5 Capitalism, Industrialism and Social Transformation

What is Capitalism?

Among both sociologists and historians, the fortunes of the concept of ‘capitalism’ have waxed and waned in different periods over the past century or so. Historians characteristically have been suspicious of the notion, although often on grounds that apply to many generalizing concepts, that it is too diffuse to do justice to the subtleties of historical detail and particularity. Where they have not been close to Marxism, sociologists have often favoured other terms to refer to the changes associated with modernity, such as ‘industrialism’, or the more global concept of ‘industrial society’. Marxists tend to use the word ‘capitalism’ with casual profligacy, regarding the development of capitalist production as the most fundamental phenomenon affecting the modern world, but not always being too careful to identify its traits in any sort of precise way. Behind the conceptual admixtures there are, however, a number of basic disagreements of substance. One concerns the primacy of the events or changes associated respectively with ‘capitalism’ and with ‘industrialism’. For Marx, and for his self-professed followers, industrialism is in its essential respects a furthering of characteristics found in capitalism, which is both more general and which precedes it in time. According to the majority of non-Marxist social scientists, on the other hand, capitalism is but a transitory phase in the formation of modern ‘industry’ and ‘industrial society’. The latter notions are thus more important for analysing the modern world, and of a more generic nature, than is the former.¹

Clearly the points at issue here are in large degree empirical: How should we seek to characterize the major economic transformations that have occurred over the past two centuries? But they are also conceptual. For evidently neither the terms ‘capitalism’ nor ‘industrialism’ are always used in the same way by those on each side of this particular theoretical fence.

It will not be my purpose in what follows to provide a general survey of vagaries in usage of these terms in the literature of the social sciences. Rather, I shall take two ‘classical’ sources as a point of departure, contrasting Marx and Weber on the nature of ‘capitalism’. Both tend to speak predominantly of ‘capitalism’ rather than ‘industrialism’. But Weber’s position is close to — and has frequently inspired — the views of those who see industrialism as the major influence shaping the institutional parameters of modern society. Inverting chronology, 1 shall first of all discuss Weber, then move to Marx. Although I shall in some respects support Marx's view rather than that of Weber, the standpoint developed will differ from both. In European history, the development of capitalism antedates that of industrialism, and by a considerable period of time. The former was also the necessary condition for the emergence of the latter. But capitalism and industrialism have their own distinctive features. They cannot be conceptually collapsed into one another and empirically they can exist in some substantial separation. This is also true, I shall argue later, of other quite elemental aspects of the development of European states in the nineteenth and early twentieth centuries.

According to Weber, capitalistic activities can be found at many times and places. There is nothing in capitalism as such that links it specifically to the West; modern (Western) capitalistic activity has certain definite characteristics that mark it out from earlier types. In Weber’s writings capitalism is tied to an interpretation of ‘economic action' as a type or aspect of social conduct. Human activity, in his terms, is ‘economically oriented’ according to whether or not it is concerned with the satisfaction of a material need. ‘Economic action’ refers to any form of economically oriented activity that is carried out peacefully. Not all economic action involves exchange, but exchange (which can take various different forms) is easily the most important means of securing desired utilities. ‘Exchange’ is any non-coerced agreement offering an existing or future utility against another or others given in return. In what Weber sometimes calls ‘natural economies’,² exchange barely occurs at all, or is made principally in kind. Natural economies are inimical to capitalism, although something approaching ‘profit-making’ may exist in them, since barter may be used to accumulate a range of goods by one or more of the involved parties. But calculation in kind is essentially concerned with the catering for known and relatively fixed wants. Capitalism, in all its forms, depends upon the existence of money. It is important to see what Weber is getting at here. One might think that money is necessary to capitalistic activity primarily because it provides a means for the assessment of ‘profit’. But the importance of money is much more profound than this. For, as Weber portrays it, money is above all a means of the storage and transformation of resources — a means of the expansion, in my terminology, of time—space distanciation and thereby of power.³

Money is a standard of exchange-value which, by nature of its very standardization, removes economic exchange from the contextual limitations of barter. Barter requires that those who exchange goods, at some point in the trading process, physically meet to carry out the transaction. With the use of money, exchange is no longer (in principle) tied to any particular locale. There is an inherent connection between the ‘calculability’ that money promotes and its transcendence of the immediacy of context. The same is true of the accounting procedures money inevitably entails. ‘Money’, in a general sense, has existed in a diversity of societies, not only in those of the class-divided type. But monetary exchange of a fairly developed sort presupposes just those forms of listing and collating of resources that are at the origin of writing, so important to the generation of power in traditional states. Weber places much emphasis upon the invention of double-entry book-keeping in the formation of the specifically Western type of capitalism, and no doubt he is right to do so. But no less important is his stress upon the generic connection of money with accounting procedures and, therefore, with information storage.

As Marx does — although not of course with the same implications being drawn for economic theory — Weber emphasizes that economic transactions involving money have a ‘use’ as well as an exchange (calculative) aspect. Every capitalistic enterprise — as Weber applies that term — involves ‘calculations in kind’,⁴ to do with the needs to which the commodities sold are to be put. These ‘considerations of use’ also extend to the instruments of production. Thus in a workshop producing yarn, the entrepreneur must give attention to wear and tear of the looms and so on. In barter systems there is no effective way of assessing ‘investment', depreciation or waste in relation to the achieved outcome of production. But money provides the possibility of organizing and regularizing ‘stocks’ as well as ‘products' across time-space. Monetary accounting is a particular version of the co-ordination of resources made possible by listing and cross-listing in general, which is why we should see a close analytical connection between the ‘account’ and the ‘file’ in the generation of power in organizations of all types. As Weber remarks, money accounting

is the method of assuring the conditions of future productivity of the business which combines the greatest degree of certainty with the greatest flexibility in relation to changing circumstances; with any storing of real stocks of materials or any other mode of provision in kind such flexibility would be irrationally and severely impeded. It is difficult to see, without money accounting, how ‘reserves’ could be built up without being specified in detail.⁵

In analysing money, Weber is not always as careful as he should be to indicate how specific, in certain ways, are the properties of money in modern capitalism — something which is relevant to criticisms that can be made of his use of the concept of capitalism in general. Of course, there now exists a much greater variety of anthropological and archaeological studies of money in tribal and class-divided societies than was available in Weber’s day. These allow us to fill in some of the gaps in Weber’s discussion. The degree of ‘universalisability’ of money was low in virtually all cultures until modern times and features which have since become integrated were usually dissociated from one another. In some societies, money was a medium of exchange but not a standard of value. There are many cases in which money served as a standard of value but was not used for the other purposes with which it is associated today.⁶ It is rare or unknown to find currency that does not retain a strong connection with forms of use-value. Prices often also maintained this connection, even in those class-divided societies in which quite highly standardized coin was in wide circulation. Thus a price might be expressed in terms of a number of livestock, even where that meant more or less the same quantified monetary value whenever it was used. Liquid reserves were normally very low compared with those involved in modern monetary systems, since the unit of value used for the long-term storage of assets was normally different from that employed for immediately convertible exchange. Deferred payments (of various possible sorts) are a major feature of the time —space distanciation of modern economic activity but were always restricted in traditional states. The means of deferred payment were often different from the standard in terms of which such payment was calculated, since the units of value may not have been in supply in the requisite quantities. For example, the code of Hammurabi permitted debtors to repay loans contracted in silver in the form of quantities of barley.⁷

Weber defines ‘capitalistic’ enterprise as any type of economic action undertaken in the anticipation of achieving profit through exchange.⁸ In several guises, it has existed ‘all over the world for thousands of years wherever the possibilities of exchange and money economy, and money financing, have been present’.⁹ One major type is mercantile capitalism, deriving from a range of profit possibilities in trade. These include the simple selling of goods, whether manufactured or not, but also numerous devices of extending credit and speculation in different currencies. Weber separates these activities analytically from profit opportunities concerned with political or military organizations; and from an orientation to profit on the part of a political authority or state itself (e.g. tax farming). Modern capitalism differs from these preexisting types in a range of ways. It involves the following.

1 ‘Rational capitalistic enterprises with fixed capital’."¹ Weber lays a great deal of stress upon this, and it is closely associated with his assessment of the significance of double-entry bookkeeping. Prior to the modern era, mercantile capitalism and certain sorts of finance capitalism were the only forms of capitalistic economic enterprise that may be durable and regularly organized, apart from those controlled directly by the state. ‘Fixed capital’ implies not only the existence of a definite locale in which the enterprise is situated but also the control of stable amounts of production equipment and investment stocks. Of course, much has been written about the concept of rationalization in Weber’s work and this is not the place to attempt to recapitulate even the main outlines of that debate. In this context, however, Weber makes his meaning reasonably clear. ‘Rational’ refers to the use of means of production and investment which, given available allocative resources, are most effective in attaining a given end — the achievement of profitable economic activity.

2    The existence of a mass of free wage-labour. In prior types of capitalistic enterprise, especially those involving the organization of production for profit, rather than purely commercial or banking transactions, unfree labour has often been used. The economic disadvantages of organizing capitalistic production through slave labour are discussed by Weber at some length. According to him they are quite formidable and, hence, the widespread employment of slave labour is only possible where slaves can be maintained very cheaply, where there are opportunities for regular slave recruitment and the production in question is agricultural. The employment of workers for wages or salaries involves much less capital risk and investment. The sanction of dismissal, in Weber’s view, is a more efficient basis of the disciplining of a work-force than are the punishments that can be inflicted upon slaves.¹¹ Of course, the functional advantages of free wage-labour over unfree labour do not in and of themselves explain the adoption of the former by capitalist entrepreneurs in the emergent phases of modern capitalism. Weber agrees with Marx that the condition of this was the large-scale expropriation of peasant workers from their means of production, a phenomenon that can by no means be wholly explained in terms of the perceived needs of expanding capitalistic enterprises.

3    The formation of clearly designated and co-ordinated tasks in the business organization. This theme obviously overlaps very substantially with Weber’s more general treatment of bureaucracy. Capitalist firms share with other modern organizations the characteristics of administrative power, involving the hierarchical specification of offices and procedures governed by written codes of conduct. But they have a distinct disciplinary problem. That is to say, a large proportion of those subject to bureaucratic authority do not themselves directly participate in it. Workers are a ‘horizontal’ grouping — Weber occasionally says ‘class’ — subject to the collective authority of ‘management’.

4    The connecting of individual capitalistic enterprises within a market economy. By the ‘market’ here Weber means both labour and product markets, in which labour-power as well as a vast range of goods have become commodities. A market economy presumes national and international markets, thereby again depending upon the existence of highly standardized money. In all class-divided societies there have been markets, which in some respects stretch well beyond the physical confines of specific market-places. But, as Weber says, these have always not only been limited in their extensiveness, but have been regulated by many factors other than the economic demands of price, investment and profit.

