ECONOMIC DEVELOPMENT OF BOURGEOIS-CAPITALIST SOCIETY. TRADE PHASE (TRADE CAPITALISM).
1. Socio-productive relations.
Bourgeois-capitalist society, in the course of its economic development, passed through the same phases as the slave-holding Ц serf society beginning its life with trade phase as well. So, one can call the bourgeois-capitalist society of the first phase "trade capitalism", as many researchers do.
Trade Ц slave-holding and trade-capitalist societies, together with similarities, have some distinctions. The first of them is in the fact that traders carrying on large trade exchange with the use of alien labour power, at the trade phase of slave-holding society, applied mainly slave labour, while at the trade phase of capitalist society Ц the labour of hired workers and employees. Thus, the traders of trade Ц slave-holding society were traders Ц slave-holders, while the traders of trade-capitalist society were traders-capitalists. The second distinction: if, in trade Ц slave-holding society, small production being the basic form of economy was of mainly natural character (though there were exceptions to this rule), then, in trade capitalism, small production remaining to be the main form of economy was of mainly commodity nature. However, the latter distinction is not to be overestimated. First, it was insignificant. We may suppose that the share of commodity production in overall production was about 30% in trade Ц slave-holding society and about 50% in trade-capitalist society. Second, in some trade Ц slave-holding states, the proportion of commodity production exceeded 50%, while, in some trade-capitalist states, it was less than 50%. And, third, at different stages of the trade phase of both slave-holding and capitalist societies, the share of commodity production in overall social production was different, so that this share by the end of trade Ц slave-holding society was higher than that in the initial period of trade capitalism. Nevertheless, the proportion of commodity production in the period of trade capitalism was, as a whole, bigger than that in the trade Ц slave-holding society. It can be explained by the fact that trade capitalism developed during the industrial-technical revolution owing to which, the significance of industry increased sharply. The role of industry in trade-capitalist society was by far bigger than that in trade - slave-holding society. And since the products of specialized industrial production, functioning on the basis of operational division of labour, were commodity products, the increase of proportion of industrial production caused the growth of proportion of commodity production.
The main classes of the trade-capitalist society were the class of traders and the class of small commodity producers. At that, the traders were divided into two groups: traders that did not use hired labour and only exploited small commodity producers, and traders that used hired labour and, in such a way, exploited two classes: numerous class of small commodity producers and the class of hired labourers Ц workers and employees Ц not numerous in trade-capitalist society.
Along with the main working class Ц the class of small commodity producers Ц there were other working classes in trade capitalism: the class of natural producers, i.e. producers that carried on, entirely or mainly, natural economy selling the surpluses of products of their labour on the market only from time to time; the class of hired labourers being exploited by traders-capitalists in the sphere of trade and by capitalists-employers in the emerging sphere of capitalist production. Besides, there existed serf slaves in some places, as a remnant of old society.
Together with the main exploiting class Ц the class of traders-capitalists Ц there were also the class of capitalists-employers and the class of capitalists-usurers in trade capitalist society.
After the abolition of serf slavery in the course of bourgeois social revolution, a considerable part of former slave-holders Ц landowners, though having lost proprietary right not only to their serf slaves but also to some part of their land, had a substantial part of land (and other means of production) in their hands. Landowners, former slave-holders Ц landlords, in new, trade-capitalist society that existed in Western Europe since XV to XVII century, did not, as a rule, carry on their large households but leased their land to free peasants that often were their former serf slaves. Like before the bourgeois social revolution, before the abolition of serf slavery, farmers gave back landowners some part (though smaller one) of their labour product in the form of either natural-product or money rent. Thus, the same landowners continued to exploit the same farmers after the bourgeois social revolution, like they did before it. At that, even the form of exploitation remained the same, the landowners, as before, exploited farmers by means of usurious exploitation. Only the degree of exploitation had changed; as a rule, it decreased but in some places it, on the contrary, increased.
