Chapter 36: Pre-Capitalist Relations

The development of usurer’s capital is bound up with that of merchant’s capital, and particularly with that of money-dealing capital. In ancient Rome, from the latter phases of the Republic onwards, although manufacture stood at a much lower level than the average for the ancient world, merchant’s capital, money-dealing capital and usurer’s capital – in the ancient form – were developed to their highest point.

We have already seen how hoard formation necessarily arises along with money. But the professional hoarder only becomes important when he transforms himself into a money-lender.

The merchant borrows money to make a profit with it, to use it as capital, i.e. to lay it out. Even in the earlier forms, therefore, the money-lender confronts him in precisely the same way as he does the modern capitalist. This specific relationship was even perceived by the Catholic universities.

‘The universities of Alcalá, Salamanca, Ingolstadt, Freiburg im Breisgau, Mainz, Cologne and Trier successively acknowledged the legality of interest on commercial loans. The first five of these approvals are deposited in the consulate archives of the city of Lyons, and are printed in the appendix to the Traité de l’usure et des intérêts by Bruyset-Ponthus, Lyons’ (M. Augier, Le Crédit public, etc., Paris, 1842, p. 206).

In all forms where the slave economy (not patriarchal slavery, but rather that of the later phases of the Greco-Roman era) exists as a means of enrichment, and where money is thus a means for appropriating other people’s labour by the purchase of slaves, land, etc, money can be valorized as capital and comes to bear interest precisely because it can be invested in this way.

Two of the forms in which usurer’s capital exists in phases prior to the capitalist mode of production are particularly characteristic. I deliberately use the word ‘characteristic’, for the same forms recur on the basis of capitalist production, though here they are merely subordinate forms. In the latter case they are no longer forms that determine the character of interest-bearing capital. These two forms are, firstly, usury by lending money to extravagant magnates, essentially to landed proprietors; secondly, usury by lending money to small producers who possess their own conditions of labour, including artisans, but particularly and especially peasants, since, wherever pre-capitalist conditions permit small autonomous individual producers, the peasant class must form their great majority.

Both of these things, the ruining of rich landed proprietors by usury and the impoverishment of the small producers, lead to the formation and concentration of large money capitals. But the extent to which this process abolishes the old mode of production, as was the case in modern Europe, and whether it establishes the capitalist mode of production in its place, depends entirely on the historical level of development and the conditions that this provides.

Usurer’s capital, as the characteristic form of interest-bearing capital, corresponds to the predominance of petty production, of peasants and small master craftsmen working for themselves. Where, as in the developed capitalist mode of production, the conditions of production and the product of labour confront the worker as capital, he does not have to borrow any money in his capacity as a producer. When he does borrow, this is for personal necessity, as at the pawnshop. When the worker is, on the other hand, the proprietor of his conditions of labour and his product, in reality or in name, then it is as a producer that he relates to the money-lender’s capital, which confronts him as usurer’s capital. Newman puts the matter rather inanely when he says that the banker is respected, while the usurer is hated and despised, because the former lends to the rich and the latter to the poor (F. W. Newman, Lectures on Political Economy, London, 1851, p. 44). He overlooks the fact that a difference between two social modes of production and the social arrangements corresponding to them is involved here, and the question cannot just be resolved into the contrast between rich and poor. Rather, the usury that impoverishes the poor petty producer goes hand in hand with the usury that ruins the rich landed proprietor. As soon as the usury of the Roman patricians had completely ruined the Roman plebeians, the small farmers, this form of exploitation came to an end, and the petty-bourgeois economy was replaced by a pure slave economy.

