W.

Playfair, the Earliest Theorist of Capitalist Development Author(s): Henryk Grossman Reviewed work(s): Source: The Economic History Review, Vol. 18, No. 1/2 (1948), pp. 65-83 Published by: Blackwell Publishing on behalf of the Economic History Society Stable URL: http://www.jstor.org/stable/2590263 . Accessed: 09/02/2012 19:11
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W. PLAYFAIR, THE -EARLIEST THEORIST OF CAPITALIST DEVELOPMENT

doctrine of the objective tendencies of capitalist development. But Sismondi reflectsnot so much the French as the English industrial experience, and we know that in I8I7 he went to England, the home countryof the Industrial Revolution, to collect material for his Nouveaux Principes. This is not surprising:Britishcapitalism was' the most developed at that time. It would be surprising,however, if the basic trends of capitalism, which manifested themselves in early nineteenth-century England more clearlythan anywhereelse, had not leftany trace in English economic literature. In Playfairwe rediscovera missinglink; it shows that the English industrialexperience found its expressionnot only indirectly, via Sismondi in France, but also directlyin England. 'Trend spotting', or discoveryof the objective developmental trendsof capitalism,is the primaryaim of modern economic science. It is also one ofthe essentialelementsofMarxian economics. Nevertheless, thereprevails great confusionabout the genesisof thisimportantdoctrine. Some writers attributethe first formulation the fundamentaltendenciesof capitalism of to Karl Marx; others maintain that Marx borrowed them from his forerunners, particularlySismondi. Can one agree with ProfessorCharles Rist who declares that of all the ideas that Marx took over fromSismondi 'the mostimportant the idea of the concentration wealthin the hands of is of a small number of owners,and of the increasingproletarianization the of labouringmasses....This conception which... remainsone of the foundations of Marxian collectivism Sismondi's.' 1 is to Nothingis more contrary truththan thisassertion.The concentration of wealth, the trend toward large-scale production, and the growing half of the nineteenth proletarianizationof the workingclasses in the first centurywere not theoretical conceptions, but statementsof empirically observable facts. Marx did not have to 'borrow' fromSismondi factsthat could be easily ascertainedfromcontemporary English industrialstatistics and that servedas the common starting-point all critiquesof capitalism for by the leaders of the working-class movementin France in the middle of the nineteenthcentury. Who was the first discoverand to establishtheseobjective tendencies? to In the preface to the first volume of Capital (i867) Marx declares that 'it is the ultimate aim of his work to lay bare the economic law of motion of modern society', namely, to show 'its tendencies', which Marx regardsas 1 CharlesRist et Charles Gide, Histoiredes doctrines (Paris, i909), eJconomiques
p. 229.

BY HENRYK

GROSSMAN

I MO ND E D E S I SM O ND I is

regarded theearliest as representative the of

65

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to 'the natural laws of capitalist production'.' He is referring objectively ascertainabletendencies,which Marx and Engels describe elsewhereas the concentrationof capital and land in a few hands; the ruin of the petty bourgeoisie and peasants; the misery of the proletariat; the crying inof equalities in the distribution wealth; and theindustrialwar ofextermination among the nations.2 to However, Marx and Engels were not the first establish the existence of such tendencies. As early as I843, Victor Considerant, the Fourrierist leader in France, clearly formulatedall these tendenciesin his pamphlet, au de Principes socialisme, du Manifeste la democratie XIXe si'cle.3 Particularly importantare paragraphs VII, VIII and XI. Para. vii (The tendency to the destructionof the small and medium industries).The resultof freecompetition massesto collectiveserfdom...the 'is the directreductionof the proletarian progressive crushing...of small and mediumindustry...under the weightof and underthecolossalwheels bigindustry bigtrade.' (Ibid. p. 9.) of bigproperty, Para. VIII (Concerning the tendencyto the concentrationof capital and of the impoverishment the workingmasses): to 'Society tendsmoreand moredistinctly be dividedinto two greatclasses: ... a small numberpossessing or everything almost everything and the great nothing, livingin absolutecollectivedependenceupon the numberpossessing of compelled to hire for owners of capital and the instruments production, to and energies the wages theirhands, talents, precariousand ever decreasing feudallordsofmodernsociety.'(Ibid. p. i I.) Finally, Considerantemphasizesthefactin Para. XI,that as an inevitable resultof freecompetitiontherearises the tendencyto the formationof big monopolies in everybranch of business (ibid. p. I 3). to Nor was Considerantthe first discoverthesetendencies. Several years with beforehim, all the tendenciesdescribed above had been formulated, masterful conciseness and precision, by Constantin Pecqueur. In his of Sociale4this writerpredictsthat as a resultof the introduction 1?conomie machines, will and 'the varioussmallindustries, manufacturing commercial, agricultural, will disappear, the small disappear quite generally.... As small industry
K. Marx, Capital (Kerr ed.; Chicago), I, I4, I3. I Abt. (quoted as M.E.G.A.), (Berlin, I932), Marx-Engels Gesamtausgabe Bd. 6, pp. 548-9. 3 First published as a programmatic statement in the issue no. i of Democratie the Pacifique, daily organ of' L'lRcole Societaire' (i August I 843). The quotations to refer thesecond edition,Paris, October I 847. A fewmonthsafterthe appearance of Considerant's Manifesteof i843, Parke Godwin, an American Fourrierist, and Constructive Pacific(New York, i844), which published a pamphlet, Democracy followsclosely Considerant and in which the developmental trendsof capitalism are defined. I am indebted to Mr Maurice Buchs who is preparing a new study aux in French, entitled 'Le fourrierisme JItatsUnis', for having drawn my attention to Godwin. 4 Constantin Pecqueur, Lconomie et de du Sociale des Inte're'ts Commerce l'Industrie de I'Agriculture (2nd ed.; vol. i, Paris, i839).
2

