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The Invention of the Modern World 4.

Spring-Summer Serial 2012.

Chapter 4: THE ORIGINS OF CAPITALISM

By Alan Macfarlane.

THE INDUSTRIAL AND agricultural revolutions were part of something even bigger – namely market capitalism, a complex set of attitudes, beliefs, institutions and networks within which economy and technology are situated. The quintessential features of this system have often been described. At its heart is the separation out of the economy into a special domain, dis-embedded from society, religion and politics. Such a process can be seen in various key areas.

One of these is in attitudes to property. The privatized and individual nature of property in English Common law is a very old feature, dating back over a thousand years. Property in England is owned by an individual. He may own a horse, a coat, a house, a field, the right to fish, the right to cut down a tree.

The powerful principle of law-protected private rights in property which John Locke saw as underpinning English freedom, and which was transmitted as one of the defining features of individualistic capitalism to the U.S., is present in English law and society from very early. In terms of ownership, the unit is the individual – neither family, religious or political authority can forcefully (lawfully) deprive a person of these rights. This is unusual in the world until recently.

AT THE HEART of capitalism there is an attitude towards profit maximization and the saving or spending of wealth. Max Weber pointed out that while the great cities of Italy, Spain or France in the fifteenth to seventeenth centuries were full of wealth, luxury, money, consumerism, yet they were in their essential spirit ‘pre-capitalist’. Meanwhile, in the rural backwoods of America, Benjamin Franklin and his friends showed in their attitudes to time, money, investment and saving, a capitalist ideology.

England was like backwoods America. Until the middle of the eighteenth century, England was a rather rural place – filled with smallish towns and small cities, less urbanized than most of the rest of Europe, seemingly filled with country people. Yet when we start to investigate the mentality of those villagers, we find little, if any, difference between their basic attitudes to time, saving, re-investing of profits and anxieties about consumption and status to those seen in England today. The mentality of the seventeenth century country clergyman Ralph Josselin whose diary I have analysed is as ‘capitalist’ as any modern farmer or businessman.[1. Macfarlane, Josselin.] We can trace similar attitudes through the numerous letters, diaries and other sources which survive from the later middle ages.

In other words, the Weberian ‘Protestant Ethic’ is there in England, certainly after the Protestant Reformation, but also well before. The legal cases, the literary sources, the village records, none of them indicate a sudden watershed or move from a pre-capitalist ethic to a capitalist one. The acquisitive, wealth-pursuing, rational and dis-embedded accumulation is there in Chaucer and the legal records of England from the fourteenth century onwards.

It is this ethic which found its expression in the austere, saving, calculating world of English Puritanism, but it was also there much earlier. And it is, as Weber noted, the engine that drives that capital accumulation, the re-investment for profit, which gradually leads a country to become richer.

In most societies, temporary success in accumulation is normally used for consumption, display  and gifts, for fear that it will be grabbed by the powerful or destroyed through war.  On the contrary, the ‘Protestant Ethic’ enjoined hard work, time and labour saving, re-investment for profit. All of this is a feature which distinguished England from most countries, though the Dutch, as Simon Schama points out in Embarrassment of Riches, had the same tendency. It was not just the forms but also the spirit of capitalism which was early present in England.

The outcome was a constant striving for more – as my school motto put it, ‘Striving for the sun’. There was not, as in most cultures, a fixed limit. There was always extra profit to be made, or fears of ruin to be allayed.

FRENCH VISITORS NOTED these traits in England. Hippolyte Taine wrote in the middle of the nineteenth century that ‘The mind becomes narrower, men grow hot after gain, work too much, acquire too many needs….Everybody becomes plebeian, proletarian or shop-keeperish, sharp, hard, anxious and unhappy. To make money – such, nowadays is the daily concern, the all-absorbing idea – and in this country more than any other.'[2. Taine, Notes, 190.] Poverty, he writes, is generally degrading. ‘It is to some extent to avoid falling into such degradation that the English strive so fiercely after riches. They prize wealth so highly because it is, in their eyes, the accompaniment to, sustenance for and condition of morality, education and all the attributes which make a gentleman. It is under this unremitting lash that every man goes forward, drawing his load after him. And use turns into a need: even when he has reached his goal, he still goes on pulling and, in default of a load of his own, harnesses himself to that of his parish, his association, or the State.'[3. Taine, Notes, 62-3.]