The original modes of market regulation have been various, partly traditional and magical, partly dictated by kinship relations, by status privileges, by military needs, by welfare policies, and not least by the interests and requirements of the governing authorities of organisations. But in each of these cases the dominant interests have not been primarily concerned with maximising the opportunities of acquisition and economic provision of the participants in the market themselves; they have, indeed, often been in conflict with them.¹²

5    The provision for the wants of the whole of the population predominantly by means of capitalist production. This is in a sense nothing but a summary version of the preceding points but is, at the same time, evidently a quite elemental feature of modern capitalism. The capitalist enterprise is not just one type of production organization among others — as in all societies where capitalistic ventures have been found previously — but the form of production upon which everyone becomes dependent.

Weber makes it clear that he regards the origins of capitalism as lying well before those of industrialism, and that the latter comes about because of pressures introduced by the former. According to him, the main period of large-scale expansion of capitalism is in the sixteenth and seventeenth centuries. In the seventeenth century in particular there was ‘a feverish pursuit of invention’, dominated by the perceived imperative to cheapen production.¹³ It is at this point, Weber argues, that technological innovation and the pursuit of profit in economic action tend to begin to come together. Although there is a history of invention dating back into the Middle Ages, only in war — as 1 have mentioned in chapter 4 — did these previously go along with one another.

It is hardly surprising that Weber treats industrialism as a more or less direct outcome of capitalism, since he has already accentuated the centrality of the ‘rationality’ of production to modern capitalistic enterprise as a whole. His discussion of industry is, nevertheless, a sophisticated one, linking factory and machine to their immediate organizational forerunners. Steam machinery derives from earlier mechanized forms of production and is not quite the radical innovation Victorians took it to be. However, the most essential characteristic of industrialism is not the use of power-driven machinery in the production process but the concentration of ownership of the work-place, means of production, source of power and raw material in the hands of the entrepreneur. Such a combination, Weber observes, was rarely met with prior to the eighteenth century.¹⁴

Marx’s dating of the origins of modern capitalism differs little from that of Weber. ‘The capitalistic era’, Marx says, ‘dates from the sixteenth century.’¹⁵ Unlike Weber, however, he is reluctant to use the term ‘capitalism’ to apply to economic activity at other times and in non-European contexts and only does so rather infrequently. Capital pre-exists the development of modern capitalism but Marx denies that either mercantile activities or the pursuit of profit on the part of financiers are accurately identified as types of capitalism. Although variant interpretations of Marx are possible on this point, it can scarcely be denied that he gives little attention to the organizational features of capitalistic enterprise upon which Weber places so much weight. Marx’s analysis concentrates above all on the commodity, giving particular attention to a theme that political economy supposedly had previously ignored — the fact that, for the majority of the working population, labour-power becomes a commodity. While Weber acknowledges the significance of this, and pays due obeisance to Marx for having analysed it with great insight, it does not play quite as pivotal a role for him as it does for Marx. According to Marx, the conjunction of capital and wage-labour both supplies the historical clue to unravelling the origins of capitalism and, at the same time, constitutes the axis of its class system. As Marx says,

In themselves money and commodities are no more capital than are the means of production and of subsistence. They want transforming into capital. But this transformation itself can only take place under certain circumstances that centre in this namely, that two very different kinds of commodity-possessors must come face to face and into contact: on the one hand, the owners of money, means of production, means of subsistence, who are eager to increase the sum of values they process, by buying other people’s labour-power; on the other hand, free labourers, the sellers of their own labour-power, and therefore the sellers of labour ... With this polarisation of the market for commodities, the fundamental conditions of capitalist product are given.¹⁽¹

Marx’s analysis therefore concentrates much less upon the conditions necessary for the stabilizing and expansion of product markets than upon the production processes linking the transformation of nature to the commodification of labour-power. It is a basic part of Marx's critique of political economy that, as he puts it, 'so-called primitive accumulation’ finds its main impetus in the expropriation of the peasantry rather than in the specific achievements of entrepreneurs themselves. Major lacunae in Marxist analysis stem from this at the same time as do some of its major strengths. The sanctity of private property in orthodox political economy is explained in terms of the diligence of the ‘frugal elite’.¹⁷ By their careful husbandry, some groups of individuals accumulate wealth which they ‘place at the disposal’ of the indigent, offering them the means of their livelihood by putting them to work. For Marx, the situation is not like this at all. This ‘insipid childishness’ disguises not only a series of social changes in which ‘conquest, enslavement, robbery, murder' play the greater part,¹⁸ but occludes the class relations at the core of capitalism. It would be too easy and, in some respects, utterly misleading to say that, for Weber, capitalism is distinguished by its ‘rational' nature, whereas for Marx capitalism is specifically ‘irrational' because its success is chained to human servitude. Two different senses of ‘rationality’ are in play here, related to variant epistemological positions. Nonetheless, ‘modern capitalism’ for Weber is intrinsically tied to an expansion of the organizational features of the capitalist enterprise, which assume pride of place in his analysis over its class character. For Marx, however, the heightened power generated by capitalism is traced largely to the vastly augmented control it allows over the material world, in which the development of technology is combined in a novel way with human labour.

Marx’s discussion of the commodity explains why he is reluctant to label pre-modern forms of economic activity ‘capitalism’, as Weber does, and why capitalism has to be regarded as a ‘mode of production’ but one that is very different from preceding types.'⁹ ‘Capitalism’ is nowhere defined by Marx in the formal way it is by Weber. But it is clear enough that for Marx ‘capitalism’ is not conceptualized as to do with the pursuit of profit through exchange relations, but as this conjoined to the exploitation of ‘abstract labour power'. It is not only that the majority of the population are propertyless and have to sell their labour on a market to maintain a livelihood. What is essential is that labour power becomes ‘detached" from other traits or characteristics of the worker and can thus be integrated with technology. The labour contract is the focal element in Marx’s analysis here, demonstrating how distinct capitalism is from all previous systems of the exploitation of labour.²⁰ In capitalism, labour-power is a commodity in virtue of its abstract form. The fact that the worker has to sell his or her labour to an employer in order to gain a living is the main constraint through which the compliance of the labour-force is achieved. It replaces, Marx stresses, the various admixtures of bondage and the threat of the use of violence characteristic of traditional states. On the one hand, it connects with the upsurge in material transformation made possible by the conjunction of abstract labour and technology and, on the other with the ‘bourgeois rights' to private property so central to capitalist enterprise (and to the modern state, as Marx conceives it). For, as Marx so forcefully points out, the rights of ‘free and equal' political participation have as their other side the subordination of the worker to capital.

Given the manner in which Marx formulates his interpretation of capitalism, it is not surprising that his discussion of money carries certain different emphases from that of Weber. Rather than the significance of money accounting, and of the state in acting as a guarantor of standard value, Marx once again relates money to the nature of the commodity. There is an unbroken thread running from Marx's early strictures about money, that ‘universal whore’, that ‘pander between men and nations’,²¹ to his analysis of the phenomenon in his mature economic writings. Money is the medium — or, rather, the material expression — of the commodification of labour-power which makes it ‘translatable’ into material goods in terms of numerically assessed equivalences. Labour-power can be evaluated as a cost in terms strictly comparable to material goods or products, in spite of the fact that these share nothing in common in terms of their substantive traits. Money, according to Marx, is ‘the reflection, in a single commodity, of the value relations between all commodities’.²² When a commodity is converted into money, the exchange confirms the specific value-form rather than providing its value; it makes manifest that the qualities of a service as good are not exhausted by what it can be ‘used for’.

Marx’s analysis of money, traced back through his general discussion of commodification, has considerable importance for characterizing how ‘capitalism’ should be understood, although his view cannot be accepted as it is. In refusing to apply the concept to pre-modern economic enterprise, Marx signals something very important. Put in the terms I have suggested previously, what this amounts to is that capitalism is involved in a central way in the discontinuity of modern history.²³ This issue is somewhat submerged in the otherwise characteristically acute interpretations that appear in Weber's writings, at least in some part because of his preoccupation with what distinguishes the long-term development of the West from the other ‘world civilizations'. The strength of Marx’s theory is that it provides the leverage for analysing that massively sharp wrench away from traditional modes of economic enterprise that occurs in Europe in the sixteenth and seventeenth centuries. It can confidently be asserted that Marx’s view is the more sophisticated in this respect, in spite of the prominence that has been achieved by Weber’s thesis of the association between Puritanism and (he development of modern capitalism. This thesis may or may not be valid — the gap between proponents and antagonists yawns as widely as ever

— but in any case it is more relevant to the question of explaining the first origins of capitalism than to interpreting how it is that it differs from pre-existing forms of economic activity. Weber’s analysis of the ‘rational’ nature of modern capitalist enterprise is undeniabiy important, although I shall not choose to use that term in what follows. However, Marx’s account of commodification directs our attention to a particularly significant nexus of relations.

How, then, should we best conceptualize what ‘capitalism’ is? I suggest that the following elements are involved. As I shall henceforth use the term, capitalism is a form of economic enterprise that has its origins only some four centuries ago in European history. That is to say, although there have been many forms of profit-making enterprise at other times and in other places, these are sufficiently different from what has occurred in modern history that it is more misleading than helpful to use the same term to refer to them all.

Capitalism involves the production of commodities. In this it is not distinctive, since the production of goods for purposes of profitable exchange has been carried on in many other contexts. But it has two distinct characteristics:

1    The process of commodification has not proceeded remotely as far in any prior type of society, for various reasons. Limitations on the alienability of property, especially in the most overwhelmingly important means of production — land

fundamentally blocks the expansion of commodified relationships. But so also do the ‘modes of market regulation’ of which Weber speaks, meaning that the sustained pursuit of profit rarely emerges untrammelled by other, divergent considerations.

2    The commodification of labour power is the essential accompaniment of the expansion of commodity production in general in capitalism. Marx is entirely right to insist upon the significance of this, as distinguishing modern economic enterprise from all other forms of economic order. For the first time in history, large segments (eventually the vast majority) of the working population do not directly produce the means of their own subsistence, but contract out their labour to others who, in the form of money wages, provide the wherewithall for them to survive.

