The Invention of Capitalism: Classical Political Economy and the Secret History of Primitive Accumulation

by Michael Perelman

The originators of classical political economy—Adam Smith, David Ricardo, James Steuart, and others—created a discourse that explained the logic, the origin, and, in many respects, the essential rightness of capitalism. But, in the great texts of that discourse, these writers downplayed a crucial requirement for capitalism’s For it to succeed, peasants would have to abandon their self-sufficient lifestyle and go to work for wages in a factory. Why would they willingly do this?Clearly, they did not go willingly. As Michael Perelman shows, they were forced into the factories with the active support of the same economists who were making theoretical claims for capitalism as a self-correcting mechanism that thrived without needing government intervention. Directly contradicting the laissez-faire principles they claimed to espouse, these men advocated government policies that deprived the peasantry of the means for self-provision in order to coerce these small farmers into wage labor. To show how Adam Smith and the other classical economists appear to have deliberately obscured the nature of the control of labor and how policies attacking the economic independence of the rural peasantry were essentially conceived to foster primitive accumulation, Perelman examines diaries, letters, and the more practical writings of the classical economists. He argues that these private and practical writings reveal the real intentions and goals of classical political economy—to separate a rural peasantry from their access to land.This rereading of the history of classical political economy sheds important light on the rise of capitalism to its present state of world dominance. Historians of political economy and Marxist thought will find that this book broadens their understanding of how capitalism took hold in the industrial age.

Genres: History, Economics, Politics, Nonfiction, Theory, Sociology, Philosophy

424 pages, Kindle Edition

First published January 1, 2000

About the author

Michael Perelman (born October 1, 1939) is an American economist and economic historian, currently professor of economics at California State University, Chico. Perelman has written 19 books, including Railroading Economics, Manufacturing Discontent, The Perverse Economy, and The Invention of Capitalism. A student of economics at the University of Michigan and San Francisco State College, Perelman earned a Ph.D in agricultural economics from the University of California, Berkeley in 1971, under supervision of George Kuznets. Perelman writes that he was drawn away from the "framework of conventional economics," noticing that the agricultural system was "consuming ten times more energy than it was producing in the form of edible food." Perelman's research into how "profit-oriented agricultural system created hunger, pollution, serious public health consequences, and environmental disruption, while throwing millions of people off the land" led to his first book, Farming for Profit in a Hungry World (1977). Perelman continued to write extensively in criticism of conventional or mainstream economics, including in all his books (and especially his books published from 2000 to date), papers and interviews.

Although perceiving flaws in Marx's work as it is typically interpreted in the context of its modern reading, Perelman writes that "Marx’s crisis theory was far more sophisticated than many modern readers had realized," focusing on an interpretation that is largely bypassed by many readers of Marxian economic thought. Perelman views Marxist theory as vindicated through its account of crises that a capitalist economy must inherently generate.

Perelman has appeared on a number of programs, including Media Matters, Pacifica Radio, KPFA 94.1 Berkeley, and WBBR (Bloomberg Radio).

Reviews

[Adam Kiehl · Rating 5 out of 5]

The birth of capitalism (defined here as one in which a small group of people are capital owners and most of the population has to rent themselves to capital owners to survive) is one of the most horrific events in human history. The European world would go from a frequently brutal feudal society in which the peasantry had nevertheless managed to build spaces of collective communal village life with social support and a remarkable degree of democratic control over their lives to one of disenfranchised labor facing no choice but to sell themselves on the market. Central to the story are two of histories greatest crimes: the slave trade for the massive slave plantations of the new world and the forced labor of the indigenous population for the export of gold and silver. It was that triangular trade that created a sufficiently large market for England to become a textile exporter. It was the desire to produce commodities for this market that made capitalism a desirable outcome for the rich and powerful. However what capitalism needs, at least in its early stages, is cheap labor.