In the form of interest, the usurer can in this case swallow up everything in excess of the producers’ most essential means of subsistence, the amount that later becomes wages (the usurer’s interest being the part that later appears as profit and ground-rent), and it is therefore quite absurd to compare the level of this interest, in which all surplus-value save that which accrues to the state is appropriated, with the level of the modern interest rate, where interest, at least the normal interest, forms only one part of this surplus-value. This is to forget that the wage-labourer produces and yields to the capitalist who employs him profit, interest and ground-rent, in short the entire surplus-value. Carey makes this absurd comparison in order to show the great advantage for the worker of the development of capital and the accompanying fall in the interest rate. If the usurer, not content with extracting his victim’s surplus labour, gradually obtains the ownership title to his conditions of labour themselves – land, house, etc. – and consistently sets out to expropriate him in this way, it should still not be forgotten that this complete expropriation of the worker from his conditions of labour is not a result towards which the capitalist mode of production tends, but rather the given presupposition from which it proceeds. The wage-slave is just as much excluded by his position as the slave proper from being a debt slave, at least in his capacity as producer; if he can become so at all, it is in his capacity as consumer. Usurer’s capital, in this form where it actually appropriates all the surplus labour of the direct producer, without altering the mode of production; where the producers’ ownership or possession of their conditions of labour (and the isolated petty production corresponding to this) is an essential precondition; where capital therefore does not directly subordinate labour, and thus does not confront it as industrial capital – this usurer’s capital impoverishes the mode of production, cripples the productive forces instead of developing them, and simultaneously perpetuates these lamentable conditions in which the social productivity of labour is not developed even at the cost of the worker himself, as it is in capitalist production.

Usury thus works on the one hand to undermine and destroy ancient and feudal wealth, and ancient and feudal property. On the other hand it undermines and ruins small peasant and petty-bourgeois production, in short all forms in which the producer still appears as the owner of his means of production. In the developed capitalist mode of production, the worker is not the owner of his conditions of production, the farm that he cultivates, the raw material he works up, etc. This alienation of the conditions of production from the producer, however, corresponds here to a real revolution in the mode of production itself. The isolated workers are brought together in the large workshop for specialized and interlocking activity; the tool is replaced by the machine. The mode of production itself no longer permits the fragmentation of the instruments of production that is linked with petty property, any more than it permits the isolation of the workers themselves. In capitalist production, usury can no longer divorce the conditions of production from the producer, since they are already divorced.

Where the means of production are fragmented, usury centralizes monetary wealth. It does not change the mode of production, but clings on to it like a parasite and impoverishes it. It sucks it dry, emasculates it and forces reproduction to proceed under ever more pitiable conditions. Hence the popular hatred of usury, at its peak in the ancient world, where the producer’s ownership of his conditions of production was at the same time the basis for political relations, for the independence of the citizen.

As long as slavery prevails, or the surplus product is consumed by the feudal lord and his retinue, the mode of production still remains the same even though slaveowner or feudal lord fall prey to usury; it simply becomes harsher for the workers. The indebted slaveowner or feudal lord takes more out of them, since more is taken from him. Ultimately, he may be completely replaced by the usurer, who himself becomes a landowner or slaveowner as the knights did in ancient Rome. In place of the old exploiter, whose exploitation was more or less patriarchal, since it was largely a means of political power, we have a hard, money-grubbing upstart. But the mode of production itself remains unaltered.

Usury has a revolutionary effect on pre-capitalist modes of production only in so far as it destroys and dissolves the forms of ownership which provide a firm basis for the articulation of political life and whose constant reproduction in the same form is a necessity for that life. In Asiatic forms, usury can persist for a long while without leading to anything more than economic decay and political corruption. It is only where and when the other conditions for the capitalist mode of production are present that usury appears as one of the means of formation of this new mode of production, by ruining the feudal lords and petty production on the one hand, and by centralizing the conditions of labour on the other.

In the Middle Ages, there was no generally prevailing interest rate in any country. The Church prohibited all interest dealings from the start. Laws and courts gave little security for loans. All the higher was the interest rate in particular cases. The low monetary circulation and the need to make most payments in cash compelled people to borrow money, and all the more so, the more undeveloped the system of bills of exchange. There was great variation in both the rate of interest and the concept of usury. In Charlemagne’s time, it was considered usurious to take 100 per cent interest. At Lindau am Bodensee in 1344, some local burghers took 216 2/3 per cent. In Zurich the town council fixed 43 1/3 per cent as the legal interest. In Italy, 40 per cent had to be paid on occasion, though from the twelfth century to the fourteenth the rate did not usually exceed 20 per cent. Verona settled on 12 1/2 per cent as the legal interest. Emperor Frederick II fixed 10 per cent, but this was only for the Jews. He would not decree for Christians. 10 per cent was already common in the German Rhineland in the thirteenth century. (Hüllmann, Geschichte des Städtewesens, II, pp. 55–7.)