An important question may arise here: to what class should we refer the landowners-usurers, who were related to the class of slave-holders Ц landlords before the bourgeois social revolution? Many researchers refer them to the class of feudal lords that supposedly remain to exist even at present in many countries including industrially developed ones. But, as we have already seen, the feudal socio-economic structure does not exist as such and neither does the class of feudal lords. Since there are only two class socio-economic structures - slave-holding - serf and bourgeois-capitalists Ц and, accordingly, two exploiting classes Ц the class of slave-holders Ц landlords (traders, managers-employers and usurers) and the class of capitalists, and since the landowners-usurers cannot be related to the class of slave-holders Ц landlords, we have to refer them to the class of capitalists.
The reader may object at this point that capitalists exploit hired workers not peasants. But hired workers (and employees) are exploited by the class of capitalists-employers. Class of capitalists, the same way as class of slave-holders Ц landlords, consists of three main groups: capitalists-traders, capitalists-employers and capitalists-usurers, to which the three forms of capital correspond: trade or merchant capital; productive or enterprise capital; and usurious or loan capital. And if the class of capitalists-employers exploits mainly hired workers; if the class of capitalists-traders exploits mainly small commodity producers; then the class of capitalists-usurers exploits all the working classes, including peasants, who gave back free of charge the surplus product, entirely of partially, in the form of product or money rent for the land rented from him. Thus, the landowners exploiting free peasants by means of usurious ground rent refer to the class of landed capitalists-usurers that differ from landed slave-holders Ц usurers only by the fact that the latter exploited serf slaves not free peasants. The capitalists-usurers differ from capitalists-employers by the fact that they, like capitalists-traders (in trade-capitalist society), exploit not the class of free hired workers but the class of free peasants. Difference from the capitalists-traders is only in the form of exploitation. If the traders exploit peasants by means of trade exploitation, appropriation of trade profit, then the usurers exploit the same peasants by means of usurious exploitation, appropriation of usurious profit in the form of ground rent. Finally, the difference between the money capitalists-usurers and landed capitalists-usurers is only in means of exploitation: the former exploit the labourers, directly or using banks, with the help of money, means of enrichment; the latter exploit them, directly or through capitalists-employers (farmers), with the aid of land plots, means of production.
In general, capitalists-usurers exploit labourers using various means: grain and other food-stuff, money, land plots, craft workshops, dwelling houses, agricultural technics, animals, etc. At the trade phase of bourgeois-capitalist society, like at the previous, usurious phase of slave-holding Ц serf society, the land is only the main, basic, but not the only means of usurious exploitation. When a usurer lends money or grain on interest, he, they say, loans them; and, since the debtor is to return them with an interest, i.e. with a surplus product, the lent money or grain turn to capital. And when the usurer lends a house, land plot or other means of production on interest, he, they say, leases them. In such a case, many researchers prefer not to say that these means of production turn to capital as well, and the form of exploitation is the usurious form. But, after all, land plot, dwelling house or bulls being leased are also to be returned, by the end of term of lease, together with some surplus product that is usually paid in parts. Consequently, they turn to capital, just like grain and money. And this capital comes out in the usurious form as well, because the separation of social function of ownership from functions of labour and management takes place in this case, the latter being a characteristic feature of usurious capital and usurious exploitation. If, for example, a money capitalist having ceased to loan money to bank or capitalist-employer, or to peasants, buys a dwelling house and leases it, then he would not cease to be a usurer. The only difference is in the fact that, previously, he was a money capitalist-usurer, but now he turns to a capitalist-usurer Ц house-owner. If he buys not house but land and leases it, he would turn to a landed capitalist-usurer.
Loaning and leasing are only different names or, rather, different kinds of one and the same form of exploitation of man by man Ц the usurious exploitation. Some researchers are misled by the fact that, in the course of usurious exploitation with the use of grain or money, the surplus product comes out in the same form as the usurious capital does. If money is loaned then the surplus product is in the form of money; if grain is lent then the surplus product is in the form of grain. But when leasing a house, land or other means of production, the surplus product comes out not in the form in which the usurious capital: house, land, craft workshop, animals, etc. does, but in the form of money or food-stuff. These superficial features mask, disguise the real essence of phenomenon.