A THEORIST OF CAPITALIST DEVELOPMENT

67

working day a intowage labourers, massofserfs industrialists willdegenerate ... without future;and all the big a into by day in themanufactures, proletarians by feudalism.'1 exclusively an industrial will industries be monopolized A few other authors propounding similar ideas could be quoted. Their principes d'economie primarysource in France was Sismondi's book, Nouveaux in politique, which the fundamentaldevelopmentaltendenciesof capitalism were clearlystated as early as i8i9.2 As regardsthe tendencyto concentraaccumulates, it contion, Sismondi shows that as capitalism progressively the tendencyto the centratesin large-scale manufactures.3He formulates in destructionof small and medium enterprises industryand trade. As of forthetendencyto the impoverishment thelabouringmasses,he observes that, as a result of the technological advances that extend to a growing, become new masses ofworkersconstantly number of branches of industry, unemployed; to find employmentthey are ready to work for starvation wages and as a result become physicallyand morally degraded, sinking below the level of beasts. Every technological revolution is followed by a new deteriorationof the status of labourers. However, Sismondi too, had a predecessor. This article attempts to of show that the trueoriginator the doctrineofthe objectivedevelopmental trendsofcapitalismwas William Playfair(I 759-I823), a Britisheconomist, who until now has remained completelyunnoticed. Such revaluation of a forgotteneconomist has more than a merely personal significance. If it can be established that the conception of the objective fundamentaltendencies of capitalism, the ideas of the growing accumulation of capital in a fewhands, of the disappearance of the middle time not of classes,ofnecessity capital export,etc. can be foundforthe first in Sismondi, i8i9, but in Playfair,as early as i805, this means that all perceptible in England and these tendencies had become sufficiently yearsbeforethe publication ofSismondi's objectivelyascertainablefourteen book, and forthat very reason could be formulatedat that early date.5
1 Ibid. II, I0I (see also I, 269). Quotations are from the second edition of Sismondi's book (Paris, i827). 3 ' It is sufficiently worthy of note that ... the effectof the increase of capital is usually concentration of labour in very large manufactures' (I, 36I). 'Discoveries in mechanical arts always result ultimately in concentrating the industryinto the hands of a minorityof rich merchants' (II, 327). 4 'They (the discoveries) result in savings through large-scale administration ... the common use, for a large number of people simultaneously, of light, heating, and all the natural forces. Thus the small merchants, the small
2

remained entirelyunnoticed in the historyof economic ideas, although his book, Nations and Wealthy Causes of theDecline and Fall of Powerful permanent Inquiryinto had some success in his time and was published in a second edition in (i805) i807 -Playfair is not even mentioned in any early or recent historyof economic theories. Furthermore, Playfair's name is not mentioned in the Encyclopaedia nor of (ed. I 94 I, V, I 8), nor in the American Encyclopaedia Social Sciences, Britannica in James Bonar's monograph Malthus and His Work(2nd ed., I924) although it deals with a period in which both Malthus and Playfair were active. Only two

manufacturers disappear' (II, 327). 5 William Playfair,known as an anti-Jacobin pamphleteer and statisticianhas

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Furthermore, is noteworthy it that while the previouslyknown French theorists oftheobjectivetrendsofcapitalismwere utopian or petty bourgeois socialists, semi-socialists, or who sharplycriticizedcapitalism and proposed to replace it by another more or less socialistformof society,Playfairwas a spokesman for the petty bourgeoisie. He too criticizes the failings of capitalism, but his critique is purely sentimental. He does not conceive of any way out of the situation; despite all the failingsof capitalism that he points out, he wants to preserveit, and does not propose to replace it by another system. Playfairis not a theoretician comparable to the classical economists, that is to say, he is not an analyst. He does not precede his expositionby any general principles,such as a theoryof value, fromwhich he might draw inferences way oflogical deduction. He applies the reverseprocedureby the method ofthe historicalschool. He describesthe real processesand the observed developmental tendencies,and theorizesrarely. 'In this inquiry it has been a rule, neverto oppose theoryand reasoningto factsbut to take experience as the surestguide' (276).1 The result is a surface treatment, and a lack of depth and analysis. But he is an excellentobserver. Playfair is interestedabove all in the fate of the British Empire and its future economic developmentas a basis foritspolitical power. In orderto foresee that futurefate,Playfairfirst strivesto discover a general law of historical development, a law valid for all nations and all times,fromantiquity to the modern era, so that Britain would representonly a special case in the application of the general law, only its modificationunder the particular of circumstances moderncapitalism,which can be understoodonly as such. For that reason Playfair's exposition of Britain's developmental trends would be difficultto understand without a discussion of his general historicallaw of the rise and decline of nations. I.
THE DOMINANT TENDENCIES OF CAPITALISM

While contemporary French evolutionists such as Turgot (I 750), Condorcet (I795) and Count Saint-Simon (firstpublication in I802) assumed the existenceof a law of continuous cultural and economic progress,Playfair rejectssuch an idea. His law ofthe Rise and Decline ofNations is based on the idea that mankind marks time without moving forward; that states, just like individuals,go necessarily through periodsofinfancy, manhood and decrepitude and then die; that all of them begin with 'the original state of of poverty'(IV), thattheysubsequently graduallydevelopintocentres wealth Englishdictionaries containshortbiographicaland bibliographical noticeson Playfair-RobertPalgrave'sDictionary Political Economy(1 9I3), III, II 6, and of
(I92I-2),

The Dictionary National Biography, of ed. Sir Leslie Stephen and Sir Leslie Lee XV, I300. But even these notices are confined to enumerating the titles of Playfair's writings; his economic theories are not mentioned. The Economic History Supplement), I935, contains an article on 'PlayJournal(Economic fair and his Charts', by H. G. Funkhouser and H. M. Walker. 1 The figuresin parentheses that follow the quotations from Playfair refer to the page numbers of his main work.

