Primitive Accumulation of Capital

the forcible process by which the masses of direct producers (above all, the peasants) are transformed into wage laborers, and the means of production and monetary wealth into capital; historically, the process that preceded the capitalist mode of production.

The foundation for the primitive accumulation of capital was laid by the development of the productive forces, the growth of commodity and money relations, and the formation of sufficiently extensive national markets. The expansion of commodity and money relations in the depths of feudal society intensified economic differentiation and the ruin of small-scale commodity producers. The rise of manufacture led to an increase in the demand for labor. Under these conditions, forcible methods of expropriating peasants and small-scale craftsmen were widely practiced. The “classic” example of forcible expropriation is the enclosure of common lands and peasants’ plots by the English landlords—a practice that became particularly widespread in the late 15th century. In the 18th century the British Parliament issued a series of enclosure acts, which in fact permitted the large-scale landowners to completely appropriate the common lands. By the beginning of the 19th century the mass dispossession of the direct producers and the breakdown of feudal agrarian relations had resulted in the disappearance of the British peasantry as a class.

Small-scale peasant ownership of the land (small holding) gave way to a new type of large-scale landed property associated with the organization of capitalist farms. The forcible expropriation of the peasantry and the usurpation of the land by the landlords tore the masses from their customary means of existence, denying them shelter, as well as their former livelihood. A rapidly growing army of paupers was transformed into an army of vagabonds and beggars.

The state exerted a crucial influence on the formation of the proletariat in Western Europe in the 16th-18th centuries by issuing a series of legislative acts known as the bloody legislation against the dispossessed. These laws were designed to force the indigent to hire themselves out and accept capitalist labor discipline. The emancipation of the peasantry from personal dependency as serfs was an extremely important factor in the intensification of the primitive accumulation of capital.

Another aspect of the primitive accumulation of capital was the transformation of the usurped means of production into capital, and the formation of the bourgeoisie. The colonial wars and the ferocious exploitation of the populations of the captured colonies were powerful factors accelerating the process of primitive accumulation. Taking advantage of their monopoly status and relying on the active support of their governments, the Western European trading companies dictated piratical terms in their commercial dealings with the colonial countries. Moreover, they resorted to outright seizure of land in the colonies, plundered the national treasures, and imposed indemnities.

The large-scale plantation systems established in the colonies were based on the most inhumane forms of exploitation of the local population. The use of slave labor in mining precious metals and on the plantations gave a powerful impetus to the growth of the slave trade, which guaranteed colossal returns exceeding the profits from any other trade. The huge fortunes of many British and Dutch capitalists had their origin in the barbaric enslavement of the colonial population and the traffic in slaves. At the same time, the slave trade and the exploitation of slave labor in the colonies furthered the development of the world market. Emphasizing the connection between the processes of primitive accumulation and the exploitation of slave labor and the slave trade, Marx referred to slavery as a pivot of bourgeois industry. “It is slavery that gave the colonies their value; it is the colonies that created world trade; and it is world trade that is the precondition for large-scale industry” (K. Marx and F. Engels, Soch, 2nd ed., vol. 4, p. 135).

Colonial conquests and commercial wars required large-scale government appropriations. Expenditures increased more rapidly than tax revenues, and budget deficits rose. To make up the deficits the state was obliged to obtain heavy loans from the owners of money capital. This enabled the bourgeoisie, which became the government’s creditor, to appropriate on a regular basis a substantial percentage of the revenues allocated for paying off government obligations. The development of government credit operations stimulated trade in all sorts of securities and gambling on the stock market, enriching the speculators. The tax system was the ultimate source of the interest payments on state bonds and subsequent payments on the principal. Therefore, increases in the government debt were inevitably accompanied by new taxes and a further rise in the tax rates. As the tax burden increased, greater numbers of small-scale commodity producers were ruined. Another important means of primitive accumulation was the protectionist system.

The separation of the direct producer from the means of production was also extremely important for the expansion of the domestic market. When they became wage laborers, the masses of peasants and artisans were compelled to sell their labor power and purchase necessities on the market. The means of production, concentrated in the hands of a minority, were transformed into capital. A market was created for the means of production —a market indispensable for the expanded reproduction of capital.

The specific features of primitive accumulation in various countries reflected primarily the differences in their social and economic systems and the characteristics of their historical development. In Italy, for example, the relations of personal dependency characteristic of serfdom died out rather early. Owing to an intensively developed transit trade and to the practice of usury on an international scale, fairly large accumulations of capital developed in the cities of northern and central Italy in the 14th and 15th centuries. In the late 15th century, Spain and Portugal became the first Western European countries to seize territory and plunder colonial possessions. The expansion of wool exports from Spain accelerated the dispossession of the peasantry and the transformation of arable land into pastures. However, the beginning of capitalist development in these countries dates from the 16th century. In France the tax system and tax farming, usury, protectionism, and the colonial policy were the main levers of primitive accumulation. In the USA primitive accumulation was, to a considerable extent, based on the seizure of the lands of the native Indian tribes, on the slave trade, and on the savage exploitation of the colored population.

In Russia, where the transition to capitalism was delayed by the prevailing economic system of feudal serfdom, there was no distinct historical period of the primitive accumulation of capital. Some Soviet researchers date the genesis of capitalist production relations in Russia from the second quarter or the middle of the 17th century, but others date it from the 1760’s and 1770’s. The accumulation of wealth in the hands of the nascent capitalist class was linked primarily with the growth of trade and formation of a national market. The colonial sources of accumulation, the transit trade, and the system of national debt were less important factors in Russia than in Great Britain or the Netherlands. The structure of Russian state finances made tax-farming operations a particularly important source for the generation of capital.

In the second quarter of the 18th century state contracts and subsidies to entrepreneurs began to play a vital role in the creation of monetary wealth. The absolutist state played an even greater role in the accumulation of capital by the nascent bourgeoisie in Russia than in the Western European countries. From the very beginning of its history, the Russian bourgeoisie was closely linked with the autocracy. However, the serf system of personal dependency hindered the extensive use of accumulated reserves as industrial capital. In the 18th and early 19th centuries a considerable part of the monetary wealth was still used in feudal economic relations. For some peasants, the decline of the corvée system and the transition to cash payment of feudal rent raised the possibility of seeking employment in the cities (otkhodnichestvo). However, because the personal dependency of serfdom was maintained, the peasants who went to the cities were obliged to return periodically to the villages for seasonal work.

The formation of an army of wage laborers could only be completed after the elimination of the system of personal dependency. Therefore, the abolition of serfdom and the expropriation of the peasants through the Peasant Reform of 1861 played a particularly important role in developing the primitive accumulation of capital in Russia. “It was the first act of mass violence against the peasantry in the interests of nascent capitalism in agriculture. It was the ‘clearing of estates’ for capitalism by the landlords” (V. I. Lenin, Poln. sobr. soch, 5th ed., vol. 16, p. 254). The Reform of 1861 created another lever for the expropriation of the peasantry and for producing capital—the redemption payments. In the period after the Reform of 1861 the primitive accumulation of capital accelerated sharply. At the same time, the kind of capitalist accumulation that presupposes the reproduction of bourgeois production relations became more important.