To this end the landlords and manufacturers of England acted in concert to unilaterally strip the peasantry of the legal rights they had developed to their common lands to turn their villages into pastures for sheep's wool for textiles and to create a market of desperate laborers stripped of their land and communal village support that would be willing to work horrific hours for their new capitalist masters. Those that clung on as tenants were subjected to consciously escalated rents, laws banning hunting, and forced to operate smaller plots all with the goal of ensuring they would need to supplement their income as wage workers in their free time (medieval peasants had a lot more free time then you do). This crime, bearing an astonishing resemblance to the forced collectivization campaign of Stalin, went on for centuries and the unfortunate "free" labor was subjected to a rapid escalation of criminal law for things like "vagrancy", locked up in forced workhouses, and shipped by the hundreds of thousands as indentured servants to toil in the 13 colonies with horrific mortality rates. This rein of terror served to both create the necessary labor force and artificially reduce the wages to a low enough level to turn England into the world's leading industrial power and exporter, a position it leveraged to further colonize and plunder much of the world.

This book is a review of the political economists of England who attempted to make sense of this process, who advocated for capitalism and argued that it was the result of voluntary exchanges. The author demonstrates that all these figures despite their verbal commitment to freedom we're willing to turn to state intervention and outright violence at the drop of a hat if market forces were insufficient to push the peasantry into providing cheap labor, including openly advocating for higher food costs, and rounding up the unemployed poor to be set to work in workhouses (prison forced labor). They openly endorsed many of the measures I described above and expressed their constant annoyance with the peasantry's resistance to wage labor. He goes through their work and private correspondence to show where their priorities lay and how serious they actually were about laissez faire.

[tara bomp · Rating 4 out of 5]

Good, entertaining book covering both a basic history of primitive accumulation and a basic history of classical political economy, focusing on the links between the two and the ways in which political economy support primitive accumulation, often while hiding it. It feels a lot like a much extended version of Marx's footnotes against economists in the primitive accumulation section of Capital Vol 1. Lots of quotes and citations that build up a clear and fascinating picture.

It has some problems. The section that talks about the dialectic between allowing household provisioning because it reduces wages and keeping it down to a low level because if it's too successful it stops people becoming wage labourers makes sense, but the diagram it gives and the details were completely baffling - I'm sure this is probably a problem with me though. Some of the quotes are a little confusing and might have been cut up too much. Sometimes it drifts a bit too much into speculation, although I understand this is due to the absence of source material on a key subject and it's clearly marked and all seems a reasonable follow-on from the views that are sourced. Sometimes it uses Marxist/general economic terms and you'll have trouble following if you don't have a basic familiarity with them, which is annoying because otherwise it avoids being obscure and could be a good introduction.

I like it a lot, even though it's not necessarily an essential book or anything, both because it sheds light on an important topic (classical political economy is still a strong force with everyone loving Adam Smith and primitive accumulation is highly relevant to the world today) and because it's very engaging - the economists mentioned come across as real characters, even if their main trait is being giant turds with varying degrees of honesty. Adam Smith is given a lot of coverage and comes across very poorly, which is appropriate and important given his incredibly high reputation and the evil perpetuated in his name. I enjoyed reading it a lot even apart from the useful information - a lot of the quotes are evil in a sort of comic book way, and they're pretty funny in a sad way.

The last chapter is pretty short but it touches on Lenin's relationship with Smith's works and mentions Mao for a little bit. Unfortunately it's not really built on and it seems reluctant to either seriously criticise or to look to different Marxist possibilities - it just restricts itself to point out some links between them and Smith and not much else. It's still interesting although it feels a bit vestigial - I'm interested in what else he has to say on the topic.

[Jasonrhodes71 · Rating 5 out of 5]

primitive accumulation & the division of labor are two sides of the same coin. while there is an original (primitive) separation of people from land and tools, maintaining this separation is an ongoing process under capitalism, and is one of the chief functions of the state. if studied, the capitalist division of labor will show that one of the chief ends of work under capitalism, when taken as a social whole, is to maintain the need to keep on working. radical politics should be all about the reversal of primitive accumulation. that is our exit to freedom.

