Primitive Accumulation and Imperialism

I want first to make some remarks which may sound patronizing or parental or grand-parental. I was tremendously impressed, in rereading the section on “So-called Primitive Accumulation” in volume 1 of Capital, with an element in Marx that is not fully appreciated, and that is the depth of his scholarship.2 Because of the appeal of Marxist formulations as neat answers to many questions, there is a tendency for many to look for grandiose formulations which are supposedly “Marxist” but are based upon speculation rather than intensive work. Yet, the significant aspect of Marx’s speculations is the amount of sheer digging, hard work, and enormous energy in the accumulated facts that show up in his sentences. Behind each statement rests a tremendous amount of research. Frequently there is a distinction between the apocalyptic Marx and Marx, the scientist—the economist. Every once in a while Marx writes something that is just a grand overall statement. But what impressed me once again was the depth of his scholarship.

I say this in context of my having completed a long essay on the history of colonialism for the Encyclopedia Britannica’s next edition.3 Feeling a sense of responsibility that an encyclopedia article has to be authoritative, I did a lot of reading and thinking about the field. By pure accident, I picked up The German Ideology, an early work of Marx and Engels, which, as noted in the preface to Marx’s 1859 Contribution to a Critique of Political Economy, they had left to the “gnawing criticism of the mice.”4 That is, they left work unpublished if they didn’t think it good enough. I read the section on the extension of the world market, a matter of two pages which had to do with my reading on colonialism.5 Again, I was impressed with the meaningfulness of the historical summary of the commercial revolution. This was not something that a man just picked out of his head and developed into a theoretical formula. It is something in which theory and generalization played important roles, and where he knew precisely what he was writing about.

Coming to the question of primitive accumulation, let me first of all make clear that the term “primitive” is a bad translation. The German original is ursprünglich Akkumulation which really means, if anything, “that from which it comes” or “primary.” The word “primitive” here is therefore misleading. It is true that there was a period when “primitive” had a usage that was similar to “primary,” but the development of the field of anthropology has changed the use of the term. There is now a clear-cut difference between the connotation of the word “primitive” and the word “primary.” It is improbable that the usage of the term “primitive accumulation” will change since it has now become so accepted in English terminology. Nevertheless, I think we should be aware that this does not mean “primitive” in the sense that it is commonly understood today and that a better usage would imply “primary” or “original.”

Aspects of Primitive Accumulation6

People have selected from Marx’s theory of primary accumulation those aspects which seem to be most important in relation to the issues with which they are concerned. In the discussion in the Soviet Union during the 1920s and the very early 1930s a debate arose with regard to the economic principles by which socialism was to be built. The economist E.A. Preobrazhensky developed a thesis that socialism required a kind of primary or primitive accumulation parallel to that from which capitalism had grown. By this he was referring to only one aspect of the accumulation process: that of getting enough resources—call it capital fund, savings, or surplus—to put into further capital investment.7 For many of us in the field of economic development, this issue of accumulation, from the standpoint of capital or money, or reserves, has become the most important issue because of this discussion. Because this debate applies to underdeveloped countries and to economic development it is a perfectly proper question to ask.

If, however, our aim is to analyze the Marxist proposition, then more significant from this standpoint are two other moments of primary accumulation. First and more important is Marx’s emphasis on the creation of a working class. This may seem fairly obvious to one who has carefully read the chapters of Capital, vol. 1, on “So-Called Primitive Accumulation,” but a reading of the literature, especially of the bourgeois commentaries on Marx, demonstrates how this aspect has been completely ignored.8 Most of the discussion on Marx’s theory of primary accumulation in textbooks and in commentary, for example, deals with the problem of financial accumulation. Almost none of it deals with the other issues, the key one of which, from the standpoint of Marx’s analysis, is the creation of the working class. Implied in this is the issue of how a class is created that is available to work for wages, which is strategically the most important problem in the development of capitalism.

