The Formative Period of American Capitalism

A Materialist Interpretation

Daniel Gaido

• Publisher: Routledge
• Year: 2006
• ISBN:
  9781134222001
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

Applying certain Marxist categories of analysis to the study of American history, the central thesis of this outstanding book is that the main peculiarity of American historical development was the almost direct transition from a colonial to an imperialist economy. Expertly dealing with such topics as:

* the American Revolution and the Civil War against the background of the European bourgeois revolutions
* the influence of the Western land tenure system on the process of capital accumulation
* the passage from plantation slavery to sharecropping in the South and its legacy of racism
* the transition to imperialism towards the end of the nineteenth century
* the rise of the labour movement and the main American socialist organizations up to the end of the First World War.

A valuable resource for postgraduate students and researchers of business studies and American studies, Gaido's text will undoubtedly find a place on the bookshelves of many.

1 Settler colonialism and the bourgeois revolutions

Settler colonialism and the early Marxist theoreticians

American capitalism had its origins in settler colonialism—the extermination or enslavement of the native population of the colonies—and white supremacy—the colonialist version of modern racism. Marx, in the chapters of Capital dealing with primitive accumulation, argued that capital comes into the world “dripping from head to foot, from every pore, with blood and dirt” and summarized as follows the results of the birth of capitalism in the colonies:

The discovery of gold and silver in America, the extirpation, enslavement, and entombment in mines of the aboriginal population, the beginning of the conquest and looting of the East Indies, the turning of Africa into a warren for the commercial hunting of black-skins, signalized the rosy dawn of the era of capitalist production.¹

This original insight into the racist and genocidal nature of capitalism was largely absent in the works of the Marxist theoreticians of the Second International period, including those of its center and left wings. In Kautsky and Mehring’s works on the colonial question, what Marx had called “true colonies” or “free bourgeois colonies”—that is colonies of settlement like the United States, Australia, New Zealand, Canada, Argentina, Chile, Southern Brazil, etc.—were usually called “work colonies” and favorably contrasted to the “exploitation colonies.”²

Franz Mehring (1846–1919), a prominent theoretician of the German Social Democratic left and founding member of the Spartakusbund, the early German Communist party, distinguished between “agricultural or work colonies” (Ackerbau- oder Arbeitskolonien) and “commercial or exploitation colonies” (Handels- oder Ausbeutungskolonien). He divided the history of European colonial policy into four periods, corresponding to different stages in the rise and decline of the bourgeoisie: the world policy of capitalist absolutism in the sixteenth century, as represented above all by Portugal and Spain; the world policy of bourgeois commercial capital, exemplified by the Netherlands in the seventeenth century, and by England and France in the eighteenth century; the world policy of great industrial capital, as represented by England in the nineteenth century (Manchesterianism); and the world policy of declining capitalism, that is the imperialist policy of finance capital during the late nineteenth and early twentieth centuries. “The fact that states without a free bourgeois constitution cannot establish agricultural colonies is recognized by the bourgeois scholars themselves, especially by citing the English case as a positive and the French case as a negative example,” Mehring argued.

The Englishmen must thank, not their Navy, but their free bourgeois government for having consummated the world policy of capitalist commercial capital; for having established not only commercial but also agricultural colonies; for having grounded these colonies, not only on wasteful exploitation, but also on creative work. With the settlement of North America they accomplished for human culture an eventful and most beneficial task, which carried to its highest level of development the world policy of bourgeois commercial capital.³

Of course Mehring was lavishing praise, not on the ethnic cleansing of the Native Americans, but on the effect of settler colonialism on the growth of the productive forces and the development of the world market. And yet one cannot help feeling repelled by this complete overlooking of the Indian holocaust as the true basis of American history.

A similar bias can be observed in the work on colonialism by Parvus (1867–1924), a prominent member of the left wing of the Second International. He also distinguished between two forms of colonization and pointed out that, while the tropical and subtropical regions had been colonized by greedy adventurers, the temperate regions had received above all the peasants expropriated as a result of the primitive accumulation process in Europe.

To this difference in the social character of the immigrants, which coincides with the difference in the settlement regions, corresponds two different kinds of colonial development. The results lay clearly before our eyes; one has only to compare the economic and cultural conditions of North America with those of South America! And yet South America possesses an incomparably greater wealth in natural riches. What does that mean? It means that the development of the colonies depends less on their natural wealth than on the labor force applied to it. Even more than that: it was not the merchants, even less the colonial officials, or the bourgeoisie, or the capitalist profit-makers, but the proletarianized European peasantry that has brought about the development of North America.⁴

Here again the ethnic cleansing is overlooked and the emphasis placed on the creative energies of the European proletarians and “proletarianized peasants.”