The free hired labourers work for capitalists-employers using exclusively ownersТ means of production, while the free peasants work for capitalists-usurers with the help of partially ownersТ means of production (land, sometimes houses, agricultural technics, etc.) and partially their own means. Free hired labourers work for capitalist-employer under his control, supervision at his enterprise, while free peasants work for capitalist-usurer at household leased by them under their own "supervision". This is the only difference. Thus, the land-owners exploiting some part of the class of free peasants in the trade-capitalist society by means of ground rent refer to the class of landed capitalists-usurers.
The capitalists-employers exploit only hired workers. The capitalists-traders exploit small commodity makers and, besides, hired labourers both in the sphere of trade and those working in the sphere of production by way of capitalists-employers that returned them some part of employerТs income. But capitalists-usurers exploit all the working classes: small commodity makers, hired workers and small natural producers. They exploit hired labourers both directly lending them money and by means of capitalists-employers and capitalists-traders who, getting a money loan, land plot or other means of production from capitalists-usurers return them back some part of surplus product (surplus value) created by hired workers. Capitalists-usurers exploit small commodity producers both directly leasing them land and sometimes loaning them money, and by means of capitalists-traders. Capitalists-usurers exploit small commodity producers, that carry on natural economy, directly, leasing them land or loaning them money, grain, etc.
Thus, small commodity producers carrying on natural economy were exploited in trade-capitalist society only by capitalists-usurers; small commodity producers were exploited both by capitalists-usurers, and by capitalists-traders; hired labourers working in the sphere of trade were also exploited by capitalists-traders and by capitalists-usurers; and hired labourers working in the sphere of production were exploited by all the groups of class of capitalists: capitalists-employers, capitalists-traders and capitalists-usurers.
The circumstance that the capitalists-usurers exploited all the working classes of trade capitalism, may lead to an erroneous conclusion that not traders-capitalists but usurers-capitalists were the main exploiting class (or, rather, the main group of class of capitalists) of this society. However, the following should be remembered: first, the main part of aggregate surplus product of trade-capitalist society was appropriated by traders-capitalists; second, the part of aggregate surplus product that was appropriated by capitalists-usurers: landed, money, etc. reduced more and more, so that, if, in the initial period of trade capitalism, they could, owing to preservation of remnants of old society: large landownership, usurious exploitation, natural economy, appropriate and consume a considerable part of surplus product of society, then, in the course of development of trade-capitalist society, the major part of aggregate surplus product began to be appropriated and consumed by the class of traders-capitalists. There appeared the redistribution of surplus product of society between the different groups of class of capitalists. And in the end, the class of traders-capitalists became the winner in the process of division of social surplus product created by working classes. In the period of trade capitalism, the capitalists-usurers were though influential but descending class, the significance, role, status, wealth and power of which decreased more and more. This class was leaving the political and, then, the economic arena of society. The capitalists-traders were, on the contrary, an ascending class becoming ruling one both politically and economically.
In the course of bourgeois social revolution, the basic form of ownership of the main means of production remained the private ownership and, together with it, the small household of producers. The existence of private ownership of the main means of production makes the usurious Ц slave-holding and trade-capitalist societies similar. But there is also a vast difference between them. First, the production in usurious Ц slave-holding society was based on slave-serf labour, while the production in trade-capitalist society was grounded on free labour. Second, the serf slaves in usurious - slave-holding society carrying on their small households independently were not the owners of the main means of production Ц the land, while the free peasants in trade-capitalist society, in their majority, were the owners of land plots. The large land property though not being utterly eliminated reduced significantly, the former landless serf slaves turned, in the course of bourgeois social revolution, to free small land owners that (though not all of them) got in their ownership small land plots, that belonged to slave-holders Ц landlords before the social revolution.
