Jairus Banaji, Translated by Zhang Yanchen: A Reading Guide to the Marxist History of Merchant Capitalism
I. Introduction Part 4 of Volume III of Capital contains Marx’s lengthiest text discussing merchant’s capital or trading capital. First, it must be clarified that Marx strictly regards "commercial capital"—which he identifies as one of the two basic forms of merchant’s capital, the other being "money-dealing capital"—as a function of the circulation of industrial capital. The merchant is merely an "agent" of industrial capital, whose sole function is to buy and sell the commodities that constitute the commodity capital of industrial enterprises.
In my view, Marxists should not mechanically insist on using Marx’s "theoretical definition" of the concept in Chapter 16 ("Commercial Capital") of Part 4, Volume III, as the basis for writing the history of capitalism; such research will yield no progress. In contrast, the passages in Chapter 20 ("Historical Facts about Merchant’s Capital") concerning possible "transitional" types within capitalism are the most brilliant parts of Marx's discourse on merchant’s capital. Beyond this, there are scattered discussions of merchant’s capital in the Grundrisse, Theories of Surplus Value, and Volume II of Capital. Among the most valuable contents are: the discussion of mercantilism in the "Chapter on Capital" in the Grundrisse; the discussion of the putting-out system [1] and large-scale production, and their relationship with major trading centers such as Venice; and the discussion of domestic industry controlled by Russian merchants in Chapter 13 ("Production Time") of Part 2, Volume II. Nevertheless, in my opinion, the historical account of merchant’s capital in Chapter 20 of Volume III remains insufficient, and certain judgments therein are open to debate.
A major unresolved theoretical issue in Volume III of Capital relates to Marx’s analysis of the status of "commercial workers." Relevant content can be found in the exploration in Chapter 17 ("Commercial Profit") and the "difficulties" he faced in that exploration. Marx argued: "The difficulty is: since the merchant's own labor-time and labor are not value-creating labor (although this labor creates for him a share in the already produced surplus value), what is the situation regarding the variable capital he uses to purchase commercial labor-power? Should this variable capital be included in the advanced merchant's capital as a cost expenditure? If it should not, then this seems to contradict the law of the equalization of the rate of profit; what capitalist would advance 150 when he can only count 100 as advanced capital? If it should be included, then this seems to contradict the essence of commercial capital, because this type of capital functions as capital not because it sets the labor of others in motion like industrial capital, but because it performs labor itself—that is, the functions of buying and selling—and it is precisely for this reason and through this channel that it transfers a portion of the surplus value produced by industrial capital to itself." In other words, can the wage laborers employed by commercial capitalists produce value and surplus value? On this question, the "difficulty" Marx faced is obvious: since commercial capitalists do not produce value (a point Marx was well aware of), how do commercial workers produce surplus value?
II. Commercial Capitalism: General Research Mikhail Nikolaevich Pokrovsky was a famous Marxist historian and social activist, and the founder of Soviet historiography. His History of Russia from the Earliest Times to the Rise of Commercial Capitalism is a work that attempts to use merchant capital to explain the historical development of Russia. In this book, Pokrovsky regards "commercial capitalism" as a socio-economic formation in Russia.
John Barber’s work Soviet Historians in Crisis, 1928-1932 primarily covers: discussions on Pokrovsky's significance to Soviet history, Stalin’s attacks on Pokrovsky in the late 1920s, and the supportive stance taken by Karl Bernardovich Radek—a Soviet political activist and early leader of the Comintern—toward using "merchant capitalism" as a category for historical analysis.
In 1984, David Ormrod published "R. H. Tawney and the Origins of Capitalism" in Volume 18 of the journal History Workshop. This article analyzes the complexity of the work of British economic historian Richard Henry Tawney, elucidating the significant position of the category of "commercial capitalism" in Tawney’s thought. In the internal debates of the post-war Marxist tradition, a strict adherence to a dichotomy [2] that distinguished the British economy into commercial and agricultural sectors gained the upper hand—as seen in the writings of Robert Brenner and others. In contrast, Tawney took a more balanced approach to the study of British economic history, and his research blurred the lines of this dichotomy.