[Chelsea · Rating 4 out of 5]

This book illuminated an embarrassingly obvious fact for me, which is that studying the history of ideas and their contexts of origin helps you better understand those ideas' present-day forms. This careful reading of texts and historical analysis seems especially important for ideas that everyone assumes they understand, ideas that became foundational to many proceeding systems and philosophies. It can be a bit dreary at times to be so thorough (looking at you, chapter on how or how not Benjamin Franklin may or may not have hung out with Adam Smith), but it is also refreshing, because political economy sometimes seems like the art of trying to force the world to match an abstract idea you have of how world should work. This book showed how things actually worked in real markets at the dawn of capitalist ideas and how people's theories of markets did or did not reckon with those inconvenient details, specifically, about the role of primitive capital accumulation.

Even someone familiar with the concept of primitive accumulation from Marxist readings would still probably benefit from the depth of the historical analysis in this book. I especially enjoyed the earlier chapters, which explored the Game Laws, lesser-known political economists and their varying frankness about the necessity of this process to market capitalism, and the chapters on Daddy Capitalism, Adam Smith, who actually seemed like a bit of a sad guy in this analysis. I would have gotten more out of it had I been more familiar with the primary texts, but still a valuable read.

[Juan Pablo · Rating 4 out of 5]

An analysis of the history of specific proponents of our economic system & how they contrast with Adam Smith, specifically the work for which he is most famous, “The Wealth of Nations” & the importance of primitive accumulation as factor in the development of that system.

Perelman shows how Adam Smith was not particularly special amongst his contemporaries. He shows his book for what it is, more propaganda than thorough analysis. He shows how some of his contemporaries are a bit more honest about what was actually necessary to get capitalism going despite not being popular in the eyes of the general public & sometimes not by those in power either. In the eyes of the latter, they were not popular not so much because of the accuracy of their analysis but it seems more so because they wanted to keep the truth obscure. Hence the popularity of Smith. It seems Smith obscured the importance of primitive accumulation sometimes intentionally & sometimes because he lacked the proper understanding. What’s clear after reading this, is that capitalism is not part of a natural process as typically espoused by its proponents but is a product of coercion & violence. It is not frowned upon & is seen as necessary as evidenced by the various ways people resisted any & everywhere capitalist production reared it’s head.

Only two gripes with this book. I’m not sure the chapter contrasting Smith with Benjamin Franklin fits. It seemed unnecessary & out of place but perhaps I need to read it again. Lastly & most important, his section on Vladimir Lenin. I’m not sure how much he understands about Marxist thought, Lenin’s thought & analysis & the conditions in which the latter arose, especially in light of the Russian Revolution & the subsequent Civil War where 21 countries tried to undo what the Bolsheviks & the people had accomplished. Lenin’s adoption of the New Economic Policy was less because of a belief in the development of capitalism as necessary but more as a pragmatic measure to buy Russia some time in light of how the Russian Civil War devastated the ranks of the workers, how the failure of the German Revolution to help ignite an international revolution amongst the working class made things worse & it seems too late an understanding of the bureaucratic degeneration that facilitated Stalin’s rise to power, which added further obstacles to establishing socialism. The omission of these facts, especially those of the Civil War & German Revolution, are all the more glaring because of Perelman’s emphasis on the coercive nature of capitalism & the examples he gives. How is it not a form of coercion by backing the opposition, which has among them supporters of capitalism that seek to bring it about & take away the gains made for the working class & masses in general?

Overall it was a very good book. Drags a little at times but is engaging for the most part. It is worth it for the understanding of how the powers that be intentionally confuse the truth of the socioeconomic system that is capitalism, the illuminating of which, Perelman has paid a heavy price.

[James Steele · Rating 3 out of 5]

[[Now I know this book is poorly written. Just real Karl Marx. Marx devotes the last few chapters to the topic, and Marx did a way better job describing what happened. https://www.goodreads.com/review/show...]]

