Capitalism arose at a very specific time and place

(and it was 16th-century England)

Hello friends. Two days into my book release and the anxiety has hit me! I’ve also sent the fantasy novel to my agent, so I am between projects right now, which is a very weird feeling. I haven’t been truly between projects in five years.

Very weird to think that my substack audience is COMPLETELY different from my YA audience, demographically speaking. Like, if I post about Compact here, people are like "How do you know it's fascist?" Whereas if my YA audience knew I was even reading that journal, they would be horrified.

Have been reading Ellen Meiksins Wood's book The Origins of Capitalism.¹ About eight years ago all my friends became socialists, and I found it very confusing (particularly because most worked for tech companies). Did they really believe that we shouldn't have private investment and private ownership of capital (yes, they did). My conception of socialism is either the Christian democracy of Western Europe (which isn't real socialism, it's merely a large social safety net) or Marxist-Leninism, which is marked by government control of the means of production. I don't think I currently have heard a proposal for a socialism that wasn't extremely statist, and, personally, I just don't know if the state telling people what to do is a great thing.

The closest I can come to socialism is by thinking about the economy as a whole. In America, government spending is 37 percent of the economy. In the EU it is 50 percent of the economy. That means the government really is directing about half the economic activity. And in some sectors, that control is total: in most countries, the education sector is entirely government, and defense is entirely government. In many countries, the health care sector is entirely government (here in America, Medicare accounts for 50 percent of health care spending). And in some places (most notably Sweden, I believe), the housing stock is mostly controlled by the government.

And government is a very heterogenous thing. If resources are controlled by the government, then they are not allocated according to the principle of "will this earn money." Instead they're allocated through the political process. The government is not subject to competition; the government doesn't have to worry about capital outflows if it underperforms. But the political process can be a lot of different things: it can be state or local representatives; it can be federal block grants TO the states; it can be independent institutions like the Fed or Fannie Mae.

I think the idea behind socialism is that you start edging that 37 percent up towards 100 percent. So the government takes over more and more sectors, through various mechanisms, until it's taken over everything.

Capitalism, in contrast, is not democratic. It's not controlled by the political process. Capital is allocated according to the profit principle. Thus, capital is invested into areas where there will be a return on capital. Capital represents ownership in an enterprise, and that ownership represents the right to direct that enterprise. This means that, within areas where capital predominates, decisions are made undemocratically.

When I was trying to figure out what socialism was, I read the three volumes of Marx's Capital, and I think his framing of capital as being "alienated labor" was helpful to me. His key insight is that economic relations are also social relations, but the presence of markets effaces those social relations (mystifies them, in Marxist parlance). Like with this Substack Nazi thing, we are all using this platform, but it is not controlled democratically. And yet the platform is only valuable because we use it. We are in an economic relationship with the owners of Substack, but that doesn't translate into any social relationship: they do not need to acknowledge that we possess some interest in this platform.

In a feudal system, those relations are not mystified. The peasant supports the lord directly, through taxes and labor. If the lord isn't around to extract those taxes and labor directly, the peasant won't pay. You cannot rely on the market to do your dirty work, you need to do it yourself, which is an acknowledgement of the social relationship involved. And if you want more money, you need to go down and physically threaten them. In feudalism, peasants are almost never dispossessed from their land—indeed the problem is often that of keeping them on the land.

It is free competition that effaces this social relationship. Let's say the peasant is only there on a ten-year lease, and they pay their rents freely and on time. But there is a free market in leases, and the market value of the lease is greater than the rent you are charging? What happens? Well, you raise your rent. And what does the peasant do? They either agree to the new price, or they get thrown off the land—you’re not killing or threatening them, you’re simply dispossessing them from the land. So what happens in this circumstance? Well, suddenly you don't need to enforce your will on the peasant: the fact that a free market for leases exists means that the lord can always dispossess them and bring in someone else who will pay.

The free market for leases also means that the worth of the land will always be equal, more or less, to what someone can pay for it. If there is no free market for leases, then the peasant has power, because they can refuse to pay, they can refuse to do their service, they can let inflation reduce their rent to a nominal sum, etc. The lord really has no leverage in that situation, other than physical force, and the latter is continually eroded by the Crown. This was the situation in France during the early modern period, where peasants tended, over time, to come into possession of their own land.