Second, along with this issue of the creation of the working class stands the closely related question of the creation of an internal market. The Rosa Luxemburg variation maintains that the internal market never suffices and that capitalism encounters a shortage of effective demand at home. Capitalism, therefore, must continuously create new markets by penetrating noncapitalist markets, by taking over either primitive or peasant agriculture which have not yet evolved their own commercial markets, or by going out to new colonies. This becomes the framework of her theoretical explanation of colonialism, or, as we call it today, imperialism.9

In the Russian literature there was the quite different political debate which took place on this question between Lenin and the narodniki, or social revolutionaries, who argued that capitalism could not develop in Czarist Russia because of the absence of an internal market. Lenin develops his arguments in a very interesting pamphlet and a big fat book, trying to explain how capitalism could develop within Russia because capitalism creates its own markets. Lenin emphasizes the domestic aspect of it.10

I mention these varying viewpoints deliberately because this theme penetrates Marxist literature and debate. It is an object lesson because all too often Marxian theory is approached from the standpoint of fixed notions and formulas. And here on this issue of the creation of internal markets, the same tendency is evident. For a particular purpose, for a particular debate, Rosa Luxemburg emphasizes one aspect of the problem which has, in my sense, some relative significance, incorrect perhaps, but significant in terms of certain historical periods. And that has become a fixed position, and one is asked to believe in this theory or not. Lenin is dealing with a completely different question: whether capitalism can develop within Russia. And there is, to some extent, no contradiction, because one of the assumptions of Lenin’s theory is the creation of commercial and internal markets which is precisely one of Rosa Luxemburg’s points, that is, the extension of the internal market by breaking into the noncapitalist markets. But in historical terms, these appear as two major conflicting tendencies, and there is an inclination to exaggerate the differences through the adoption of fixed formulas. In understanding such issues, we must be alert to recognize what a theory is intended for, what it was applied to, what it tries to explain, and what its limitations are within its historical relevance.11

Returning to the issue of the creation of a working force, which is essential to Marx’s theory of capitalism, this can only be understood in terms of the theory itself, and the level of abstraction that Marx uses in his analysis. In his theoretical work and in the process of abstraction, Marx has a way of taking into account historical development. In other words, the theoretical approach relying on the force of abstraction and the historical approach are intertwined. Marx does this by abstracting aspects of those events which he considers most relevant. In other words if many phenomena are occurring at the same time, then in the interests of abstraction, some aspects must be ignored and others exaggerated if necessary in order to examine how these aspects work in a more or less pure situation.

The basic question in approaching these various issues then becomes what is most relevant, and there are various purposes and criteria of relevance. In my opinion, Marx uses historical relevance as the key guide to this question. Even the way in which Marx develops the theory of value and the theory of money in the first section of Capital, volume 1, and proceeds with these further in the second and third volumes of Capital, is actually an abstraction in terms of historical periods. Marx proceeds from simple commodity production to a full capitalist society with polarization of the working class and ownership of the means of production in the hands of capitalists. He then moves on to a more competitive situation, abstracted from the competitive situation of pure capitalism, in which he begins to account for the elements of monopoly, international trade, world exchange, and so on. In this process of abstraction, Marx already assumes some of the historical conditions, and the historical elements discussed at the end of volume 1 are in his mind from the start of the first theoretical section on commodities and money.

The reason that Marx’s method of abstraction has relevance for us here, aside from understanding the history of capitalism, is in the understanding of the history of the underdeveloped world, and the whole development of the imperialist system. Because in each one of the nonadvanced capitalist societies, the process of “primary accumulation” has been taking place over a long period and is carried on under force along with whatever the economic process is developing. In other words, we observe in a bastardized, specialized form the duplication of the process of primary accumulation taking place in almost all the colonial areas, and it is in that sense that we should read this section of Capital and examine it practically.

The most obvious and the clearest case of all is the creation of a labor supply, and the purest case of this, of course, is Africa. The same occurs in Malaya, in India, and in Latin America when the Spanish first recruited labor to work in the mines under their control. In this instance, the technique of creating a work force is simply one of forcing work, in other words, a form of slavery. In the case of Africa, a labor supply was created directly by force and also indirectly through the introduction of poll and hut taxes, which drove labor out of non-capitalist production into wage labor.