This presupposes the intersection of two markets, labour and product markets. To speak of ‘the market’ in general, however, is not without sense, because of the close relation that necessarily exists between the two. While markets transcending the local level have existed in all class-divided societies, only in capitalism does the market become linked to the production of goods required for the day-to-day needs of a considerable proportion (subsequently again nearly a complete majority) of the population. Market relationships in capitalism presume the existence of a distinct ‘economy’, insulated from other institutional sectors.²⁴ The insulation of the economy is basic to the cycle of investment— profit—reinvestment characteristic of capitalist enterprise. ‘Private property’ plays an essential role here, in the sense that the accumulation process is influenced mainly be decisions taken by those owning ‘privately held’ capital. ‘Privately held’ here should be understood as contrasted to one main sense which the adjective ‘public’ can have, not as meaning resting in the hands of individual entrepreneurs. ‘Private property’ in this context means capital controlled by agencies — whether individuals, families or joint-stock corporations — rather than by the political apparatus of the state.

Capitalism involves the centrality of the ‘financially accounting' organization, in which balance-sheets of investment and cost are used as the main index of whether the organization should expand or contract. The business firm shares much in common with other, non-capitalistic organizations in respect of its bureaucratic features — at least, such is the case with the larger economic organizations. But its continued existence depends upon sufficient profitability to provide renewed investment: its whole nature, as it were, is ‘commodified’. Such is not the case with other organizations, including the state. Although all these organizations depend upon allocative resources, and their continued existence is tied in some sense to ‘fiscal management’, they are ‘non-commidified’ in the sense that the provision of their needed resources is not governed primarily by the operation of market forces.

All of this so far refers to capitalism as a form of economic activity. It does not satisfactorily elucidate how one should use the term ‘capitalist society’. ‘Capitalism’ can be, and frequently is, used to designate a type of overall societal order, not only a distinctive series of economic relationships. 1 do, indeed, want to claim that capitalism is the first and only form of society in history of which it might be said with some plausibility that it both ‘has' and ‘is' a mode of production. I do not mean this, however, in the semi-technical sense in which Marx applies the term ‘mode of production’. I mean that in capitalism, more than any other kind of social order, economic influences play a major dynamic role — if not unequivocally the dominant one in the way in which many social thinkers, close and distant from, Marxism have presumed. But what are the principal characteristics of the type of society that can be designated ‘capitalist’? 1 shall give a preliminary answer here, but a fuller discussion of the question demands understanding phenomena to be discussed subsequently. For there has been no capitalist society which has not also been industrialized and which has not been a nation-state. I date the emergence of ‘capitalist societies’ at the same period (somewhere about or subsequent to the turn of the nineteenth century) at which nation-states come into being. Both have their roots several centuries earlier, and it is obvious enough that any temporal identification of their first formation must be only quite general.

A capitalist society has the following major characteristics.

1    ‘Capitalism’, defined as a form of economic system in the manner indicated, is the primary basis of the production of goods and services upon which the population of that society as a whole depends. Because of the combination of the investment—profit— investment cycle and the mechanized co-ordination of human labour-power, capitalist societies are heavily influenced by what goes on in ‘the economy’, which has a very high degree of technological motility.

2    The existence of a distinct sphere of ‘the economy' involves the insulation of the ‘economic’ and the ‘political’ from one another. Such insulation may take various concrete forms and mistakes that are often made in characterizing it must be avoided. As mentioned earlier (pp. 67—8), it is misleading to speak too readily of the ‘separation’ of economy and polity since, compared with class-divided societies, these are more closely connected than ever before. But the insulation of the economic and the political should also not be equated with competitiveness in labour and product markets.²⁵ Such a view has often been taken by those influenced by classical political economy, even where in other respects they have been critical of it. The classical economists tended to identify the sphere of the ‘economic’ with the competition of independent and autonomous capitalist firms, in which any form of state intervention breaches the division between economy and polity. This not only greatly underestimates the ways in which the existence of an insulated ‘economy' depends upon the state in the first place, it suggests a decline in the scope of the ‘economic’ with the increasing state intervention in productive activity. But what is usually termed the ‘intervention’ of the state may have the consequence of actually protecting the insulation of the economy — in fact, it may even be its necessary condition.

3    The insulation of polity and economy presumes institutions of private property in the means of production. Caution is again necessary here. I have indicated earlier that ‘private’ should not be equated solely with wealth that is at the disposal of the individual entrepreneur. However ‘property’ also has to be understood not just as a series of rights but as having a definite content associated with its nature as capital. It presumes, in other words, the processes of commodification noted above, which affect the ‘propertyless’ as much as the ‘propertied’. In this sense wage-labour is, indeed, the other face of capital. It is for this reason that capitalism is a ‘class society’, in contrast to societies of the class-divided type. This does not imply, as Marx tends to argue, that class divisions and conflicts are the institutional dimension to which most (all?) other divisions and conflicts can be traced. It does mean that class conflict (in various guises) plays a more important dynamic role than in any previous type of society.

4    The nature of the state, as a mode of ‘government’, is strongly influenced by its institutional alignments with private property and with the insulated ‘economy’. The autonomy of the state is conditioned, although never completely ‘determined’, by its reliance upon the accumulation of capital of which its control is to a large degree indirect.

5    That ‘capitalist state’ can be used as synonymous with ‘capitalist society’ demonstrates that the ‘boundary maintaining’ qualities of the nation-state are integral to its existence. On the face of things it would seem as though capitalism, as a form of economic activity, has no intrinsic relation to the nation-state. This indeed was the underlying assumption of many nineteenth-century thinkers, including Marx, and is relevant to the characteristic limitations of social theory remarked upon in chapter 1. Capitalism promotes the development of long-distance economic activities that stretch well beyond the borders of states. That there are ‘capitalist societies’, as bounded entities then, is something that demands some considerable analysis rather than being merely be taken for granted.

Capitalism and Industrialism

In looking at the nature of industrialism, there are two questions to be tackled. One is the conceptual problem: how should ‘industrialism’ be understood? But we also have to consider the relation between capitalism and industrialism and ask in what sense, if any, one might be deemed the “outcome' of the other.

It is of some interest and relevance to consider the etymology of the word ‘industrialism’ and associated terms to do with production. The term ‘industry’, which started to come into common coinage in English and French in the latter part of the eighteenth century, was originally associated primarily with diligent labour (thus indicating its close connection with administrative power, to be explored later). Adam Smith defines ‘industry’ in contrast to idleness, often using the first term to refer indifferently to both human labour and the means of production.²⁶ Ferguson links ‘industry’ with the learning of habits of ‘responsible work activity', the endeavours of men to improve their arts, to extend their commerce, to secure their possessions, and to establish their rights’.²⁷ The term was not employed in such a way as to distinguish manufacture from either commerce or agriculture. Similarly, ‘mechanical’ was used to refer to a quality of an assemblage of work-tasks, not to machines as such; and manufacture’ was not understood in the sense I have just employed it, but as referring to the ‘productive arts’ in general. Only some way into the nineteenth century did this group of terms start to assume the usages they have today.²" Etymological consideration of such words helps emphasize that it would not be apposite to treat ‘industrialism’ as a strictly technological phenomenon. In the concept of ‘industrial society’, as applied by Saint-Simon, industrialism preserves these wider connotations. Saint-Simon’s industriels are not defined in terms of their control over newly emerging industrial power but in terms of their propensity for disciplined work. In an industrial society, in contrast to feudalism, everyone — including those in the directive positions — is involved in productive labour.

Although I shall not use the term ‘industrial society’, I think it correct to hold that industrialism refers to more than mechanized technology alone. It also should be understood to embrace more than such technology plus factory production — this for two reasons. The ‘factory’, a locale in which direct productive activity is carried on through manual labour, is too narrow a notion to capture the organizational changes that occur with the advent of industrialism. Rather, it is better to speak of the ‘industrial workplace’ (which is also first of all a ‘capitalistic work-place’): a locale in which vocationally organized labour is carried on separately from the home. But ‘industrialism’ should not be confined in its meaning to phenomena directly involved with the work-place, however that be described. Mechanization in modern economic life has helped produce economic transformations affecting the circulation of commodities. The development of mechanized transportation and modes of communication in particular is a major feature of industrialism.

I shall define ‘industrialism’ as presuming the following traits.

1    The use of inanimate sources of material power in either production or in processes affecting the circulation of commodities. What has come to be termed the ‘Industrial Revolution’ is usually associated above all with the harnessing of steam power to economic ends. But in the late eighteenth- and early nineteenth-century Britain, the water-mill was at least equally important in some of the main sectors of production that expanded most dramatically at that period. Moreover, the harnessing of electricity to production has proved to have as profound consequences as the more directly ‘mechanical’ sources of material power.

2    The mechanization of production and other economic process. What a ‘machine’ is cannot be defined as easily as might at first sight appear, but can be said to involve an artefact that accomplishes certain set tasks through the regularized application of inanimate power resources. All machines, no matter how automated they may be, have of course in some sense to be tended by human labour. Early processes of industrialization normally involved the direct integration of mechanization and human labour-power. The machine demanded corresponding human activities of a routine type to ‘work’ it. But there seems no reason to build this into the definition of mechanization, which has also to include more automated processes in which the role of the worker is ‘supervisory' and the mechanization of the labour-task in question more or less complete. Mechanization should not be associated intrinsically with the economic utilization of science. The first stages of the ‘Industrial Revolution’ were only quite marginally connected with scientific discoveries; the closer integration of science and technology is largely a more recent phenomenon.

3    Industrialism means the prevalence of manufacturing production, but we have to be careful about how ‘manufacture’ is to be understood. It is very frequently used to designate the production of non-agricultural goods but it should refer to the manner of production, rather than simply the creation of such goods. Manufacture should be regarded as connecting (1) and (2) in a regularized fashion, such that there are routinized processes creating a ‘flow’ of produced goods.

4    It is in this regularized component of production that we find a link with the existence of a centralized work-place in which productive activity is carried on. Industrialism cannot be a wholly ‘technological’ phenomenon because the three elements mentioned above presume an organization of human social relationships. I do not mean to imply some sort of technological reductionism here. The process of industrialization in its original form, in Britain, demonstrates various dislocations between elements that later came together as a more homogeneous productive order. Several of the more advanced sectors of production in respect of traits (1), (2) and (3) were organized largely through the putting-out system rather than in terms of the centralized work-place. Some of the early factories, by contrast, were established in sectors of production not distinguished by a particularly high level of mechanized manufacture.²⁹ But once these factors had come together, they formed something of a unitary ‘productive package' that generated novel economic opportunities and was perceived as such within the framework of expanding capitalist enterprise.