Under the influence of the industrial-technical revolution, social division of labour, limitation of usurious exploitation, etc., the small producers reserved a considerable part of surplus product to themselves; they turned it to commodity selling it on the market. Then they gradually began to sell also a considerable part of necessary product, buying essential consumer goods on commodity market. The proportion of commodity production in overall social production constantly increased, and, finally, it became the dominant economic mode.
The small commodity production under trade capitalism was, unlike the next, productive phase, simple commodity production, i.e. such production in which the households of commodity producers functioned on the basis of the labour of producers themselves and members of their families. Together with simple commodity production, there existed also capitalist commodity production functioning on the basis of exploitation of labour of hired workers; however, its share in overall social production was insignificant. Capitalist production was still unprofitable, inefficient at that time.
2. Trade profit, its kinds. Rate of trade profit.
The law of lowering rate of trade profit.
The trade profit of traders-capitalists in trade-capitalist society, the same way as trade profit of traders Ц slave-holders in trade Ц slave-holding society, comes out in three forms or kinds. Trade profit I is derived by traders-capitalists by means of exploitation of small commodity makers, buying up their products of labour at the prices lower than values and selling them in commodity market at the prices higher than values, i.e. in accordance with the price of production (ref. Chapter Nine). The major part of surplus product (often, all the surplus product) created by small commodity makers is appropriated by traders-capitalists in the form of trade profit I. Those small commodity producers having low labour productivity and high costs of labour product give traders-capitalists not only all the surplus product but also some part of necessary product. As a result, this part of small commodity makers is being gradually separated from their means of production, including land, because they have to sell their means of production to nourish themselves and their families. Some part of free peasants is being deprived of their land; at that, the future class of hired workers or proletariat begins to be formed.
If the trade profit I is derived and appropriated by the class of trade bourgeoisie by means of exploitation of small commodity makers owing to non-equivalent exchange, then the trade profit II is appropriated by trade bourgeoisie by means of exploitation of hired labourers occupied in the sphere of trade. Some of them, such as transport workers, loaders, packers, etc. are productive workers (ref. Chapter Nine) that increase the price of commodities sold by means of their labour. The others are not productive workers. But all of them are exploited by traders-capitalists. The surplus product appropriated as a result of exploitation of hired trade workers comes out in the form of trade profit II.
Together with trade profits I and II, the trade bourgeoisie also derives trade profit III representing the difference between values (prices of production) of similar or the same commodities produced in different, isolated places or countries with different production conditions, as a result of which, the value of the same commodity in different countries with underdeveloped trade connections between them can differ multiply. Buying a commodity at its low individual value in one place or country and selling it at its high individual value in another land or place, merchants gained huge trade profit III.
Overall trade profit of trader consists of these three forms of trade profit. If we divide, say, annual trade profit of merchant by the amount of his capital, advanced into the sphere of circulation, we would get the rate of trade profit.
After the completion of bourgeois-social revolution that released the productive forces of society from the chains of slave-holding Ц serf socio-productive relations, the rate of trade profit increased sharply, while the rate of usurious profit, on the contrary, reduced, especially after the great geographic discoveries and their direct consequence - so-called price revolution in XVI century. This sharp increase of trade profit rate in comparison with that of pre-revolutionary period can be explained by a number of reasons: rapid expansion of trade caused by the same rapid development of social division of labour; increase of labour productivity and the volume of commodity production; the lack of capital in the sphere of trade that did not enable to satisfy the need for capital in society; elimination of various duties, taxes, local currencies and other obstacles put by local authorities in the way of traders; formation of centralized bourgeois national states; building the large national commodity markets; restriction of usurious exploitation; sharp expansion of foreign trade, etc. At that, the significant role in the development of social, as well as operational division of labour, was played by the progress in the field of transportation technics and means of connection that led to the sharp reduction of transport costs and, by means of this, to the rapid development of division of labour.