Taine gives a portrait of a model life. ‘Here, then, is an admirable specimen of an English life: left early to fend for oneself; marriage to a woman with no fortune; a large family of children; income all spent, no savings; work very hard and place one’s children under the necessity to do likewise; constant acquisition of facts and positive knowledge; find relaxation from one task in another task, and rest in travel; produce constantly and consume as much.'[4. Taine, Notes, 60.] Or as Max O’Rell put it, ‘Poverty is no vice in France. It is in England. But everything has its redeeming point. This thirst for wealth, this adoration of the Golden Calf, has made the English nation a nation of bees. Everyone works. The heir of a millionaire does not dream of a life of idleness.'[5. in Wilson, Strange, 227.]

Another Frenchman who noted the same characteristic which had been transferred even more forcefully to America, was Tocqueville. He wrote that ‘Intelligence, even virtue, seem of little account without money. Everything worthwhile is somehow tied up with money. It fills all the gaps that one finds between men, but nothing will take its place’.[6. Tocqueville, Journeys, 78.] Everything was about money. ‘In a nation where wealth is the sole, or even the principal foundation of aristocracy, money, which in all society is the means of pleasure, confers power also. Endowed with these two advantages, it succeeds in attracting towards itself the whole imagination of man; and ends by becoming, we may almost say, the only distinction which is sought.'[7. Tocqueville Memoir, I, 230-1.]

IT IS ALMOST always the case that in agricultural societies, co‑operation in, and command of, labour is obtained through real or manufactured kinship links. Those who herd the animals, work the farm, run the es­tate, are recruited on the basis of kin ties. In such a system, to increase the level of production, the central mechanism is to increase the family labour force, either by marriage strategies which bring in wives and children, or through the creation of fictive kinship ties such as god-parenthood or adoption. There is little incentive to devise ‘labour‑saving’ devices. This overlap between the unit of reproduction and production continued in much of Europe until quite recently. ‘The decline of the family as a productive unit…reached the European peasant and working classes only during the nineteenth century, and, in some areas like Southern Italy, rural Ireland, and rural France, not until the twentieth century’.[8. Scott and Tilly in Rosenberg, Family, 176.] It is easy to assume that this was also the case in England. Yet what is striking is that from at least the fourteenth century, the family does not seem to have been the basic unit of production.

What emerges from the detailed study of manorial and taxa­tion documents is that we are not dealing in English history with a familistic, subsistence, economy, but with one where from the medieval period most of the labour that is recruited is contractual labour, that is work provided by servants, apprentices, day‑labourers and full‑time labourers. Hired labour was no oddity in the system but a central feature of it. Whether we look at the large medieval estates or the small copyholdings, we find that they were not, on the whole, run by groups of parents and chil­dren, but by people who have a non‑family relationship. Of course, it was possible for small family firms and partnerships to develop; but this was a matter of conscious choice, not of automatic organization. Only husband and wife acted as a joint unit.

THE GAP WHICH had emerged between people and the land, the flexibility of property concepts, the non‑familistic use of labour, all of this was only made possible by various symbolic instruments, the most important of which was money. Monetized values, whether in the form of actual currency or credit, are usually held on the edge of the community in most traditional socie­ties. Tribal societies keep money right outside the system, only engaging in exchange on the boundaries. Peasant societies are linked to the market and to money but also refuse to allow the medium of money to penetrate too deeply into the local community and into the operation of daily life. Money and all its stands for, it is realized, will destroy the inter-blending of social and economic which is of their essence. While money is essential in such societies, principally to pay taxes, rents and to pur­chase some luxuries and perhaps even necessities from the outside world, it is something which is kept out of most daily relationships.

The situation which is evident to any historian who has contemplated the English records from the fourteenth century is different. The penetration of cash and money values appears almost complete and spectacular from the earliest documents. The detailed account rolls, manor court rolls, rentals and other materials would not make sense unless we realize the impor­tance of monetary values in all parts of life. Almost everything was given a monetary value, and almost everything could be bought and sold for cash.

Just to give one example, the agricultural treatise of Walter of Henley written in about 1280 as a work to help the management of estates carefully works out how much each agricultural cost is in cash. A horse costs 13s 6d a year to keep; one sixth of a bushel of oats costs a half penny; shoeing the horse one penny. The cost of sowing an acre of wheat is also worked out carefully with cash values, as are many other items.[9. Oschinksy, Walter, 319, 325.]