The creation of a labor supply continues throughout the entire process of primary accumulation and is today very much a live issue. An understanding of how this took place in concrete situations in particular countries is extremely important in understanding the economic problems of these countries. Thus, the nature of the labor supply and how it varies in different countries depends upon the way the labor supply was created.*

The other fundamental question, of course, deals with the original creation of the “capital,” so to speak, that becomes the basis for capitalist development. Here again, there has been a great deal of exaggeration by Marxists in oversimplifying the issue. The problem is not one of merely accumulating money [or a capital fund—Ed.]. One way of looking at this moment of the Marxist theory of primary accumulation is to say that by commerce, slavery, and other techniques, a certain number of wealthy individuals accumulated a large amount of money, and therefore, had the capital to invest in the Industrial Revolution and in large manufacturing enterprises. This, however, is not what Marx primarily had in mind, nor is it of particular significance here.†

I see the issue in the following way, which is not exactly Marx’s, and it may not be entirely correct; the problem for real capitalists is not only a matter of having enough money to invest, but the capitalist needs a rate of profit. He needs an excitement, a stimulation. Part of the process that Marx discusses, though not recognizable in terms of the adventurous entrepreneurial spirit, is an economic and psychological change in society commencing in the early stages of capitalism. The commercial revolution which broke down the old economic ties also meant that fortunes could be made, though at tremendous risk, and an enormous drive was released to make those fortunes.

It is a combination of all these factors, I think, that Marx is talking about. It is the fact that sudden breakthroughs could be made at first with the opening up of new opportunities along commercial lines and then in the development of new markets. It is not one versus the other [i.e., the supply of capital or the development of the market—Ed.]. Likewise, the debate over whether the key development was the home or the export market in England is irrelevant. It is neither one nor the other, but a combination of the two. One simply takes precedence in one period and the other takes precedence in another period.

Here again the problem of abstraction is important, and one must be careful in reading controversies concerning Marx’s hypothesis and evidence. For example, one of the more serious criticisms that bourgeois scholars have leveled at Marx’s concept of the role of the Enclosure Acts in the creation of a labor supply in England has been made in the study by J.D. Chambers.‡ He argues that in certain periods when the Enclosure Acts were imposed, the number of people residing in the farm areas of those counties increased. Setting the statistical arguments aside for the moment and assuming that his technical methodology is correct, I am suggesting that Chambers’s conclusions have nothing to do with this particular issue.

In understanding Marx’s approach, we must remember that he is dealing at different levels at different times, and within his approach, he does recognize that there are periods when population will increase in the rural areas, even within the context of the development of industrialism. In the early stage of capitalism, the primary steps connected with the treatment of the raw materials took place in the rural areas. It is only at the later stage that people were needed in the cities. The Enclosure Acts and the forcing people off a certain primary relationship to the land, together with the conditions for the development of job opportunity (to put it in modern terms), formed the basis of the early stages of manufacturing right in these rural areas. Only with later stages did industry become located in the cities. There is no contradiction. This kind of criticism, the most notable one of which is by Chambers, has nothing to do with the issue because he is not confronting the historical argument that Marx makes. At one point, Marx is making a generalization of broad significance for a period starting with the fourteenth century until the end of the eighteenth century. At another time, he is talking about the processes in the interim stages.§

Marxian analysis has nothing to do with the way Chambers examines a particular, isolated problem of change in population in given agricultural counties which, he claims, undermines Marx’s theory. This in fact has nothing to do with Marx’s analysis because included in Marx’s theory and the sweep of his presentation are the recognition of both the long and short run with respect to agriculture and to the stages of development of manufacturing processes. Marx thus allowed room for periods of alternating cycles of population within the counties. Unless the population censuses are taken in the context of a particular historical period [and an overall analysis of historical specificity, taking into account both long run and short run—Ed.], Marx’s hypothesis is not being examined. This criticism of Chambers is important in understanding the whole issue; first, of Marx’s methodology and its significance in understanding economic history and second, bourgeois methodology, which isolates questions outside of context.

These chapters in Capital on “So-Called Primitive Accumulation” are particularly inspiring in terms of knowledge, history, and writing style. Even for economists, the whole question of development of the national debt, the stock market, and taxation system as part of the primary accumulation process are all spelled out here, briefly at times and therefore to be read with closer attention. The questions of protectionism and the role of monopoly in the early stages of capitalism are also analyzed here.