The relation of capitalism to industrialism needs to be directly discussed, but first it is worth briefly asking why the concept of ‘capitalist society’ is acceptable while that of ‘industrial society’ is not. This issue, of course, raises questions of general importance, since the contrast between ‘capitalist society' and ‘industrial society’ has tended to epitomize distinct theoretical traditions. If both Marx and Weber themselves favoured the former of the two terms, Weber’s writings, as has already been mentioned, have often been drummed into service to support ‘the theory of industrial society’.³⁰ But the concept of ‘capitalist society’ is defensible in a way in which that of ‘industrial society’ is not. Both notions have a similar format. That is to say, in each case it is held that a particular type of economic formation is so important for other institutions that it serves to designate the overall form of society linked to it. In both instances, a particular dynamic impetus is attributed to economic transformations — in the one case to capitalism, in the other to industrialism. And, in each, economic institutions are presumed to have a definite alignment with other institutions within a societal totality. Now in the case of capitalism, as I have defined it above, the source of the dynamic impetus is clear. Namely, capitalistic enterprise involves the pursuit of profit through the production of commodities for sale on a market; the perceived need to achieve profits sufficient to guarantee an adequate return on investment generates a chronic impetus towards economic transformation and expansion. But in the instance of industrialism considered alone, such a source of dynamism — one of the main features of the discontinuities of modernity — is lacking. Industrialism is a highly effective form of productive activity but it carries no inner dynamic of the sort associated with capitalist enterprise.

A further aspect of the contention that modern society both ‘has and is a mode of production’, in its two different versions, is that some kind of definite articulation between the ‘economic’ and other institutions must be established. Again, in the case of the conception of capitalist society this is clear, whereas in that of ‘industrial society' it is not. As a type of production system dominant in a given society, capitalism is predicated upon an alignment of the ‘economic’ and the ‘political’, focused through private property and the commodification of wage-labour. However, industrialism is ‘neutral’ in respect of wider institutional alignments. That is to say, it is not at all obvious that industrialism carries any definite implications for the wider societal totality that would place it in a particular type suigeneris. Of course, I do not want to pretend that these matters can be settled on the level of conceptual cogency alone. They depend also upon a definite empirical assessment of the trends of development of modern societies, which will emerge in the context of my later arguments.

For both Marx and Weber, in variant ways, industrialism is regarded largely as an extension of the basic features of preexisting capitalist enterprise, as it developed in preceding centuries in Europe. In well-known sections of the first volume of Capital,¹¹ Marx discusses the progression of the workshop from a division of labour between skills to manufacture and ‘machino-facture'. The intensification of production through the concentration of the labour force in factories, and the application of machinery to the labour process, are regarded as the culmination of capitalist development. Weber traces the emergence of mechanization and the factory in terms generally akin to those of Marx.¹² But the similarity of the historical description disguises their contrasting orientation, that derives from their contrasting appraisal of capitalism. In Weber’s writings there is a generalized connection between bureaucracy, the capitalist enterprise and the machine. Capitalism, defined in terms of the rational organization of economic activity, is tied via the concept of rationalization to bureaucratic organization in general and to mechanization. Weber in fact frequently compares bureaucracy to a machine, each constructed in terms of ‘technical’ application of formalized knowledge.

I shall take a position here which is different from both of these authors, although at the same time drawing on elements of each. But my view also differs from those who suppose that ‘capitalism’ is a sub-type of industrialism. The problem with them all is that they fail to think through what is implied treating ‘capitalism’ or ‘industrialism’ as modes of economic organization, on the one hand, and as types of society, on the other. ‘Capitalist society’ is a ‘society’ only because it is also a nation-state, having delimited borders which mark off its sovereignty from that claimed by other nation-states. The characteristics of such a state form, I shall propose, depend (in its initial European development) upon conjunctions of capitalism, industrialism and certain administrative apparatuses of government. But none of these can be merely reduced to either of the others. They constitute three distinct 'organizational clusters’, associated in a direct way with one another in their original European context, but which should be kept analytically distinct and which can have separate substantive consequences when instituted in other societal orders.

In the original European development, the close ties that existed between capitalism and industrialism can be explicated as follows, with many variations between different societies. The emerging hegemony of capitalist enterprise as a system of production introduced a novel source of dynamism within economic organization. Part and parcel of this process was the formation of the differentiated and insulated economy, which became a much more prominent source of generalized institutional transformation than had ever been the case in pre-existing types of society. The economy of capitalist societies, both internally and externally, is inherently unstable for reasons diagnosed by Marx. These concern the motility and economic expansionism associated with the investment —profit-reinvestment cycle. The stability of capitalist production, small- or large-scale, depends — and is known to depend — upon the generating of profit sufficient to provide for ‘expanded reproduction'. There is a primary sense in which all ‘economic reproduction' in capitalism is, of necessity, in Marx’s terms ‘expanded reproduction’ because the economic order cannot remain more-or-less static as all traditional economic systems tend to. The drive to maintain profit, or to enhance profitability where this is consistent with the perceived investment needs of firms, is associated with an intrinsic propensity to technological innovation via mechanized manufacture. Technological adaptations can be used both to directly cheapen the immediate costs of production and offset investment costs in respect of the hiring of labour. This should not be seen, of course, as a smoothly flowing historical process. In its original phases of development in particular, it involved a stuttering and fractured series of changes, poorly understood by most of those who played the leading parts in initiating and furthering them.

The impetus towards economic expansion and the heightening of productivity thus described by no means exhausts what we might call the ‘elective affinities’ between capitalism and industrialism. Quite fundamental is the commodification of labour-power. Here we can trace one of the most basic discontinuities that separate modernity from pre-existing forms of socio-economic order.³³ It is a phenomenon that directly connects the class system of capitalist society with industrialism as a form of production. Nonetheless, it does not follow from this that the transformation of that class system ipso facto implies a radical reordering of the nature of industrialism. Marx’s writings, and those of most of his followers, are ‘class reductionist’. In other words, they seek to explain too many of the characteristics of modern societies in terms of class domination and class struggle. 1 have emphasized that, in contrast to agrarian states, capitalist societies are ‘class societies’ — class conflict is ‘structured into’ them in a way quite distinct from the forms of class antagonism characteristic of traditional cultures. But we cannot infer from this that class structure is at the origin of all aspects of domination in modern societies.

Such an observation is hardly new, for it has been the stock observation of critics of Marx since the first time at which his ideas became generally known. Many such critics, especially those who have propounded one or other version of a theory of ‘industrial society' have, however, simply substituted ‘authority’ for ‘class' in their analyses of modern society.¹⁴ Marx, it is argued, mistook one particular form of authority (class domination, focused through private property) for authority relations in general, essentially assimilating authority and property. Now it is my argument that Marxism is deficient in respect of its concept of power, which is traced first and foremost to control of allocative resources. But it will not do simply to substitute a notion of authority for that of class in analysing the institutions of modern societies. Control of allocative resources — as capital — assumes a peculiar importance' in capitalist societies, in which the economy’ has the dynamic impetus previously mentioned. But authority is not all of a piece. There are various possible types or categories of authoritative resources.

Let me trace through the relations between private property, the commodification of labour-power and industrialism at their ‘point of origin’ in the European societies. The commodification of labour-power is at the root of the class system of capitalist society in the sense formulated by Marx. In prior types of class domination, class exploitation took the form of the appropriation of ‘surplus’ production.³⁵ The dominant class largely apart from the productive activities of those from whom it drew its revenues

— something inherent in the segmental character of class-divided societies, as discussed in previous chapters. In capitalism, however, the expropriation of the majority of the members of the population from direct control of their means of subsistence means that the resultant labour-force falls under the immediate sway of the entrepreneur or of ‘management’. At the same time, the commodification of labour-power not only permits but demands its consolidation as ‘abstract labour’, malleable to the organizational directives of employers. The result is a significant nexus of connections to mechanized manufacture, making possible the ‘design’ of work processes in ways which integrate labour-power with the technological organization of production. This does not occur directly through the construction of machinery, but depends upon perceived opportunities for the calculative co-ordination of productive activity.¹⁶

A further basic point of connection between capitalism and industrialism is to be found in the expansion of administrative power in the work-place. This is closely bound up again with the commodification of labour-power, although once more we must be careful to avoid the supposition that it is therefore wholly reducible to class relations. Industrialism, as I have said, involves the emergence of the centralized work-place, within which manufacturing operations can be concentrated and co-ordinated. The possibilities of industrial production are thus very limited in class-divided societies, quite apart from the lack of existence of sophisticated machinery there, because of the difficulties facing the sustained application of surveillance in work settings. Several factors influence this. These include, first and foremost, the aforementioned segmental character of class-divided societies, entailing that production is for the most part carried on in locales physically and socially distant from the direct influence of the dominant class. However, where labour-forces of some size are gathered together, with the objective of carrying on concentrated and collaborative processes of production, the level of available surveillance measures is also slight compared to those which can be mustered in modern systems of production. As Weber claims, modes of organizing production that rely upon slavery, or upon some more-or-less nakedly coercive type of corvée labour, are probably intrinsically ineffective compared to the disciplinary possibilities opened up by the mass utilization of ‘free’ wage-labour. In addition the ‘storage capacity’ of organizations in respect of information is, however, low prior to the developments which Weber identifies — systematic accounting and filing.

The extension of surveillance operations within modern societies is neither confined to the capitalist work-place, nor does it have its sole origin there. However, given the dynamism which the insulated economic sphere injects into other institutional arenas, it is a reasonable supposition that the expansion and consolidation of surveillance in the work-place strongly influences what happens elsewhere. This can readily be demonstrated to be tied to the commodification of labour-power. The ‘freeing’ of peasants from their involvement with fixed plots of land in agrarian production, and their transmutation into ‘wage-labour’, is also a ‘freeing’ from their dispersal in separate, localized communities. As newly ‘mobile’, they are available to be concentrated in more centralized locales in which production is carried on via mechanized manufacture.

The considerations discussed in the preceding paragraphs make it possible to speak generically of ‘industrial capitalism' as a type of productive order and as a form of society. It is a key part of my argument that it is only when the conjunction between capitalism and industrialism is well advanced that it becomes plausible to speak of the existence of ‘capitalist societies’. When I henceforth use the notion ‘capitalist society’, therefore, I shall mean a society in which industrial capitalism is the main motor of production and one which displays the various institutional traits previously described. But it should perhaps be re-emphasized that this does not mean that industrialism is confined in its influence, or its potential influence, to capitalist societies alone.

It will be useful at this juncture to pursue the implications of such a claim a little further. In so doing I shall seek to introduce some themes that will underlie most of the remainder of this work. Four clusterings of institutions can be distinguished in the conjunctions between capitalism, industrialism and the nationstate in the European societies, as shown in figure l. In Western capitalism they have been closely tied to one another, so much so that the reductive tendencies demonstrated by Marx, and by others from opposed positions, are readily understandable.

