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The origins of capitalist development: a critique of neo Smithian Marxism

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					The origins of capitalist development: a critique of neo
Smithian Marxism.

   Presented by;

   ifekandu chiedu chike

   M.A/39947/2010-2011




Adam smith and his ideology..

Adam Smith, 18th-century philosopher and political economist, was born in Kirkcaldy, Scotland, in 1723.

Best known for his classic treatise An Inquiry Into the Nature and Causes of the

Wealth of Nations, he is credited with establishing the discipline of political economics. The ideas

put forward in his work represented a radical departure from the then-dominant economic policy and

philosophy of mercantilism, which had held sway in Europe for three centuries. Smith’s Wealth of

Nations was published in 1776 and is considered the first great work in political economics—the

science of rules for the production, accumulation, distribution and consumption of wealth. One of Smith’s

initial observations was that production was enhanced by the assigning of specific tasks to individual

workers. This division of labor would maximize production by allowing workers to specialize in discrete

aspects of the production process. He saw in the division of labor and in expanding markets virtually

limitless possibilities for the expansion of wealth through manufacture and trade. He also held that

individuals acting in their own self-interest would naturally seek out economic activities that provided the
greatest financial rewards. Smith was convinced that this self-interest would in turn maximize the economic

well-being of society as a whole.


One particularly radical view in Wealth of Nations was that wealth lay not in gold but in the productive

capacity of all people, each seeking to benefit from his or her own labors. This democratic view flew in the

face of royal treasuries, privileges of the aristocracy, or prerogatives doled out to merchants, farmers and

working guilds. It is not coincidental that such democratic, egalitarian views arose simultaneously with the

American Revolution and only just preceded the French Revolution of 1789. Smith believed that the true

wealth of a nation came from the labor of all people and that the flow of goods and services constituted the

ultimate aim and end of economic life. Modern capitalism traces its roots to Adam Smith and his Wealth of

Nations, which has served, perhaps more than any other economic work, as a guide to the formulation of

nations’ economic policies. His theories continue to occupy an important position in the development of

economic thought.




Karl Marx response to Adam smith and others


Marx's economics took as its starting point the work of the best-known economists of his day,


Smith, in The Wealth of Nations, argued that the most important characteristic of a market economy was

that it permitted a rapid growth in productive abilities. Smith claimed that a growing market stimulated a

greater "division of labor" (i.e., specialization of businesses and/or workers) and this, in turn, led to greater

productivity. Although Smith generally said little about laborers, he did note that an increased division of

labor could at some point cause harm to those whose jobs became narrower and narrower as the division of

labor expanded. Smith maintained that a laissez-faire economy would naturally correct itself over time.
Marx followed Smith by claiming that the most important beneficial economic consequence of capitalism

was a rapid growth in productivity abilities. Marx also expanded greatly on the notion that laborers could

come to harm as capitalism became more productive. Additionally, in Theories of Surplus Value, Marx

noted, "We see the great advance made by Adam Smith beyond the Physiocrats in the analysis of surplus-

value and hence of capital. In their view, it is only one definite kind of concrete labour—agricultural labour

—that creates surplus-value....But to Adam Smith, it is general social labour—no matter in what use-values

it manifests itself—the mere quantity of necessary labour, which creates value. Surplus-value, whether it

takes the form of profit, rent, or the secondary form of interest, is nothing but a part of this labour,

appropriated by the owners of the material conditions of labour in the exchange with living labour."


Malthus' claim, in "An Essay on the Principle of Population", that population growth was the primary cause

of subsistence level wages for laborers provoked Marx to develop an alternative theory of wage

determination. Whereas Malthus presented an ahistorical theory of population growth, Marx offered a

theory of how a relative surplus population in capitalism tended to push wages to subsistence levels. Marx

saw this relative surplus population as coming from economic causes and not from biological causes (as in

Malthus).


Ricardo developed a theory of distribution within capitalism, that is, a theory of how the output of society

is distributed to classes within society. The most mature version of this theory, presented in On the

Principles of Political Economy and Taxation, was based on a labor theory of value in which the value of

any produced object is equal to the labor embodied in the object. (Adam Smith also presented a labor

theory of value but it was only incompletely realized.) Also notable in Ricardo's economic theory was that

profit was a deduction from society's output and that wages and profit were inversely related: an increase in

profit came at the expense of a reduction in wages.
The great debate: Brennner versus; Frank, Sweezy and Wallerstein.