I think, however, an important issue worthy of special emphasis is of the role of commercial supremacy that gives rise to industrial supremacy. At this point, let me elaborate on the hypothesis that one of the key elements in the history of the success of the United States has been the role of shipping and the development of a merchant class with commercial experience in the United States. The New England area and, to some extent, the Middle Atlantic states did not possess the export potential of agricultural staples which characterized the South, and later on, the West. Those areas in which an export staple became the key factor in the development of the economy, as in the South, soon became “underdeveloped,” complete with a plantation system, an aristocracy, a slave-and-poor-white system combined, in short, a typical colonial pattern.¶ The few good ports available in the South were commercially undeveloped. Even as to their dominant cargo, cotton, often more than ten percent of all exports were shipped first to New York and from there trans-shipped to England, France, and other European ports. Manufactured goods bought in England were shipped to and then distributed from New York. The classic position of the metropolis can be seen very early in the historical development of the United States through the growth of the primary port of trade, complete with brokers, insurers and bankers, all mainly at first in British hands and then American and centralized in New York. The South controlled relatively little of its own shipping, even though most of the shipping involved cotton produced in the South, a typical underdevelopment-development pattern.

With the early development of New England as a commercial center, a source of indigenous economic development was to be found in the extension of its own merchant shipping. Natural resources helped in this respect, because wood and other elements were available for ship stores. But here was a typical non-colonial relationship. When England became involved in the Napoleonic wars, United States boats carried over 90 percent of the tea trade from the Orient to England.

The commercial revolution also became possible with the support of the building of navies. For example, one of Cromwell’s first acts in power was the establishment of administrative standards for a professional navy which then came to serve a key role in the development of English commerce, the empire, and in maintaining English commercial and military supremacy through this period. Adequate discussion of the role of the navy is missing in Marx’s analysis. If I were to amend these chapters in Capital, I would elaborate further on the question of the fight for and role of naval supremacy and the importance of naval stores in relationship to British history.12

Emmanuel and the Theory of Imperialism

In my view, Arghiri Emmanuel and others oversimplify the structure of Lenin’s theory of imperialism. For example, one of the minor annoyances in the Emmanuel article on “White-Settler Colonialism and the Myth of Investment Imperialism” is the unimportance with which he holds Lenin’s “marginal work,” Imperialism, the Highest Stage of Capitalism and the notion that it is merely a political pamphlet based upon Hobson.13

Written in 1916 while Lenin was in Zurich, Imperialism is the result of a kind of information and organization of material which is not done by just “picking” here and there. Recently the Russians published volume 39 of Lenin’s Collected Works, and I realized that these are the notebooks of what he read while preparing this “marginal work” on imperialism. This ain’t no little political tract that a guy dashes off overnight in order to meet the political purpose. He read the stuff; he went through the statistics; he studied banking structure, and industrial organization, and all that the theoretical economist thinks is not important, and yet which makes a hell of a lot of difference in understanding how society works.

It is therefore startling that Hobson’s theory of imperialism is interpreted by people on the right and on the left, including Emmanuel, as Lenin’s theory of imperialism. The whole point to Lenin’s book is to go beyond Hobson. Hobson’s theory of imperialism is simply an explanation of the phenomenon of the late nineteenth century as a move to export surplus capital. Put crudely, Hobson wrote that due to the unequal distribution of income, the ordinary European populace were unable to buy all their own production. Continued investment at home in that case leads merely to overproduction, and capital thus sought colonies abroad. This is Hobson’s, not Lenin’s theory of imperialism. Emmanuel’s article criticizes Lenin’s study for being a “left wing” theory of imperialism which develops as a system of exporting capital.

There is one sentence in Lenin’s book from which such an inference could be made with respect to the question of the export of capital. Lenin writes: “The necessity for exporting capital arises from the fact that in a few countries capitalism has become ‘over-ripe’ and (owing to the backward state of agriculture and the impoverished state of the masses) capital cannot find ‘profitable investment.’”** But this is, in fact, only one element of his theory. Nevertheless, there are many Marxists who have also written extensively on this, taking this one sentence as the basis of Lenin’s theory of imperialism.

The question of the export of capital is an important element in Lenin’s theory of imperialism, but not even in this discussion is his theory based upon the question of surplus capital or an underconsumption theory of capitalist crisis. Rather Lenin places great emphasis on the role of raw material investment which we know to be the largest element in foreign investment in the underdeveloped world. This investment has nothing at all to do with a surplus of capital but rather with the fact that raw materials are found in these places. Capital exploits iron ore in Brazil, not because of a surplus of capital in Europe or America or Japan, but rather to gain control of the resources. Second, one of the main arguments Lenin presents has to do with the question of market control by monopolies, which certainly plays as much of a role in Lenin’s theory of imperialism with respect to the export of capital, as the notion of a surplus of capital.††

Emmanuel’s article is an attempt to criticize what he considers mechanistic thinking and to present a concept of white-settler imperialism. I agree that there is no denying the importance of the white settler or the importance of the conflict between the white settler in Africa and the government in the metropolis. After all, the history of the United States is that of a white settler colony which rebels against the mother country, so to speak.

