Chapter One
From Feudalism to Capitalism: The Historical Context of Classical Political Economy

Classical political economy, wrote Karl Marx, "begins at the end of the seventeenth century with Petty and Boisguillebert."^[1] In making this statement, Marx not only identified the historical period of the emergence of classical political economy, he also implicitly identified the countries of its origin—England and France, the respective homes of Petty and Boisguilbert.^[2] Classical political economy developed in England and France during the decisive phase of the "great transformation" of Europe which ushered in capitalist society. In one sense, classical political economy was an intellectual product of this transformation. In another sense, as we shall see, classical economics was also an active element in this historic transition; it represented in part an attempt to theorize the inner dynamics of these changes in order to shape and direct them.

Although a certain commonality of problems associated with the transition from feudal to capitalist society provoked the theoretical efforts of the classical political economists, the divergent paths of English and French development during the seventeenth and eighteenth centuries forced theorists in these two countries to conceive the problems of economic development in markedly different ways. In England, the emergence of agrarian capitalism during this period made analysis of agricultural production—and especially the problem of increasing the agricultural surplus—the central focus of British political economists. In France, however, the rise of the absolute monarchy (and its appropriation of a substantial share of the economic surplus) placed the issue of the relationship between state and

society in the forefront of the concerns of French economic writers. Proposals to reform the rural social structure were often central to their analysis of state and society. But French agriculture failed to make the breakthrough to self-sustaining growth experienced by England; and this crucial fact largely accounts for the different emphases of French and English political economists. This chapter sketches the basic patterns of social development in England and France to illuminate the background for the theoretical efforts of English and French political economists in the seventeenth and eighteenth centuries.

The Crisis of European Feudalism

The view that late medieval feudalism experienced a general social crisis appears to date from Marc Bloch's French Rural History, published in 1931. Since the 1950s, economic historians have generally identified the fourteenth century as a period of feudal crisis. Indeed, most would accept the view of Michael Postan that western Europe underwent an "agricultural crisis of the fourteenth and fifteenth centuries."^[3] It is further agreed that this sustained crisis was preceded by a prolonged expansion of the feudal mode of production.

The basic historical sequence seems clear enough. After the year 800, European feudalism underwent a slow, sometimes sporadic, but nevertheless steady growth. In the middle of the eleventh century a sharp and qualitatively new upswing began. Bloch quite accurately described this period as the beginning of the "second feudal age."^[4] At the heart of this process of growth was horizontal expansion—the reclamation of previously uncultivated land. The period from 1150 to 1240 in particular saw a major expansion of ancient villages and the creation of new ones. Reclamation appears to have begun as a growing population pressed against the available cultivated land. This movement of reclamation and colonization began to exhaust itself in the middle of the thirteenth century. Reclamation encouraged further population growth and extended onto increasingly marginal lands. The result was a classic case of diminishing returns: as decreasingly fertile land was brought under cultivation, productivity and per capita yields fell.^[5] Eventually, the returns on the investment involved in reclamation could no longer be justified. Nonetheless, population continued to rise for a considerable period after declining productivity had put an end to reclamation. As a result, the land-

labour ratio fell as productivity slumped. The inevitable result was a crisis of subsistence.

The fourteenth century experienced a catastrophic decline in the level of the European population. Famines were legion throughout the century. Moreover, an extended period of substandard diet probably increased the susceptibility of the population to contagious disease. Certainly the dimensions of the Black Death must have been influenced by the deterioration of dietary standards. So disastrous was the rise in mortality that the population of Europe appears to have been halved between 1315 and 1380. Moreover, this was a crisis which persisted. The evidence suggests that the European economy experienced two full centuries of stagnation and decline. Stagnation set in during the middle of the thirteenth century. The crisis and decline began in the first quarter of the fourteenth century. From then on, most of Europe experienced a downward spiral until the middle of the fifteenth century. In other words, during the period from 1240 to 1440 European feudalism knew little other than stagnation and decline; and for over a century (from 1320 to 1440) it underwent a major contraction.^[6] Furthermore, so deep-rooted was this crisis of late medieval feudalism that it carried over in much of Europe into the seventeenth century (in some cases following a half century or so of recovery in the sixteenth century).