The nexus of institutions disclosed by Marx's analysis of the commodification of goods (epitomized by money capital) and the commodification of labour-power (abstract labour) constitutes the core of the class system in capitalist societies. Private property in capitalism, as has been indicated, unites rights of freedom of contract and the ‘universal transformability' of capital, in goods or in the purchase of labour, which is so distinctive of the modern money economy. In the sense both of opposition of interest and of semi-chronic struggle, class conflict is an inherent element of capitalist production and therefore — in many varying degrees or guises — of capitalist society. There are a series of issues to be further elucidated here, but for the time being 1 shall postpone discussion of these.

Some words are necessary about why industrialism does not appear in figure 1. When capitalism is conjoined to industrialism, as it has been in the European societies, the outcome is the

Figure 1

initiation of a massively important series of alterations in the relation between human beings and the natural world.·¹⁷ It is in these alterations that industrialism is embedded. In class-divided societies, production does not greatly transform nature, even where, for example, major schemes of irrigation exist. The city is the main power-container and is clearly differentiated from the countryside but both partake of the ‘content’ of the natural world, which human beings live both ‘in’ and ‘with’, in a condition of symbiosis. The advent of industrial capitalism alters all this. When connected to the pressures of generalized commodification, industrialism provides the means of radically altering the connections between social life and the material world. The main mediator of this process is urbanism and I repeat here the theorem introduced in the first volume of this work, that ‘urban sociology’ cannot merely be regarded as one branch of sociology among others, but has to be treated a major part of what sociology is as an endeavour to comprehend the modern world. Modern urbanism (both within Western societies and elsewhere) is not an extension of the traits of traditional cities, even where urban areas have grown up in and around the sites of such cities. It forms a ‘created environment’, which is the backdrop both to the organization of capitalist-industrial production and to the territoriality of the nation-state. As I have argued in the previous volume, the obsolescence of the city walls is both symbolic of, and substantially implicated in, the emergence of that new administrative space that is the nation-state.

For reasons already discussed, a very considerable development in modes of surveillance in the work-place is a primary feature of the emergence of industrial capitalism. But surveillance activities also expand the realm of the state itself, both within its borders and externally, as states begin to monitor the character of ‘international relations'. As 1 have stressed, surveillance is a medium of power which, whatever its ties to the ownership of private property, does not derive directly from it. The same comment applies to control of the means of violence.

6

Capitalism and the State: From Absolutism to the Nation-State

In analysing the connections between the expansion of capitalism and the consolidation of the modern state, two successive phases of development need to be assessed. The first, dating from the sixteenth to the late eighteenth century, concerns absolutism and the early diffusion of capitalist enterprise. The subsequent phase is one linking the nation-state and industrial capitalism. The maturation of capitalism involves a commodification of land and products, on the one hand, and of labour-power, on the other. While these do not proceed wholly independently of each other, the former is intertwined mainly with the development of the absolutist state. The latter — or so I shall argue — depends for its large-scale extension upon the formation of the nation-state.

Commodification and State Development

The commodification of land and products — a vast expansion of the areas of economic activity penetrated by exchange-value — involves several elements associated with the solidifying of the absolutist state. The emergence of a guaranteed, centralized legal order permitting and protecting an expanding range of contractual rights and obligations is one; another is the development of a monetary system co-ordinated and sanctioned by state power; yet another is the formation of a centrally organized taxation system.¹

What matters in respect of the development of a framework of law is, of course, both the substance of law and the possibilities of its enforcement by the centralized state apparatus. Economic

exchange as such, as has been noted, can operate with a minimum of legally enforceable ties between the parties involved, and in preceding forms of society ordinarily has done so. An exchange of goods implies the transfer of the ‘factual control' of objects from one party to another, where the assumption is that (whether in direct barter or separated in time-space) other objects will be also transferred from the second party to the first.² Such a relationship, when established in a durable way, involves trust in anticipated future transactions and returns. In so far as this is institutionally ‘guaranteed', in traditional orders, it is often more in the context of ritual exchange than in sheerly commercial transactions. Trading companies have sometimes possessed various sanctions to back up payment of debts, including the use or threat of military violence. Civilizations in which commerce has been strongly accentuated, and where mercantile groups have been particularly powerful, have normally developed forms of both public and civil law relevant to trading operations. Trade has in these circumstances frequently been financed and directed by the state, in conjunction with other revenue-generating activities. But in few of these instances has law combined the ‘calculative’ and ‘contractual’ orientations, separate from direct state involvement with economic enterprise, such as came about in post-medieval Europe. Rome was one such instance, and the direct inheritance of certain of its codes, plus its more diffuse long-standing influence, was important largely for this reason.

As Weber stresses, the recovery and transmutation of Roman law in Europe promoted ‘calculability’ plus a range of forms of alienability under contractually regulated circumstances. The former of these traits is actually more important than the latter. Although he does not develop the point, it is clear that the large-scale extension of the calculability of law depends upon the development of the principled conception of sovereignty that absolutism promoted. While royal remissions might still intrude into otherwise ‘rational’ calculations of economic activity and exchange, at the same time traditional aristocratic prerogatives become stripped away. This should not be seen as a process of the uncovering of a ‘cash nexus’ centred in ‘civil society', released from the constraints of pre-existing political supervision. Some who have held such a view have pointed to the fact that in Britain, the ‘home of capitalism',³ Roman law never took a hold.

Certainly it was in British political economy that such interpretations of the ‘rise of civil society' came to be pre-eminent. But this conception does not adequately distinguish the form of law — its promotion of calculability — from distinct codes and procedures associated with it. In regard of the former of these, the influence of Roman law, as a generalized 'inheritance' and as a revitalized phenomenon from the sixteenth century onwards, was considerable everywhere, including areas that did not directly adopt its tenets. Most of the legal codes immediately involved in capitalist enterprise did not in any case derive primarily from Roman law (something also pointed out by Weber). Annuities, stock certificates and bills of exchange arose from a combination of Germanic, English, Italian and Arabic law. Legal provisions for the identity of companies have their origins in part in the medieval corporations and in part in urban law. Moreover, it is not the case that Britain was the 'home of capitalism' if this means the main centre of the spread of commercial and mercantile operations. Capitalism in this sense was first of all most strongly developed elsewhere. Britain became the first 'home of industrial capitalism', but as I have indicated previously this cannot be regarded only as extension of pre-established capitalist enterprise.

The importance of a body of law connected to sovereignty, then — so far as the internal organization of societies goes — is mainly that in specifying the 'political' sphere it at the same time defined a distinct arena of 'economic' transactions. Already containing such a differentiation, Roman law was an important source for consolidating the insulation of the political and the economic. The point is that the 'economic sphere' should not be seen as a residual one, merely left outside the constitutional form of the modern state, as an unincorporated 'civil society'. Rather, it derives from the very same sources as the sphere of sovereignty so elemental to the nature of the modern state.

In saying this 1 do not want to deny the significance of forms of civil law that were not originally primarily promoted by the state, and that universalize possibilities of exchange transactions. Here it is important to accentuate that, although broken up into numerous competing states, post-feudal Europe drew on a common cultural legacy, deriving not only from the remnants of secular Roman influence but from the impact of the Church as a pan-European organization. Some Germanic legal practices, later to have a major role in the development of civil law in Northern and Central Europe, were early on filtered through ecclesiastical sources and through economic transactions in which the Church was directly involved. The divergences between capitalistic activity, as intrinsically ‘transnational’ in character, and the consolidation of the absolutist state, as a territorially bounded formation, were in some respects much less pronounced than might appear. For a common series of legal prescriptions and mechanisms, in some degree already informing commercial transactions of various kinds, facilitated intra-continental economic connections. They even informed the circumstances in which European trading companies related to one another in other parts of the world, in so far as there were regularized economic ties between them.

The expansion of sovereignty was partly achieved through centralization of methods of law enforcement — a matter which applies to the achievement of generalized social discipline as well as to the means of backing up contracts. Weber tends to be rather dismissive of the importance of legal sanctions in relation to the extension of capitalist enterprise. The power of law over economic activity, he points out, weakened in some aspects with the expansion of capitalism, compared with what had sometimes been the case previously. The enforcement of controlled maximum prices, for example, became much more difficult than it was in some prior economic systems. Legal coercion in economic activity is limited in two chief respects. One is to do with the goods possessed by individuals subject to litigation — these may be too few, or of the wrong type, to make good whatever a given contractual obligation entails. Rather than being decreased by a general commodification of products, Weber suggests, this type of difficulty tends to become accentuated. Repayment of defaults in cash becomes, in principle, easier but this only applies to an isolated instance, or set of instances, of the breaking of contracts. Most economic units become so interdependent that there is no way in which legal sanctions could be brought to bear to influence the conduct of overall sectors of the market. The co-ordination of economic agencies has to be left to the negotiated activities of production, pricing and investment, carried on without direct reference to the possibility of coercive sanctions.⁴ A second reason can be found in the relative strength of private economic interests compared to those favouring conformity to codes of law. Where economic opportunities exist, Weber says, the temptation to engage in them will tend to be irresistible, save where they flout strongly held moral imperatives originating in other spheres of life. Thus there will be little chance of making nominal forms of legal compulsion count, given that the promulgator of laws — the state — depends increasingly upon the fruits of capitalistic endeavours for its own continuation.

Whether or not these observations are correct, what they seem to neglect is the significance of a coercive framework of law in relation to property rights — this surely is of great importance to capitalist development. Where most property was in land, ownership rights were usually guaranteed by a mixture of custom and law, bolstered very often by the direct possession of the means of violence by those laying claim to such rights. But where property becomes capital, even landed property, ownership cannot be defended primarily as a ‘sitting claim of possession’. A centralized set of legal codes, backed by effective means of coercion, would seem to be the necessary condition of the defence of ‘private’ rights where these are no longer the ‘visible’ accoutrements of land ownership. Private property, as Marx so consistently stressed, has as its other face the dispossession of masses of individuals from control of their means of production. The incorporation of such individuals as wage-workers within regularized conditions of industrial production belongs mainly to the second phase under discussion (the formation of the nationstate). But the ‘freeing’ of wage-labour was undeniably a major aspect of the early establishing of capitalist enterprise on the grand scale. Without the centralization of a coercive apparatus of law, it is doubtful either that this process could have been accomplished, or that the rights of private property as capital could have become firmly embedded.