This kind of antagonism is an element in any history of colonialism. But Emmanuel goes over to the other extreme. He first rejects Lenin’s theory of imperialism based on an oversimplified and false interpretation of it and then jumps back to the question of white-settlers’ colonialism. When he deals with the issue of the export of capital, again he completely misuses the economic concept, in my opinion. In his attempt to show simply and mechanically how the metropolitan center sucked more money out of the colonies than they put into them, he uses this evidence to deny the whole question of what he calls “investment imperialism.” As Emmanuel develops his thesis, it becomes clear that the whole question lies in trade and not investment. According to Emmanuel, investment is realized only when exports surpass imports.14

The fundamental issue in this discussion, however, is one of approach and a way of thinking. Emmanuel’s abstract approach to the problem of capital investment is simply not correct, and trying to fit it into a grandiose Marxist framework does not work. The question of the export of capital is the question of the structure of industry and related factors, hardly a theoretical notion, but related to the development of industry.‡‡ Take as an example, railroad building which got its major start in England of all the European powers. Early in the nineteenth century, the British developed the capacity to produce railroads and mobilized funds through a capital market. But how many railroads can you build in one little country? What could they do with the knowledge and techniques to make iron (and later steel) for rails, to make locomotives, and more important to plan and organize a railroad system? Why, they went out into the world to find business. At times it was the railroad builders themselves who found opportunities. At other times it was the speculators who brought opportunity and capital together. But fundamentally, British investment in railroad building worldwide derives from the fact that they had finished their job at home and were looking for work to be done.

One way then to understand the spread of capital throughout the world is to recognize that capitalism begins as a world system and must live as a world system. A second principle is that capitalism must continuously reinvest the surplus or most of the surplus. This is the sine qua non of the system.

That expansion is at the heart of capitalism does not mean that capitalism may not suffer terrible crises in certain periods. But the fundamental drive of the capitalist economy, which is different from other economies, is the imperative to accumulate capital. Under the imperative to accumulate capital and being born a world system (and necessarily so), the pressure to seek out new investment opportunities is continuously present. Where and under what circumstances capitalism is in a position to do so most favorably is a function of concrete analysis which must be undertaken in terms of the historical period, structure of the world market, and for the recent period, in terms of the changing structure of the multinational corporations. These are the issues that have to be examined and understood, and formulations that either stress surplus pressure of capital or deny surplus pressure on capital are missing the point.

It is with such considerations in mind that I strongly endorse the tendency for the younger economists to plunge into economic history and examine what imperialism is all about, rather than try to rationalize and theorize abstractly on the basis of fancy formulas without first having studied history. It is this approach which is evident so positively in Marx’s analysis and negatively in Emmanuel’s.