The feudal mode of production contained no self-correcting mechanisms for resolving this crisis because of the surplus-extractive relations which characterize feudalism. Feudal lords, as Robert Brenner has pointed out, did not have the option of increasing their incomes through capital investments that would raise the productivity of peasant labour and enable peasants to produce more output during their surplus labour time. Since feudal peasants possessed their own means of production, their economic reproduction was in a sense independent of the surplus-extractive demands of the lords. The production of a surplus product required extraeconomic compulsion over a labour process which the lords did not control or direct. To invest in improving the technical basis of this labour process would have been an extremely risky undertaking. Furthermore, because neither lords nor peasants depended upon access to the market for their subsistence (although they might well enter into market transactions by choice) they were under no direct economic pressure to produce competitively. As a result, the drive to innovate in order to

raise productivity was absent as a general dynamic of feudal economy; the market did not impose this necessity upon peasants or lords, and the organization of the labour process was a disincentive to innovative investments by the lords.^[7]

The pressure on seigneurial incomes created by crisis did not therefore lead to investment and development. On the contrary, the efforts of lords to raise their depressed incomes further exacerbated the crisis. They tried to increase their incomes by squeezing the living standards of their peasants, primarily through increased rents or labour services. Continual pressure from the lords tended, however, to prevent the peasants from accumulating a surplus, that is, an amount above their own subsistence needs which would be adequate to replenish the soil and maintain or improve its fertility. The response of lords to crisis thus led to a decline in the productive powers of the most basic means of production in the feudal economy—the land.

Under such circumstances the main avenue by which feudal lords could increase their incomes was distributional struggles. Since the feudal mode of production lacked a developmental dynamism of the sort which characterizes capitalism, lords did not generally have the option of raising their incomes by investments designed to increase the total social output. If a lord were to increase his distributive share, he had to do so at the expense of his peasants or of other lords (the latter redistribution of income requiring war). Crisis, which heightened the downward pressure on incomes, thus tended to unleash bitter class and intraclass struggles. As we shall see, it was the specific, historic outcome of those struggles which shaped the general direction of social and economic development in England and France. In England, the ability of a section of the peasantry to improve its situation was critical to the development of agrarian capitalism and in the long term to self-sustaining economic growth. In France, by contrast, the ability of the monarchy to build an absolutist state as the last line of defence of noble power imposed a system of surplus extraction which made sustained economic recovery virtually impossible.

England: Towards Agrarian Capitalism

Following the decimation of the labouring population during the Black Death, the English aristocracy launched an offensive to com-

pensate for the fall in noble incomes brought about by the reduction in their workforce. One analyst has estimated that manorial income in the 1370s was only 10 percent below its level of the 1340s. Since the population had fallen by at least 30 percent, there must have been a substantial increase in the level of exploitation of the English peasantry. This increased exploitation stimulated widespread peasant resistance and led ultimately to the massive peasant uprising of 1381. The rebellion of 1381 was directed against the lords' attempts to increase money rents and to maintain village assessments for the poll tax despite the decline in population. Although the rebellion failed to achieve its objectives, on-going peasant resistance did win substantial economic concessions from the lords.^[8] In these circumstances, the conditions of agricultural labourers improved markedly. In fact, farm labourers experienced a 50 percent rise in wages during the period 1380–1399 relative to the period 1340–1359. Overall, there was a shift of national income away from lords and towards peasants and labourers.^[9]

Under these conditions, the situation of the peasantry improved substantially. Incomes rose, obligations were lightened, and a growing amount of land was let out to peasants on a copyhold basis, which was accepted increasingly as legal tenure under common law. As a result of the breakup and leasing out of the big demesnes, the size of manors contracted and on average peasant holdings grew. The fifteenth century, therefore, has correctly been called "the golden age of the English peasantry."^[10] At the same time that they were obtaining increased security of tenure, English peasants were winning stable, long-term leases (often as long as ninety-nine years) and, moreover, prices for agricultural products were rising. Between 1500 and 1640, for example, food prices in England rose by 600 percent. With rising prices for their marketed produce and relatively stable money rents, many richer peasants began to accumulate a growing surplus above their own costs of production (including subsistence and rent). The drive to small-scale accumulation and expansion of holdings followed logically from the ever-present threat of contraction in bad years. Petty investment and accumulation insured against the future; a system of simple reproduction (where the basic drive is to maintain the peasant farm, not endlessly to expand it) does not reproduce itself evenly over the years but, rather, through a cycle of small-scale expansion and contraction which may always be halted

by a profound secular crisis. In the unique economic circumstances of the fifteenth and sixteenth centuries, it was possible for petty accumulation to become a remarkably sustained process, at least for the better-off peasants. These peasants were able to buy up small pieces of land and invest in livestock (the most important source of fertilizer) and improved implements. While increased rents did take a share of the growing output, rents generally failed to keep pace with the level of increases in the prices of farm produce. Furthermore, the gap between agricultural and industrial prices also moved in favour of the agricultural producers, thus reducing their relative costs of production.^[11] Thus, the richer peasants producing for the market were in a uniquely favourable situation—characterized by rising prices, falling relative costs of production, and stable or declining real rents—to use a share of their rising income for investments that would expand their base of production, raise the productivity of land, and increase the surplus product in their possession. In this way, the diversion of income from lords to peasants contributed to petty accumulation and a steady rise in agricultural productivity.