The formation of a generalized ‘money economy’ is undoubtedly the sine qua non of widespread commodification. Marx makes this abundantly clear, both in respect of products and of wage-labour. But he does not provide a coherent discussion of the role of the state in the provision and guaranteeing of monetary units. Indeed, we may aptly remark with Perez-Diaz that this is not a direction in which Marx could feasibly have propelled his analysis very far, because it would have tended to undermine his view of the state as resting upon relations of class domination.⁵ Money has always been used for two main purposes — those of payment and exchange — but in traditional states the former tended to predominate over the latter. Even in some large imperial systems, for example the Persian empire, coined money was used almost wholly for the making of payments, usually military ones. It was not necessarily either minted or its value underwritten by agencies of the state, and could co-exist with various other monetary forms. Money has, of course, also been used traditionally for hoarding and some have in fact suggested that this is usually the prime factor making for the use of precious metals as coinage. Prior to seventeenth century Europe, the amount of coinage in circulation tended to be limited by purely technological considerations. Medieval money was made and stamped by hand, and typically involved the labour of up to a dozen craft-workers using different skills. The costs of production were very high — up to a quarter of its value for smaller denominations — and the accuracy of coining was widely variable. Thus the usual practice was to assess coinage in terms of weight.

While Rome did have a standard coinage, more developed than that found in any other traditional state, in the Middle Ages there were numerous localized coinages. The Carolingian coinage system never became more than of marginal importance in most of Europe and was produced by an association of craft-workers, not by any political organization. The influx of precious metals into Europe in the sixteenth and seventeenth centuries without doubt played a key role in making possible the large-scale diffusion of money.⁶ It has often been remarked how much this increased the available wealth in Europe, but probably more important was its conjunctural effect in promoting money as a medium of exchange rather than only of payment or hoarding. For this made possible a transition that combined increased state control over the provision of money with a burgeoning capitalist development in the ‘civil’ sector. It provided the springboard for the emergence of paper money (and subsequently, electronic money).

In analysing the phenomenon of money it is useful to distinguish between ‘commodity money’ — in modern times most notably gold and silver — and paper money.⁷ Commodity money exists where the quantity of the money, assessed in physical units, corresponds to the amount of money on a designated quantitative scale of value. The quantity of commodity money is limited by the availability of the scarce materials used in its fabrication, although the bullion value of the coin may be considerably less than its exchange value in circulation. Commodity money may take the form of paper money. What matters is that it is tied to the existence of a fixed quantity of scarce material; the amount of money which can be generated is limited by the availability of that material. The convertibility of money into gold or silver is not ipso facto an indication of the existence of commodity money. The tying of currencies to the gold standard in the early part of the twentieth century, for example, does not reflect the prevalence of commodity money, since the exchange value of money no longer in any significant fashion depended upon a fixed quantum of scarce material resources. Money has become ‘fiduciary'; that is, dependent upon confidence in the political and economic organizations in which it is produced and through which it is circulated.

In these terms we can readily grasp, in a general way at least, the relation between the development of the modern state and the expansion of a ‘money economy'. The centralization of state power was the necessary condition of the formation of commodity money, in particular making it possible to detach money in circulation from its convertible bullion value. Only where the state is able to create a monopoly of the certification (not necessarily the direct production) of money, via legally accredited means, can a vast impetus towards the commodification of products be achieved. In the absolutist state this process was only incompletely developed, debasement of the coinage being one of the main tactics used to temporarily swell the state’s revenues. While state backing is required for a substantial development of commodity money, the basis of generalized confidence in its value remains closely bound to the value of the scarce material that physically composes it. Commodity money — like the form of state which was its guarantor — is a sort of ‘halfway house’ between the most predominant traditional forms of money and fiduciary money. It is important to see that the development of commodity money is not just a matter of the internal organization of legal tender, but is bound up directly with the reflexive monitoring of the state system. Commodity money, backed by a mixture of the guarantee of an individual state and its bullion value, was the basis for the international exchange of goods in market relations of broad scale and depth. It allowed for a tremendous spread of capitalistic exchange outside the increasingly more consolidated boundaries of the state, but at the same time was in some considerable degree an outcome of that very consolidation.

The condition of the existence of fiduciary money is a fully articulated state apparatus, having administrative power over its own territory and a legal monopoly over internal ‘order' that is more-or-less complete. Commodity money need not be legal tender and confidence can be sustained in it even through the vicissitudes in the material fortunes of particular states, although of course the tendency to revert to ‘bullion value' in circumstances of crisis is an ever-present one. Fiduciary money operates in the absence of such fall-back possibilities, depending upon confidence in the productive capabilities of business organizations within the penumbra of the state, and upon the state’s own guarantees of the value of its currency. It is right to say of fiduciary money that it is, ‘at least in the first instance, national money in the sense that the limits of its general acceptability as the medium of circulation are determined by the domain of exercise of the political power on which the fiduciary money is based’.“ But it is just as essential to emphasize that fiduciary money has from its first origins been international. This is so not just in the sense that it circulates beyond the borders of the states that issue their respective currencies. Fiduciary money has not been the creation merely of individual states but has been tied to an extension of the reflexively monitored state system, and the ‘confidence’ that keeps it afloat has never been confined to the citizenry of the state which is its legal guarantor. The development of fiduciary money — the condition of a global extension of commodified exchange of products — is part and parcel of the formation of a world-wide nation-state system. It should be emphasized again, perhaps, that this does not deny that there may be major conflicts or tensions between the perceived political imperatives of states and those of economic organizations.

\£he development of paper money should not be seen as only a ‘step beyond’ commodity money. Its origins lie in the capital accounting basic to the time-space distanciation of capitalist enterprise. Capital accounting, as I have emphasized, allows for the distancing of economic relations across time-space, facilitating the storage and co-ordination of information used to regularize such relations. In capital accounting, money (as tabulated or indexed costs, profits and losses) is already information, having no physical existence apart from marks upon paper or some other recording medium. The expansion of capitalism thus already presupposes the formation of aspects of money that presage the character it later assumes. Paper money, hence, should not necessarily be thought of as the only concrete form that fiduciary money displays. Fiduciary money maximizes traits inherent in the early development of money as information; thus ‘electronic' money is a furthering of already established trends.

Deferred payment, particularly in the shape of credit, is one of the prime forms of time-space distanciation facilitated by the emergence of a money economy. Credit, or the borrowing of money against profits expected from future transactions, is a major point of connection between the state as guarantor of currency and as the propagator of taxation. Credit can of course be organized in a barter system, or in a system in which coinage is used mainly for payment and for hoarding. But credit possibilities are obviously limited both by difficulties in calculating what is owed and by the need to keep in close contact with the debtor in case of default, especially where the legal means of sanctioning debtors are ill-developed. Money allows for the deferment in time that is the essence of credit. But this cannot be seen as exemplified in a single transaction between creditor and debtor. The point is that, in modern economic orders, credit becomes structured into the circulation of commodities. While it would be something of an exaggeration to see the deferment of payment intrinsic to the exchange of commodities across extended spans of time-space as a form of credit, there is no clear dividing-line between this and credit proper. The expansion of credit transactions was linked in the period of absolutism to the general development of financial markets and independent financial organizations, gaining a major momentum through the provision of resources for war. Girding up for war, as indicated previously, also provided the main impulsion towards the assumption of novel acceleration to the formation of a money economy, because the new forms of taxation were directly monetary in character, and involved the state as both creditor and debtor to the rest of the society.

During the period of absolutism, taxation became ‘fiscal’ in the proper sense of that term, involving the economic organization of a recognized public domain of finance and expenditure. In many ways the development of the modern ‘tax state’ epitomizes the formation of impersonal sovereignty and the insulation of the political and the economic. The tax-collecting activities of traditional states always had a certain ‘public’ character, in so far as the administrative apparatus was involved with co-ordination of tasks relevant to the lives of various segments of the popualtion as a whole. But only with the development of the modern state does it come to be the case that the administrative purview of the state begins to relate to the entire population, integrating its activities with the course of their daily lives. Such a transmutation is accompanied by an expanding range of officialdom, carrying out tasks which are ‘in the public domain’ in the sense that they are no longer linked patrimonially to the ruler’s household. Taxation in the modern state is a means of underwriting the state’s expenses, since productive enterprise is largely carried on outside the scope of its direct control. But taxation also becomes closely bound up with the surveillance operations of the state. Tax policies come to be used both to monitor and to regulate the distribution and the activities of the population, and participate in the burgeoning of surveillance operations as a whole. Taxes, it has been said, ‘are used as tools to increase population (tax burden on bachelors; tax reduction for children), to reduce laziness and to force people to work, to check certain human vices, to influence consumption patterns (particularly conspicuous consumption) and so forth. The education or social goals of such taxes characteristically prevail over the fiscal goals.’⁹ The statement may be somewhat exaggerated in its emphasis and, in my view, applies more to the nation-state than to the transitional form of the absolutist state, but it nonetheless draws attention to one of the main characteristics of modern tax-systems.

Let me concentrate here on the primary theme, the connections between the state, money and taxation, on the one hand, and the commodification of products on the other. Although in some respects there was a reciprocal relation between each of them,

the development of tax collecting and disbursement of taxes provided a major stimulus towards monetization, and fused the twin roles of guarantor of currency and fiscal manager within the sphere of the state. Prebendal taxation privileges were the main basis for the organizing of taxing in feudal Europe. Territorial princes, estates, towns and other corporate bodies enjoyed their own distinct prebendal advantages. In France and elsewhere it was supposed to be the case that the ruler lived exclusively off his own taxation prerogatives, with the Estates only making contributions under special and unusual circumstances. Both the concept and the reality of sovereignty developed in some part from the claim to the dominium eminens, increasingly channelled to meet whatever were designated by the monarch as 'public' needs. As in so many other respects, the seventeenth century was the critical period in the movement towards centralized fiscal policies. Those states that survived or expanded their boundaries were also the states in which the various aspects of taxation, including the specification, collection, administration and disbursement of taxes, were gathered firmly in the hands of the centralized regime.

This much is common-or-garden history of the time, but wherein lay the connections with a rapidly strengthening area of capitalist enterprise? The main factors involved were these. The solidifying, and monetarizing, of taxation in the control of the state apparatus were both expression and instrument of the erosion of the privileges and power of the land-owning aristocracy. They helped to open up the space for the intrusion of commerce and of capitalistic endeavours, at the same time as being facilitated by those endeavours. But they also expanded the areas of commodification of social life in ways in which entrepreneurial enterprise as such probably could not have done. In class-divided societies, tax schemes rested normally upon a mixture of moral \ suasion and force, often subjecting those involved to extreme material deprivation, but for the most part not reordering their day-to-day lives in a significant way. However the new taxation policies, integrated with fiscal management, cut across the types of relationship previously involved in fused politico-economic domination of the old kind. A system of regular direct taxation can only be sustained if those due to pay translate at least a certain proportion of their assets into monetary income. This

does not imply that these individuals were necessarily drawn into commodity markets, but the scope of such markets undoubtedly received a major boost.

