumulation of stock....As soon as the land of any country has all become private property, the landlords, like all other men love to reap where they never sowed and demand a rent even for its natural produce....As the accumulation of stock must, in the nature of things, be previous to the division of labour, so labour can be more and more subdivided in proportion only as stock is previously more and more accumulated.... "
The land in itself can be considered to be the primordial capital because it provides subsistence, and, therefore, whoever owns the land can command labour. The appropriation of land was one of the main factors which opened the door to the accumulation of capital and the division of labour. Without it Capitalism could not have developed.
Another essential factor in the development of Capitalism after the appropriation of the land by a minority, was the consequent forced exodus of the majority of peasants from the land their only means of subsistence. The result was the division of the population into proprietors of land and capital at one end, and destitute free laborers at the other.
The peasants under the feudal lord, although they had the status of serfs, were his wards. In theory, he was responsible to the King and ultimately to God for their well being. Moreover, the lord in theory had no more right than his serfs over the land entrusted to him; the King had the ultimate right over the land.
This relation and feudal covenant was broken: the law about property was changed and property over the land became absolute. The feudal masters took possession of the land repudiating all responsibility towards their laboring serfs; they were set free from their bondage.
The freed serf had to look after himself in a world where the land had been fenced off and had become private property. Without the use of the land for his subsistence he could only walk along the roads looking for work wherever he could find it, looking for a benefactor willing to employ him. It was and still is the degree of one's control over the land and the other means of production that determines one's degree of freedom and equality.
How did this separation of the labourer from the land and the means of subsistence come about?
The story that most capitalists apologists are always keen to tell about the accumulation of wealth and the origin of capital is that...in the beginning all people had the same opportunity, but only a few industrious people by hard work and sacrifices became rich and wealthy; the rest were less industrious and wasted their opportunity, therefore they became poor; eventually the poor to survive had to depend on the good will and generosity of the rich to be allowed to work for them in return for the price of their subsistence.
If we accept this story we must believe that only ten percent of the world population are honest hard working Human beings, while the rest is composed of lazy idiots; and in this number we must include most of the geniuses, inventors, explorers, etc. who very seldom were good businessmen. It is not so much intelligence, wisdom, education or hard work but it is mainly the cunning and business sense of the merchant that are most essential for material success in capitalist society.
In reality the fact is, as Adam Smith stated, that the appropriation of the land had to be effected and the separation of a mass of people from it had to be under way before capitalism could develop further.
Amongst all the factors that we have mentioned earlier, in the evolution of Capitalism from feudal economy, there are some that deserve to be mentioned again. The basis of the strength of the feudal lords against their rivals had been the number and loyalty of their subjects. But, with more stability and peace, they did not need any more a big population on their domains. At the same time a revolution in technology and the opening of new markets was causing a revolution in agriculture. It became more attractive for the feudal lords to change the use of the land from open field subsistence farming to large scale commercial farms, and to enclose large tracts of land for pasture and sheep grazing to supply the growing woolen industry.
There is plenty of historical evidence about this process. While it increased agricultural production and wealth, it increased also the poverty of a large part of the population, and their dependence on industrial development. This did not happen at once, but at different stages in different parts of Europe.
It was this process that was the basis for the accumulation and development of capital. Not the idyllic tale of hard work and self denial of the capitalist apologist, but a documented story of greed, ruthlessness and misery. This is generally speaking and with few exceptions the genesis of capital.
Eventually, the wiser and more liberal capitalists themselves had to devise laws to limit the degree of exploitation of the common people, even laws to protect children from the greed of their employers and the necessity of their destitute parents.
In Europe, Capitalism had to wear a Christian mask; but the mask was dropped without shame by the capitalists in their dealings with colonial nations of different race and religion.
Further evidence that the accumulation of capital could not take place without abundant cheap labour is found in the fact that in North America, where land was cheap and available to all, a nation evolved of strong and independent small farmers. Large commercial landowners had to use slaves, and industrial capital did not develop to great extent until during and after the Civil War. Only on the eastern coast of the United States, the staging area of European migration before its march towards the West, we see some early industrial development, and the wages of labour, there, were well above those in Europe.
To overcome the problem of the scarcity of wage labour in parts of Australia, Wakefield's plan of systematic colonization was adopted by England in the nineteenth century: the price of land was made artificially high to force poor migrants to work for those who had capital, at least until they could save enough to buy their own land.
Capital needs labour, if labour is scarce it must be created either by denying the use of the land, and therefore the means to be independent, to the majority of people, or by forced labour and immigration.
Generally speaking, a man may become modestly rich and comfortable in his lifetime by his own hard work and sacrifices, but only by employing directly or indirectly the labour of other people to produce more value than they are paid in wages, or by the forced labour of slaves, could large capitals be produced and accumulated.
This is, in the main, how capital evolved from the appropriation of the land and from the early stocks of the merchants and usurers of the Middle-Ages.