[[Despite the above, the author convinced me to read Steuart, the original source, and I have confirmed everything he wrote is accurate. Capitalism did not happen naturally. It was a deliberate seizure of our self-sufficiency.]]

A very academic book. Not easy to digest, using a lot of economist’s terms to define other economist’s terms. Still, if you can let that sink into the background and peel back the layers to see what this book is about, this is scary.

Proponents of capitalism maintain that market forces create and maintain themselves, and the system was an inevitable progression of society from an inefficient system of feudalism and households producing goods to the highly efficient system of factory economy.

But these views overlook how people lived before capitalism. They lived on feudal lands, and though they had to pay tribute to the landowners, they were otherwise self-sufficient.

It was the aristocrats who sat in their ivory towers and looked down on the commoners below and said “those people have too much free time. Look at them, those lazy and inefficient people. They provide for themselves and what little excess they make they sell, and it all goes to benefit themselves! What a waste! If only something could be done to whip them into shape and be more productive. They could produce even more for us if they only had motivation!”

They also figured if people spent more time working and less time observing religious holidays and otherwise wasting their time merely providing for their own needs, they wouldn’t have time to commit crimes. Capitalism was envisioned as a means of social control, as well as a means to make more money for the noblemen who owned the land.

People who were thinking about the nation as a whole, competing on the world market for goods, also looked down on the self-sufficient peasants with disdain. From a national perspective, they were useless. They provided for themselves, and gave nothing back to the country. Someone had to do something about that. Make these people productive so they will be an asset to the country, not a drain.

But there was a problem: the people were self-sufficient. The household was essentially the economy. It was decentralized, and each family provided for itself and occasionally made excess which they traded or sold for whatever they could not produce themselves. The aristocrats sought to enact government policies that, in essence, made it illegal for a person to provide for himself. This diverted labor from the family’s benefit to the employer’s.

These aristocrats actively changed society to suit their needs. They consciously turned the family unit into a part of a machine that would directly profit themselves. They kept the people in poverty because starvation increases productivity, and the poorer people were, the less free time they had, the harder they would work and the more they would produce to keep themselves afloat, thus the more surplus labor could be wound out of them for the good of the country, and the nobility.

Producing products for export was of chief concern to these people—having more products to export would make the country stronger, and they determined that they owned the land, so they should organize the people working it to produce as much excess as possible. The commoners were little more than chess pieces to manipulate towards a goal.

This book makes a lot of long-winded logic proofs that could be written so much simpler. Chapter 4 is especially hard to get through because it’s not clear until the last page what he’s trying to say. 20-something pages just to say households were self sufficient until the capitalists decided to remake the family to suit the needs of the market? The section on the Corn Laws is also very dense and fails to make a point. It does not explain what the Corn Laws were, rather assumes readers already know, so the entire section plods along, never explaining itself, or its point.

It’s also written assuming the reader has the opinion that the likes of Smith and other early writers of capitalism and market theory are godlike and can do no wrong. One important fact this book shines light on is that Adam Smith was not the only person writing about the virtues of markets and ownership and labor. In fact, in his time Smith's writings were dismissed as unrealistic and childish, and his views on the labor-value of markets has long been downplayed.

Other people wrote about it, too, often in less rosy language. Sir James Steuart, a contemporary of Smith's, is now forgotten, but he wrote a grittier, more cynical outline of how a capitalist system would work, and who benefits. He didn't mince words about what he thought of peasants and that they are an untapped resource that can be put to work for the good of the nation, and it's these writings Perelman draws from. The more cynical texts show us exactly what the aristocrats thought of the non-landowning masses, and how they could be used for a greater purpose. Today, Smith is held up as the golden boy of Capitalist writers precisely because he paints such a pretty, unrealistic picture of it.

Academic jargon aside, the point this book makes is startling. Though it is heavily Marxist and will not convince anyone leaning to the right, it is exhaustive in examining what these 18th and 19th century intellectuals really believed, how disconnected they were from the reality on the ground, and how they regarded the commoners as little more than tools to make themselves richer, and the country as a whole more competitive on an international market.