Finally, we should not underestimate the importance which state economic direction from the beginning had for the growth of generalized capitalist enterprise. Fiscal management, the influence of the state over money supply, production and consumption do not date only from the later period of the 'interventionist state’ but were in substantial degree necessary conditions of the large-scale expansion of capitalist activity. In the early phases of capitalist development, these have to be seen largely as unintended consequences of policies initiated primarily for other reasons, most particularly the prosecution of war externally and the quelling of discord internally. Only later did they become undertaken deliberately in order to create favourable conditions for the expansion of capitalist production and even then, of course, only in a halting way and against the resistance of landed interests in most countries. The writer who in fact first used the term 'tax state’, Rudolf Goldscheid, regarded warfare as the ‘moving motor of the whole development of public finance’, and certainly one cannot deny this during the period of the absolutist state."’

Central to the emergence of industrial capitalism is the commodification of wage-labour. This cannot be interpreted as simply the working out of some sort of endogenous ‘logic’ of capitalist development but has to be independently explained. The commodification of products, especially as involved with the commercialization of agrarian production, provided one of the causal conditions leading to the ‘freeing’ of a mass wage-labour force from the residual bonds of feudalism. But the commodification of wage-labour — in the shape of an industrial work-force — depended upon a range of circumstances other than those directly involved in the expansion of economic enterprise itself. It will be part of my concern in chapter 7 to analyse these. They are factors directly bound up with the nation-state and its involvement with other states.

My main thesis runs as follows. In industrial capitalism there develops a novel type of class system, one in which class struggle is rife but also in which the dominant class — those who own or control large capital assets — do not have or require direct access to the means of violence to sustain their rule.¹¹ Unlike previous systems of class domination, production involves close and continuous relations between the major class groupings. This presumes a ‘doubling-up’ of surveillance, modes of surveillance becoming a key feature of economic organizations and of the state itself. The process of what — for want of a better phrase — can be called the internal pacification of states is an inherent part of the expanding administrative co-ordination which marks the transition from the absolutist state to the nation-state. It is this internal pacification, which coincided historically with a prolonged period of absence of major wars between the European powers, that is the backdrop against which those in the ‘classic traditions' of liberalism and socialism developed their views of the intrinsically pacific nature of industrial capitalism.

Certain elements of Marx’s characterization of industrial capitalism must be sustained here.¹² It is quite right to claim that the advent of industrial capitalism signals a new type of productive order, in which the buying and selling of labour-power, quantified into temporal units, combines with rapid technological change to inject an extraordinary dynamism into production processes. But (a) Marx’s account is a class-reductionist one, in respects already indicated and to be more fully elaborated upon below; (b) Marx does not analyse in anything like an adequate way the authoritative resources mustered to stabilize industrial capitalism nationally and internationally; and (c) he does not ask what happens to the means of violence ‘extruded’ from the labour contact. [This third phenomenon is admittedly characterized here in a rather crude way, and will have to be developed more precisely. However, my theme will be that the correlate of the internally pacified state — class relationships that rest upon a mixture of ‘dull economic compulsion’ and supervisory techniques of labour management — is the professionalized standing army. The process of internal pacification, I shall argue, is only possible because of the heightened administrative unity that distinguishes the nation-state from previous state forms. On the other hand, this very administrative unity depends upon the ‘infrastructural’ transformations brought into play by the development of industrial capitalism, which help finally to dissolve the segmental character of class-divided societies.

Capitalism and World System Theory

From an early date the development of capitalism in Europe was linked to the political and economic penetration of what became ‘the West' into many other areas of the world. The diffusion of European power, as I have already noted, did not occur in the time-honoured fashion of traditional imperial states, by direct military expension into adjacent areas — with the exception of the recovery of some of the Mediterranean regions occupied by the Ottomans. It occurred mainly via sea-going commercial and military endeavours, connecting Europe to a global system of production and commercial relationships, fuelled by capitalistic economic mechanisms. Of course, colonialism in its various forms is also a highly important associated phenomenon, both in respect of areas in which an existing indigenous population was made subject to European rule and in areas in which European settlers became predominant.

I have frequently criticized elsewhere those standpoints in social science that have adopted endogenous models of social change.¹³ Such models tend to treat ‘societies’ (nominally societies in general but usually meaning, in fact, nation-states) as isolated entities, whose patterns of change can be understood primarily in terms of internal processes. One of the main attractions of what has come to be called ‘world system studies’, associated especially with the work of Wallerstein, is that these specifically oppose any such view. As a generalized critique of endogenous models of change, ‘world system theory’ therefore shares a good deal in common with the approach adopted in this book and the volume preceding it. Since Wallerstein’s main preoccupation is with the impact of post-sixteenth-century Europe upon the rest of the world, there are important substantive points of relevance to my concerns here.

World system studies are concerned with the longue durée of institutional transformation, giving particular emphasis to the discontinuities between modern history and what went before. What Wallerstein calls ‘world economies’ have, according to him, existed previously, but they were very different from what has come into being over the past four centuries or so.¹⁴ States, particularly large imperial ones, have in earlier times been at the centre of long-distance networks of commerce and manufacture, in which there was some degree of regional interdependence in a division of labour stretched across substantial sectors of the globe. The world economy ushered in by the development of capitalism, however, is the first genuine ‘world system' in that it eventually comes to be a fully global phenomenon.

World system theory is offered in conscious contrast to two alternative views which have sought to analyse social change outside Europe since the development of European global hegemony. One, associated mainly with a liberal political stance, is modernization theory; the other, linked primarily with certain versions of Marxism, is dependency theory. The first school of thought usually has proposed endogenous interpretations of change. It focuses upon what has often ingenuously been called ‘nation-building’, in parts of the world other than where nationstates were established relatively early on. Against this type of viewpoint, Wallerstein stresses that ‘We do not live in a modernising world but in a capitalist world.' The so-called ‘modernizing societies' today are not countries that have not yet caught up with the processes of development witnessed in the West. They have been, and are, shaped by their involvement in global economic relationships stemming from the world-wide reach of capitalism. According to Wallerstein:

once capitalism was consolidated as a system and there was no turnback, the internal logic of its functioning, the search for maximum profit, forced it continuously to expand — extensively to cover the globe, and intensively via the constant (if not steady) accumulation of capital, the pressure to mechanise work in order to make possible still further expansion of production, the tendency to facilitate and optimise rapid response to the permutations of the world market by the proletarianisation of labour and the commercialisation of land. That is what modernisation is about, if one wants to use such a contentless word.¹⁵

In advancing this position, Wallerstein is critical of those authors who have looked to the notion of dependency to demonstrate how the West has managed to develop such a prime economic role in the global economic order. According at least to the cruder versions of dependency theory, the prosperity of the capitalist countries is purchased at the expense of the impoverishment of large areas of the remainder of the world. Not only this, but there is held to be a single main set of processes underlying the uneven development of the advanced and the dependent countries. Wallerstein’s views share something in common with these ideas — certainly more than with the proponents of the modernization standpoint — but are also clearly distinguishable from them. The thesis of most of the dependency theorists is that, precisely because of their dependent economic situation, the factors influencing the course of development of peripheral states are different from those pertaining within the advanced capitalist core. In Wallerstein's eyes this is mistaken, because both advanced and ‘dependent' states are parts of a single capitalist economy, world-wide in scope. Peripheral states are certainly seriously disadvantaged in the world economy but I heir paths of development are to be explained in terms of dynamics of that economy as an overall phenomenon. The main phenomena involved are the existence of world-wide capitalist markets and a division of labour in production for those markets.

The capitalist world economy has its origins in the sixteenth century or, rather, Braudel’s ‘long sixteenth century’ running from about 1450 to 1640. In identifying its main features, Wallerstein lays particular stress upon the divergence of state and economic institutions. Previous ‘world economies’ were politically administered by imperial formations. But the capitalist world economy is integrated economically, not politically, having multiple political centres. The core of the system was early on located in north-west and central Europe, with the Mediterranean becoming progessively transformed into its semi-periphery. The notions of core, semi-periphery and periphery all have to do with location in the single economic system composed by the new world economy. In the core areas are found a range of emerging manufacturing industries and relatively advanced forms of agrarian production. Their development adversely affected the semi-peripheral regions, which became ‘retarded’ and were forced into relatively stagnant economic patterns. Towards the conclusion of the long sixteenth century the power of the states in those areas also showed a marked decline. Thus Spain lost its preeminent position and the formerly prosperous city-states of Northern Italy suffered a diminution in their influence. The periphery of the early capitalist core, in Eastern Europe and

Latin America, became dominated by cash-crop production on large estates. These various regions thus became locked into an interdependent division of labour. Their relative standing within the nascent world economy was reflected in their varying political fortunes. The core states were those in which absolutism was most strongly developed, with centralized bureaucratic administrative orders and large standing armies. The periphery, on the other hand, was characterized by ‘the absence of the strong state’. In the eastern marches of Europe there emerged sprinklings of principalities, while in Latin America ‘there was no indigenous state authority at all.’¹⁶ In the semi-periphery, as befits its name, things were somewhere in between.

The divergent experience of states in the three sectors can be traced out by comparing the divergent fortunes of Poland (periphery), Venice (semi-periphery) and England (capitalist core). At the opening of the fifteenth century, Wallerstein says, the social characteristics of Poland were not very different from those of the other two societies. Trade and commerce were fairly vigorous, with commercialized agriculture developing in a progressive fashion. The Polish nobility however managed to enact legislation binding the peasantry to their estates — the so-called ‘second feudalism’ of Eastern Europe. The products of coerced, cash-crop labour were sold directly to markets in the Low Countries and elsewhere, helping to stultify the consolidation of a capitalistic class of entrepreneurs. Financing this trade enmeshed the ruling groups in very large debts to external creditors, from which it proved difficult for them to extricate themselves. By the early years of the seventeenth century, Poland had devolved into an early version of a ‘neocolonial state’¹⁷ linked to a large-scale economy, the main centres of which were elsewhere in Europe.

In Venice conditions were first of all very different. It was itself the core state of a regional economic system and an imperial power with various possessions in the Mediterranean area; it also had far-flung commercial ties across other parts of Europe. The reasons for the decline of Venice are complex, Wallerstein accepts; but as the Baltic and Atlantic became the main arenas of sea-power and trade, Venice was geographically marginalized and a range of factors eroded its erstwhile commercial success, channelling money into the countryside. Venice became ‘deindustrialized' without the total elimination of its commercial and banking activities.