This expansion of petty commodity production enabled the richer peasants to emerge as independent commodity producers, increasing the productive resources at their disposal. Buying land from poor, indebted peasants, the top stratum of peasant society emerged as a group of petty commodity producers sometimes called yeomen .^[12] The yeomanry has been described as "a group of ambitious, aggressive small capitalists."^[13] The term "capitalists" must be used with enormous care since, as I have suggested, a cycle of petty accumulation could emerge within the logic of the feudal mode of production itself and need not presuppose a new, capitalist economic logic. Nevertheless, within an economic system reshaped by profound crisis and a changed balance of class relations, the yeomanry emerged as a small but dynamic rural middle stratum, exploiting its advantage throughout the fifteenth and sixteenth centuries to improve its social and economic position. Thus, it was among the yeomen that enclosure first began. The early enclosure movement involved the formation of compact fields out of fragmented strips of land, the redivision and reallotment of land, or what Tawney called "a spatial rearrangement of property."^[14] The bulk of enclosure by peasants was by agreement. Sometimes it also involved a collective decision by the villagers to divide the commons; in other cases it involved simply the exchanging or buying of land.

Ironically, it was sections of the landlord class which reaped the greatest long-run benefits from the early enclosure movement and the rise of the yeomanry from the ranks of the English peasantry. One effect of the social differentiation of the peasantry was the dispossession of many small tenants and the creation of a new class of rural poor. By the early seventeenth century, both an indigenous gentry and an indigenous proletariat had emerged from the newly differentiated village community. Its traditional solidarity undermined, the village was now increasingly divided between rich and poor. As one historian has stated, "It was the consolidation of the yeoman oligarchies that decisively changed the realities of village life."^[15] This transformation of the village community opened up opportunities for those gentry and noble lords who saw a gain to be made through enclosure on a large scale. As a result, it was these enclosing and improving landlords who were, in the long run, to be the main beneficiaries of those economic processes which enriched the upper section of the peasantry and sealed the fate of the traditional peasant village community.^[16] And it was these members of the landed class who were the main agents in the emergence of a full-fledged system of agrarian capitalism.

From the late sixteenth century onwards, sections of the gentry took advantage of the weakened status of the village community to launch a sustained offensive against the rights of the small tenants. Increasing numbers of lords attacked peasant rights, trying to halt the decline in their incomes as their more or less stable revenues clashed with ever-rising prices. They attempted to break the grip of copyhold agreements and to turn them into forms of leasehold renewable only at the will of the lord. They drove up rents every year or every few years ("rack-renting"). They attempted to supplement income by increasing fines and enforcing obsolete obligations. And, most important, they undertook to enclose and reorganize lands—a path which tended to raise the productivity of the land by 50 percent on average. Contrary to older views which saw the eighteenth century as the great age of enclosure, modern research suggests that by 1700 three-quarters of all enclosure had already taken place. As a result of this multifaceted offensive, rents doubled during the half century from 1590 to 1640.^[17]

The landlords' offensive often involved a shift to large-scale capitalist farming in the form of pasturage as well as new crops and rotation patterns which brought more land into productive use year in

and year out.^[18] At the same time, the farm was being transformed into an economic unit specializing in a limited number of productive activities (especially of foodstuffs) geared to the market. More and more, the market dictated the internal organization of the English farm: prices, profits, wages, and rents were increasingly determined by market conditions. Having enclosed and consolidated their estates, a growing number of landowners rented them out to prosperous tenant farmers who hired rural labourers, made substantial annual investments, and paid large rents. Thus emerged the classic capitalist structure of English farming characterized by the tripartite relationship of landlord, capitalist tenant, and wage labourer in which the farm became a specialized productive unit geared to the market. The landowner was now a new economic agent, one whose wealth depended upon the surplus product of capitalist agriculture. This transformed ruling class now sought to ensure that the property rights and political "liberties" of landowners would be protected by (and from) the state.

The processes described above occurred at a time when the landed classes were growing enormously—they tripled in size between 1536 and 1636—and in which there was a major shift of land into the hands of the gentry. In the century after the seizure of church lands by the Crown during the religious Reformation almost one-quarter of the land of England was sold on the market at a cost of six and one-half million pounds. At the same time, there appears also to have been a flow of land from the aristocracy to the gentry between 1559 and 1602.^[19] The increasing social importance of the gentry was expressed in political terms. During the second half of the sixteenth century, the House of Commons grew from three hundred to five hundred members, while the gentry's component of the House increased from 50 to 75 percent.

Following the rise of faction and intraclass conflict that led to the virtual breakdown of government during the middle of the fifteenth century, Tudor governments encouraged the expansion of the power of the gentry, in order to undermine the local power of large nobles. A stable and—at least initially—self-sufficient monarchy was constructed by the early Tudors, who used increased parliamentary representation and low levels of taxation to win the gentry's support as an important counterbalance to the traditional power of the upper nobility. The Tudor monarchy, therefore, relied increasingly on new

sources of landed wealth and political power in exchange for concessions to the gentry, such as low taxation and increased powers at the local level, particularly in the administration of justice. The result was a significant weakening of the independent powers of the Crown, a strengthening of the political power of the landed proprietors, and a departure from the absolutist path.^[20] By the beginning of the seventeenth century, then, England was undergoing the transition to agrarian capitalism in the context of a nonabsolutist state which relied upon the participation of broad sections of the landed classes in the affairs of state. Participation of landed gentlemen in the exercise of political power was increasingly seen as a right which flowed directly from ownership of property. Such "liberties" were considered inherent rights of property. Thus, any attack on the participation of landed gentlemen in affairs of state was seen as an attack on property itself.