A THEORIST OF CAPITALIST DEVELOPMENT

69

and power and that in the end, afterreaching the climax of theirwealth, throughthe operation of the same General Law, they inevitablyrelapse into barbarism and poverty; theirplace is then taken by other,culturally and economicallybackward nations,so 'that the greatnessofnationsis but of shortduration' (iv). To prove the existenceof such an historicallaw, Playfairbriefly outlines the rise and fall of all the civilizationshe knowsfora period of more than 3000 years, covering Antiquity, the Middle Ages and Modern Times. Under 'the pressureof necessity' (i67) the poor countrieswith 'superior energy' (i9) attack the wealthy nations eitherby peaceful methods or by war, producingalways the same effect:the triumphofpovertyover wealth and luxuryof the rich' (I 77) operatingpersistently (is9). 'The effeminacy 'from generationto generation' (8i) underminesthe energyand activity of the wealthy. This General Law of historical development works in 'modern' (i.e. .capitalist) industrial countries only with some modifications, because of the presence of 'some particular causes that operate in modern nations' (i64). One of these 'particular causes' is the tremendousdevelopmentof modern military technique and mechanical warfare. In the past, the triumphofpovertyover wealth was possible because the backward nations under the pressure of necessitywere energetic,martial and brave. In modern times, however, wars no longer favour poor nations. 'Bodily has while the enginesofwar can only be procured strength but littleeffect, by thoseresourceswhich wealth affords.' constitute To and equip an army with modern engines 'a very considerable degree of wealth is necessary' (i8). Courage and bravery,the fighting qualities of the poor nations, no longer prevail against modern weapons. While in the past, wealth and luxury led to the decline of the wealthy nations, in modern times the situation is reversed: victory is decided not by martial virtues but by the main task of the governmentis now to preserve wealth; therefore, wealth and prosperity. Having formulated the general law in Book i, Playfair confines his analysesin Books ii and iII to the 'modern', i.e. capitalistnations,inquiring into the specificcauses that determinethe rise and fall of such nations. He causes (e.g. wars) and attempts eliminates'a variety' oflocal or accidentalto deal only with fundamental causes 'operating in all of them' (go), the causes ofthedeclineofwealthynations,arisingfrom namely,'the interior wealth itself' (go), i.e. fromthe degree of accumulation ofcapital achieved threephases ofsuch accumulation: in a givenperiod. Playfairdistinguishes in thefirst, capital is available than can be invested;in the second, there less is sufficient capital; in the third-on which he concentratesalmost exclusively-there is more available capital than can be profitably invested. Therefore, capital reaches insuperable limits-' its bounds' (200)-to furtheraccumulation. All nations begin their development as agrarian countries,then become manufacturingcountriesand finallychange into creditor nations which must export the available surplus-capital (i 6i,
200, 270).

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According to Playfair,Britain has entered, or is about to enter, this thirdphase, and he analyses it in the lightboth of argumentsdrawn from observationofcontemporary conditionsin Britainand of argumentsdrawn fromthe experience of previous centuries,particularlyfromthe historyof Holland, Genoa and Venice. In the course of this analysis he attemptsand he is the firsteconomist to do so-to formulatethe developmental trendsof capitalist accumulation. During the whole period embracing the firsttwo phases of capital accumulation,whichis identicalwiththeperiod ofprogressive industrialization, Playfairobserves threefundamentaltendenciesof development: (i) The tendencyof capital to concentratein a few hands. (2) The tendencyof the productive classes to become poorer. (3) The tendency of the middle classes to disappear. When the third phase, that of superabundance of capital, is reached, a fourth fundamental tendency begins to operate-the tendency of every industrial nation to become a creditoror investornation. But thismeans theend ofprogressive industrialization and expansion,that and is, a tendencyto a stationarystate and the beginningof disintegration decline. Thus the general law of rise and decline remains valid also for 'modern' (capitalist) states,although its outward formis modified. The natural tendency wealth accumulate thehandsof a few. of to in The tendencyof wealth to accumulate in the hands of a few was often asserted as a fact. Thus d'Holbach wrote in I773: 'Wealth gradually accumulates in a small number of hands; to favour a few shrewd citizens, all othersare reduced to indigence.' Playfair-and thisis his contribution -does not confine himselfto a vague general statement that seems to apply to all epochs, and he does not explain the concentrationof capital by the personal shrewdnessof a few, but regards it as the natural and inevitable result of the accumulation process in modern industrialstates. In contrastto the beliefofeighteenth-century economiststhatfundamental economic structures are the resultof legislation,he shows that parallel to thisaccumulation, the differentiation inequalityofpossessions and increase as a natural resultof the economic process,quite independentlyof existing legislationor the political formof the state (that is, both in despoticor free states). Moreover, he shows the effects concentrationof capital on all of social classes-the enrichmentof a few big entrepreneurs,the ruin of numeroussmall entrepreneurs who lose theireconomic independence, the decline of wealth based on rentierincome, the automatic enrichmentof' the landowning class, the specificrole of creditin the centralizationof big fortunes, and, as a consequence of the concentrationprocess as a whole, the widening of the gap between the impoverishedand degraded classes and the wealthy upper classes. 'In thecareerofwealth,in its earlystate,whenindividualindustry almost is without any aid from capital,men are as nearlyon an equalityas thenatureof
1

D'Holbach, Systeme Social

(I773),

pt.

iii,

ch. vii.

A THEORIST OF CAPITALIST DEVELOPMENT

7I

things can admit. But in proportion as-capitalcomesinto the aid ofindustry, lose their that equalitydies away, and men, who have nothingbut industry, means of exerting with advantage; some become then incapable of mainit rankin society tainingtheir altogether'(I56). to 'In every country, wealth... has a naturaltendency accumulatein the the handsofcertain do individuals, whether laws ofthesociety or do notfavour the of thisaccumulation'(I25), as a result whichthe'unequal division property' of
is accentuated.1

employedcapital to concentrate This tendencyofproductiveindustrially is intensifiedby the specific function of credit. Profitsare primarily created by productive activity. But this mode of enrichmentis relatively slow. Big fortunescan be accumulated with the help of long-term credits: 'In countries for wherethe commonpracticeis to sell,chiefly, readymoney, that giveslong credits, great fortunes seldomgained... .But in a country are or in a branchof trade on which long creditsare given,we always see some individuals gainingimmense fortunes' I82) .2 ( On the basis of the observation that as capital accumulates the rate of interest sinks(Turgot, Adam Smith),3Playfairconcludes that in the course of the accumulation process the relative position of an owner of a definite amount of money capital deteriorates. If the rate of interestdrops from a 4 to 2 %0, capital of Ciooo brings in the same income as previously a capital of C500. Capital accumulation is thus accompanied by depreciation ofmoney capital and as a resultof thistendencyto depreciation,large are moneyfortunes not permanent; theyshrinkaftertwo or threegenerations. To counteract this tendency, and maintain the former relative and willingness positionofmoney capital, much energy,work,shrewdness, to take risksare required.4 In contrastto this constantlythreatenedposition of the moneylender, the relativepositionof the landowning class grows progressively stronger. As capital accumulation in industry increases and the rate of interest falls, or the value of land automatically rises,withoutthe intervention work of
1 Book ii, ch. v: 'Of the Internal Causes of Decline, arising fromthe unequal Division of Property,and its Accumulation in the Hands of Particular Persons'

Marx: 'The credit system... is the specific social mechanism for the centralization of capital' (Capital, Kerr ed., I, 687). 3 Adam Smith, Wealth of Nations,Book ii, ch. Iv. 4 'A fortune lent at interest, diminishes as the value of money sinks' 'The depreciation of money'that takes place in every countrythat grows rich, falls nearly all on the lender at interest' (i63). 'A fortuneengaged in trade is liable to risksand requires industryto preserve it; but industrynever is to be found for any great length of time in any single line of men' ( I29). 'We find that wealth seldom goes amongst people of business past the second, and almost never past the third generation' (89).
(I29).

