Introduction

This book challenges the conventional wisdom about classical political economy and the rise of capitalism. It is written in the conviction that modern interpretations of political economy have suffered terribly from acceptance of the prevailing liberal view of the origins and development of capitalist society. By the liberal account, capitalism emerged out of the centuries-old competitive activities of merchants and manufacturers in rational pursuit of their individual economic self-interest. Over time, this account claims, the persistent activity of these classes developed new forms of wealth and productive resources and new intellectual and cultural habits, which eroded the existing structure of society. The rise of capitalism is thus explained in terms of the rise to prominence of the most productive, rational, and progressive social groups—merchants and manufacturers. Not surprisingly, classical political economy came to be seen as an intellectual reflection of the ascendence of merchants and manufacturers and as a theoretical justification of their interests and activities.

This book argues that capitalism was the product of an immense transformation in the social relationships of landed society and that this fact is crucial to understanding the development of classical political economy. Without a radical transformation of the agrarian economy, the activities of merchants and manufacturers would have remained strictly confined. By no inexorable logic of their own were mercantile and industrial activities capable of fundamentally transforming the essential relations of precapitalist society. Rather, the

changes in agrarian economy, which drove rural producers from their land, forced them onto the labour market as wage labourers for their means of subsistence, and refashioned farming as an economic activity based upon the production of agricultural commodities for profit on the market, established the essential relations of modern capitalism. In what follows, these processes are described in terms of the emergence of agrarian capitalism .^[1]

I further argue that the classical economists of the seventeenth and eighteenth centuries were generally aware of the crucial importance of agrarian social change, that such change figured centrally in their account of the emergence of modern society, and that they conceived of capitalist society in largely agrarian terms. Classical political economy thus represents a social and economic theory of agrarian capitalism. The greatest political economists of the period constructed a comprehensive theory of state and society in which the essential relations of economic life were those between landlords, capitalist employers, and wage labourers. Agricultural production was for them the most fundamental sphere of the emerging capitalist economy; they generally conceived commercial and industrial activity as subordinate (for economic, political, and moral reasons) to production on the land.

My argument thus challenges the traditional view that the classical political economists constructed an economic liberalism designed to justify the individualist and self-seeking activities of merchants and manufacturers in a market society. According to the traditional line of thought, political economy developed a theoretical defence of commercial and industrial capitalism which contained three interrelated elements. First, it conceived of the capitalist market as a mechanism which automatically harmonized the selfish actions of individuals without intervention by the state. Second, it saw an expansion of national wealth as the automatic result of a system of market exchange which harnessed selfish individual passions, created a network of economic interdependence (organized in a social division of labour), and rewarded industry and frugality. Third, it presented the self-seeking economic behaviour of merchants and manufacturers, through the wonder of competitive markets, as beneficial to society as a whole and as the most enlightened basis upon which to found the economic policies of the state. For all these reasons, the traditional

line argued that classical political economy constituted an ideological defence of the modern system of industrial capitalism.

Adam Smith is widely identified as the dominant figure in the development of economic liberalism. In his writings more than those of any other political economist, the traditional view finds a sustained theoretical rationalization for industrial capitalism and its representatives. Harold Laski writes, for example, in The Rise of European Liberalism that

With Adam Smith, the business man is given his letters of credit. Liberalism has now a fully analysed economic mission. Let the business man but free himself, and, thereby, he frees mankind.... With Adam Smith the practical maxims of business enterprise achieved the status of a theology.^[2]

Consistent with this approach, another commentator has argued that the central achievement of Adam Smith was to "justify the activities of embryonic industrialists" through the elaboration of "an economic analysis of civil society."^[3] Likewise, Eric Roll in A History of Economic Thought has claimed that Smith "gave theoretical expression to the essential interests of the business class"; he maintains that Smith was merely building upon an intellectual justification for industrial capitalism which had been in process of construction for nearly two centuries:

In the eighteenth century the development of modern industrial capitalism was greatly accelerated. Its theory, embodied in the works of the classical economists, comes to maturity in the period of forty years that separates Smith's Wealth of Nations and Ricardo's Principles . But its roots reach back almost two centuries.^[4]