The Stuart reaction of 1603–1640 was a response to the dispersion of political power in England and an attempt to reconstruct centralized monarchical power. In part, the English Revolution can be seen as a rebellion by landed gentlemen against this tendency towards absolutism and in defence of rights that had been won during the previous one hundred fifty years. To be sure, significant sections of the landed class perceived rebellion against the Crown to be a greater danger than absolutism, since it might ignite a rebellion of the lower orders against authority and property. But it seems fair to say that, although many opposed the road of revolution, the majority of landed gentlemen were markedly hostile to absolutism. Thus this "bourgeois revolution" was a revolution against centralized state power. This characteristic of the English Revolution is perfectly explicable if we see it as an attempt by agrarian capitalist landowners to preserve and protect their property rights, their newfound forms of surplus extraction (and these very surpluses themselves), and their right to participate in the "committee of landlords" ruling England at the local level and increasingly shaping events at the national level (and which they perceived as vital to protect their property and their rents).^[21]

The "revolution from below" unleashed by the English Civil War did indeed pose a threat to the traditional privileges of men of property. The popular mobilizations in London and other cities, the formation of Parliament's New Model Army, the abolition of monarchy and the House of Lords, and the execution of the king all contrib-

uted to an often-millenarian sense that the old order was finished and that it would be replaced by a democratic and highly egalitarian form of society.^[22] Faced with such an upsurge of popular radicalism and an army drawn from the lower orders which opposed a return of the traditional social order, the bulk of the propertied class chose to support a restoration of monarchy and the House of Lords. Even then, however, when Charles II, who took the throne in 1660, attempted to pursue an absolutist policy, he incited the great wave of Whig agitation of 1679–1681 against the court, which culminated in 1688 in the overthrow of his successor, James II.^[23]

The drive against the independent powers of the monarchy became even more powerful following the Glorious Revolution of 1688. Despite the fact that 1688 was an event carefully orchestrated to avoid renewed rebellion from below, and despite the fact that the Bill of Rights of 1689 did not go nearly as far as the Whig radicals desired, the bill reinforced the trends towards limiting the powers of the Crown by making extraparliamentary taxation illegal; by ensuring that there should be no standing army without parliamentary approval; and by abolishing the Crown's suspending and dispensing powers.^[24] The Triennial Act of 1694 guaranteed regular parliaments and abolished the royal prerogative of summoning and dissolving Parliament. Finally, the Act of Settlement of 1701, subtitled "an act for the further limitation of the Crown and the better preserving the liberties of the subjects," provided that the tenure of judges would be permanent, subject only to good behaviour, and not dependent upon the Crown.

Having achieved a state responsive to their interests, after 1688 the large landowners moved with a passion to enclose and concentrate holdings. Between 1690 and 1750 there was a major shift of property away from the peasantry and lesser gentry and towards the large landowners. The century after 1690 experienced a dramatic decline in the percentage of land held in farms of less than one hundred acres and a sharp rise in the share held by farms of one hundred acres or more. This shift in land ownership involved a doubling of rents, in part a result of the increased productivity of the land brought about by enclosure and improvement.^[25] For financial considerations such as these, landlords turned to enclosure on a vast scale. Having taken the reins of government into their hands, they used acts of Parliament to legalize expropriation that has been accurately described as a

"massive violence exercised by the upper classes against the lower."^[26] In 1710 the first private enclosure act was presented to Parliament. Between 1720 and 1750, 100 such acts were passed. Some 139 acts followed in the subsequent decade. Another 900 acts were passed between 1760 and 1779. The movement reached its peak between 1793 and 1815, when 2,000 acts of enclosure were approved by Parliament. As a result, over the eighteenth and nineteenth centuries more than 6.5 million acres of common fields and commons were enclosed by acts of Parliament—an area equal to nearly 20 percent of the total land of England. In some areas, the amount of land enclosed went as high as 50 percent of the total. The change was thus massive—and, for the small tenant, catastrophic.^[27]