The early Marxist theoretician who dealt most at length with the issue of settler colonialism was the “Pope” of the Second International, Karl Kautsky (1854–1938).⁵ In one of his early works, when he was still the most prominent theoretician of the Social Democratic left and was looked upon as a master by both Lenin and Trotsky, Kautsky argued that whereas “the work colony is settled by members of the working classes of the motherland, craftsmen, wage workers, and particularly, peasants,” the “exploitation colony is settled by members of the exploiting classes of the motherland.” Exploitation colonies were set up in the tropics, where only small numbers of Europeans were ready to settle. Hence “the economic utility of such a colony does not rest on the labor of the colonists, but on the plundering or forced labor of the natives” or of bound laborers imported from other tropical and subtropical regions. Since the productivity of forced labor is always very low, European colonization in places like the West Indies, India, and most of Latin America did not lead to capitalism:

Where social development makes unfree labor the general form of labor, it leads to a dead end, out of which a way to further advance can only be opened by the destruction of this culture by free laborers, or by laborers who have freed themselves.⁶

The colonial powers that built their empires on exploitation colonies did not ultimately profit from their booty, as shown by the decline of Portugal and Spain.

Work colonies, on the contrary, were established in temperate and “very thinly populated regions, in which a very primitive mode of production predominates, perhaps hunting, which requires immense territories to support a single individual.” This passage from Kautsky’s book on colonialism is typical of early Marxist views on America in its combination of economic insight and disregard for the Native American holocaust:

If settlers from the European civilization come into a practically unpopulated land [sic], and apply themselves to its cultivation, they immediately raise its productive power. They replace a backward economy, which hardly produces but rather mainly gathers what nature freely offers, with the highest productive methods of their time. Even more: freed from hidden pressure, and burdens of ground-rent, taxes, military service, etc., they are able to develop spiritual and material forces much more freely than in the mother country. They do not merely replace the tiny productive force of the savages with the high productive force corresponding with their cultural level, but are able to develop their own productive force much quicker than the motherland, and thus become one of the powerful driving forces for developing the general productive forces of mankind. The most shining example of this is provided by the United States of America.⁷

Our readers are invited to draw their own conclusions from these quotations. We think they show that, though Marxism is the closest thing we have to a science of society, it does not make its representatives immune to the prejudices of their times. It was necessary that the racist contradictions of the United States should unravel in events such as the Vietnam War and the black liberation movement for Marxists to take into serious consideration the effects of settler colonialism, the Native American genocide, and African slavery on the historical development of the United States.⁸

The European empires in America

The colonial policy of Spain and Portugal was carried out by absolutist monarchies saturated with feudal elements, and satisfied above all the needs of the state bureaucracy (including the army needed for the grandiose plans of the Habsburg dynasty), the Catholic Church, the court parasites, and the nobility rather than those of the embryonic bourgeoisie. The discovery of precious metals and silver mines in Latin America gave to those absolutist states financial resources that for a long time ensured their prosperity without fostering the development of trade and industry and centralizing the country. The colonies themselves were regarded above all as sources of precious metals. The bullion stolen from their mines promoted the development of commodity production and monetary circulation above all in the countries of Western Europe located outside the Iberian Peninsula. After a short golden era in the sixteenth century, Spain and Portugal entered a long period of economic and cultural decline, beginning with the revolt of the Netherlands and the defeat of the “invincible Armada” by England in 1588 and ending three centuries later (1898) with the replacement of Spanish by US imperialism in the Caribbean and the Philippines.

The results of this policy for the development of the Latin American countries were described as follows by the Peruvian Marxist José Carlos Mariátegui: “The colonial inheritance we want to put an end to is that of the feudal economic regime, whose expressions are seigniorialism ( gamonalismo), the latifundio, and serfdom.”⁹ The class of landowners known as terratenientes or oligarquía (in Mexico as estancieros, in Peru as gamonales, in Argentina and Venezuela as hacendados, in Brazil as fazendeiros, etc.) dominated the Latin American countryside. The cities were administrative and commercial rather than industrial centers, and the local bourgeoisie never went beyond an embryonic merchant stage. The organization of labor was equally rudimentary: alongside the enslavement of Indian populations in Mexico and Peru (encomienda, later mita) and Negroes in the Caribbean islands and Brazil, we find debt peonage under such names as enganche (Peru) and gañanería (Mexico), as well as sharecropping under at least seven different names: inquilinato, colonato, aparcería, yanaconazgo, mediería, agregaduría, and arrendamiento.

The seventeenth century witnessed both the replacement of the world policy of capitalist absolutism by that of bourgeois commercial capital and the beginning of English settlement in the North American colonies. The first half of the century was dominated by Holland which, for all its contributions to nascent bourgeois culture, mostly plundered the richest Portuguese colonies and in the New Netherlands (later New York) proved incapable of embarking on a large-scale process of settler colonialism because of its small population and narrow mercantile outlook.