Footnotes

1. * On colonial problems and the history of imperialism, I would very strongly recommend J.S. Furnivall, Colonial Policy and Practice, (Cambridge, England, 1948), and Netherlands Indies (Cambridge, England, 1944). The author is brilliant, a real thinking man. I feel like a propagandist for him, simply stemming from my own neglect of his books in earlier days.
2. † One of the most disappointing chapters in this section is Chapter XXXI, “Genesis of the Industrial Capitalist.” Although this is an exciting and informative chapter, Marx doesn’t describe the genesis of the industrial capitalist! Marx obviously intended to do so or perhaps he didn’t know the answer. He does write brilliantly about the question of merchant capital, commercial capital, and loan capital which took hold in different periods. This part is extremely important but easily takes our eye off the central issue. The question of the origin of the industrial capitalist just isn’t developed there in my view. This is an area that still needs development.
3. ‡ J.D. Chambers, “Enclosure and the Labor Supply in the Industrial Revolution,” Economic History Review, 1953. Reprinted in Eric L. Jones, Agriculture and Economic Growth in England 1650-1815 (London: Methuen, 1967).
4. § Even the so-called “corn-hog cycle” can be found in two sentences in which Marx describes the cyclical relationship between cattle and feed. This example is important for the underdeveloped worlds as well as for understanding our own society. The alternating cycle of corn production and hog production, which Henry Wallace was one of the first to work out for the United States, existed historically between cattle and feed for cattle. An upsurge in the cattle cycle led to a diminished demand for labor in rural areas and alternated with an upsurge in the food cycle which pulled population back into the agricultural areas. This analysis is right there in one or two sentences in Marx. See Karl Marx, Capital, vol. 1 (New York: International Publishers, 1967), 748.
5. ¶ This fits with Andre Gunter Frank, Capitalism and Underdevelopment in Latin America (New York: Monthly Review Press, 1967).
6. ** V.I. Lenin, Imperialism (London: International Publishers, 1939), chapter 4, “The Export of Capital,” p. 63.
7. †† With respect to the foreign direct investment of U.S. corporations, see Stephen Hymer, “Direct Foreign Investment and the International Operation of National Firms,” unpublished doctoral dissertation, MIT, 1960. [Later published posthumously by MIT Press in 1976—Ed.]
8. ‡‡ I am referring exclusively to direct investment, not to loan capital or political “scare” capital or to the short-term movement of capital which responds to interest rates or banking problems of various kinds.

Notes

1. ↩ Arghiri Emmanuel, “White-Settler Colonialism and the Myth of Investment Imperialism,” New Left Review no. 73 (May-June 1972): 36.
2. ↩ Karl Marx, Capital, vol. 1 (London: Penguin, 1976), 871–940.
3. ↩ Reprinted in Harry Magdoff, Imperialism: From the Colonial Age to the Present (New York: Monthly Review Press, 1978), 17–75. See also Bruce Franklin, “On the Rewriting of History,” Monthly Review 34, no. 6 (November 1982): 40–47.
4. ↩ Karl Marx, Contribution to a Critique of Political Economy (Moscow: Progress Publishers, 1970), 22.
5. ↩ Magdoff was referring to the section “Most Extensive Division of Labour: Large Scale Industry” in Karl Marx and Frederick Engels, The German Ideology (Moscow: Progress Publishers, 1976), 81–82.
6. ↩ This subtitle was added by the editor.
7. ↩ E.A. (Evgeni Alekseevich) Preobrazhensky, The New Economics (Oxford: Oxford University Press, 1965).
8. ↩ In the original German edition of Capital the section on so-called primary accumulation is not a separate part divided into chapters, but rather makes up Chapter XIV of the book, while the separate “chapters” of the English edition are sections of that single chapter.
9. ↩ Rosa Luxemburg, The Accumulation of Capital (New York: Monthly Review Press, 1951).
10. ↩ V.I. Lenin, The Development of Capitalism in Russia (Moscow: Progress Publishers, 1967), and “The Agrarian Question and the ‘Critics of Marx,” Collected Works, vol. 5 (New York: International Publishers, 1975), 103–222.
11. ↩ Magdoff’s respect for the classical approaches to imperialism, developed by Lenin and Luxemburg, based on intensive historical research, as well as theory, is evident in later writings. See Magdoff, Imperialism: From the Colonial Age to the Present, 94–113, 262–79.
12. ↩ A page is missing to the manuscript here. It appears that Magdoff continued the discussion of the role of naval power in the development of commerce. He then no doubt provided a short transition into the discussion of Emmanuel’s imperialism theory, which is the topic of the following section.
13. ↩ Emmanuel, “White-Settler Colonialism and the Myth of Investment Imperialism.” See also Arghiri Emmanuel, Unequal Exchange: A Study of Imperialism and Trade (New York: Monthly Review Press, 1972).
14. ↩ This is related to Emmanuel’s basic theory which stipulates: “As for the actions of the monopolies, of which the Marxist authors talk so much, this question is as remote from our subject as any other form of direct plunder of the underdeveloped countries by the rich and strong ones.’” Emmanuel, Unequal Exchange, 93. Emmanuel explained unequal exchange and imperialism as stemming from conditions of free trade and explicitly excluded monopoly capital/multinational corporate investment from his analysis. This was stipulated, if anything, more sharply in his “White Settler Colonialism” article to which Magdoff was responding.