Summary of E.K.Hunt Ch.1

[Lisa Rogers <eqwq.lrogers@xxxxxxxxxxx>]

E.K.Hunt 1992 _History of Economic Thought: a critical perspective_,
HarperCollins pub.

Chapter 1  Introduction
summary by Lisa Rogers

All writers discussed in this book tried to understand and evaluate
capitalism: how it works, what determines volume of production,
economic growth and distribution of income; how well does it meet
human needs, how can it be changed?

 A Definition of Capitalism
All economies have a mode of production, defined by the forces of
production [knowledge, organization, tools] and the social relations
of production [between those who produce and those who control the
product], which must meet the minimal costs of production, (raw
materials, replacement of tools and worker subsistence) and usually
produces a social surplus also.

Capitalism is characterized by
1.  market-oriented commodity production
 products have use-value and exchange value, markets are impersonal
2.  private ownership of the means of production
 owners have total control of the m of p, and control all surplus
3.  a large working class
 no ownership of m of p, no option but wage-work, labor is a
commodity
4.  individual acquisitive behavior by most people
 work or starve, cap. comp. for surplus, ethos of consumerism creates
demand

 Precapitalist European Economy
After the decline of the Roman Empire, there was no single authority
for law and order.  In the feudal hierarchy, the strong protected the
weak and granted land-use rights, although at a high price of
produce, cash, labor, allegiance.  Most people were farmers / sheep
herders.  There were both secular and religious lords of various
levels.  The Catholic church was the largest single landowner.
Religious teachings and the control of the land by bishops and abbots
made the church the closest thing to a central government in W.Europe
during feudalism.

Towns were centers of manufacture, goods were sold to manors, some
traded long-distance, and this was dominated by guilds that regulated
members, in more than business.

Changes in agricultural practices, such as crop rotation methods,
widespread by 11th cent., [and plow technology] greatly increased
productivity per acre.  This made horses more affordable, which
further increased productivity per ag-worker and speed of transport,
further aided by improved wagon technology.  This all contributed to
rapid population growth; the pop. doubled from 1000 to 1300, much of
it concentrated in larger cities and towns.  Rural-urban
specialization, output of manufactured goods, long-distance trade and
commerce all increased.

 Increase in Long-Distance Trade
The internal economic evolution of Europe had furnished the
prerequisites for profitable trade, which contributed to the
disintegration of feudalism, but in W.Europe feudalism had already
been on the decline.  Although the social surplus was growing, the
ruling class was growing faster [due to plague], and was fighting
over a relatively shrinking surplus.  The growth of cities and the
rise of a wealthy merchant class then further eroded the dominance of
the manorial lords.

Long-distance trade in early medieval times was limited to sea trade,
on the Mediterranean, Adriatic, North and Baltic seas.  From 11th
cent. onward, trade expanded, with Vikings and Arabs.  This was the
basis of the Crusades, that France and Venice had trade interests in
the East.  This allowed increased production for export, and huge
trade fairs were held from 12-14th cent. in big European trade
cities.

By the 15th cent. commercial cities had year-round markets, generally
independent from church and feudal lords and their restrictive rules.
 Credit, currency exchange and commercial law developed.

Artisans still owned the means of production.  Those in the city quit
farming and sold goods for export to merchants who transported and
resold them.

 Putting-out System and the Birth of Capitalist Industry
By the 16th cent. the artisan-owned shops had been largely replaced
by the 'putting-out system'.  First, merchant-capitalists bought raw
materials, paid workers a fee and owned the products.  Then they
owned the materials, tools and the shop, and hired workers.  Labor
had become a commodity, and workers had become dependent on the
merchant-capitalist staying in business.  The market and
profit-seeking determined employment and how the jobs would be
performed.

Capitalism had been created, but it became dominant when this
relationship was extended from export industries to most industries
in the economy.  This followed the loss of economic self-sufficiency
of the feudal manors, and the change of agriculture into a capitalist
venture.

 Decline of the Manorial System
Large urban populations traded their products with the rural manors
for food.  The peasants now could market any private surplus they
produced, which gave incentive to "commute" feudal obligations into
rent payments for land use.  The lords wanted luxury goods and
preferred to rent out the land than run a farm, so lords became
landlords.

More important were the Hundred Years' War and the Black Death.  By
the early 15th cent. population had dropped by nearly 40%, resulting
in labor shortage, higher wages, less demand for land, lower land
rent, prospering peasants and bankrupt lords.  The lords' attempts to
turn back the clock resulted in bloody peasant revolts.  The ruling
class went to great lengths to resist change, as always.

 Creation of the Working Class
After 1500, social and economic changes speeded up, rapidly creating
a working class.  A huge increase in population was accompanied by
the enclosure movement.  The lords privatized formerly communal
pastures, because the booming textile trade made wool production more
profitable.  This forced 75-90% of former land-tenants off the land,
with nothing but their labor power to sell.  The new working class
also came from within the cities, as many people were bankrupted and
guilds became more exclusive and monopolistic.  Both squatting and
unemployment were harshly punished.

 Other Forces in the Transition to Capitalism
The intellectual awakening of the 16th cent., scientific progress,
the telescope and compass, all contributed to advances in navigation
and the 'Age of Exploration'.  Europeans went to India, Africa and
the Americas, resulting in a huge rush of gold and silver into Europe
and the beginning of colonization.  This caused immense inflation,
with prices rising much faster than rents or wages, which benefitted
the capitalists and reduced real incomes of landlords and workers.
The large profits accumulated as capital.

The ownership of capital is the source of profits and further
accumulation, but the spiral began with substantial initial
(primitive) accumulation.  The most important sources were the
1. growing volume of trade
2. putting-out system
3. enclosure movement
4. huge price inflation
as well as colonial plunder, piracy, the slave trade and other
sources of profit.

The new nation-states were supported by the new capitalist class,
merchants were freed from the feudal maze of rules, monarchs provided
protection of commerce.  The English Parliament [House of Commons]
represented the capitalists and became very powerful.  Unified and
independent France, Spain and the Dutch Republic also emerged in this
period.

 Mercantilism
Mercantilism is early capitalism.  When there was still a shortage of
gold and silver, laws prohibited their export.  Mercantilists tried
to control the balance of trade to keep money in each country.  Each
government granted a monopoly to one merchant/company which prevented
several merchants from one country from bidding against each other in
foreign trade.  Colonial possessions kept other countries out of an
area altogether.  Trade regulations, subsidies and restrictions on
imports multiplied.  Rules did not benefit all capitalists in a
country equally, as they fought against each other.

Efforts to increase the power of the state and promotion of various
capitalists' interests were interwoven, as their interests largely
overlapped.



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