The centrality of kinship is often best indicat­ed when people need help. In most societies, it is to kin that an individual will turn in sickness, old age, flood or fire. When money is needed for a wedding or a funeral, it is kin who are asked first. What is therefore significant about the impression from the English documents is that it was ultimately not kin who were a person’s main resource for help. When people borrowed, as we can see from lists in inventories taken of a person’s possessions at death, and from ac­count books and diaries, the majority of the loans were not from kin.

In times of poverty, resulting from accident, old age, unem­ployment or other calamity, it does not seem to have been the wider kin group that acted as the insurance group. Poor relief was based on residence, not on kinship; it was fundamentally institutions other than kin ‑ the church, the manor, the parish, which had taken on the problems of poverty, disaster and old age, and it is out of this tradition that England developed the first Welfare State. Just as there was, ultimately, no legal right of the children in their parents’ or siblings’ property, so, recip­rocally, the parents had no legal right in their children’s good fortune.

This is not to say that the family would never help out in emergencies. Just as today, it is probably the case that a good deal of informal help was given by close kin. Yet the difference between the past in England and in much of the rest of the world is considerable. A situation where kin are the only people one can trust, the only people who help, who carry all the burden of sickness, accident and old age, where elder siblings will auto­matically help their younger ones is not one we find in England.

THAT ENGLAND WAS a capitalist country from the middle ages is mirrored and expressed in a number of other features which it is worth briefly noting. In my book on English Individualism I documented the widespread use of wage labour and high social and geographical mobility in the thirteenth to fifteenth centuries as further evidence of the early penetration of the market.[10. See Macfarlane, Individualism, chapter 6.] For example, by the later fourteenth century in East Anglia over half the adult male population were listed as servants and labourers.   

Another feature is that land was conceived of as a commodity – not as something intertwined with the family. ‘Keeping the name on the land’, a central value in all peasantries from Ireland to China, was largely absent, except perhaps to a small degree with aristocratic families. Land is like everything else, a commodity – something to buy, sell, and speculate in. In France, as Tocqueville observed, the French ‘peasant’s love for property in land was extreme, and all the passions born in him by the possession of the soil were aflame.'[11. Tocqueville, Ancien, 29.] On the other hand, ‘habits and instincts of the English peasant are…totally unlike those of our own. If he possesses more intelligence or more capital than his neighbours, he turns his advantages to account in trade; the idea of becoming a landowner never enters his head. With the English, therefore, land is a luxury; it is honourable and agreeable to possess it, but it yields comparatively little profit. Only rich people buy it.'[12. Tocqueville, Memoir, II, 7.] In France from the twelfth century or earlier many peasants, as families, held absolute property in their land.[13. Bloch, Feudal, I, 248.] In England there was never peasant allodial land – all land in England was ultimately held of the Crown and was something that could and would drift away from a particular family.

This makes the holding of land seem at first sight somewhat insecure – especially if it was rented. But here again, there was a peculiarity. In share-cropping or similar regimes, there is little or no incentive for the tenant to make improvements – the landlord would take the improved assets the following year. Yet in England from early on the sub-letting of land for lengthy periods was secure. And the tenant kept the value of the improvements. Consequently, as Laing observed, ‘we do see tenants in England, such is their reliance on the moral principle, laying out money, and largely too, in draining, manuring, obtaining fine breeds of cattle and sheep, and in all the most expensive farm improvements; and doing so as freely and confidently, under their no-tenure, as the Scotch tenant under his nineteen years’ lease duly registered and in form of law complete.'[14. Laing, Observations, 291.]The same applied to all property, including, housing, factories or other leased property. It was in the tenants’ interest to improve the yield from the asset, for which they would be compensated.

ANOTHER FEATURE WORTH considering is money lending. As we have seen, in embedded peasant civilizations of the world, from China to Italy, money is on the periphery of the village economy. When a peasant needs money – for a wedding, funeral, harvest failure, he or she has to borrow the cash from a professional moneylender, usually at very high rates of interest, up to a hundred percent a year or more. This is an almost universal feature of peasant civilization. Yet medieval records in England do not suggest that there was a class of professional money-lenders at the village level in recorded English history. Most people had access to money from informal networks or savings. The widespread pawning of rice and other assets which most peasantries had to undergo in order to last through the difficult parts of the year is hardly to be found in England.