Modern historical research has demonstrated the shortcomings of the view that enclosure directly provided the labour force for urban industrialization. In reality, the majority of those who suffered at the hands of enclosure appear to have stayed on the land. This fact has led some writers to claim that the dislocation caused by enclosure has been exaggerated; they have asserted that enclosure and innovation provided work for those members of rural society who no longer held sufficient land or access to land (for example, commons) to support themselves. In this interpretation, enclosure was a largely technical process which benefited most members of the village community through higher levels of output and new prospects for employment.^[28] Such an approach so minimizes the social consequences of enclosure as to distort the whole process. Whatever the shortcomings of some Marxist interpretations of the relationship between enclosure and industrialization, the great strength of the Marxist approach has been to see in enclosure a crucial element in a process of social transformation in which the fabric of traditional rural society was rent asunder and a new social structure, based on a propertyless proletariat, created. Enclosure was, after all, as W. G. Hoskins described its effects on the Leicestershire village of Wigston, "the destruction of an entire society with its own economy and traditions, its own way of living and its own culture."^[29]

What took place in England during the sixteenth, seventeenth, and eighteenth centuries is what Marx described as the "primitive accumulation of capital." In a nutshell, primitive accumulation refers to those historical processes by which direct producers were separated from the land and transformed into "free" wage labourers.

The freedom of wage labour was for Marx a two-sided phenomenon: on the one hand these workers were "freed" from the land—they neither owned nor controlled means of production adequate to their own subsistence; on the other hand, they were juridically "free" individuals able to enter voluntarily into an agreement to work for an employer. At the heart of primitive accumulation, therefore, is "the historical process of divorcing the producers from the means of production." The separation of labourers from means of production is the crucial historical process which makes capitalist accumulation and production possible. Primitive accumulation creates the unique commodity, labour power that is bought and sold on the market, which distinguishes capitalism from all other modes of production. The creation of a propertyless class of wage labourers establishes the social relationship within which capitalist exploitation and accumulation can develop. The great strength of Marx's analysis was to recognize the critical importance of this social relationship and to grasp the historical fact that "the expropriation of the agricultural producer, of the peasant, from the soil is the basis of the whole process."^[30]

However, those most directly affected by enclosure did not, as many early Marxists believed, move in large numbers to urban centers to labour in the workshops of the industrial revolution. Their rural existence was nonetheless radically altered; they became the rural proletariat of the farms and village industries. What many Marxists have failed fully to appreciate is that agrarian capitalism formed the connecting link between primitive accumulation and industrial capitalism. By agrarian capitalism we refer to that situation in which large farms (usually of two hundred acres or more) were leased out to prosperous tenant farmers who hired wage labourers; and produced an agricultural product for sale on a market. The surplus above costs of production (including wages) was then divided between the farmer and the landowner in the forms of profit and capitalist ground rent (as Marx called it). Primitive accumulation thus contributed directly to the creation of a rural proletariat and a system of agrarian capitalism.

Having said this, we must emphasize that the development of agrarian capitalism was neither as direct or unambiguous a process as the economic data alone might suggest. The emergence of agrarian capitalism was constrained by the traditional force of customary rights, to which the small tenant and labourer clung tenaciously. In a

very real sense, the full flowering of agrarian capitalism in the eighteenth century represents the victory of property rights over customary rights; but the complete victory of property over custom took place only over centuries in the course of often bitter social conflicts. Agrarian capitalism was anything but a pure social species which leaped fully formed onto the stage of history. On the contrary, it emerged in a hesitant—but nonetheless forcible and sometimes violent—step-by-step process in which it was invariably coloured by the traditional society it was leaving behind.^[31]

Proletarianization occurred in a context in which customary rights continued to play an important part in the lives of the direct producers. In the sixteenth and seventeenth centuries in particular, perquisites and customary rights on common lands constituted a significant supplement to the wage. Such rights and perquisites to some extent kept the village labourer from complete subjection to the vagaries of the labour market. For this reason, village labourers objected not so much to their status as wage labourers but rather to those measures which threatened to eliminate such customary rights. This objection is only natural, given that the disappearance of such rights represented their complete proletarianization, the restriction of their sources of livelihood to the price which they could command for their ability to work. It represented, in other words, their total subordination to the rhythms of the capitalist labour market. The parliamentary enclosure in the eighteenth century, therefore, centred as it was on common lands, truly completed the process of proletarianization. For this reason we can echo E. P. Thompson's statement that in the eighteenth century "agrarian capitalism came fully into its inheritance." For it was then that the conflict between property rights and customary rights was resolved decisively in favour of the former.^[32]

The growth of large farms and the displacement of small tenants also expanded the home market. The decline of self-sufficient family farming and the growth of specialization forced capitalist farmers, labourers, and landowners to turn to the market to meet their needs for producer and consumer goods. In large measure, the rural proletariat (including semiproletarianized cottagers and the like) provided the labour force for those industries which grew up in response to the demands of England's growing domestic market. In active farming areas, local industries grew up which were devoted pri-

marily to the production of farm and domestic products. Lace-making, straw-plaiting, nailing, needle-production, paper-making, and framework-knitting were the most common industries in such areas. The most significant economic growth took place in less arable areas, such as the Midlands. Here tanners, leatherworkers, fullers, weavers, shearers, clothworkers, and ironmongers dominated the industrial scene.^[33] During the sixteenth century, increasing numbers of yeomen and small farmers were drawn into industries such as these. And in the seventeenth and eighteenth centuries, displaced peasants often found employment in these trades as agricultural specialization increased demand for these industrial products. The decline of rural self-sufficiency thus increased the industrial market. In this way, the growth of agrarian capitalism accelerated the growth of an industrial market.

