Capitalism, Poverty and Praxis

By Prabhat Patnaik | Orginal Source: IDEAs | 10 May 2018

Capitalism is an economic system driven by its own immanent tendencies, which the State that presides over it normally supports, sustains and accelerates. One such tendency is its encroachment upon the surrounding petty production economy, resulting in an income squeeze upon, or the dispossession of, the petty producers.
Dispossession here refers not just to an appropriation gratis of the assets of petty producers; it also includes cases of obtaining such assets at less than “market prices”, and also cases where only certain sections of those engaged in the petty production sector are paid, while others are not, in the process of the capitalist sector’s acquiring the assets of this sector. These others, which include labourers, may have a customary right to the produce of this sector and hence indirectly upon its assets; their not being paid when the asset is acquired by the capitalist sector therefore also amounts to dispossession.

Such encroachment by the capitalist sector upon its surrounding petty production sector was referred to by Marx as “primitive accumulation of capital”, and it is carried out both by the capitalist sector itself acting directly, and also by the State acting on its behalf. In the light of what has been said, we can provide a more precise definition of primitive accumulation of capital as follows: it is a process of compression of the petty production sector, through an involuntary loss of their incomes or of the rights to their means of production, by those engaged in production within this sector, which is brought about by the intervention of an agency external to this sector itself and associated with the capitalist sector.

The concept of primitive accumulation of capital has been much misunderstood even with regard to its theoretical import. The misunderstanding is of two kinds. The first is the belief that it is confined only to the period before the birth of capitalism, and that once capitalism comes into being it ceases to have any relevance. All subsequent accumulation according to this view occurs within the capitalist sector itself, with the outside world playing no necessary role, on the basis of the surplus value produced internally and in accordance with the picture drawn by Marx in his two-department schemes in Volume II of Capital.

This view is completely erroneous, for capitalism throughout its history carries out primitive accumulation of capital as defined above, alongside the capitalization of the surplus value it appropriates from the workers whom it directly employs. These two processes are linked through a complex dynamic that keeps changing over time. Primitive accumulation in the colonial era took inter alia the form of direct plunder through the instrument of taxing the peasants. In the current period it takes very different forms which need to be researched and some of which I shall mention in passing below.

In fact Marx himself had recognized this phenomenon, of a regular and systematic “drain of surplus” from India to Britain through the use of the colonial taxation system, which is nothing else but primitive accumulation of capital, in a letter to N.F.Danielson, the well-known Narodnik economist, written on February 19, 1881. Primitive accumulation of capital therefore, even by Marx’s own recognition, did not stop when capitalism  stood on its feet but instead continued later in its life as well. And of course the idea of capitalism being perpetually engaged in a process of primitive accumulation of capital that keeps destroying the pre-capitalist sector was the crux of the argument that Rosa Luxemburg had put forward in her opus, The Accumulation of Capital, though her concern was more with the question of the capitalist sector finding markets at the expense of the petty producers, rather than with the “drain of surplus”.

The second misunderstanding is the view that the petty producers displaced through primitive accumulation of capital are generally absorbed, barring a small reserve army of labour, into the capitalist sector, as part of its active army of labour, which therefore makes the misery heaped upon them by primitive accumulation of capital only a transient affair. True, the life of a proletarian is not exactly a rosy one under capitalism, but at least the displaced petty producers do not remain permanently unemployed or underemployed; and as Joan Robinson had once put it (1962, p.45): “the misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all”. This latter misery, it is believed, does not befall the displaced petty producers, barring perhaps a very small number who constitute the reserve army of labour.

This view too is wrong. The fact that the displaced petty producers did not remain permanently unemployed or underemployed in the case of European capitalism has nothing to do with any inherent tendency under capitalism to absorb such displaced producers; it was a result of massive emigration from Europe to the temperate regions of new settlement such as Canada, the United States, Australia, New Zealand and South Africa.

These were the “colonies of settlement” as distinct from the “colonies of conquest” that lay largely within the tropics and semi-tropics, and were used for extracting an economic surplus. To the colonies of settlement by contrast there was an export of capital from Europe, financed largely by the surplus extracted from the “colonies of conquest” (Bagchi 1972) which went hand in hand with the emigration of labour from Europe to these colonies.

The emigres from Europe drove the local inhabitants in these colonies of settlement off their land, and set themselves up as farmers with a reasonably high standard of living which served to increase the “reservation wage” back home. And capital exports to these colonies meant a massive diffusion of capitalism from Europe to these new lands, which gave the entire capitalist system a buoyancy that lasted right until the first world war.

The point to note is that there is nothing in the dynamics of capitalism which ensures that those displaced by primitive accumulation of capital necessarily get absorbed by the system. On the contrary, as I shall argue shortly, there is an important theoretical reason why they do not get absorbed, which the European experience does not contradict, because European capitalism had caused displacement of petty producers over a far wider area than within Europe itself. In other words, the absorption or emigration of those petty producers whom European capitalism had displaced within Europe, did not mean the absorption of all petty producers whom European capitalism had displaced.

Because of this theoretical reason that comes in the way of capitalism absorbing all the petty producers it displaces (barring a small reserve army), it is not surprising that even in economies experiencing high GDP growth today, the growth of employment, as we shall see, is invariably too small compared to the number of job-seekers, consisting of both the natural growth of the work-force and the displaced petty producers.

It would follow then that the spontaneous tendency under capitalism which both unleashes primitive accumulation of capital and does not create enough employment to absorb the displaced petty producers into the active army of labour, is to give rise to growing absolute poverty. Read further at IDEAs