Brenner's theories injected important new impetus into the old question: what led to the advent of

capitalism. In 1977 Brenner published a very different sort of essay in New Left Review. In this paper,

"The origins of capitalist development: A critique of Neo-Smithian Marxism,"

he restated his theory about the European origins of capitalism and then leaped forward into the 20th

century to use this theory as a weapon against what he called "Third-Worldist" deviations in modern radical

scholarship. The main targets of this attack were three well-known Neo-Marxists scholars, Andre Gunder

Frank, Paul Sweezy, and Immanuel Wallerstein. These three were at the time perhaps the most widely-read

English-language exponents of a theoretical perspective which emphasizes the crucial significance of

colonialism and neocolonialism, and the struggle against it, in modern history. Frank's view, a form of

"dependency theory," Brenner is of the opinion that; The parallels between the positions of both Sweezy

and Wallerstein and that of Adam Smith are striking, and the defects of their arguments are the result of

their adopting his assumptions. Like Smith, both Sweezy andWallerstein, implicitly or explicitly, equate

capitalism with a trade-based division of labour. Wallerstein's view, is often called "world-systems

theory," and Sweezy's is rather more traditional anti-imperialist Marxism, all differed in some respects but

held in common the proposition Wallerstein and Sweezy follow Smith in arguing for a more or less natural

emergence of increased specialization, and a resulting increase in productivity due to specialization—

ultimately leading to the transformation of the productive forces, and with them the productive relations

But the fact is that such flowerings of commercial relations cum divisions of labour have been a more or

less regular feature of human history for thousands of years. Because the occurrence of such ‘commercial

revolutions’ has been relatively so common, the key question which must be answered by Sweezy and

Wallerstein is why the rise of trade/division of labour should have set off the transition to capitalism in the

case of feudal Europe? This question is pivotal because, between Smith, Sweezy and Wallerstein, the

development of trade does not determine a transition to new class relations in which the continuing
development of the productive forces via accumulation and innovation become both possible and

necessary..




    that events outside of Europe have been crucial in social development since the rise of capitalism, and the

Third World is thus crucial in the struggle for socialism To answer this argument, Brenner said, in essence:

The world outside of Europe has not been important for social development since the Middle Ages. It

played no role in the original rise of capitalism. It was not prevented from developing by European

imperialism. And too much enthusiasm for Third World struggles as against struggles within Europe (that

is, by the European working class) will favor meaningless reformism in the Third World and will hinder,

the struggle for socialism in the world as a whole. Feudalism was taken to be a stagnant economic system;

but in the sixteenth century things began to change. There was something of an agricultural revolution in

England, with technological innovation, changes of cropping systems, and significant increase in land

productivity. There were the beginnings of manufacture, leading eventually to water- and steam-powered

machines. There was a population shift from the countryside to towns and cities. There was industrial

revolution, in their thinking about the forces of historical change, past and present. Frank, Sweezy,

Wallerstein, and those who agree with them are "Neo-Smithians." Brenner wants to label Frank,

Wallerstein, and company "Neo-Smithians" because, in essence, they pay so much attention to commerce,

to trade, to urbanization . For him, Wallerstein et al abandon class struggle in favor of commerce and the

rest. Brenner is of course one of the leading critics of world-system analytical form of “neo-Smithian

Marxism.” His work on the origins of capitalist development later gave rise to the so-called Brenner debate.


.


.Robert Brenner, argues that the method of an entire line of writers in the Marxist tradition has led them to

displace class relations from the centre of their analysis of economic development and underdevelopment,
in a bid to negate the optimistic model of economic advance derived from Adam Smith, whereby the

development of trade and the division of labour brought about economic development, then though trying

to discard his model, they ironically end up coming with an alternative theory of capitalist development

which is very much the mirror image of the progressist thesis they discarded. The difference however is

that where these Marxist thinkers conceive class relations as emerging more of less directly from the

changing requirements for the generation of surplus and development of production under the pressures and

opportunities engendered by a growing world market, their opponents tend to see such markets

determined processes as setting off automatically a dynamic of economic development, they see them as

enforcing the rise of economic backwardness. They fail to take into account how class structures emerge,

and the fact that these class structures, once established, will determine the course of economic

development or underdevelopment. The maintain capitalism is bound up with and supportive of

underdevelopment in large parts of the world, and conclude that the development of underdevelopment is

an indispensable condition for capitalist development itself.