However, in the course of development of trade capitalism; with the progress of transport technics and means of connection; in the course of increase of commodity production and volume of trade; with the concentration of capitals in the hands of trade bourgeoisie and saturation of spheres of trade, circulation with capital; in the course of numerical growth of the class of traders; the rate of trade profit began to sink. This happened owing to the decrease of trade profit III that reduced with the development of economy. This decrease of trade profit rate in trade-capitalist society, the same way as earlier Ц in the trade - slave-holding society, is an economic law of development of capitalism at its first phase.
At the same time, an inverse process took place Ц the increase of the rate of employersТ profit caused by the growth of the number of poor labourers that remained without their own means of production in the course of social differentiation of small commodity producers; this phenomenon caused the decrease of wages of hired workers owing to competition between them. The increase of the rate of employersТ profit was also conditioned by the growth of labour productivity in industrial production as a result of industrial-technical revolution (application of machine technics, new materials, methods of processing, kinds of energy, operational division of labour, etc.). The rise of labour productivity led to the decrease of the value of labour power of hired workers and to the increase of employersТ profit, while the competition between the poor replenishing the ranks of hired workers caused the lowering of wages down to the value of labour power and, sometimes, even lower. All these led to the increase of the degree of exploitation of hired workers and the rate of employersТ profit.
The reduction of trade profit rate and simultaneous increase of the rate of employersТ profit in trade-capitalist society led to their levelling at certain stage of its development. And this levelling the rates of profit of traders and employers caused the mass transfer of capital from the sphere of trade, where there was plenty of it, to the sphere of production, where the lack of it was felt. As a result, the share of aggregate capital of the sphere of trade in the overall capital of one or another land began to decrease while the respective share of sphere of production, especially industry, began to rise. And in the end, the volume of capital in production exceeded that in trade. But this means the transition of capitalist society from its first, trade phase of development to the second, productive phase.
3. Economic laws and economic contradictions.
Soon after completion of the bourgeois social revolution in Western Europe, the trade-capitalist states began to accomplish the trade-economic and military-political expansion to many countries and continents of the Earth. The geographical discoveries, price revolution, enrichment of the class of traders and pauperisation of other classes took place; colonial system was created, as a result of which the territorial possessions of West European trade-capitalist states increased multiply; tribes, nations and states were annihilated in the name of enrichment of the class of traders and ruling cliques of trade-capitalist states.
This expansion was the consequence of the action of economic law of correspondence of commodity market size to the level of social division of labour. The industrial-technical and bourgeois social revolutions opened the widest space to further growth of social division of labour that, in turn, needed a larger commodity market than the one available at that time. Even the appearance of large national centralized states that, in itself, was the consequence of the action of the same law, had not resolved this problem. Trade bourgeoisie craved for higher rates of profit, and the highest rate of trade profit could be gained in the form of trade profit III in foreign trade, where the trade exchange got mixed up, combined, adjoined with plundering, violence, murders, extermination of rebels, piracy, robbery, that ensured fantastically high profits to traders-capitalists. As a result, the foreign trade gained in tremendous importance at the first stage of trade phase of capitalist society. International, interstate, intercontinental commodity markets appeared giving the wide space to further development of social division of labour, commodity production, trade, as a result of which, the commodity production, mainly small, simple, became the main mode of social production, displacing the small natural production.
The large-scale commodity production appeared already in the course of agrarian-technical
revolution, but it had not become the main economic mode in ancient society. It became such only in process of the next, industrial-technical revolution. It can be explained by the fact that, during the agrarian-technical revolution, the leading role in social production began to be played by agriculture, in which (as well as in cattle-breeding) people obtained food-stuff, so that even at highly specialized agricultural enterprises, some part of labour products was made for own, productive and private, consumption. In the course of industrial-technical revolution, the role of industrial production increased sharply; the latter became the leading branch of social production by the end of industrial-technical revolution.