(I25). 2 Cf.

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the landowner. Therefore,this formof propertyand its concentrationin a fewhands is the most dangerous.' The tendency thenumber poor to increase countries of of in advancing wealth. in In the seventeenthcentury,England was faced with a chronic problem of pauperism-pauperism in an agriculturalcountry.The new pauperism was very different;it was a consequence of industrialization.What distinguishesPlayfairfromhis predecessorsin calling attentionto this fact is that,in contrastto the countlessremediesproposed by older economistsfor curingidlenessby corrective punitivelegislation,he regardsthe-increase or in the number of the poor as a natural consequence of concentrationof capital and wealth: 'The alarming and lamentable increases of the poor in proportionas a nation becomes rich' (87-8). Playfair calculates that the number of the poor has grown fasterthan total population (88).2 These victimsof poverty,he says sarcastically,'are fillingprisons,poor houses and hospitals' (87), 'illustratingthe effectof wealth', and he devotes a whole chapter to the problem 'of the increase of the poor as general affluencebecomes greater' (Book ii, ch. vii). Playfair distinguishesbetween two types of poverty. The first, which exists 'in everynation' comprisespeople who are poor forgeneral, demographic, natural reasons, such as 'the lame, the sick, the infirm, the aged, or children unprovided for'. The number of those 'in proportion thetotalnumber inhabitants, be pretty to of will nearlythesame at all times;forit is naturethatproducesthisspeciesofhelplesspoverty'(88). 'There is anotherspeciesof poverty, not of nature'screation....That new species of povertyis occasioned by the general wealth, since it increasesin proportion it' (88). to 'As thistendency uniformly ... overthewholecountry is felt whenit advances in wealth... it mustoperate,in lengthof time,in producing declineof the the whole nation' (89). For even thoughthe enrichment some and the impoverishment others of of takes place in such a way that 'they change places gradually and without noise' the final resultis nevertheless that-'such changes are attended with ... violent commotion' (89). 'The lowerclassesbecomedegradedand discouraged, is universally found as to be the case in nationsthathave passed theirmeridian' (I32).
1 The thousandpounds laid at interest, after yearsis alwaysworthi,ooo 30 pounds. But land bought for i,ooo pounds would be worth 2,000 pounds (i63 n.). 'An estatein land augmentsin value, without in when augmenting extent, a country becomesricher... of all the ways in whichproperty accumulatesin particular hands,themostdangerousis landed property'(I29). 2 Playfair's contemporary, James Mill, states'that the paupersare equal to nearlyone-third thewhole male population, of including men,youngmen old or children'(Commerce Defended (i8o8), p. Ioi).

A THEORIST OF CAPITALIST DEVELOPMENT While some men remain idle because of theirwealth,

73

'others,who are depressedbelow the natural situationof men, are bringing of them[sc. their children] to feeltheextreme up pressure want.... Neither the powersof theirbody,nor of theirmind,arriveat maturity'(156). of is 'While thefoundation idleness laid in, forone partofa nation,from the anotherportionseemsas ifit were chaineddown to affluence theirparents, of from indigencein whichtheywere born and brought the misery up' (156). This social sicknessis not the result of accidental external causes, but of 'the interior cause'-the accumulation of capital. That is why this sicknessis inherentin the nature of the economic organism,and it becomes accentuated with the growth of this organism-a process that Playfair illustratesby quoting fromPope: The greatdisease thatmustdestroy length, at and strengthens our strength Growswithour growth, with (go). 'In all new and risingstatesthe higherorders... as theyincreasein wealth and have lost sightof its origin,whichis industry, theychange theirmode of the and by degrees, lowerclassesare considered onlymade forthe as thinking; intowhichthelowerorders of convenience therich.The degradation themselves fallby vice and indolencewidensthe difference increasesthe contempt and in are marks thedeclineofnations' of whichthey held.This is one oftheinvariable
(263).

But the rich consideronly theirown advantage; the richertheybecome, the more selfish they are; they hold the poor responsiblefortheirpoverty and treat them worse than beasts: 'It has been noticedthat in everysociety,as wealth increases,hospitality in dies [whichexisted a lessadvancedstateofsociety], away. .'. thesocialfeelings and interested, becomeless activeand men turnselfish for thinking themselves for and careless the community; while,on theone hand, the causes forpoverty are increase,on the other,themeans ofrelief neglected'(I 59). classes' to disappear. The tendency the'middling of Concentrationof wealth on the one hand, and the growingnumber of impoverishedmasses on the other,take place at the expense of the middle classes, i.e. 'those immediately above the inferiorclasses'. These middle classes gradually disappear. and 'The consequenceofgreatfortunes theunequal division property, of are thatthelowerranks.., become degraded,disorderly uncomfortable, and while classesdisappearby degrees' (i26). the middling Such an exasperationofeconomic antagonismsas a resultofthe unequal division of propertyis dangerous and leads the nation to inevitable ruin a Playfairis ftot radical. He praises the middle class and believesin their great task of assuring economic and political progress,the material and spiritual elementsof which are concentratedin that class. The rich have always managed to shiftthe burdens to the others; as for, large masses the
(i26, i28).