Very different was the case of the mainland English colonies in North America. The peculiarities of European settler colonialism in North America were determined by the precocity of the capitalist development of the metropolis, by the agrarian character of English capitalism, by the early outbreak of the English bourgeois-democratic revolution, and, last but not least, by the previous experience of colonialism in Ireland.

Protected by its insular position, England was able to dedicate the resources that the European continental states invested in standing armies and extravagant courts to the development of commerce and the navy. The early development of capitalism manifested itself in the political and religious spheres in the early development of Reformation and in the fact that English bourgeois revolution was carried out in the seventeenth century under religious banners:

On the continent, the fight between the revolutionary and reactionary classes took place in the eighteenth and the first two-thirds of the nineteenth century in the form of enlightenment against religion. In England, it was fought in the seventeenth century in the form of the struggle of one religious sect against another. The emigrants carried the peculiar Anglo-Saxon mode of thought along with them across the ocean.¹⁰

The Puritan Revolution had beneficent political consequences for the English settlers in North America even before its outbreak.¹¹ The historical origins of the Northern colonies as asylums for exiled revolutionaries, combined with English parliamentary traditions, led to the development of representative institutions in the colonies, in striking contrast with the bureaucratic and oppressive political regimes of the Spanish, Portuguese and French. The colonial legislatures retained control of the public finances and thanks to it were able to enjoy a large measure of self-government. As far back as the seventeenth century we find a sort of embryonic regime of double power in the mainland colonies. Even that paltry sequel of the great Puritan Revolution, the “Glorious Revolution,” contributed to preserve American democratic liberties, as shown by the abortive attempt of James II to transplant absolutist methods of government to the Puritan colonies by establishing the Dominion of New England (1686–89).

Unlike the French Revolution, the Puritan Revolution, in Kautsky’s words, “showed no tendency toward a general overthrow of landed property”:

In England the old feudal nobility had been destroyed during the War of the Roses, and had been replaced by a new fresh-baked nobility, who were in close sympathy with capitalism. The Reformation had plundered the churches for the benefit of this nobility. The old feudal economy had completely disappeared by the seventeenth century. What peasants remained were free masters of their own ground. The great landed possessions were not operated by the compulsory service of feudal peasants, but through capitalist tenants with wage workers.¹²

The enclosure movement—the so-called “clearing of estates,” that is the eviction of peasants from arable lands to turn them into pastureland—provided workers for urban industry and for emigration to the English settlement colonies in North America. The English migration rate during the colonial period was therefore proportionally very high: about 3,300 European immigrants reached the mainland English colonies annually, whereas 3,400 came to all of Spain’s colonies, and merely 200 arrived in Quebec, of whom just 65 stayed.¹³

Finally, the English experience of colonialism in Ireland provided the ideological framework for dealing with the American “barbarians”: “We find the colonists in the new World using the same pretexts for the extermination of the Indians as their counterparts had used in the 1560s and 1570s for the slaughter of numbers of the Irish.”¹⁴ That included carrying over to the other side of the Atlantic the methods of warfare used by the English colonialists in Ireland.

Indians refrained from the total war that involved systematic destruction of food and property—until its use by Europeans roused the Indians to reprisal. In this respect, as in so many others, the English continued a tradition of long standing from their devastations in Ireland. Burning villages and crops to reduce Irish tribesmen to subjection under Elizabeth I led naturally enough to using the same tactics against the tribesmen of Virginia.¹⁵

In addition, segregation was the rule in Ireland and was carried as policy to Virginia, first against the Native Americans and then against black freedmen.

English mercantilism

In England, as elsewhere in Western Europe, the colonial policy of the metropolis was based on the principles of mercantilism, the economic policy of the European states during the age of merchant capital (sixteenth to eighteenth centuries). The basic feature of developed mercantilist policy, also known as the balance of trade system, was that the state used its power to implant and develop nascent capitalist trade and industry through the strict regulation of all aspects of economic life, the forced importation of precious metals to speed up the transition from natural to commodity-money economy, and the use of protectionist measures to defend the local bourgeoisie from foreign competition.¹⁶ But though the colonial policies of all the European empires were based on the same exploitative and monopolistic principles, English mercantilism was distinguished by a number of progressive features, because England’s colonial policy developed under the auspices of a much more highly developed bourgeoisie.

Adam Smith dedicated a whole sect...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Introduction
• 1 Settler Colonialism and the Bourgeois Revolutions
• 2 The American Path of Capitalist Development
• 3 Slavery, Sharecropping, and Segregation
• 4 The Birth of American Imperialism
• 5 The Rise of American Socialism
• Notes
• Bibliography