The growth of agricultural productivity, especially during the eighteenth century, played a decisive role in expanding the home market and more than doubling corn exports in the first sixty years of the century. Unprocessed agricultural products as a share of English manufactured exports rose from 4.6 percent in 1700 to 11. 8 percent in 1725 and to 22.2 percent by 1750. During this same period, there was no significant increase in industrial exports. As output grew, corn prices fell. In fact, by the 1730s and 1740s, prices were 25 to 33 percent lower than the average for the 1660s. Lower prices for corn contributed to a rise in the real wage and thus brought about an increase in the demand by labourers for domestic manufactures. The terms of trade also moved in favour of manufacturers and gave a boost to the industrial sector, in relatively lower costs of production. By the 1750s, there was a permanent flow of population from the countryside to urban centres like London, Birmingham, Sheffield, and Manchester. Agricultural improvement was thus contributing to the growth of an urban proletariat.^[34]

At a certain point—recent research has suggested the 1760s—the expansion of markets and high labour costs induced manufacturers to introduce labour-saving machinery of production .^[35] And, once introduced, machinery became central to the process of accumulation. Technological innovation designed to reduce costs became an integral part of capitalist competition. Industrial capitalism—what Marx called "the specifically capitalist mode of production," in which the machinery of production is continually revolutionized in an effort to

raise productivity^[36] —thus became the order of the day. England had crossed the frontier into the age of modern capitalism. Agrarian capitalism had, however, been the vessel of its crossing.

France: The Rise of Absolutism

The French nobility was confronted with the problem of declining rents from the middle of the thirteenth century onwards. Peasants enjoyed significant success in struggles over the distribution of output and over access to common woods, pastures, and fisheries; the result was shrinking seigneurial incomes. During the fourteenth and fifteenth centuries, village communities won a corporative status that enabled them to defend their rights. Under conditions of expanding agricultural markets, improved prices for farm products, and a relaxation in the burden of the taille, a stratum of middling peasants emerged who reaped the benefits of prosperity.^[37]

In order to counteract these trends, during the second half of the fifteenth century the French nobility launched a localized offensive which picked up steam throughout the sixteenth century. In many parts of France, customary grazing rights came under attack. In response to this offensive and to the growth of rural poverty, peasants erupted episodically during the 1540s into resistance they directed especially against various forms of royal taxation. The drift towards anarchy throughout the course of the religious wars was punctuated by major peasant risings between 1578 and 1580. In the midst of widespread famine and economic crisis during the 1590s, massive peasant rebellions shook the social structure of sixteenth-century France. The scale of these uprisings forced the landed ruling class to put its internal differences behind it and to unite against the threat from below. The result was a decisive shift in the direction of monarchical absolutism.^[38] Absolutism thus represented, as Perry Anderson has written, "a redeployed and recharged apparatus of feudal domination, designed to clamp the peasant masses back into their traditional social position."^[39] Unable to break peasant resistance and to raise levies at the local level, the lords turned to the concentrated power of the centralized state.

Once the absolutist state was set on a secure footing following the civil wars and peasant revolts of the sixteenth century, the political and military weight of a centralized administrative machine was capable of ensuring a substantially increased level of peasant exploita-

tion. Between 1610 and 1644, for example, state exactions from the taille rose from 17 million to 44 million livres. Total taxation quadrupled in the decade after 1630. These increases represented a rise in the real level of exactions as grain prices stagnated during this period. By 1628, in fact, Normandy alone was providing Louis XIII with revenues equal to all those raised by Charles I in England. By the time of Louis XIV's first war (1667–1668), the French Crown was raising 60 million livres in revenue; no other European power, except Holland, could count on an income a quarter of that amount.^[40] However, though absolutism preserved the social relations of feudal exploitation, it did so in a fashion which created new social conflicts and constructed major obstacles to economic development.

The most obvious conflict engendered by absolutism was that between the surplus-extractive demands of the local lords and those of the state. Inherent in the distribution of the surplus product was a conflict between rent and taxes, the latter a "centralized feudal rent" drawn from the seigneurie of the whole realm. Especially in bad years, state exactions could entirely eliminate seigneurial rents. As a result, lords often encouraged peasant resistance directed against tax collectors or their agents.^[41]

In order to avoid a full-scale confrontation between the aristocracy and the absolutist state, the Crown strove to integrate sections of the ruling class into the machinery of taxation. The most effective means of doing so was through the sale of offices, which would give their owners a share of the centralized feudal rent exacted by the state. These officiers of the state would thus come to identify with the tax system as an important source of their personal wealth. Through the sale of offices the absolutist state provided itself with a measure of stability, since "it could absorb into state office many of those very same lords who were the casualties of the erosion of the seigneurial system."^[42] The sale of offices also had another significant effect for the Crown: it provided the state with a source of wealth separate from the surplus product of the peasantry and thus—at least in principle—lessened the direct conflict between rent collection and taxation. Moreover, to the extent to which bourgeois wealth was drawn into the purchase of offices, the Crown was able to tap a financial source largely independent of feudal exploitation.