Work for “the greater good” is supposed to be a totalitarian/communist edict, but here these aristocrats were saying the exact same thing. They even thought they were doing a noble thing, keeping the people productive and thus out of a life of crime and wasted potential, frittering their time away. Many believed the only thing the peasants did with their free time was drink and beat their wives.

They despised all those people working for themselves and giving nothing back to the nation. They decided something should be done about it, so they convinced government officials to make it illegal for the people to provide for their own survival, and thus they had no choice but to work for factory owners. They figured if the commoners dared resist and try to assert they have a right to provide for themselves, Market Forces themselves would serve sufficient means to keep the people poor and productive and unable to fend for themselves.

Capitalism is not a natural system. It did not come about by natural means. People at the top made deliberate decisions to mold society in this way, and they did not believe it would raise all boats or improve quality of life. The intent was always to keep the people poor and working so the aristocrats could benefit from their labor, as was their right, being members of the upper class and thus the best people in society.

[Tommy · Rating 4 out of 5]

Primitive accumulation is removing leisure time as an option and minimizing it socially for the working class. Early chapters cover the history of game laws, social division of labour, and such... it gets more into the economists themselves later with a good exposition of Adam Smith's contradictory conjectural explanation for the emergence of employment vs. James Steuart's account. Gives an overview of some lesser known classical economists like Robert Torrens, Edward Gibbon Wakefield and John Rae.

...the classical political economy put forth a theory that held that a greater degree of self-provisioning increases the rate of surplus value, other things being equal... At times, classical political economists seemed to take pains to avoid the appearance that they were applying something like this model. For example, Adam Smith, insofar as he addressed the subject, treated the social division of labor as the result of voluntary choices on the part of free people. Even so, on closer inspection, when we review Smith’s works as a whole, we find that he also preferred the use of nonmarket forces to manipulate the social division of labor.

For Steuart, trade first begins with government support of luxury exports.Gradually, inland commerce takes on more significance (Steuart 1767, 1:347–49). Smith, by contrast, saw the acceleration of domestic exchanges as a consequence of the expansion of internal markets. He associated this tendency with ‘‘natural’’ progress as opposed to the contrived commerce that Steuart identified as the motor force (Smith 1976, III.i.8, 380). As a result, Smith wrote as if he would have preferred to wait for the household economy to atrophy on its own as the market withdrew economic energies away from traditional activities.
Smith believed that agricultural society would naturally transform itself into an urban commercial society in short order. In truth, even the towns, which were central to Smith’s theory of economic development, began as artificial units that were granted special privileges by the state (see Merrington 1976, 180–82). Later capital shifted much of its activity to places, such as Leeds, Birmingham, Manchester, where it could be less encumbered by traditional labor regulations. In these rural sites workers no longer passed through apprenticeships, but remained as low-paid underlings (Ashton 1972, 15–16, 94). In the northern colonies of North America, however, towns did seem to develop more like Smith had envisioned the process (see Bidwell 1916, 256–62), but despite his best efforts, the preponderance of the colonial experience flew in the face of Smith’s theory of harmonious economic development.

[Joe · Rating 4 out of 5]

Laissez-faire for you, State Intervention for us!

