Capital

Capitalism is generally thought of as a phenomenon of the last two or three centuries, but I think there is a sense in which it is NOT a new, or even distinctly human, phenomenon.

The conventional understanding of capitalism is associated with a definition of capital as involving only a particular kind of wealth, namely machines and factories, that is useful for the creation of further wealth (some of which may be immediately consumed, some used over an extended period, and some used to create yet more productive capital). Capitalism is generally thought of as a phenomenon of the last two or three centuries, during which the owners of machines and factories came to dominate the global economy and during which the use of at least some of their productive capacity to build more of the same led to a rapid expansion of total output.

But in fact there are various kinds of wealth besides machines and factories that can be used to store or create more wealth, and it may be worthwhile to consider a more broadly defined concept of capital. Land is a source of food and other kinds of wealth even for hunter-gatherers (though in this case more land is not one of the things it can be made to produce). The modification of land by building nests and homes increases its value by allowing it to provide more of the usable “good” of shelter. Seeds and livestock can be used both for immediate consumption and to generate more of the same – though the carrying capacity of the environment limits the amount to which the total supply can be usefully increased. And the same is true of machines and factories, but the limits to growth by exact duplication are now set by supplies of ores and other raw materials which had not previously been used and so for which the limits did not become apparent for many years.

Any organism meets its needs through some kind of interaction (labour) with useful parts of its environment (capital in the extended sense). Some species (social insects, spiders, birds, squirrels, beavers, humans) act to modify the found environment in various ways, which (by combining labour with found capital) enhance the utility of that capital for providing future needs (and so increase the value of that capital for the organism and its offspring).

Territorial species, and species that invest energy in accumulating labour-enhanced capital, typically seek to defend their “ownership” of any kind of such extended capital, be it territory, cached seeds, nests, dams, or anything else. And humans are no exception – on both counts.

Among human hunter-gatherers, the capital they seek to control comprises both territory and tools. The territory is often shared with a community of peers, but the tools are more likely to be identified with a particular individual. With the advent of cultivation, control of territory becomes more individual-focused, and from the first farming cultures, “ownership” of land becomes a major component of an individual’s private capital – along with that of various animals for both work and food-value.

From the dawn of agriculture to the end of feudalism, capital consisted primarily of land or herds of livestock – with some cultures emphasizing one more than the other.And the combination fell more and more often into being held privately and inherited by validated offspring rather than being shared as a community resource. Throughout this period, those who gained or inherited control of capital were at an advantage, and were in a position to first buy the labour of individuals who had no capital of their own, and then to use the further proceeds to buy the labour services of enforcers to coerce the free or undervalued labour of others and to seize control of more and more of what had previously been communal resources. That is still the case, now as much as ever.

What has changed only in the last few centuries is just the dominant component of capital with the consequence that there was initially a lot of room for expansion as these new kinds of goods required raw materials of which there were initially vast reserves which had not yet been exploited.

Up until the end of feudalism it was either land and (or in some nomadic cases only) animal herds, that dominated the accounting of capital. But there were also trading cultures in which beasts of burden and ships were a major contributor. The end of feudalism is identified first with the capital value of high tech ships for trading over greater distances and at less cost than ever possible before, and the fact that these were built in shipyards where relatively small amounts of land contained buildings and tools that were capable of being used repeatedly to generate high-value products. This was followed by the appearance in other industries of dramatically enhanced (in both capacity and magnitude) tools for value production and enhancement – so much so that the capital value of the factories where these were used soon outpaced that of land and livestock.

So in this view, what is commonly identified as the transition from feudalism to capitalism was really just a transition in the economically dominant form of capital from land, seeds, and livestock to tools – first ships and shipyards during the “mercantile” period, and then turning quickly to machines and factories. The old aristocracy invested in land were just as much “capitalists” in the extended sense as the new dominant class invested in ships, factories, and tools. In many (but only a tiny proportion of) cases, individuals and families that were previously labourers (albeit usually skilled ones) managed to gain control of new kinds of capital, and a significant proportion of the previously dominant landowners became relatively less wealthy (though only a tiny fraction were stupid or unlucky enough to fall into the class of servitude and penury). But the basic model was unchanged – despite the fact that a promise of “democracy” was often used to facilitate enrolment of the less advantaged by the new capitalists in support of their goal wrenching control of state authority from the old ones.

One thing that did change in the short term as a result of that transition is the rate of economic growth. Some say that the interests of machine and factory owning capitalists will inevitably drive this to continue until either resources run out or waste products destroy the environment, but I am not yet convinced of that.

Now there is another transition under way. This most recent transition is, within the capital dominance of tools, from the physical aspect to the information aspect. This may have some potential for extending the amount of economic growth that can happen without catastrophic effect. But it also has the power, more than any other such transition, of diminishing the value of labour. Indeed, the time is not far hence when a human without capital will have nothing to trade for the essentials of life, and so, unless we do something to prevent the accumulation of capital in very few hands, the vast majority of humans, if they are to live at all, will have to do so by way of increasingly subservient and degrading service to others.

Fortunately, there is in fact, a way to avoid the world in which a tiny fraction of humanity owns all the capital resources and the rest, along with their descendants, are doomed to subservience for ever. But the bad news is that there is only a small time-window for its implementation, and even now it might be difficult to achieve.

The only way to save us from that world is to ensure, before it is too late, that the inheritance of capital primarily only by direct descendants is ended. This means the introduction of significant and progressive  “death duties” as soon as possible; and the provision, in place of the model which has heretofore been held sacred by almost every human culture, of a system whereby *every* human inherits an equal share of the capital of the previous generation  (which could be called a ‘Universal Fair Inheritance’).

What does this really mean? and how can it be achieved? Tune in next time for the answers.