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of the productive workers,theyhave neitherthe leisure nor the resources to steerthe ship ofstate. Nor has Playfaira high opinion ofthe landowners, rentiersand all those who receive a fixedunearned income. He contrasts 'the most useful class', i.e. 'those whose income is regulated by their efforts.. that is to say, the productive laborers of the country' ( I67), with 'those whose incomes are fixed, that is principally the unproductive laborers... the drones of society' (i 68). 'Where there is no regular gradation of rank and division of property, emulation, whichis the spur to action.., is... destroyed'(132). theirsharetowardsthe 'The higherclassescan neverbe made to contribute class can neverbe verynumerous;and being of prosperity a state... the higher them]towards is to of above thefeeling want... there nothing be expected[from the generalgood' (I 3 I). and laboriousclasses,again, littleis to be expected... they 'fromthe working as to have neitherleisurenor othermeans of contributing generalprosperity public men; they,indeed, pay more than theirshare of taxes in almostevery in even by election, participate the governbut theycannotdirectly, country; mentof the country'(13I). the and classesthatthefreedom, intelligence theindustry 'It is in themiddling classesto connectthehigher and of a country reside... whereare no middling . lowerorders .. a statemustgraduallydecline' (I 3 I) . The rapid disappearance of the middle class is particularlydangerous, because this increases the distance between the mass of the poor and the betweenwant and richesare brought class ofthe wealthy,and the contrasts into sharp focus: in is broken; the bond that consists the bond of society thereby 'the strongest above them.Where the classesto thoseimmediately of attachment the inferior becomes,as distanceis greatthereis but littleconnexion....The wholesociety
it were, disjointed' (I32-3).

Despite Playfair's sympathyfor the middle classes, he has no illusions about the actual development of capitalism. He knows that the wheel of historycannot be stopped. The middle classes are disappearing and social inequality operates permanently,even in the opening stages of capital accumulation, when the nation is stillpoor in capital; but it operates with particular intensityat the higher stages of accumulation and capital saturation: '.[the] tendency to [inequality] increases very rapidly of late years' (I29). 'But if thisprogress goes on, while a nationis acquiringwealth,how much faster does it not proceedwhen it approachesits decline? It is then that the and richesare to be seen in themoststriking of degree' (I 3 I) . extremes poverty nations into intoindustrial and later to nations change The tendency agricultural of nations.Superabundance capital and lack of investment creditor of (investor) and as countries factorsof disintegration decay. in opportunitiesold industrial We have shown that, according to Playfair, capitalism, from its very beginning, has been accompanied by the three developmental trends described above. We shall pass now to the most important section of

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75

Playfair'stheoryof accumulation-his view that at a specificstage capital accumulationreachesa maximumlimit.This results a profound in structural change of the whole economy. It is at thislate stage of accumulation that a fourthtrend appears-the tendencyof industrialnations to change into creditor (investor)nations, which ultimatelyleads to the disintegration of the whole economic system. For, ifcapital accumulation reaches the third phase (characterized by superabundance of capital), the profits earned in theexisting enterprises cannot be profitably absorbed at home; theybecome 'surplus' capital, and must therefore exported: be . 'When capital becomes overabundant. ..' (i 6 I) 'if thereis not sufficient ... means of employing capital withina nation or country thereare plentyof opportunities furnished poorernations' (I35). by In other words, the ' surplus' capital which cannot be investedat home must be exported to other, economically undeveloped countries. If the 'surplus' capital is neverthelessinvested in the home country and the manufacturesare expanded, an unsaleable surplus of commodities is inevitably produced, which again can be marketed only in undeveloped countries. Such countries 'affordus much reason forhope and do away one of the reasonsforfearing a declinethathasbe'en slated... namely nothavinga market ourincreasing by for manufactures' (269). 'The United States promiseto supportthe Industry England now ...far of for manufactures be insured will morethanboththeIndies... market British for
come (268). ages too

Here we have in germ a formulationof a specificunder-consumption theoryderivingfrom 'surplus' capital, a theorythat was later developed by Sismondi (I8I9) and Hegel (I82o) and that was popularized in the twentieth centuryby J. A. Hobson (i 9 I I) and Rosa Luxemburg ( 9 I 3) *1 Ricardo, in i8I7, criticized such a 'surplus' theory.According to him, there can be no 'surplus' capital in a country,because any amount of capital can always find profitable investment. Unlike Ricardo, Adam Smith explicitlydefendedthe theoryof overabundance of capital inherited fromhis predecessors, John Locke and David Hume.2 This theory of Adam Smith of a possible saturation of capital, i.e. of a 'mature economy', which has acquired 'its full complement of riches', was quite currentin Playfair's lifetime. Locke (i692) and Hume (I 752) had advanced it beforeSmith in England; in France, it was held by Turgot (I766) and Condorcet (I 794). But Playfair goes beyond his predecessors in one very important respect. Smith, for instance, confineshimselfto or lived on the interest statingthat in Holland many moneylenders rentiers of capital lent to foreignnations. Playfair, however, not only refersto
1 Simonde de Sismondi, Nouveauxprincipes d'economie polit. (2nd ed.; Paris, i827), I, 345, 36i and ii, 326; G. W. F. Hegel, Philosophie Rechts (i820), des para. 245, 246 and addit. to para. 244, 248. 2 Adam Smith cites the example of the Dutch, who lent large amounts of . capital to the English, French and othernations. (WealthofNations,Bk. ii, ch. iv.)

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investorsor rentiers,but also is the firstto define all the characteristic featuresof a parasitic creditor (-investor)nation living not on productive of work but 'without labour' (82), on the interests capital lent abroad. At of the investorstate as the necessaryand the same time Playfairconceives ultimate phase of industrial development of any country,a phase which inaugurates decline and decay. According to Playfair, there is a fundamental differencebetween an individual creditorand a creditornation. Individuals can withdrawfrom productive activityat any time. They can sell their real estate and lend their capital abroad against interest. On the contrary,a nation cannot completelycease productive activitiesand must always put to use its real estate, factories,mines, cultivated land, etc.; only movable goods and money capital can be exportedabroad. Thereforeonly part of a nation can functionas a creditor: 'The whole nationcould not becomeidle. Such a case nevercan exist,as that labour' rich sufficiently to live without becoming in ofall individuals a country
(82).