Indeed the process was the opposite. The problem was what to do with surpluses of cash, in other words how to save profitably. Hence there grew up one of the great banking traditions of the world. People saved cash, and were paid interest by institutions which held their money. This flowered in the age of Barclays, Lloyds and above all the Bank of England, but its roots are in the medieval period. These banks in turn lent at fixed and low rates of interest, at 5-15 percent. rather than the 30-100 percent. one would characteristically find in most pre-industrial societies. Money was unusually available and country wills and inventories show that most people held or had access to cash.

A further indication of an unusual situation lies in the practice of share-cropping, called by various names around the world – mezzadria in Italy, and adé lava in my village in Nepal. The idea is that land is let by the owner to a cultivator who gives in return a half or more of the harvest to the owner. Share-cropping was neither recognized in English law nor is there any evidence that it was ever practised. By the middle of the eighteenth century Adam Smith wrote of this institution that it was called ‘Metayers’ in French and in Latin Coloni Partiarii. He gave these names because, he wrote, ‘They have been so long in disuse in England that at present I know not a name for them.’ He noted that in France ‘five parts out of six of the whole kingdom are said to be still occupied by this species of cultivators.'[15. Smith, Wealth, I, 413, 414; he probably based the estimate on Quesnay.]

Adam Smith was right, there is no evidence in any of the manorial documents or other local and legal cases of the medieval period or in the treatises on land law that share-cropping was ever practised in England. If one let a piece of property to another person, one would expect to receive a fixed amount, not a share of the harvest. This payment would be in cash, equivalent to a modern rent, and not in crops. Money intervened in the transaction. The extortionate share-cropping systems which consigned millions to back-breaking work and poverty in Asia and Europe were absent.

Another indication of the difference concerns bargaining and barter. Where economic transactions are on the edge of a modern market, objects do not have a fixed price – they are subject to local laws of supply and demand and to the power relations and social nexus of the individuals involved. So bargaining, the attempt to raise or lower prices on the spot is almost universal in peripheral markets.

Yet in England bargaining seems to have been largely absent, to the astonishment of foreigners. As Count Pecchio observed in the early nineteenth century ‘In England there is no bargaining. The price of every article is fixed. This custom is not the product solely of competition and confidence, but also of the necessity of saving time. Thus a child may go to buy without being cheated.'[16. Wilson, Strange, 178.]

Or as Laing, in his Observations based on travels in nineteenth century Europe, wrote:

A shopkeeper with us, even in the lowest class, would feel it to be a degradation of himself to ask more at first than the just price, and his customer would feel it was a gratuitous insult, an implied doubt of the man’s veracity and honesty, if he were to beat down the demand and offer less. On the Continent the most respectable man in trade will begin with asking a price one half higher than he will be content to take, and will tell half-a-dozen falsehoods to make you believe that the price he asks is fair and moderate.[17. Laing, Observations, 267.]….The English are a nation of shopkeepers; but these shopkeepers are gentlemen in their feelings of self-respect, and of honourable dealing with their customers, compared to the same class in the countries claiming a higher education and more chivalrous spirit. In Paris, and a few other cities of the Continent, the shopkeepers begin now to place in their windows the announcement that they sell au prix fixe, and to do homage to the principle of fair dealing so universally acted upon for generations in England.’[18. Laing, Observations, 268.]

Examination of local documents from the medieval period onwards in England shows that a great deal of time was taken in fixing the price of various commodities, particularly the most important such as bread and ale. Those who sold above or below these prices were liable to be punished.

THE ENGLISH HAVE a strange attitude to cities. In the end they created the most urban civilization known to man in the nineteenth century, yet there is a basic anti-urbanism in their mentality. ‘The country is England’s poetry, the town her prose, which is just the reverse of the position in Latin countries – one has but to think of the towns of Italy, for instance.'[19. Cohen-Portheim in Wilson, 250.] Or as Taine observed, ‘Here and in Liverpool, as in London, the English character can be seen in their way of building. The townsman does everything in his power to cease being a townsman and tries to fit a country house and a bit of country into a corner of the town’.[20. Taine, Notes 220.]