Usurer’s capital has capital’s mode of exploitation without its mode of production. This relationship also recurs within the bourgeois economy in backward branches of industry, or those that are struggling against the transition to the modern mode of production. In comparing the English rate of interest with the Indian, for example, we must not take the Bank of England’s interest rate but rather that charged, for instance, by people lending small machines to petty producers in domestic industry.

Usury is historically important, in contrast to wealth devoted entirely to consumption, as being itself a process giving rise to capital. Usurer’s capital and mercantile wealth bring about the formation of a monetary wealth independent of landed property. The less developed is the character of the product as a commodity, the less exchange-value has taken command of production in its whole breadth and depth, the more does money appear as wealth as such, wealth proper, wealth in general, as against its restricted form of appearance in use-values. Hoard formation depends on this. Leaving aside money as world money and as hoard, it is particularly in the form of means of payment that it emerges as the absolute form of the commodity. And it is particularly its function as means of payment that develops interest and with it money capital. What wealth for extravagance and corruption wants is money as money, money as a means to buy everything. (Also for paying debts.) What the petty producer needs money for above all is for payment. (The transformation of services in kind and deliveries to landlords and the state into money rents and money taxes plays a major role here.) In both cases money is needed as money. On the other hand, it is only in usury that hoard formation becomes a reality for the first time and fulfils its dreams. What is sought from the hoard owner is not capital but rather money as money; but through interest he transforms this money hoard, as it is in itself, into capital – into a means by which he takes partial or complete command of surplus labour, and in this way of a portion of the conditions of production themselves, even if these nominally still confront him as someone else’s property. Usury seems to live in the pores of production, like the gods in Epicurus’s intermtmdia.* It is all the more difficult to get money, the less the commodity form has become the general form of the product. The usurer therefore does not come up against any barrier except the incapacity of those in need of money to pay or their capacity to resist. In small peasant and petty-bourgeois production, money is used principally as means of purchase when the worker loses his conditions of production by accident or some extraordinary dislocation (the worker being generally still their owner in these systems of production), or at least when they are not replaced in the ordinary course of reproduction. Means of subsistence and raw materials form an essential part of these conditions of production. A rise in their price can make it impossible to replace them from the proceeds of the product, just as simple harvest failure can prevent the peasant from replacing his seed corn in kind. The same wars through which the Roman patricians ruined the plebeians, forcing them into war services which prevented them from reproducing their conditions of labour, and hence pauperized them (and pauperization, curtailment or loss of the conditions of reproduction, is the prevailing form here), filled the stores and vaults of the former with plundered copper, the money of the time. Instead of providing the plebeians directly with the commodities they needed – corn, horses, cattle, etc. – they lent them this copper, which was of no use to themselves, and made use of the situation to extort enormous and usurious levels of interest, thereby making the plebeians into their debt slaves. The French peasants under Charlemagne were similarly ruined by wars, so that nothing remained for them but to exchange the position of debtor for that of serf. In the Roman Empire it frequently happened, as is well known, that famine led free men to sell their children and themselves as slaves to the rich. So much for general turning-points. When considered in detail, the preservation or loss of the petty producers’ conditions of production depends on a thousand accidental circumstances, and each such accident or loss means impoverishment and is a point at which the parasite of usury can seize hold. The peasant only needs one of his cows to die and he is immediately unable to repeat his reproduction on the old scale. He falls prey to usury, and once in that position he never recovers his freedom.

Yet the proper, principal and specific terrain of usury is still the function of money as means of payment. Any monetary obligation – rent, interest, tribute, tax, etc. – that falls due at a certain date brings with it the need for a money payment. This is why usury so generally attaches to tax farmers, fermiers généraux, receveurs généraux, from ancient Rome through to modern times. With trade and the generalization of commodity production, purchase and payment become separate in time. Money has to be provided at a particular date. The modern money crises show how even today this can lead to circumstances in which money capitalist and usurer merge into one. This very usury, however, becomes a major means of extending the need for money as means of payment, since it drags the producer deeper and deeper into debt and destroys his customary means of payment in that the interest burden itself makes his regular reproduction impossible. Here usury springs from money as means of payment, and broadens this function of money, its most specific terrain.

The credit system develops as a reaction against usury. But this should not be misconstrued, nor by any means taken in the sense of the ancient writers, the Fathers of the Church, Luther or the early socialists. It means neither more nor less than the subordination of interest-bearing capital to the conditions and requirements of the capitalist mode of production.

