The history of capital

Issue: 122

Ken Muller

Francisco Boldizzoni, Means and Ends: The Idea of Capital in the West, 15001970 (Palgrave, 2008), £45

Francesco Boldizzoni sets out in this short book (169 pages plus notes) to write the history of capital or rather “the evolution of the idea of capital” over a period of five centuries: from an end in itself to a means of producing additional wealth. However successful or otherwise he has been in this project, I have to say, unfortunately, that Boldizzoni’s book is unlikely to be widely read outside the upper reaches of academia.

Ways and Means is very expensive, especially given its size, and readers no better educated than me will need several good dictionaries to make sense of much of the book, especially its early chapters, not least because it contains a number of untranslated quotations in Latin, Italian and French, along with section headings such as “The Maieutics of Production” and “The Form of Capital: A Phylogenetic Approach”. This is a pity because, despite a number of reservations about some of the book’s arguments and conclusions, I learnt a considerable amount of interest by reading it.

My 1987 edition of the more accessible (if nothing else) Pocket Economist defines capital as “stuff used to produce things”, the third factor of production, along with labour and land. According to the neoclassical theory found in most standard A level and undergraduate textbooks, the providers of each of these factors are paid a “fair price” for their contribution to the productive process, as determined by the laws of supply and demand operating in a free market. Just as wages are a reward to workers for forgoing leisure, so profits are the reward for abstinence on the part of the capitalist.

Notwithstanding the problem most of us must have finding examples of abstaining capitalists in the boardrooms of Lehman Brothers, Goldman Sachs, the Royal Bank of Scotland, General Motors or BP, we are supposed to believe that such ideological claptrap is, in fact, a scientific analysis based on timeless assumptions about human nature.

But as Boldizzoni shows, it took a long time for this “neoclassical” conception of capital to emerge, a time of “profound changes of social processes” and of “rivalry between cultures and visions, as nations rose and declined”. And when it did in late 19th century Britain—most notably in the work of Alfred Marshall—it was, to some extent, a response to Karl Marx’s devastating exposure of the exploitation that lies beneath the appearances of free market capitalism and the impact it was making among the victims of that exploitation, the industrial working class, even if the earliest formulations of marginalism predated Marx’s mature economic writing.

Boldizzoni tells us that the term “capital” derives from the Latin caput, meaning, among other things, “stock”, the outcome of which is its “yield”. It was, at first, a purely monetary and financial phenomenon, an “end in itself”, the proceeds of trade and speculation. As Marx noted in volume one of Capital, capital first takes the form of money, as “moneyed wealth, as the capital of the merchant and usurer”. But while capital can take the form of money, not all money is capital. It only becomes so when labour power itself becomes a commodity and for this to happen the worker has to be deprived of all control over the means of production so she or he has no choice but to work for someone else: a capitalist.

In the case of Britain, the first capitalist country, this “primitive accumulation of capital” was largely achieved by successive waves of land enclosure, beginning in the 15th century and culminating with the parliamentary enclosures carried out between 1760 and 1830, which robbed millions of peasants of their means of subsistence. Marx (again in Capital, volume one) commented that “the history of this, their expropriation, is written in the annals of mankind in letters of blood and fire”.

For Marx, as Boldizzoni explains, capital is not a thing, not a means or an end, but a social relation between accumulated dead labour, personified by the capitalist class, and the living labour of the workers who are paid less than the value of what they produce. To suggest that the worker and the capitalist face one another as equals in the marketplace, each being paid a fair price for his or her contribution to the making of the finished product, is a “deception” which covers up the exploitation that is taking place.

The first half of the book takes us via the Franciscan, Dominican and Jesuit orders of Renaissance Italy, the physiocrats of France, and the classical economists Adam Smith, Thomas Malthus and David Ricardo, of industrialising Britain, to a chapter entitled “The Revolt of 1867” (when Capital was first published). The second half is largely devoted to describing and explaining the neoclassical backlash in Britain, the US and Europe, and later theoretical debates in the workers’ movement.

But even if Marx’s critique of political economy is the hinge on which Boldizzoni’s history of the “idea of capital” turns, I doubt very much that Boldizzoni himself would claim to be a Marxist. After brazenly referring to “the obscurities of Marx’s often vertiginous prose”, Boldizzoni goes on to identify what he considers to be a number of errors and ambiguities in his account. These include Marx’s analysis of the process by which the primitive accumulation of capital occurred, including his dating of the emergence of the proletariat to the period of manufacturing, and his obsession with the “three phantoms of the late 19th century—high capital intensity, colonial imperialism and finance—which he projects backwards into history” (pp96-98). These alleged ambiguities, Boldizzoni claims, are responsible for the competing interpretations of the origins of capitalism by 20th century Marxist historians and sociologists.1

If he has reservations about Marx’s historical account of the rise of capitalism, Boldizzoni rejects altogether any suggestion that Marx has anything relevant to say concerning what he calls, following Daniel Bell, post-industrial society. “The decline of the world of the factory and manual labour, the diminishing contraposition between wages and profits, and the fact that the very concept of ‘social class’ continues, still today, to lose its connotations,” he claims, “have brought the period which began with Ricardo and Marx to an end”—even if the history of capital continues as it transforms itself into human, social or institutional capital (p5).

Such a perspective, once fashionable among certain intellectuals who had little personal experience of being exploited in an alienating and oppressive working environment, suddenly seems dated. Try telling the white collar workers in the banking and finance industry—who are losing their jobs and maybe their homes while their fat cat bosses continue give themselves astronomical salaries, bonuses and severance packages—that social class no longer counts.

To be fair to Boldizzoni, he was not a great fan of the status quo, even before the boom turned to bust. Bewailing the fact that “Keynesian voices” had been “sidelined practically everywhere”, there is, he laments, “no effective counterbalance to the prevailing order as it now stands”. “For the future,” Boldizzoni predicts, “a certain degree of pessimism thus seems to be justified” (p169). At the time of writing, with neoliberalism thoroughly discredited and the injustices of capitalism itself increasingly being questioned by striking workers and students in France, Greece, Ireland and elsewhere, on the contrary, a certain amount of optimism can be justified, just so long as the left can rise to the challenge.

Like André Gorz in France, a few months before the events of May 1968, Boldizzoni has had the misfortune to foretell a future of continued economic growth and relative social peace just as the world was about to be turned upside down. The root of his poor predictive abilities is his dismissal of Marx’s argument that the inevitably rising “organic composition of capital” (loosely, the amount of money spent on machinery, etc, compared to that spent on labour power) would eventually lead to a falling rate of profit and thus to a crisis—which is, as Chris Harman and others have shown, exactly what has happened with the current global slump.

For all that is interesting and novel in the history of capital recounted in Means and Ends, Boldizzoni fails to recognise what Marx understood when he wrote volume three of Capital: that “the real barrier to capitalist production is capital itself”.


1: For a review of the debates about the origins of capitalism, see Chris Harman, “From Feudalism to Capitalism”, International Socialism 45 (winter 1989),