(89). it 'A nationcan neverretire, mustalwaysbe industrious' However, althopgh not all individuals in a creditornation can live comfortably,'without labour', the number of such idle individuals who live on interestcoming fromabroad is steadily increasing. Once the state of overabundance of capital is attained, there begins of process, a retrogression the industrialstate, which a slow disintegrating must lead to its decline. Two types of change take place: in the end a structuralchange in the economic basis, and parallel to it, a far-reaching change in the spiritual superstructure.' Playfair is a realist; his analysis of the economic disintegrationand speculationsor conclusions ultimatedecay ofa creditorstate are not wishful reached by deduction fromabstract presuppositions;theyhave a realistic character,forhe takes as a basis ofhis analysesthe historicalexample of the other, that ifin the future decline ofHolland, a creditorstate,and he thinks forthe time being backward, nations ever reach the stage of capital superabundance, theywill produce analogous symptomsof material and moral disintegration. and the Accordingto Playfair, economic disintegration decline ofHolland was not accidental. Accidents play a great part in the lives of individuals for small human groups, but not in the life of a whole nation. Playfair obviouslyhas in view the statisticallaw of big numbers,which he was the first to apply to history. The accidental forces inclining in different directionscancel one another, and only the fundamentalforcescommon to the total mass of the nation assertthemselvesand can be considered the 1 In another contextPlayfairillustrates the parallelismof economic and of remarkwhich is reminiscent Max by spiritualdevelopment the following of and the establishment Manufactures in Weber: 'The Reformation religion, from are experience, the in Englanddatefrom sameperiod there manyreasons, to favourable industry' is religion particularly forbelievingthat the Protestant
(265).

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dominant trends.A whole nation can perish only if 'interiorcauses' have prepared it fordecay (I85): 'An inquiry intothecausesoftherevolutions nations moreperfect than of is ... when directed to those of individuals....Nations are exempt from those accidentalvicissitudes whichderangethewisest humanplans upon a smaller of scale. Number and magnitudereduce chances to certainty. The single and unforeseen cause thatoverwhelms man in themidstofprosperity, a neverruins a nation; unlessit be ripeforruina nationneverfalls.. ..Accidenthas onlythe appearanceofdoingwhat, reality, already in was nearly accomplished' (XI-XII). Playfairanalyses the rise and decline of Holland fromthat standpoint: 'As forthe Dutch, theycontinueto increasein wealth till the end of the seventeenth century....In additionto their greatindustry: fisheries art the and of curingfish,the Dutch excelled in makingmachinesof various sorts,and became thenationthatsuppliedothers withmaterials a statereadyprepared in formanufacturing; was a new branchof businessand verylucrative, this for, as themachineswerekepta secret, abbreviation labour was great' (66). the of But when Dutch industrybecame saturated with capital, there were no furtherprofitable investmentsat home. The additional capital could functiononly as commercial agent between foreignnations; the Dutch became a nation of intermediaries: 'But, when they[the Dutch] became affluent... manufacturers the became and .. merchants, themerchants became agentsand carriers. Dutch capitalwas and sell themin another; the employedto purchasing goods in one country Dutch became carriers others, of instead of manufacturing..forthemselves' (66). [Thus] 'the solid sourcesof riches[i.e. production]disappeared... The merchants safe agencies for foreigners tradingon theirown... to preferred superiority manufactures in over othercountries was continually diminishing; and less active' (67).1 consequently, industry not so well rewarded, was of According to Playfair,the structuraltransformation the countrydid not stop there.The manufacturer who regressed the statusof a merchant to later became a rentier; the industries were neglected, and the nation changed froman industrialinto a creditornation. 'Manufacturers aspireto becomemerchants, merchants becomelenders and to ofmoneyor agents.' 'The Dutch were the greatest example of this....They have long ceased to to raised them givethatgreatencouragement manufactures whichhad, at first, to wealth and power. They had, in the lattertimes,become agentsforothers ratherthanmerchants theirown account; so thatthecapital,which,at one on time,brought probably,20 or 25 percentannually,and whichhad, even at in, a late period, produced ten or fifteen, employedin a way that scarcely was
produced three' (I 34).

This economic transformation was accompanied by a parallel change of which reacted on the economic basis and further accentuated its mentality,
This picture of the decline of the Dutch industryis essentiallyconfirmedby a modern historian. (C. H. Wilson, 'The Economic Decline of the Netherlands', Review (May I939), vol. IX, no. 2.) Economic History

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weakness. In an investornation 'it is not merelya neglect of industry... thatishurtful; generalway ofthinking actingbecomesdifferent' the and (90o). The mentalityof an idle class of rentierswho despise productive work leaves its impresson the whole lifeof an investornation. This 'degradation of moral character' of an investornation is again illustratedby Holland. In an industrial country,her manufacturersare a class of robust, active entrepreneurs; an investorcountry, in wealthy,well-established firms avoid risks,withdrawfromproductive activityand live on interest(i62). 'Whatever,therefore, tendsto accumulatethe capital of a nation in a few hands, not only increasesluxury,and corruptsmorals, but diminishesthe activity thecapital and industry thecountry....In all thegreatplaces that of of are now in a stateofdecay,we findfamilies livingon theinterest money, of that formerly were engaged in manufactures commerce.Antwerp,Genoa and or Venice, were fullof such; but thosepersonswould not have ventured single a shilling a new enterprise' in (I34). In this way, both for objective and subjective, psychological reasons, capital expansion is brought to a standstill,productivity deteriorates,and industrydisintegrates. Holland's position deteriorated as a result of an internal development, not of unfavourable external circumstances: 'There was no violentrevolution, invasionby an enemy;it was the silent no operationof thatcause of declinewhichhad been alreadymentioned'(67). The foregoingoutline of the economic evolution of Holland from an industrialto a parasitic creditornation is, according to Playfair, a casual not excursion into the historyof a specific, country. It is on the contrary conceived of as an illustration a general law of the rise and decline of all of modern industrialnations.The economic transformation the attending and processes of material and moral degradation are seen as an inevitable historicalstage in the development of everyindustrialstate, which begins the moment its capital accumulation has entered the phase of superabundance and capital export. Thus Playfair was the first-and for a whole centuryhe remained the only one-to describe this characteristic tendency in the evolution of modern industrialstates,the tendencyto capital exportand to transformation into creditorstates. Economic theoryneglected this problem during the entire nineteenth century. Only at the beginning of the twentieth centurywas the problem raised again by J. A. Hobson, whose work gave rise to a whole literature; but it is interestingto note that Hobson's economic interpretation investment, theoryofsurplus-capitalformuof his lated in I9II does not go an inch beyond Playfair's views expressed as early as I805.
II. COUNTERACTING TENDENCIES