In England, the process was something of a reverse one, as what was initially a relatively rather poor relation of its more glittering Continental neighbours became launched on a path towards economic pre-eminence. The enclosure movements had the effect of completing the break-up of feudal relations that had begun some considerable while before. There existed a reasonably strong state apparatus in England that was able to block efforts of the aristocracy to return to more traditional styles of agrarian production. A diverse system of manufacture for markets, plus an expansion of trade, placed the country in a particularly suitable position to exploit opportunities offered by the expanding capitalist world economy. A key part of Wallerstein’s approach depends upon the idea that phenomena of basic importance to capitalism — including its class system — cannot be interpreted in ‘internalist’ terms but have to be understood in the context of the world economy as a whole. When ‘capitalism’ is seen to refer to the world capitalist economy, we see that it does not involve a single axis of class domination, but two. One is that of wage-labour and capital. But this dimension has from the early origins of capitalism been interwoven with the spatial hierarchy in the ‘international’ division of labour, setting off core from periphery.

From the sixteenth century onwards the capitalist world economy has stretched beyond the European continent to the Americas and eventually to virtually all parts of the globe. As against those who have supposed that it only in the twentieth century that capitalism has in any real sense become a global phenomenon, Wallerstein insists that its world-wide reach was established very early on. ‘Capitalism’, as he puts it bluntly, ‘was from the beginning an affair of the world economy and not of nation states . . . capital has never allowed its aspirations to be determined by national boundaries in a capitalist world economy, and the creation of “national” barriers — generally, mercantilism

—    has historically been a defensive mechanism of capitalists located in states which are one level below the high point of strength in the system.’¹⁸ It is because capitalism is, in a quite essential sense, an economic rather than a political order that it has been able to penetrate into far-flung areas of the world which

—    even if simply because of their distance from the core states — would have been impossible to bring under political sway. The spread of the capitalist world economy, following the 'long sixteenth century', continues the tri-partite sectoral interdependence established in its beginnings. But, of course, the specific geographical locations alter and certain new patterns of core— periphery exploitation are introduced. A growing need for raw materials was the principal factor underlying the colonization or enforced incorporation of new regions within the world economy. These materials were mostly produced through the setting up of what Wallerstein loosely calls 'plantation systems’ — forms of production based upon the use of large areas of land and involving coerced labour rather than legally 'free' wage^Jlabour as in the core countries.

With the further development of the world system, the more directly coercive aspects of cash-crop labour became lessened. Serfdom, slavery, peonage were abolished. Wallerstein proposes various reasons for this. The gradual incorporation of zones previously outside the world capitalist economy — those, for instance, from which slaves were derived — elevated the cost of systems of forced labour and generally made them less practicable. The political expense of maintaining control over plantation systems rose, since 'the process of maintaining relative social peace in the core areas required the elaboration of various ideological schemes of “freedom”, which had the inconvenience that the concept spread to realms for which it was not intended.’¹⁹ Finally, Wallerstein says, converging here with the argument of Weber, the increasing adoption of employment policies approximating to 'free wage-labour' in the Western sense was prompted by the fact that they prove in the end to be more economic than coerced labour. Those who pay the workers' wages are not directly responsible for providing the reproduction of their families.

The importance of Wallerstein’s contributions is considerable. In providing a critique of endogenous conceptions of social change, he also develops what has proved to be an empirically fruitful interpretation of the nature and dynamics of capitalist enterprise. It is an interpretation that strongly emphasizes the regionalization of political and economic systems and which, thereby, lays stress upon spatial features of social organization and change. By pointing to the differences that separate the capitalist world economy from imperial formations, Wallerstein helps demonstrate the discontinuities between modern world history and what went before. Nonetheless, there are a range of criticisms that should be made about his views, which serve quite sharply to distinguish the position I wish to advance from them.²⁰ It is important to make these differences of standpoint clear since, although Wallerstein is critical of a number of well-established viewpoints which I also want to attack, his formulations do not offer a framework within which the main problems with which this book is concerned can be satisfactorily addressed.

Wallerstein’s conception of ‘capitalism’ is suspect, something which tends to have consequences for various other aspects of his discussion of the dynamics of the capitalist world economy. He persistently identifies capitalism with sale of products in a market for profit, a definition which oddly is closer to that of Weber than it is to that of Marx, in spite of Wallerstein’s claimed affiliation to a Marxist standpoint. In emphasizing markets, Wallerstein’s view obscures the significance of the commodification of labour power as distinctive of capitalist production and, therewith, some of the most consequential dynamics of capitalist class structure. To some extent this is because he stresses too much the external involvement of states in the developing world system.²¹ But there is a more subtle and telling way of putting the same point. One cannot interpret what (he meaning of ‘internal’ compared to ‘external’ influences is without an analysis of the consolidation of the modern state as a political form. For Wallerstein the existence of separate states seems to be largely a historical residue of the fact that capitalism came into being within a pre-formed state system. While he is quite right to point to the significance of this

— that is the contrast between the history of Europe following the demise of the Roman Empire and the history of the other world civilizations' — the formation of the modern state, including the nation-state, is left unexplicated.

Wallerstein’s arguments involve an uncomfortable amalgam of functionalism and economic reductionism. In these respects they are certainly closer to commonly held presumptions of Marxism. The functionalism involved in Wallerstein’s writings is evident and quite pervasive, but perhaps one example of it will serve to make the point. The existence of semi-peripheral regions is explained by reference to the ‘needs’ of the world system. It is an

order based upon unequal distribution of reward, and as such, he says, ‘must constantly worry’ about the possible dissention of those who are most ill-favoured within it.²² Disruptive consequences could come about if the high-income sector were directly confronted by low-income, deprived ones. Such confrontation is avoided by the spatial separation of one from the other provided by the development of the semi-peripheral regions. This sort of observation would be defensible if it were offered simply as an interpretation of the results of the formation of semi-peripheral areas, but becomes illegitimately teleological when posed in the manner suggested by Wallerstein. More damaging, however, than its functionalist connotations is the marked tendency of Wallerstein’s standpoint to downplay the impact of specifically political and military factors upon processes of social change in the modern world. States appear as territorial subdivisions within gross economic sectors of the world economy, not as organizations able to mobilize forms of power other than economic power and with interests other than economic interests. The multiplicity of states within the world economy is interpreted in two main ways (each of which continues in a functionalist vein). One is that the absence of a single political authority prevents any general control of the world system and thus the potential curbing of the worldwide scope of capitalist enterprise. The other is that separate states can often provide the means for the core elements of capitalism to preserve their advantages at the expense of those in the disfavoured sectors of the world economy. The core states are able to defend their privileged position within the system of ‘unequal exchange’.

Concentration upon economic relationships within world markets also infects Wallerstein’s tri-partite classification of states. The concepts of ‘core’, ‘semi-periphery’ and ‘periphery’ are obviously in any case fairly crude, as are their rough counterparts in other writing of ‘First’, ‘Second’ and ‘Third’ worlds. Political and military strength are not straightforwardly an expression of economic development, even if closely related to it. This leads to definite oddities in Wallerstein’s mode of classifying societies. A good example is his placing of the Soviet Union within the world system. It is no doubt the case that the USSR operates within a world economy dominated by capitalistic mechanisms. Wallerstein appears to hedge his bets somewhat about the USSR, but still treats it as at most on the margins of the ‘core’. As I have remarked earlier in the book, even if this were a feasible view economically speaking, it is plainly fatuous in politico-military terms when the Soviet Union is one of the two ‘super-powers’ that dominate the modern world system. This means acknowledging that the world system is not only formed by transnational economic connections and interdependencies, but also by the global system of nation-states, neither of which can be exhaustively reduced to the other.

These observations have to be extended to include democratization and modernity more generally. Wallerstein’s comments about the unintended consequences of the exportation of ideas of ‘freedom’ and ‘democracy’ are surely too gratuitous to be acceptable. Virtually all states in the world today lay claim to being democratic. This is clearly not something that can merely be understood as (he result of some sort of unexplicated ideological accompaniment of the spread of capitalism. The impact of political ideas and motives cannot be explained away as matters of economic expediency. I shall argue below that the factors involved in the extension of ‘democracy’ — leaving aside for the moment how that term might best be conceptualized — are closely bound up with the nature of the nation-state. A tendency to see them as of rather marginal importance is closely connected with the failure to acknowledge the independent significance of political and military power in shaping ‘international relations’.

Most of Wallerstein’s criticisms of ‘modernization theory’ are well-taken and apt. But it is not altogether possible to avoid use of concepts of modernity, or equivalent terms. The discontinuities associated with the ascendant position of Europe are not limited to economic transactions, but range much more broadly. In chapter 7 I shall further develop the thesis that four partly separable clusters of institutions have been generated by the convergent development of capitalism, as an economic order, and the nation state, as a political form. It is through these that the generalized impact of modernity can be understood and its implications for both current and potential future modes of social organization traced out.

In what sense, then, is it worth talking of the emergence of a ‘world system’ from the sixteenth century onwards and what is the specific nature of its connections with the expansion of capitalism? I shall have more to say on these issues later and my comments here will be limited and general. The early development of capitalism was indeed predicated upon an insulation of the political and the economic not only internal but external to the territorially bounded state. The external relations involved are broadly speaking those pointed to by Wallerstein, connecting a multiplicity of states within an economic order which none of them wholly control, although over which some have much more influence than others. This economic order is one largely constituted of market relationships, and thus is not a simulacrum of the organization of capitalism within states in respect of class divisions. It is, nonetheless, one in which strongly defined imbalances are created and perpetuated. The global reach of the economic relations stimulated by — although not even as economic relations wholly reducible to — the spread of capitalism can accurately be called a ‘system’, and a single system, as long as certain reservations about that notion are borne in mind.²¹ A system should not be regarded, in this connotation at least, as a unified and coherent whole. Rather, the term refers to certain relations of interdependence, which may be diffuse and fractured, and may involve imbalances of power. The concepts of core, semi-periphery and periphery should only be used with considerable caution to describe the regionalization of the world system. They are general, indicative notions rather than ones that have any precision and, in any concrete analyses more precise designations are called for. The ‘world capitalist economy’ refers only to one particular aspect of the world system, not to it in its entirety. Of equal importance is the state system, especially in the later period at which it becomes a globally encompassing nationstate system. More abstractly put, this means giving due weight to the effects of political and military power in the shaping of the international order. The very term 'international' only has full meaning with the emergence of nation-states which, because of their strictly demarcated character, give a very particular shape to ‘internal’ versus 'external' relations. )