The sale of offices served as a short-term solution to the basic structural problem of French absolutism. The absolutist state was

plagued throughout its history by a chronic inability to raise revenues sufficient to pay its basic costs—especially the costs of war. War forced the state to resort to even more extraordinary measures in an effort to meet its expenses; it relied increasingly on loans. In receiving loans from financiers and wealthy nobles, the Crown agreed in turn to alienate specific revenues from the tax system. While the system of loans enabled the monarchy to meet pressing expenses, its longer term effect undermined the financial strength of the state. The result was that absolutism experienced a sharp conflict between the Crown and those officeholders who claimed a share of royal revenues. So desperate became the situation of the Crown that it often sold fraudulent rights or imaginary supplements to the salaries of officiers . And so intense did the conflict between officiers and the Crown become that it at times erupted into open insurrection.^[43]

A basic contradiction thus ran through the structure of French absolutism: the conflict between Crown and officiers . It was a conflict which could not be resolved. On the one hand, the monarchy needed a stratum of nobles and bourgeois whose private wealth it could tap. On the other hand, however serious their grievances, the officiers could not fundamentally challenge the absolutist régime; to do so would have deprived them of access to the potential fortunes to be made through participation in the fiscal apparatus of the state. On its own, perhaps, this basic contradiction could have been tolerated. In the long run, however, the extraordinary financial machine of French absolutism siphoned enormous amounts of wealth out of productive activity and into the purely speculative area of state investments. In so doing, the fiscal machine erected an insurmountable obstacle to revitalization of the French economy.

The main focus of bourgeois investment in the eighteenth century was what George Taylor has called "court capitalism," which term refers to "the exploitation by individuals and syndicates of government farms, state loans, and joint-stock flotations and speculations."^[44] "Court capitalism" revolved around the speculative activities of financiers, those who were private agents in the collection of state revenues as farmers general, treasurers, and receivers general of finance in the provinces and those who advanced loans to the Crown in exchange for office and rentes . In reality, the term is a misnomer. Porshnev's notion of a "feudalization" of the French bourgeoisie is more accurate. In one form or another, through loans either to nobles

or to the state, enormous amounts of bourgeois wealth were advanced to the traditional ruling class in exchange for a share of feudal dues from either the local or central level. These feudal dues became a form of interest payment on capital advanced as credit. In this way, bourgeois incomes became dependent upon the system of feudal surplus extraction. Without doubt, the greatest fortunes were to be made through investments in the fiscal machine. In addition, the purchase of venal office could provide noble status while further investments could acquire fiscal exemption and seigneurial rights. The speculative fortunes to be made from lending to the Crown or participating in joint-stock enterprises were immense and stimulated an intricate network of intrigue and influence peddling; state-related investments thus dominated bourgeois pursuit of wealth and status. Consequently, commercial wealth did not flow into productive investments in agriculture and industry, since "the most spectacular operations of old regime capitalism were made possible by royal finance and political manipulation rather than industrial or maritime enterprise."^[45]

But perhaps the major obstacle to economic development posed by absolutism had to do with its effects upon the peasantry and the system of agriculture. As in England, significant social differentiation did occur in the ranks of the peasantry during the fifteenth and sixteenth centuries. Unlike England, however, this differentiation did not in France proceed to the point at which a yeoman stratum emerged from the ranks of the peasantry and undertook a form of petty commodity production. The reason for this seems clear: the consolidation of absolutism enabled the state to significantly increase the level of exploitation of the peasants. By raising the level of exploitation, the royal power prevented peasants with larger holdings from amassing surpluses sufficient to improve the productivity of the land, to expand their holdings, and to set in motion the bare beginnings of a genuine agricultural revolution.

Just as absolutism tended to block the emergence of a commodity-producing stratum of rich peasants, so it tended to close off the possibility of lords enclosing land and moving in the direction of agrarian capitalism. Absolutism heightened peasant exploitation; at the same time it also buttressed peasants' rights to property and defended the peasantry against excessive exaction by local lords. The Crown saw clearly that marked rises in rents would prevent full pay-

ment of taxes. Furthermore, since the nobility was exempt from taxation, the Crown had a direct interest in the preservation of the peasantry—its primary tax base. As a result, peasants generally received support from the monarchy and especially from its local representatives, the intendants, in their campaigns against enclosures by landlords. For this reason, according to Bloch, "the victory of the absolute monarchy kept the 'feudal reaction' within bounds."^[46] Absolutism thus defended the property rights of the peasantry while it heightened exploitation of peasants; and while it blocked the emergence of a prosperous stratum from the ranks of the peasantry, it put major obstacles in the way of agricultural improvement and enclosures by landlords.

