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

Michael Perelman

4.16 · Rating details · 101 ratings · 9 reviews

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 creation: For it to succeed, peasants would have ...more

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Paperback, 424 pages

Published May 3rd 2000 by Duke University Press Books (first published January 1st 2000)

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Aug 13, 2017 Adam Kiehl rated it it was amazing

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 disenfran 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. ...more

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Aug 20, 2013 tom bomp rated it really liked it

Shelves: anthropology, economics, history, non-fiction, marxist, politics

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 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.

...more

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Oct 21, 2009 Jasonrhodes71 rated it it was amazing

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 r ...more

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Jul 30, 2020 J.P. rated it really liked it

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 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. ...more

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May 04, 2020 James Steele rated it liked it

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 t ...more

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Dec 09, 2020 Chelsea rated it really liked it

Shelves: political-economy

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 Benjami ...more

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Nov 26, 2018 Tommy rated it really liked it

Shelves: economics, sociology, history

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 R 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.

...more

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Apr 22, 2019 Joe rated it really liked it

Shelves: economics, history, liberal-left, marxism, political-thought, sociology, reviewed

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 in 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. ...more

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Sep 08, 2013 David Steele rated it it was amazing

World-view changing. Easy to read. Recommended.

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About Michael Perelman

Michael Perelman

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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 ...more

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“In the wake of primitive accumulation, the wage relationship became a seemingly voluntary affair. Workers needed employment and employers wanted workers. In reality, of course, the underlying process was far from voluntary.” — 0 likes

“Indeed, the history of the recruitment of labor is an uninterrupted story of coercion either through the brute force of poverty or more direct regulation, which made a continuation of the old ways impossible” — 0 likes

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