According to Andre Gunder Frank, “economic development and underdevelopment are the opposite faces

of the same coin”, that “both development and underdevelopment are the necessary result and

contemporary manifestation of internal conditions in the world capitalist system….economic development,

and underdevelopment are the same in that they are the product of a single but dialectically contradictory

economic structures and process of capitalism. Thus, they cannot be viewed as the product of supposedly

different economic structures… one and the same historical process of the expansion and development of

capitalism throughout the world, and continues to generate both economic development and structural

underdevelopment. The satellites remain underdeveloped for lack of access to their own surplus and as a

consequence of the same polarization and exploitative contradictions, which the metropolis introduces and

maintains in the satellite’s domestic

structure.

Although Frank did not neglect to lay out the mainstreams of capitalist development as well as
underdevelopment. The roots of capitalist evolution, he said were to be found in the rise of a world

commercial network developing into a mercantile capitalist system; thus a commercial network spread

from Europe to incorporate the Mediterranean world the sub-Saharan Africa and the adjacent Atlantic

islands in the fifteenth century, until the whole world had been incorporated into a single organic

mercantilist or mercantile capitalist and later also industrial and financial system whose center developed in

western Europe and then in north America and whose peripheral satellites underdeveloped on all the

remaining continents.

Though frank did not go much further than this in filling out his view of capitalism as a whole, it origin and

development, he was however unambiguous in locating the dynamics of capitalist expansion in the rise of

world commercial network, while specifying the roots of both growth and backwardness in the surplus

appropriation chain, which emerged in the expansionary process.

For frank, the accumulation of capital in the core depends on the one hand upon a process of original

surplus creation in the periphery and surplus transfer to the core and on the other hand, on the imposition of

a raw material producing export-dependent economy periphery to fit the productive consumption

requirements of the core.




The burden of Brenner’s critique of Wallerstein’s world-system perspective was largely to focus on the

centrality of class relations and the class struggle in agriculture, to the exclusion of virtually everything

else, locating the origins of capitalist development in the English countryside. In contrast, Wallerstein

locate the origins of capitalism in the context of an expanding world-system, tied together by a single

division of labor, one which transgresses the territorial boundaries of individual nation-states.


Wallerstein’s focus was on Social Origins of Dictatorship and Democracy, Lord and Peasant in the Making

of the Modern World. The present day crisis of capitalism on a world scale would seem an especially
fortuitous time to revisit these important debates on the nature of capitalist development, its origins, future

trajectories, possible demise and realistic.


Immanuel Wallerstein on what he term the “world Economy” defined negatively by contrast with the

preceding universal “world empire” so the world empires which ended up by dominating all economies

prior to the modern one, prevented economic development through the effects of their overarching

bureaucracies which absorbed masses of economic surplus and prevented its accumulation in the form of

productive investments. According to Wallerstein, an essential condition for modern economic

development was the collapse of World Empire and the prevention of the emergence of any new one from

the sixteenth century until present. He sees the Immanuel development dynamic of unfeltered world trade,

if left to develop on it without the suffocating impact of the world empires, developing commerce will

bring with it an ever more efficient organization of production through ever increasing regional

specialization – in particular through allowing for a

more effective distribution by what he terms system of labour control in relations to the world’s regional

distribution of natural resources and population. The trade induced world division of labour will in turn

give rise to an international structure of unequally powerful nation states. A structure, which through

maintaining and consolidating the world division of labour, determines an accelerated process of

accumulation in certain regions (the core) while enforcing a cycle of backwardness in others (the

periphery).

From Wallenstein’s argument, it can be seen that his conception of world economy and world empire were

developed to distinguish the modern economy which can, and does experience automatic economic

development from the pre-capitalist economies (World Empires ) which were capable only of redistributing

a relatively inflexible product because they could expand production only within definite limits.

Capitalism differs from all pre-capitalist modes of production, in its systematic tendency through the

expansion of relative as opposed to absolute surplus labour. Because under capitalism, surplus is

systematically achieved through increases in labour productivity, leading to the cheapening of goods and a
greater total output from a given labour force. That means a given labour force, achieves an increase in

labour productivity when it can produce its own reproduction (continued existence) in less time than

previously (working at the same intensity).