In the modern credit system, interest-bearing capital becomes adapted on the whole to the conditions of capitalist production. Usury proper not only continues to exist, but in countries of developed capitalist production it is freed from the barriers that former legislation had always placed to it. Interest-bearing capital retains the form of usurer’s capital vis-à-vis persons and classes, or in conditions where borrowing in the sense appropriate to the capitalist mode of production does not and cannot occur; where borrowing results from individual need, as at the pawnshop; where borrowing is for extravagant consumption; or where the producer is a non-capitalist producer, a small peasant, artisan, etc., i.e. is still the possessor of his own conditions of production as a direct producer; finally where the capitalist producer himself operates on so small a scale that his situation approaches that of those producers who work for themselves.

What distinguishes interest-bearing capital, in so far as it forms an essential element of the capitalist mode of production, from usurer’s capital is in no way the nature or character of this capital itself. It is simply the changed conditions under which it functions, and hence also the totally transformed figure of the borrower who confronts the money-lender. Even where a man without means obtains credit as an industrialist or merchant, it is given in the expectation that he will function as a capitalist, will use the capital borrowed to appropriate unpaid labour. He is given credit as a potential capitalist. And this fact so very much admired by the economic apologists, that a man without wealth but with energy, determination, ability and business acumen can transform himself into a capitalist in this way – just as the commercial value of each person is always assessed more or less correctly in the capitalist mode of production – much as it constantly drives an unwelcome series of new soldiers of fortune onto the field alongside and against the various individual capitalists already present, actually reinforces the rule of capital itself, widens its basis and enables it to recruit ever new forces from the lower strata of society. The way that the Catholic Church of the Middle Ages built its hierarchy out of the best brains in the nation, without regard to status, birth or wealth, was likewise a major means of reinforcing the rule of the priests and suppressing the laity. The more a dominant class is able to absorb the best people from the dominated classes, the more solid and dangerous is its rule.

Instead of anathema against interest-bearing capital in general, the founders of the modern credit system proceed from its express recognition.

We are not referring here to the reaction against usury which sought to protect the poor from it, such as the Monts-de-piété (1350 at Sarlins in Franche-Comté later at Perugia and Savona in Italy – 1400 and 1479). These are noteworthy only because they display the historical irony which turns pious wishes into their very opposite when they are realized. 100 per cent is a conservative estimate for the interest that the English working class pay to the pawnshops, these off-shoots of the Monts-de-piété.21 Just as little do we have in mind the credit fantasies of such men as Dr Hugh Chamberleyne and John Briscoe, who tried to emancipate the English aristocracy from usury in the last decade of the seventeenth century by way of a land bank with paper money based on landed property.²²

The credit associations set up in the twelfth and fourteenth centuries in Venice and Genoa arose from the need of the sea trade and the wholesale trade based on it to emancipate themselves from the rule of old-fashioned usury and from the monopolizing of money-dealing. If the banks proper that were founded in these urban republics were at the same time institutions for public credit, from which the state received advances against taxes anticipated, it should not be forgotten that the merchants who formed these associations were themselves the most prominent people in those states and were equally interested in emancipating both their government and themselves from usury,23 while at the same time subordinating the state more securely to themselves. When the Bank of England was to be founded, the Tories objected that banks were republican institutions. Flourishing banks existed in Venice, Genoa, Amsterdam and Hamburg. But who ever heard of a Bank of France or Spain?

The Bank of Amsterdam (1609) was not a milestone in the development of the modern credit system, any more than that of Hamburg (1619). It was simply a bank for deposits. The cheques that the bank issued were in actual fact simply receipts for the coined and uncoined precious metal deposited with it and circulated only with the endorsement of their recipients. But in Holland, commercial credit and dealing in money did develop along with trade and manufacture, and by the course of development itself, interest-bearing capital became subordinate to industrial and commercial capital. This was already evident from the low level of its interest rate. In the seventeenth century, however, Holland served as the model country of economic development, just as England does today. The monopoly of old-fashioned usury, based on poverty, was thrown overboard there automatically.