What consequences does Playfairdraw fromhis theoryof the fundamental developmental trendsof capitalism? The prospectofdecay presentedPlayfair,who assumed it to be a proven truth as regards the whole historical past of more than 3000 years, with

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considerable theoretical difficulties, so far as he dealt with the future in evolution of Britain,then the leading industrialcountryin the world. The French.evolutionists, Condorcet, Sismondi and particularlySaint-Simon, or utopian Socialists like Pecqueur and Considerant, were able to point out the contradictions and inadequacies of capitalismbecause theynot only criticizedsuch inadequacies, but also rejected the existingsocial organization and wanted it replaced by a higherform. But Playfair,who criticizes the contradictions of capitalism with equal keenness, is a partisan of capitalism,and wants to preserveit despite its evils. The idea ofa transition to another,socialist organization,is outside his horizon because in his eyes the existingcapitalist formis the highest, and he violentlycriticizes the French Revolution forits 'levelling' tendencies. But if the capitalist basis is retained, then, according to Playfair'sown general historicallaw valid for all epochs, societyis threatenedwith decay, because these tendencies originate in wealth, i.e. in the very essence of capital accumulation. The danger is all the more to be feared because historyshows that wealth and power 'when once destroyed.. .never have been renewed' (79). . Thus the theoreticalproblem has a practical implication, and Playfair raises the question whetherEngland cannot avert such a tragic end: 'It is worthwhileto inquireintothe causesof such a terrible if reverse, that degradation whichnaturally follows, and which has always hitherto followed, may be averted' (iv). He solves this problem by distinguishingbetween 'necessity' and 'tendency', and by a new methodological construction in which the dominant tendencyis weakened by one or more counteractingtendencies. These do not eliminate the main tendencybut check its effectiveness and postpone its ultimate triumph. If decay were a historicalnecessityimpossible to avert 'the Inquirywould be ofno utility.It is ofno importance seekformeansof to preventing whatmust necessity of is cometopass; butifthewordnecessity changed fqr tendency propensity, itbecomesan Inquirydeserving or then (IX). attention,' 'It meritsinvestigation, whetherit is or is not possible to counteractthe tendencyto decline.., afterhaving attained the summitof wealth, we may remainthereinsteadofimmediately descending'(i69). We know that later Ricardo (I 8 I 7), John S. Mill (I 848) and Karl Marx (i867), resorted to the same methodological instrumentof a dominant tendencyand counteractingtendencies. Economic theoryrecordedthisas a factbut has never raised the problem ofthe originofthisidea, and has neverinquired into the circumstances that led to making such a distinctionbetween the tendencies. The foregoing passage fromPlayfair's book shows that he is the originator of the idea and castslighton the circumstances that led him to this' methodoimportant logical construction. Playfair,the petty-bourgeois theorist,elaborates the counteracting tendencies because he regards them as the theoretical justification of an effortto preserve the existing capitalist society from disintegration decay, or at least to postponethemforseveralgenerations. and

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This does not mean that Playfair places his subjective wish for the preservationof capitalism above the objective developmental trends; he stillthinksthat history governedby necessity.Justas he triesto show the is objective inevitability decline on the basis ofthe internalstructure the of of economic organism,'the interior causes', so remainingtrueto his methodological principles,he inquireswhetherobjectivecounter-tendencies not are active within the economic organism. Only if such objective countertendencies can be discovered, is there room for the interventionof the subjective factor-the deliberate effort strengthen to them. According to Playfair, the task of strengthening and directing these objective counter-tendencies incumbentnot upon individuals, but upon is the government: this 'Governmentcan never be better employed than in counter-acting to tendency decay' (172). This does not eliminate the inevitability decline, but-and this is all of that Playfairexpects fromhis Inquiry-it might be possible 'to findthemeansby whichprosperity may be lengthened out,' and theperiod to of humiliation procrastinated a distant day' (IV). With the help of such a distinctionbetween 'necessity' and 'tendency' and between 'tendency' and 'counteracting tendency', Playfair'sgeneral law of rise frombarbarism to civilization and subsequent decline can be with regard not only to the past but also to Britain's upheld theoretically future,and at the same time the decline of England, even though the existingcapitalist basis is maintained, can be averted or at least postponed forlong generations. What are these counteracting tendencies? Playfairenumeratesseveral,2 of which we shall discuss the most important-export of capital. Superabundance of capital in an industrialnation entails consequences that Playfair describes in a special chapter entitled 'Of the tendency of capital and industryto leave a wealthy country' (Book ii, ch. viii). 'If there is not sufficient means of employingcapital withina nation or ... of furnished poorernations.' country thereare plenty opportunities by This withdrawal of capital 'that operatesin somemodernnations, counteracting effect, faras it is this so is occasionedby a superabundance capital' (i 64). of 'As it raisesthepoornationnearertheleveloftherichone,itseffect gradually becomesless powerful'(i 83).
1 Playfair emphasizes this idea in the subtitle of his book: 'An Inquiry... designed to show how the prosperityof the British Empire may be prolonged.' 2 The counteracting tendencies listed here-export of commodities and of capital, decentralization of capital, furthervarious forms of unproductive expenditure and waste-are the same as those mentioned fortyyears later by J. S. Mill (Principlesof Political Economy, Book iv, ch. iv, para. 5). This fact suggeststhat Mill carefullyread Playfair.

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Nations with superabundant capital indulge in comforts, keep numerous servants,and work less than the poorer nations,just as the sons of a wellto-do fatherwork less than the fatherworked in his youth. occasioned But the export of capital, though it counteracts the effects by superabundance of capital, does not eliminatethe dominant tendency to decline. These counteractingtendenciesrelieve the situationof capitalsaturated countriesonly temporarily. In the long run of betweennationsis in favour the poorerone' (I79). 'the intercourse in in a 'The capital of a richnationis employed fostering rivalship a poorer nation' (i 8o). Young nations which appear as rivals of older and wealthier nations enjoy a number of advantages that enable them to rise fasterand even to overtaketheirmodels. Elaborating on an idea that Condorcet formulated ten years earlier, Playfair observes that the leading nations can develop technologyand inventnew methodsof work only by the hard way of trial and error. The rival young nations need to imitate only the successful inventions,thus saving a great deal of time and expenditure. invention, a newpath.... etc. treadsin discovery, 'The nationthatis highest, have,in general, to copy,and in doingthat,it is generally but Those who follow pretty easy to improve' (208). and machinery concerned, imitating are the 'So far as methodof working nationhas theadvantage;it copiesthebestsortofmachineand thebestmanners