Brenner countered, that it is worth noting that in Wallenstein’s argument, he can neither confront nor

explain the fact of a systematic development of relative surplus labour used on growth of the productivity

of labour as a regular and dominant feature of capitalism. Wallenstein does not in the last analysis, take into

account the development of the forces of production through a process of accumulation by means of

innovation, because to do so would undermined his notion of the essential role of the underdevelopment of

the periphery in contributing to the development of the


Economic development is not caused by a single dominant factor -- a point that Guy Bois embraces in one

of his essay. Rather, all these factors were in play in European economic development -- and several others

as well. (For example, Ken Pomeranz introduces the exploitation of the natural resources, energy sources,

and forced labor of the Americas in his account of the economic growth of Western Europe there is also a

significant disagreement between Brenner and another important Marxist economic historian), Guy Bois’s

crisis of feudalism appeared in 1976 -- the same year as Brenner's first paper in the debate. The

crisis to which Bois refers is an analogy with a classic Marxist claim about capitalism: where Marx

discerned a crisis in capitalism deriving from the falling rate of profit, Bois found a crisis in feudalism.

Bois criticizes Brenner's account for being excessively theory-driven. He argues that Brenner begins with

a commitment to class struggle as a fundamental explanation, and then forces the facts of French and

English rural life into this framework. Better, he argues, to let the complexity of the historical situations

emerge through careful evaluation of the evidence. "Brenner's thought is, in fact, arranged around a single

principle: theoretical generalization always precedes direct examination of historical source material". And

Bois argues that the evidence will suggest that it is the declining feudal levy rather than the capacity for

resistance by French peasants that best explains the course of events in France.
In short, one important consequence of the Brenner debate was the renewed focus it placed on the question

of social causation. Brenner and the other participants expended a great deal of effort in developing

theories of the causal mechanisms that led to economic change in this period. And in hindsight, it appears

that a lot of the energy in the debates stemmed from the false presupposition that it should be possible to

identify a single master factor that explained these large changes in economic development. But this no

longer seems supportable. Rather, historians are now much more willing to recognize the plurality of

causes at work and the geographical differentiation that is inherent in almost every large historical process.

So the advice that Bois extends -- don't let your large theory get in the way of detailed historical research --

appears to be good counsel.

In conclusions, frank asserts that capitalist development, depends on the process of original surplus

creation; and then overflow transfer as well as the imposition of a raw material-producing, export

dependent economy upon the start to fit consumptive requirements. The above viewpoint, elucidates

smith’s essential feature of a world economy; that ‘production for sale in a market in which the object is to

realize profit. In such a system, production is profitable, and men constantly innovate new ways of

producing things that depends on their profit margin. The neo-smithians questions if the appearance of

widespread production signal the existence of capitalism. But only where labourers have been emancipated

from direct relation of domination( slavery) are both capital and labour free to make possible their

combination at the highest level of technology. Smith was the economist of pre-industrial capitalism; he

did not live to see the market system threatened by enormous enterprises; or his laws of accumulation and

population upset by sociological developments fifty years off. When Smith lived and wrote, there had not

yet been a recognizable phenomenon that might be called a "business cycle." The world he wrote about

actually existed, and his systematization of it provides a brilliant analysis of its expansive propensities. Yet

something must have been missing from Smith's conception. For although he saw an evolution for society,

he did not see a revolution -- the Industrial Revolution. Smith did not see in the ugly factory system, in the

newly tried corporate form of business organization, or in the weak attempts of journeymen to form
protective organizations, the first appearance of new and disruptively powerful social forces. In a sense his

system presupposes that 18th-century England will remain unchanged forever. Only in quantity will it

grow: more people, more goods, more wealth; its quality will remain unchanged. His are the dynamics of a

static community; it grows but it never matures. But, although the system of evolution has been vastly

amended, the great panorama of the market remains as a major achievement.




REFERENCES.



Adam smith (1723)         the cause of nature and the wealth of nations. London;

                          London inn press

Brenner Robert (1977): the origins of capitalist development; a critique of neo- smithian Marxism.

Bois Guy

				
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