Right through the eighteenth century we hear the cry for a compulsory reduction in the interest rate, with reference being made to Holland, and legislation proceeds in the same direction; the aim being to subordinate interest-bearing capital to commercial and industrial capital, instead of vice versa. The leading spokesman is Sir Josiah Child, the father of normal English private banking. He declaims against the monopoly of the usurers in the same way that the off-the-peg tailors Moses and Son attack the monopoly of the bespoke tailors. This Josiah Child is also the father of English stock-jobbing. As autocrat of the East India Company, he defends its monopoly in the name of free trade. Against Thomas Manley (Interest of Money Mistaken) he says: ‘As the champion of the timid and trembling band of usurers he erects his main batteries at that point which I have declared to be the weakest… he denies point-blank that the low rate of interest is the cause of wealth and vows that it is merely its effect’ (Traités sur le commerce, etc., 1669, trs. Amsterdam and Berlin, 1754 [p. 120]). ‘If it is commerce that enriches a country, and if a lowering of interest increases commerce, then a lowering of interest or a restriction of usury is doubtless a fruitful primary cause of the wealth of a nation. It is not at all absurd to say that the same thing may be simultaneously a cause under certain circumstances, and an effect under others’ (ibid., p. 155). ‘The egg is the cause of the hen, and the hen is the cause of the egg. The lowering of interest may cause an increase of wealth, and the increase of wealth may cause a still greater reduction of interest’ (ibid., p. 156). ‘I am the defender of industry and my opponent defends laziness and sloth’ (p. 179).

This violent struggle against usury, the demand for the subjection of interest-bearing capital to industrial capital, is simply the prelude to the organic creations that these conditions of capitalist production produce in the form of the modern banking system, which on the one hand robs usurer’s capital of its monopoly, since it concentrates all dormant money reserves together and places them on the money market, while on the other hand restricting the monopoly of the precious metals themselves by creating credit money.

Just as in this case with Child, so opposition to usury can be found in all English writings on banking in the last third of the seventeenth century and the beginning of the eighteenth: the demand for the emancipation of trade and industry from usury, as well as the state. Also colossal illusions about the miraculous effect of credit, of the removal of the monopoly held by precious metals and their replacement by paper, etc. The Scot William Paterson, founder of the Bank of England and the Bank of Scotland, is in every way Law the First.*

Against the Bank of England, ‘all goldsmiths and pawnbrokers set up a howl of rage’ (Macaulay, History of England, IV [London, 1855], p. 499). ‘During the first ten years the Bank had to struggle with great difficulties; great foreign feuds; its notes were only accepted far below their nominal value… the goldsmiths’ (in whose hands the trade in precious metals served as the basis of a primitive banking business) ‘were jealous of the Bank, because their business was diminished, their discounts were lowered, their transactions with the government had passed to their opponents’ (J. Francis, op. cit., p. 73).

Even before the foundation of the Bank of England, a plan for a National Bank of Credit had already been drawn up in 1683, its purpose being, among other things: ‘that tradesmen, when they have a considerable quantity of goods, may, by the help of this bank, deposit their goods, by raising a credit on their own dead stock, employ their servants, and increase their trade, till they get a good market instead of selling them at a loss.†

After much trouble, this Bank of Credit was established in Devonshire House on Bishopsgate Street. It lent to industrialists and merchants, on security of three-quarters of the value of commodities deposited, in the form of bills of exchange. In order to give these bills currency, a number of people in each branch of business combined together to form a company, from which anyone possessing this bank’s bills was supposed to receive commodities for them with the same ease as if he offered cash payment. The bank did not do a flourishing business. The machinery was too complicated, and the risk involved in the depreciation of commodities too great.

If we concentrate on the real content of these writings, which were the theoretical accompaniment to the formation of the modern credit system in England and helped to foster it, we find nothing in them but the demand for the subjugation of interest-bearing capital and loanable means of production in general to the capitalist mode of production, as one of its preconditions. If we just look at the phrases used, the way they coincide with the banking and credit illusions of the Saint-Simonians is often astonishing, right down to the very words.

Just as for the Physiocrats the ‘cultivateur’ does not mean the actual worker on the land, but rather the big farmer, so Saint-Simon’s ‘travailleur’ is not the worker but rather the industrial and commercial capitalist, and this usage is still current with his disciples.

‘A travailleur [worker] needs helpers, supporters, ouvriers [labourers – Marx emphasizes the word in the French quotation]; he looks for intelligent, adept and devoted ones; he puts them to work, and their labour is productive’ ([Enfantin,] Religion saint-simonienne. Économie politique et politique, Paris, 1831, p. 104).