In such a case, the peasant has market opportunities--they can try to increase their yield or to plant crops that will bring in more money. But they do not face market imperatives: they can also continue to plant the same old way without facing consequences.

But in England, where there was a free market for leases, conditions were different. Here, there are market imperatives. If you don't improve your farming methods, you will produce less than the land is "worth", and you will be dispossessed of it (as indeed many people were, by enclosure).

This is at the center of Ellen Meiksins Wood's story of the origin of capitalism. She posits not that capitalism is an inevitable process, but that it arose at a specific time and place, due to specific circumstances. That capitalism arose in England and only in England, because of the free market for leases. And the free market for leases existed as a result of unique circumstances (a strong monarch, a centralized state, and a large land-owning nobility that did not have official duties or privileges). In other states, where nobles had the ability to enter official-dom or levy their own taxes and penalties, they tended to find ways of just going down and taking more of the peasant's production. In that situation, there is no imperative to improve your production--the lord will not take more from you than you need to survive. But in England there was an imperative: it was very possible to be thrown off your land and become landless and now lack the means you need to survive (or, in Marxist parlance, "replicate" yourself).

It's a fascinating story, and not one I had been exposed to before. And in this slim book Wood teases out the implications behind that story. The first is that modernity and capitalism are not inextricable. Modernity arose in France, with the Enlightenment, but 18th-century France was not a capitalist society--there were no market imperatives as there were in England. During the 18th century, England was already quite urban, with a large landless population who used the market to buy food--France, in contrast, was 80 to 90 percent rural, with most people living off the land.

The book is basically an argument with a bunch of other people--she traces the lineage of the argument early in the book--about how capitalism began. She argues that capitalism was not a necessary or inevitable stage in human development, that it arose at a specific time and place, when, for unique reasons, the landowners and their tenants started interacting with each other through a market mechanism, rather than through the more politico-social methods they had typically used in other times and places.

I think my interest in non-capitalist societies has been stimulated by reading the Icelandic epics--that reading has allowed me to see what emotional life might've looked like in a non-capitalist society. You can still fall in love, have families, have some element of personal autonomy, etc. You can still produce literature about ordinary non-heroic people! I think the most intriguing thing about economic history is that non-capitalism can work. 10th-century Iceland might not've been a great place to live, but it existed. It replicated itself. And so did every other place on Earth prior to the development of capitalism.

Personally, I am not convinced by socialism. It seems to me that we've had a number of examples of socialist economies, and they've all proven to be failures, while capitalism has succeeded in producing prosperity for those countries that have embraced it (including, most recently, China and Vietnam). But even in a capitalist country, not everything is capitalist, and I think it's worthwhile to debate whether such-and-such a sector would be better run by the government. But I do not think you can have a modern industrial society without capitalism, and I happen to like our modern industrial society!

The most intriguing thing about Wood's book is it does away with the dialectic. If capitalism was not inevitable, and if it arose through specific historical circumstances, then what other forms of economic organization could also arise organically? Perhaps someone, somewhere, will develop some new form of economic organization. Alternatively, capitalism might collapse and prove unsustainable in the long run: if we know anything, it is that non-capitalist societies can exist and prosper--it's just that they cannot do so when other capitalist societies exist to compete with them. If capitalism proves unsustainable in the end, then non-capitalist management of resources would return automatically.

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Addenda:

By release day my last novel had already engendered an online controversy that tanked its Goodreads ratings and dramatically affected public opinion of the book. I am happy that hasn’t happened with this one! It’s been nice to see people reading and reacting to the book. And the reaction has mostly been very positive!

At the same time, even some of the positive reviews are like “this was so upsetting” or so triggering. It was a reaction I expected and purposefully courted, as I write about here. The book really contains what I would call the mildest possible transphobia on the part of the parents and other students (the reaction of the teachers and alumni is a bit worse), and it’s so weird how the YA audience doesn’t really tolerate anything other than rosy, perfectly-sunny visions of queer life (even as it insists that queer people are horribly oppressed). It’s like if Malcolm X had said, I won’t want to read books about Black people being happy and well-adjusted in contemporary America.

Anyway, it has made me feel happy about my Substack audience, which is, so far at least, much more reasonable and thoughtful.

1. Found this book through the trusty old “Random Book” function of my e-reader. I went through a Verso books phase a few years back, but I eventually gave up on their stuff because it just seemed didactic and thoughtless.