The products of industrial labour (all or almost all of them), even at the most backward, non-specialized enterprise or workshop, are made not for own use but for sale. However diverse the products made by industrial labourer are, he would have to sell the most part of them in commodity market to buy himself food-stuff, clothes, footwear, etc. Many free peasants carried on natural economy both in slave-holding - serf and in trade-capitalist societies, but no one free professional craftsman have ever carried on natural economy. Being isolated as an independent branch, the handicraft-industrial production, from the very beginning of its existence, was of commodity nature; this circumstance stipulated the domination of commodity production in the course of industrial-technical revolution. The second, but not less important, reason was the sharp reduction of transportation costs in process of industrial-technical revolution owing to machinization of transport.
In small industrial workshops (manufactories) in trade-capitalist society, there existed the operational division of labour, but its development, growth were restrained by small sizes of industrial enterprises and still poor expansion, application of machine technics. The economic basis of trade capitalism was simple commodity production that was incompatible with operational division of labour. There were few workshops where the hired labour was used and only several hired labourers worked at each of them that hampered the wide application of operational division of labour. The prerequisite of wide use of operational division of labour and machine technics was the appearance of relatively large machine production that, at its origin, was based mainly on simple co-operation and hand technics. Industrial workshops with operational division of labour became widespread only by the end of trade phase. And with their occurrence, there also appeared the contradiction between the operational division of labour and small sizes of these enterprises. This contradiction was the consequence of the fact that the large capitalists invested their capitals into the sphere of trade that gave them large profit. This contradiction was resolved with the transition of capitalist society from trade to productive phase. But it should be remembered that the reason for this transition was not the appearance of contradiction between the operational division of labour and the level of centralization of production, but the decrease of trade profit rate, its levelling with the rate of employersТ profit. Not the transition of capitalist society from trade phase to productive one was the consequence of the contradiction between operational division of labour and insufficient centralization of production, but, on the contrary, resolution of this contradiction was the consequence of transition of capitalist society from trade to productive phase.
The existence of small commodity production as economic basis of trade capitalism enabled to eliminate temporarily (for some 2-3 centuries), by means of bourgeois social revolution, the contradiction between the growing needs of people and the labour productivity that, though continued to increase, but at a slower pace. By the end of this phase, the ability of simple commodity production was exhausted. Neither advantages of machine technics, nor benefits of operational division of labour could be used in small, individual economy. The latter remained to exist in its dwarfish size, with its conservative technics and low labour productivity that did not enable to satisfy the constantly growing needs of society. This contradiction was only temporarily resolved with the transition of capitalist society from trade to productive phase.
In a society with highly developed commodity production, commodities are exchanged, as a rule, at their production prices. At that, traders sell a commodity at the price higher than its value while buying the same commodity of small commodity makers at the price lower than its value.
Thus, a non-equivalent exchange takes place that is conditioned by the fact that the class of traders is the exclusive owner of the mains means of circulation: means of conveyance for transportation of commodities, storehouses to keep them, shops to sell commodities, etc.
Exploitation of man by man did not disappear in the course of bourgeois social revolution; it simply changed its form. If, at the last, usurious phase of slave-holding Ц serf society, the main, dominant form of exploitation was usurious exploitation by landed slave-holders Ц usurers of serf slaves carrying on their small households on the land of slave-holder Ц usurer and giving him back their surplus product in the form of ground rent, then, at the first, trade phase of bourgeois-capitalist society, the dominant form of exploitation became the trade exploitation by traders-capitalists of free peasants and craftsmen carrying on their small economy, as a rule, on their own land or in handicraft workshop and returning the traders a considerable, as a rule Ц major, part of their surplus product that was appropriated by trade bourgeoisie in the form of trade profit being just a softer, more disguised form of exploitation.
Thus, the capitalist society, already at the dawn of its existence, at the first phase of development of capitalist socio-economic structure, was full of its own economic contradictions, to which one should add the contradictions stipulated by the availability of remnants of the old, usurious Ц slave-holding society: large land ownership, usurious exploitation, natural economy, that aggravated the status of working classes.
Almost uninterrupted class struggle of peasants and craftsmen against the ruling class of capitalists and capitalist state, that often came out in the form of peasants' revolts and insurrections was the reflection of these economic contradictions.
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