Eric H. Mielants’s The Origins of Capitalism and the "Rise of the West" (Second Edition) opposes the description of early capitalism from a purely Eurocentric perspective; in this regard, it is a very useful introductory work, though Mielants does not expand further into theoretical discussions on the topic.
One of my articles, "Merchant Capitalism," divides capital accumulation modes into four main forms and conducts a typological examination of their historical development over the centuries up to the 19th century. It provides a powerful case for refuting the habitual description of merchant capital as "antediluvian" [3] and highlighting the essentially modern characteristics of merchant capital. This article is included as a chapter in the forthcoming Handbook of Marxism, edited by Sara Farris and Alberto Toscano.
III. Merchant Capital in Antiquity L’économie antique: Une économie de marché?, edited by Yves Roman and Julie Dalaison, includes Maurice Picon’s paper "Production artisanale et manufacturière à l’époque romaine: à propos de L’Histoire brisée d’Aldo Schiavone." This article offers an impressive critique of the world-renowned Roman law scholar Aldo Schiavone and his minimalist view of Roman economic organization. Picon, who specialized in ceramics, made full use of the cross-analytical methods of archaeology and extracted cases of merchant capital from the glass and ceramics industries.
IV. The Germination of Commercial Capitalism in the Late Middle Ages and Early Modern Period In the final part of Volume III of Capital—the "Supplement to Book III of Capital" edited by Engels—Marx describes Venice and Genoa as city-republics where merchants lived and felt perfectly at ease having the state serve them. Giorgio Cracco’s work Societa e stato nel medioevo Veneziano [secoli xii-xiv] (Society and State in Medieval Venice [12th–14th Centuries]), while not explicitly written from a Marxist standpoint, provides a detailed account of capitalism in Venice from the 12th to the 14th century, demonstrating the extent and forms of control that great merchants exercised over the Venetian Republic. Cracco notes that by the 13th century, the concentration of merchant capital had developed sufficiently to destroy the solidarity among the various classes previously involved in maritime trade.
Mohamed Ouerfelli’s Le Sucre: Production, commercialisation et usages dans le Méditerranée médievale (Sugar: Production, Marketing, and Uses in the Medieval Mediterranean World) provides a fruitful examination of the development of the sugar industry in the medieval Mediterranean. The industry began with its early evolution in Egypt (gradually expanding during the Fatimid and Ayyubid dynasties) and subsequently grew as it crossed various regions of the Mediterranean from east to west. Ouerfelli points out that by the end of the 15th century, the Mediterranean sugar industry entered a period of decline as sugar with better price advantages continuously flowed into the Mediterranean market from the Eastern Atlantic. Throughout the book, Ouerfelli repeatedly emphasizes that merchant capital (especially from Italy) played a prominent role in expanding and organizing the market, investing in sugar refineries, and imbuing the industry with an international character from the very beginning.
Tognetti Sergio, in the book Un’industria di lusso al servizio del grande commercio (A Luxury Industry at the Service of Great Commerce), provides a case study of the Florentine silk industry. The book uses a wealth of archival material from the commercial documents of merchant houses and emphasizes the modernity of commercial firms, attributing this to the scale of resources possessed by the merchants, their management skills, and their profound knowledge of the international market.
Fernand Braudel, a representative figure of the French Annales School, produced in his two-volume masterpiece The Mediterranean and the Mediterranean World in the Age of Philip II what is undoubtedly the clearest and most vivid economic history of the 16th century ever written. The second part forms the core of these two volumes. In this work, Braudel demonstrates how capitalists moved seamlessly between the major sectors of the Mediterranean economy—trade, finance, and industry—with the exception of agriculture. Beyond this, the extensive material collected in the second volume of Braudel's other work, Civilization and Capitalism 15th-18th Century: Volume 2, is equally noteworthy.
Leo Noordegraaf’s article, “The New Draperies in the Northern Netherlands, 1500-1800,” included in the volume The New Draperies in the Low Countries and England, 1300-1800 edited by Negley B. Harte, provides an exceptionally fine Marxist analysis of the production systems in the Dutch wool textile industry and the process of their transition toward a more concentrated mode of production.