ofworking once' (2I2). at

explainsthefactthatwhereastheold industrial This, accordingto Playfair, nations which improved their technique step,by step are burdened with many obsolete machines, thathave improved manufactures latest, have alwayscarried 'the nations in the

to them thegreatest perfection' ii). (2

nationsthrough experiencedby capital-saturated In thismannertherelief of capital to backward nations is of shortduration. Their economic export and technical advantage is only temporary, it disappears by degrees, and England 'cannot. be expected long to maintain its superiorityover others' (204). It is oflittleavail to possessa legal or factual monopolyin orderto secure superiority: superiorin the arts of 'Holland, Flanders and France were all originally mostgoods,to England' (203). manufacturing Nevertheless,these countries lost their superiorityto England, because the is while the risingnation's industrialization stimulatedby high profits, earned by the advanced nation 'which is about being rivalled' low profits produces 'a sortof discouragementand dismay' (2 i2). Such nations with superabundant capital cease accumulating, theytend to a stationarystate in which no capital investments take place: a 'At all events, day mustarrivewhen the nationthatis highest, ceasingto it' mustovertake (208). proceed,the others
F

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advancedin inventions evident, thatthenationthefarthest 'From this is very it and a has only to remainstationary fewyears,and it will soon be overtaken, perhapssurpassed'(203). and advantage relief Thus the exportofcapital which broughttemporary to the industrial country exportingcapital in time undermines its longbecause the exported capital helps in the industrialization range interests, of the rival country: suppliesthe want of 'In thismannerit is, that the capital of a rich country a of it in poorerones,and that,by degrees, nationsaps the foundation its own and to wealthand greatness, givesencouragement themin others'(i8i). Playfairillustratesthis development by the example of Holland: and, at theircapital in thismanner, 'the Dutch, forthelast century, employed ... They ruinedmanyof one time,were the chiefcarriers givingcreditlargely. in in theirown manufactures thismanner....There are many manufactures roseby means ofDutch capital.' (i 8 i). England thatoriginally Thus Playfair shows that there is an insoluble antagonism of interest between the industrial and merchant capital of a country. At firstthe Dutch merchants' ruined many oftheirown manufactures'by givinglarge and earned large profits merchantsand carriersof as creditsto foreigners, raw materials and finished commodities; but later 'they sank both as a commercial and manufacturing people' (i 8 i). does not reproach the Dutch merchantswith lack of However, Playfair patriotism; he considers their conduct inevitable in a nation that has reached the creditorstage. Everymerchantis underpressureofcompetition and must take the constantlychanging circumstancesinto account. He cannot stop to considerwhetherhe servesor harms his nation; he is guided and driven by the profitincentive,the principle on which the systemof private enterpriserests. Should he allow himselfto be guided by other of motives, he would soon be ruined. The transfer capital and industry abroad is not the result of the merchant's personal decision, but of an in of stage. objectivetendency industry a nation thathas reached thecreditor The counteractingtendencies, therefore, bring only temporaryrelief; in the long run, the backward agricultural and colonial countries are industrializedwith the help of exported capital and attain the level of the wealthycountries; theytoo entera stage at which theyhave accumulated fromsupersufficient capital of their own or even have begun to suffer abundance of capital. At such a futurestage of development, all international credit operations will inevitablystop: 'If thetimeshouldevercomethatcapitalshouldbe abundantin all nations.. . obtainingcreditwill not be an object...' (i 8i). For despitethe operationofall counteracting trends, dominanttrend, the if the changes and rebounds caused by wars are disregarded,assertsitself in the end; all nations will ultimatelyreach the state of capital saturation, or the stationarystate.

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half of the nineteenthcentury,before The fact that as early as the first Karl Marx, a number of authorssuch as Playfair(i 805), Sismondi (i 8 I 9), Pecqueur (I837), and Victor Considerant (I843) described the objective developmental trendsof capitalism, raises the question of Marx's relation to his forerunners.If he is not the originatorof the idea, what is Marx's to contribution that doctrine? Marx approached the problem of the developmental tendencies of capitalism not as a historianbut as a theoretician. His purpose was not' once again to describe these tendenciesthat had repeatedlybeen described in contemporaryFrench literature,but to explain them. Marx's Capital chapter or sectionin which the above-mentioned does not contain a singletrendsare described-as is the case withSismondi; Pecqueur developmental or Considerant-as empirical facts. In chapter XXXII, 'The Historical Tendency of Capitalist Accumulation', and in chapter xxv, 'General Law of Capitalist Accumulation', Marx strivesto show whythe trend to concentration(and the associatedtrendsto centralizationand to thedestruction result of capitalist of the,small and medium industries) is the inevitable accumulation on the basis of the law of value; his purpose is to show that all thesetrendsare dominated and explainable by the law ofaccumulation.1 At the same time Marx developed an idea that was completelyalien to all his forerunners and that is the focal point of Marx's theory of the developmentaltrendsof capitalism-the idea that the trendsto concentration and centralization, as well as the disappearance of small industry, follow onedirection,and that they are only the outward expressionof the slow,gradual, long processofsocialization oflabour-even undercapitalism a process that paves the way for the socialized economy of the future. This process begins with the 'scattered private property arising from individual labour'; it continues with the 'centralization of the means of production and socialization of labour'; and it ends with the transformati-on'of already socialized production into socialized property'-a result of that looms only at the end of a long historical transformation social labour. What Playfair,Sismondi, Pecqueur and Considerant could not see were the far-reaching implications of this historicprocess. It is true that many writers before Marx referredto the regularityof crises and the remained precariousconditionofthe workingclass. However, theseinsights mere observationsuntil Marx showed them to be the inevitable result of another long-term fundamental tendency, which he discovered-the tendency of capital, as technology advances, to increase its so-called 'organic composition',i.e. the amount ofinvestedfixedcapital per worker. New rorkCity
1 It mustbe stressed that Marx does notuse theword'trend' or 'tendencies' in the usual sense of the term; by 'trend' he means 'tendenciesworking with iron towardinevitable necessity results'. (K. Marx, Capital,Kerr ed., I, I3.) The otherfactors counter-trends weakenor slowup thedominant and can trendbut not prevent from it asserting itself.