It should in no way be forgotten that it was only in his last work, Le Nouveau Christianisme, that Saint-Simon directly emerged as a spokesman for the working class and declared its emancipation to be the final goal of his endeavours. All his earlier writings are in fact simply a glorification of modern bourgeois society against feudal society, or of the industrialists and bankers against the marshals and law-mongers of the Napoleonic era. How different from the contemporary writings of Owen!²⁴ Even for his followers, as the passage quoted shows, the industrial capitalist remains the travailleur par excellence. If one reads his writings critically, it is no surprise that the realization of his credit and banking dreams was the Crédit Mobilier * founded by the ex-Saint-Simonian Émile Péreire, a form that incidentally could come to such prominence only in a country like France, where neither the credit system nor large-scale industry was developed to the modern level. In England and America this kind of thing would have been impossible. In the following passages from the Doctrine de Saint-Simon. Exposition. Première année, 1828/29, 3rd edn, Paris, 1831, we already have the Crédit Mobilier in a nutshell. It is easy to understand how the banker can make cheaper advances than the capitalist and private usurer. And so it is also possible for this banker ‘to provide the industrialist with his tools more cheaply, i.e. at lower interest, than the landlords and capitalists could do, as these could more easily be mistaken in their choice of borrower’ (p. 202).

But the author himself adds in a footnote:

‘The advantage that was supposed to follow from the intervention of the banker between the idle capitalist and the travailleurs is often outweighed and even destroyed by the opportunity that our disorganized society offers for egoism to hold sway, in the various forms of fraud and charlatanry; the bankers often intervene between travailleurs and idle capitalists simply to exploit both sides to the detriment of society.’

Travailleur here stands for capitaliste industriel. It is wrong, incidentally, to view the resources that the modern banking system has at its disposal simply as the resources of idle capitalists. In the first place, these resources include the portion of capital that industrialists and merchants keep temporarily unoccupied in the money form, as a money reserve or as capital still to be invested, i.e. idle capital, but not the capital of the idle; secondly, that portion of everyone’s revenues and savings that is permanently or temporarily set aside for accumulation. And both of these are essential to the character of the banking system.

It must never be forgotten, however, firstly that money in the form of precious metal remains the foundation from which the credit system can never break free, by the very nature of the case. Secondly, that the credit system presupposes the monopoly possession of the social means of production (in the form of capital and landed property) on the part of private individuals, that it is itself on the one hand an immanent form of the capitalist mode of production and on the other hand a driving force of its development into its highest and last possible form.

As was already asserted in 1697, in Some Thoughts of the Interests of England, the banking system, by its organization and centralization, is the most artificial and elaborate product brought into existence by the capitalist mode of production. Hence the tremendous power an institution such as the Bank of England has over trade and industry, even though their actual movement remains completely outside its orbit and it behaves quite passively towards them. Such a bank, however, supplies the form of a general book-keeping and distribution of the means of production on a social scale, even if only the form. We have seen that the average profit of the individual capitalist, or of any particular capital, is determined not by the surplus labour that this capital appropriates first-hand, but rather by the total surplus labour that the total capital appropriates, from which each particular capital simply draws its dividends as a proportional part of the total capital. This social character of capital is mediated and completely realized only by the full development of the credit and banking system. On the other hand this also goes further. It places all available and even potential capital that is not already actively committed at the disposal of the industrial and commercial capitalists, so that neither the lender nor the user of this capital are its owners or producers. It thereby abolishes the private character of capital and thus inherently bears within it, though only inherently, the abolition of capital itself. Through the banking system, the distribution of capital is removed from the hands of the private capitalists and usurers and becomes a special business, a social function. Banking and credit, however, thereby also become the most powerful means for driving capitalist production beyond its own barriers and one of the most effective vehicles for crises and swindling.

The banking system further shows, by substituting various forms of circulating credit for money, that the latter is in actual fact nothing but a special expression of the social character of labour and its products, which however, as antithetical to the basis of private production, must always present itself in the last instance as a thing, as a particular commodity alongside other commodities.