According to this view, the development of economic liberalism, advanced most clearly by Adam Smith, was a theoretical expression of developments in the economic and social spheres—the rise of industrial captialism—and an intellectual justification for the activities and practices of that class most closely associated with this process, the industrial bourgeoisie. Indeed, one modern commentator has begun a study of Smith on the "axiomatic premise" that "capitalism is an embodiment of Smithian principles."^[5]

The present study takes issue with this argument. In the chapters which follow I shall argue not only that classical political economy prior to Ricardo did not represent the interests of industrial capi-

talists but also that the classical political economists up to and including Smith were strongly critical of the values and practices associated with merchants and manufacturers.^[6] Much as they may have approved of certain important economic effects of division of labour and market exchange, the greatest classical economists did not seek to ground political life in the activities of self-seeking individuals. Nor did they seek to advance a justification for industrial capitalism. On the contrary, the pre-Ricardian economists betrayed a definite bias in favour of the agrarian, not commercial or industrial, classes and a profound fear that the "commercial spirit" of their age might undermine the agrarian foundations of society and corrupt political life by replacing the classical goal of a state operating according to public interest and public virtue with a polity ravaged by the pursuit of private interest.

On the basis of these concerns and of their analysis of those processes which were transforming traditional rural economy, the political economists examined in this study developed a theory of agrarian capitalism. At one level, their investigations constituted important attempts to comprehend the most significant social and economic changes of their age. The industrial revolution was not a fact of life before the publication of Smith's Wealth of Nations . The primary focus for these writers was thus agrarian, not industrial, change. At another level, their theories of agrarian capitalism contained an important element of prescription. Concerned to reap the beneficial effects of economic growth while resisting moral and intellectual corruption and the decline of civic virtues, they looked forward to the development of a capitalist agriculture which could sustain a state uncontaminated by private interests. Their economic theory of agrarian capitalism thus served both a moral and political purpose—which is to say that it was political economy in the fullest sense.

There were, however, profound differences between the conceptions of the relationship of the state and agrarian capitalism which characterized British and French political economy. As I shall demonstrate, British political economy developed from the Commonwealth tradition of political thought, which conceived of the state largely in terms of the self-government of landed gentlemen. By contrast, French political economists—especially the Physiocrats—thought in terms of a centralized absolute monarchy constituted over and above civil society as a bulwark against the influence of particu-

lar interests upon the state. These differences, as I shall show, correspond to the quite different paths of social and economic development taken by Britain and France in the early modern period.

Despite these differences with respect to the nature of the state, the British and French political economists alike advanced a theory of and program for agrarian capitalism. They sought to direct the processes of capitalist development to preserve the agrarian basis of society and, in so doing, prevent excessive influence upon economic development and political policy by commercial and industrial interests. For the Physiocrats, such an objective required that the state shape social and economic development. For Adam Smith, however, such development required merely that the state break the manipulative activities of merchants and manufacturers and guarantee an institutional order in which no section of society would have any form of monopoly power. But such a state could not be based upon commercial or industrial interests, since these were incompatible with those of the public; instead it would have to rest largely upon enlightened, public-spirited representatives of the landowning class.

Eighteenth-century Britain and France were—albeit with major divergences—societies in transition from feudalism to industrial capitalism. The characteristics of the transitional society of eighteenth-century Britain we will describe as agrarian capitalism. France, labouring under the creaking structures of feudal absolutism, had not experienced the breakthrough to agricultural improvement and economic growth which had occurred in England. Yet the frame of reference for her most important political economists was without doubt the system of agrarian capitalism which had emerged in Britain. No major thinker in Britain or France had yet grasped that economic development based on capitalist farming (which largely separated the direct producers from the land and transformed them into wage labourers) led in the direction of industrial capitalism. Subsequent attempts to depict these earlier theorists as prophets of nineteenth- and twentieth-century capitalism have seriously distorted our understanding of their theoretical efforts and of the society they attempted to understand and influence. As I shall show in the course of this work, the classical political economists of the seventeenth and eighteenth centuries developed an agrarian-based model of the emerging capitalist economy, adhered to values markedly different from those generally associated with industrial capi-

talism, and accorded priority to the formulation of just and benevolent policies which could guide civic-minded statesmen in the pursuit of wealth, power, prosperity, and justice. I shall conclude by arguing, however, that their acceptance of the basic social relations of capitalism undermines any attempt to employ the work of these theorists as the basis of a concrete and comprehensive critique of modern industrial capitalism.