There was no great difference in terms of social, mental or moral structures between the city and the country. There was rus in urbe – that is, the country in the towns – with an attempt to make the towns country-like with trees, parks, and small gardens. And there was urbs in rure – that is to say the countryside was inhabited by people whose values were urban: obsessed with time, with calculation, with social mobility.

In most civilizations until recently there were the bourgeois, the town dwellers, often literate, with a particular mentality and morality, living behind their city walls and despising the sea of illiterate and hard-working ‘peasants’ who surrounded them. The late adoption of the French term ‘bourgoisie’ in England is an indication that there was no native separate estate or class of ‘bourgeois’ in England. Townsmen spent much time in the country, and by the seventeenth century a fifth of the English population had spent some time living in London.

Foreigners were astonished at the love of the English gentry for rural life. Taine noted that ‘As long as three centuries ago the traveller Poggio could write of this country… “Among the English the nobles think shame to live in the towns; they reside in the country, withdrawn among woods and pastures; they consider him the most noble who has the greatest revenues: they give themselves to the things of the fields, sell their wool and their cattle, and do not consider such rustic profits shameful.”‘[21. Taine, Notes, 141.]

In the middle of the fifteenth century, Sir John Fortescue, who had lived in France for some years described how the English countryside ‘is so filled and replenished with landed men, that therein so small a Thorpe [village, hamlet] can not be found wherein dwells not a knight, an esquire, or such a householder, as is there commonly called a frankleyn, enriched with great possessions: And also other freeholders and many yeomen able for their livelihoods to make a Jury in form aforementioned. For there be in that land diverse yeomen which are able to dispend by the year above a hundred pounds…’ This was very different from the Continent as he had experienced it.[22. Fortescue, Governance, fols. 66v-67.]

In essence, England was one large town in its values, and the wall round it was the sea.    Not only did the ‘bourgeois’ not constitute a separate ‘estate’ in Parliament, or a recognizable separate social category, not only were any walls that had once existed around some of the older cities allowed to crumble, not only were towns not islands in a peasant sea, not only was there great mobility between the merchants and the ‘aristocracy’, but the barriers between trade and other activities did not really exist.

Just as Pirenne has described the Netherlands as a suburb of Antwerp, so one could describe England as a suburb of London. This is implied in many of the earlier travelers, who move in and out of London and other cities and then into the countryside with no sense of shock or surprise that they were moving into another world – which they certainly would have felt in China, India, and Russia or Continental European countries.

If one follows Braudel and agrees that ‘Money was the active and decisive element…Money is the same as saying towns’, then England is one large town, for it has been fully integrated into a money economy very early on.[23. Braudel, Capital­ism, 397.] Curiously there was no distinct ‘bourgeoisie’ in this ancient nation of shopkeepers because everyone was in one way or another a member of the bourgoisie.

TO PUT ALL this in another way, England has never been a peasant society. The early monastic institutions and the agricultural treatises of the thirteenth century, for example, show an attitude towards making money, investing, banking, rational profit calculation, the flow of capital, which would have delighted Adam Smith.

The wealth that created many of the greatest cathedrals in medieval Europe was derived from this early market system and the immense wealth of the wool trade. Basically England was all one ‘market’ with few barriers, good water communications, widespread wage labour, carefully regulated and supervised pricing mechanisms, extensive guilds and craft organizations. The world we see portrayed in Chaucer’s fourteenth century Canterbury Tales, not only in its occupations, but also in its attitudes, is a recognizably modern, capitalist, one. There is not a peasant amongst them, nor are there recognizable peasants in the stories which the pilgrims told.

This is also related to a complex legal underpinning with its mortgages, banks, loans and financial dealings. Almost everyone, we can see, is out to make money. This was the background to the development of the great institutions which carried the weight of British expansion in later centuries – the Bank of England, the East India Company, the Stock Exchange. All this, as Weber noted, was based on a system of Germanic legal devices, of law and trusts and legal fictions of various kinds. By the time of the industrial revolution, Britain was already becoming the Banker of the World.


A video of the lecture on which this chapter is based:

2012 Serial Index: Introduction and Contents | Preface | Bibliography.

Chapter 4 of The Invention of the Modern World by Alan Macfarlane.

© 2012 Alan Macfarlane. All rights reserved.

NOTES (please see the bibliography for citation details):

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