Finally, there can be no doubt that the credit system will serve as a powerful lever in the course of transition from the capitalist mode of production to the mode of production of associated labour; however, only as one element in connection with other large-scale organic revolutions in the mode of production itself. On the other hand, illusions about the miraculous power of the credit and banking system, in the socialist sense, arise from complete ignorance about the capitalist mode of production and about the credit system as one of its forms. As soon as the means of production cease to be transformed into capital (which also means the abolition of private property in land), credit as such no longer has any meaning, something incidentally that even the Saint-Simonians have realized. As long as the capitalist mode of production persists, however, interest-bearing capital persists as one of its forms, and in fact forms the basis of its credit system. Only that same sensationalist writer who wanted commodity production to continue while money was abolished (Proudhon) could dream up the enormity of a crédit gratuit [interest-free credit], the ostensible realization of the pious wish arising from the petty-bourgeois standpoint.25

In the Religion saint-simonienne. Économie politique et politique, we may read on p. 45: ‘The purpose of credit is that in a society where some people possess tools for industry without the ability or the will to use them, while other industrious people possess no instruments of labour, these instruments can be transferred in the easiest possible manner from the hands of the former, their owners, to others who know how to use them. Let us note that according to this definition credit is a result of the manner and form in which property is constituted.’

Thus credit disappears together with this constitution of property. It is further said, on p. 98, that the banks of today ‘consider themselves destined to follow the movement initiated by transactions outside their own domain, but not to provide the impulse for these themselves; in other words, the banks play the role of capitalists for the travailleurs to whom they advance capital’.

The Crédit Mobilier is latent already in the idea that the banks should take over this leadership themselves, and should excel ‘by the number and usefulness of the firms they control and the works they have promoted’ (p. 101).

In the same way, Constantin Pecqueur demands that the banks (called by the Saint-Simonians ‘système général des banques’) should ‘govern production’. Pecqueur is essentially always a Saint-Simonian, even if far more radical. He wants ‘the credit institution… [to] govern the entire movement of national production’. – ‘Just try to create a national credit institution which will advance resources to people of talent and merit, but no property, without binding these borrowers together compulsorily in a close solidarity in production and consumption, but rather, on the contrary, in such a way that they themselves determine what they exchange and produce. In this way you will only achieve what the private banks already do achieve, anarchy, a disproportion between production and consumption, the sudden ruin of some and the sudden enrichment of others; so that your institution will never do more than produce a sum of benefit equally balanced by a sum of misfortune borne by others… you will simply have provided the wage-labourers whom you assist with the means to compete with one another, just like their capitalist masters do now’ (C. Pecqueur, Théorie nouvelle d’ économie social et politique, Paris, 1842, pp. 433, 434).

We have seen how merchant’s capital and interest-bearing capital are the oldest forms of capital. But it lies in the very nature of the matter that interest-bearing capital should appear to the popular mind as the form of capital par excellence. In merchant’s capital we have a mediating activity, whether this is considered as fraud, labour or whatever. In interest-bearing capital, on the other hand, the self-reproducing character of capital, self-valorizing value, the production of surplus-value, appears as a purely occult quality. Hence it also happens that even a section of political economists, particularly in countries where industrial capital is not yet fully developed, as in France, cling to interest-bearing capital as the basic form and see ground-rent, for example, simply as another form of this, in so far as here too it is the form of a loan that prevails. In this way the internal articulation of the capitalist mode of production is completely misconstrued, and it is quite overlooked that both land and capital are only hired out to capitalists. Instead of money, means of production can of course be loaned in kind, in the shape of machines, business premises, etc. But in this case these represent a certain sum of money, and if, apart from the interest, a portion is paid for wear and tear, this arises from the use-value, the specific natural form, of these capital elements. The distinguishing thing here again is whether they are loaned to the immediate producers, which presupposes the non-existence of the capitalist mode of production, at least in the sphere in which this kind of thing takes place, or whether they are loaned to industrial capitalists, which presupposes precisely that the basis is the capitalist mode of production. It is still more irrelevant and senseless to drag in the renting of houses, etc. for individual consumption. It is plain enough that the working class is swindled in this form too, and to an enormous extent; but it is equally exploited by the petty trader who supplies the workers with means of subsistence. This is a secondary exploitation, which proceeds alongside the original exploitation that takes place directly within the production process itself. The distinction between selling and lending here is completely immaterial and formal, and, as already shown, appears fundamental only for those who are in complete ignorance of the real context.