This is a very good book. It is the revised edition of a book I saw sometime in the (?) eighties. This book decisively shows how the birth of capitalism required the dispossession of both small-holders and landless peasants by closing off the commons and forest areas (through Enclosures and various Game Laws, for instance) and thus removing their supply of food (from hunting and gathering) and fuel (such as wood).
This expropriation forced them into the workforce, whether as craftsmen, factory workers or mere day-laborers is a matter of little import. They were now all trapped within the Capitalist System, under the yoke of wages, with no way either back or out. Also, the Corn Laws and Poor Laws continued the "work within the Capitalist System or starve" policy by making food more expensive and curtailing the (very) little aid the poor previously had received. In Marxist literature, this expropriation of the peasantry became known as 'primitive accumulation'.
My Libertarian friends tend to think of Capitalism as the salvation of the poor. As always, they were beaten and dragged into the supposed "salvation".
The first five chapters make this abundantly clear. After this, our author discusses how early modern capitalist thinkers (David Hume, Adam Smith, Benjamin Franklin and so on) were well aware of all this and thought it necessary. The study of Political Economy and its relation to primitive accumulation consumes the second half of this book.
And since (as I said) early political economists were aware of the necessity (from the viewpoint of Capital) of this dispossession, many fits of indignation ensue throughout the second half of the book regarding their 'dishonesty'. Too many. Obviously, I agree that state intervention through various laws and enclosures contradicts the laissez-faire ideology of emerging capitalism. But our author should have trusted his readers to react to the evidence on their own. James Steuart, who I have never read, comes off as the most forthright of these early-modern political and economic thinkers and philosophers regarding the necessity of dispossession and impoverishment of the rural poor (to force them into the capitalist regime) at the beginning of industrial capitalism. I think reading him alongside Smith would make for a fascinating comparison.
This is a very interesting book. Even though our author is a Marxist, I think anyone interested in the rise of the modern world (especially the Anglo-Saxon world) will find this book quite useful.

[David Steele · Rating 5 out of 5]

World-view changing. Easy to read. Recommended.

[Marcelo Brasil · Rating 4 out of 5]

A very good book about the history of Capitalism, more specifically on primitive accumulation and the views of classic political economists like Smith, Stuart, Rae, and even Ben Franklin (though he focuses more on Smith). Pretty alarming and eye-opening quotes from these classic political economists that make it pretty clear how much contempt they had for peasants, as well as how much they actually needed the state to push forth the Capitalist agenda--though they want to have you believe that it is all "laissez faire."

Some good chapters on the Game Laws (peasants unable to hunt for food anymore), and its connections to primitive accumulation and/or Marx's Silent compulsion of Capital.

Essentially Perelman is arguing how central the coercion of peasants into wage labor--by kicking them out of the common lands, where they were able to sustain themselves to a degree-- and that capitalists were very much dependent on the state to be able to create laws (anti-begging laws which could lead to execution, game laws as I stated earlier, as well as the poor laws which essentially forced poor people to wage labor) to make this into a reality. Moreover, all of these laws were created to push forth capitalism, which essentially was about accumulation of wealth and profit. The effect of these laws was primitive accumulation; like I said earlier, these capitalists had a lot of contempt against peasants, and the Irish (they're lazy). This primitive accumulation and/or Capitalism led to the need of poverty and its maintenance for Capitalists, as poverty was there to "accumulate wealth for the rich."

Lastly, he does a pretty decent job describing the process and transition from feudal societies, to the enclosure acts and the cottage industries to the big factories of the industrial revolution. My only real gripe with the book is the disjointedness of it. The first four chapters or so speak greatly about primitive accumulation and such, and then it sort of changes gears and begins to focus on classic political economists. I mean, it makes sense in the end in that it all does connect to primitive accumulation in a sense, but it feels like it could have been two different books.

[Damjan Pavlica · Rating 5 out of 5]

Brutal analysis on how people were forced to leave their land and became industrial workers.

[Athend · Rating 2 out of 5]

Very informative, but a bit dry.

[Herb Neumann · Rating 5 out of 5]

The story behind the story. It helped me to understand New Mexicans' treatment after the Treaty of Guadalupe Hidalgo.

[Roger Lewis · Rating 5 out of 5]

I read this book in the summer of 2010, to say it had a profound effect on my own critical thought processes is to do the book a huge injustice.
My appreciation of the book has only grown as I have explored wider implications of some of the political realities of the cartoon of Capitalism sold to me as I studied land economy in the first half of the 1980's.
The path I set out on reading this book in many ways ends with a review of a book I am still studying
and that is this one.
https://www.goodreads.com/book/show/3...
Would that we had listened and learned from the book published in 1976.