Nobles did attempt to enclose, consolidate, and undermine the traditional rights of the peasantry. And in some cases they did demonstrate an orientation to commercial farming.^[47] But none of these movements succeeded in transforming France's rural social structure—nor could they have, given the nature of feudal absolutism. Unable to change the social relations of agricultural production, through primitive accumulation, and thereby to boost surplus product with innovations designed to maximize output, the French nobility were left with no real option but to squeeze a greater surplus from essentially unchanged levels of peasant output.

Thus, while absolutism preserved the power of the nobility—in a dramatically altered form—it also undermined the long-term strength of the economy upon which that power rested. The result was that peasants failed to meet the requirements of simple reproduction, to replace the seed, tools, livestock, and labour necessary to sustain a standard level of productivity; and the vitality of the economy was sapped. Consequently, the productivity of the land declined. At the same time, rural poverty blocked the development of a growing home market for domestic manufactures. The maintenance of a mass of small peasant holdings thus guaranteed that absolutist France would not make a breakthrough to self-sustaining economic growth. The sapping of economic vitality also undermined the power of the absolutist state. An impoverished peasantry could not endlessly provide the revenues necessary for a massive, centralized state. Periodic crises, which became endemic by the 1690s, forced the monarchy to tax noble wealth. Yet in so doing the Crown threatened its own often tenuous base of support in the ruling class. The eco-

nomic and fiscal structure of absolutism thus generated a series of economic and political contradictions, all of which conspired to prevent a capitalist transformation of the agrarian sector and thereby to block a breakthrough to self-sustaining economic growth. In this way, economic crisis sowed the seeds of political crisis.

In 1758—when the physiocratic school first rose to prominence—France was facing a threefold crisis. Her armies were reeling under a series of defeats that were to result in the loss of the Seven Years' War. Foreign trade was ruined and the financial crisis reached alarming heights. Payment of inscriptions was suspended, salaries were stopped, and people were urged to bring in their gold and silver ornaments for minting. By this point, absolutism had run its course. The economy was impoverished, the state effectively bankrupt. Theorists like the Physiocrats saw one way and one way alone out of the crisis: an English-style capitalist transformation of the agricultural sector. The physiocratic revolution was not to be, however. The result was that the monarchy stumbled from one crisis to another. By 1789, the annual deficit equaled one-fifth of the state budget while interest payments on the national debt rose to more than half of annual government expenditures.^[48] Inability to solve these economic dilemmas of absolutism sealed the fate of the régime, contributing powerfully to the revolutionary crisis of 1789. However, the failure of agrarian revolution continued to haunt the French economy long after absolutism had been laid to rest.

Conclusion

Classical political economy, as we noted at the outset of this chapter, originated in England and France in the second half of the seventeenth century. It was during this period that the course of social and economic development for the subsequent century was largely determined. And it was the prospects and problems posed by these patterns of development that occupied the attention of the classical political economists.

In the case of England, the seventeenth century was the century of revolution and of the rise of agrarian capitalism. Transformation of the agrarian social structure was a central feature of this period; the Revolution served ultimately to accelerate this process by fashioning a state which increasingly served the interests of capitalist landowners. Within the structure of agrarian capitalism, rent was the

dominant economic surplus and its utilization the key to economic development. It should come as no surprise (to anticipate the next chapter) that the central concern of British political economists of the seventeenth century was understanding those processes which created and increased the rents accruing to the owners of the land.

In France, as we have indicated, consolidation of monarchical absolutism, while preserving noble power, erected major obstacles to economic development. By raising peasant exploitation, absolutism impoverished the rural economy. By defending the rights of peasant ownership, it blocked seigneurial attempts to enclose and consolidate farms and to organize agricultural production on a new basis. Finally, in "feudalizing" the bourgeoisie by integrating it into the apparatus of state credit and finance, it directed non-noble wealth into unproductive channels. The overall result was that a sustained recovery was not triggered and that, every time the lords or the state increased exactions, economic catastrophe loomed.

These economic contradictions of absolutism fundamentally destabilized the monarchy. The financial well-being of the state depended ultimately on the health of the economy. As absolutism undermined the latter, it signed its own death warrant. The most dramatic feature of the crisis of absolutism was its fiscal aspect—the crisis of state revenues. For this reason, the problem of taxation was the central concern of French political economists during this period. The more perceptive theorists recognized, however, that the system of taxation could be reformed in any lasting way only if the economic system—and its agrarian sector, in particular—were radically transformed. The problems of taxation and economic development were intimately connected.

Rent and taxes were thus the major economic categories which dominated the writings of the pioneers of classical political economy. How these categories were constructed, and their place in a general model of economic relations, is the topic of the next chapter.