In 1976, volume 88 of Rivista storica italiana published Carlo Poni’s “All’origine del sistema di fabbrica: tecnologia e organizzazione produttiva dei mulini da seta nell’Italia settentrionale (sec. XVII-XVIII)” [At the Origins of the Factory System: Technology and Productive Organization of Silk Mills in Northern Italy (17th–18th Centuries)], a pioneering study of the Bolognese-style hydraulic silk mills that spread across Northern Italy in the 17th century. Poni argues that these large-scale, mechanized sites of production predated the British factories of the 19th century by approximately 200 years. He also points out that investment in these silk mills came primarily from great merchants. This article particularly emphasizes the control of merchant capital over labor and stands as Poni’s most characteristically Marxist work since the 1970s.
Merchants and Revolution: Commercial Change, Political Conflict, and London’s Overseas Traders, 1550-1653 is arguably the best work by the American Marxist economist and historian Robert Brenner. This work focuses primarily on the internal differentiation within the English merchant stratum during and after the Elizabethan era. However, it is striking that while the book refuses to describe these merchants as "merchant capitalists," it repeatedly refers to the landed aristocracy as a "capitalist class" as a matter of course. Perry Anderson authored a brilliant review of this book.
In his two-volume work Portuguese Monarchical Capitalism, 1415–1549: A Contribution to the Study of the Origins of Modern Capitalism (O Capitalismo monárquico Português, 1415-1549. Contribuição para o estudo das origens do capitalismo moderno), Manuel Nunes Dias regards Portugal as the frontrunner of European capitalism, arguing that although its form of government was monarchical, it could essentially be called the first truly capitalist state. Dias points out that Portuguese monarchical capitalism adopted an institutional model of cooperation between the state and (commercial) capital—a partnership structure quite distinct from the joint-stock companies of France and England that later expanded into Asian markets.
Peter Kriedte’s treatise Peasants, Landlords and Merchant Capitalists: Europe and the World Economy 1500-1800 was one of the earliest Marxist works to break free from the shackles of Stalinism [4], returning to the study of merchant capitalism and rehabilitating its reputation.
The work of Chinese economists Xu Dixin and Wu Chengming, Chinese Capitalism, 1522–1840, contains several very interesting chapters detailing the "sprouts of capitalism" [5] within various industrial and commercial sectors during China’s Ming and Qing dynasties.
V. Other Related Research
Pierre Goubert belongs to the Labrousse school within the French historiographical tradition. His monograph Beauvais and the Beauvaisis from 1600 to 1730: A Contribution to the Social History of 17th-Century France (Beauvais et le Beauvaisis de 1600 à 1730. Contribution à l’histoire sociale de la France du XVIIe siècle) avoids deep exploration of theoretical questions. Nevertheless, his depiction of that predominantly rural period of French history is filled with concerns regarding the nature of French capitalism in the 17th and 18th centuries, explaining in particular how the putting-out system [6] integrated the countryside into the circuits of international trade.
In Way of Death: Merchant Capitalism and the Angolan Slave Trade, 1730-1830, Joseph C. Miller provides a detailed study of the Portuguese slave trade, exploring the role played by merchant capital in establishing control over this traffic in human beings. The 18th century serves as a watershed for the internationalization of capital, which is the overarching perspective of Miller’s analysis.
In 1927, Peter Ivanovich Lyashchenko published his Russian article "The Development of the Russian Grain Economy during the Crisis of 1880-1890." In 1998, this article was translated by Hari Vasudevan and included in his edited volume Commercialization and Agriculture in Late Imperial Russia: Essays on Russian Economic History. In this piece, Lyashchenko expounds on the evolutionary trajectory of the category of "trading capitalism" within Marxist theory, providing a good explanation for why Russian Marxists raised no objections to this category until it was discarded by Marxist theory.
Sven Beckert’s Empire of Cotton: A New History of Global Capitalism is the only work capable of proving how crucial merchant capitalists were to the expansion of industrial capitalism within its specific branch of industry—namely, cotton textiles. Beckert states in this work that because the global expansion of the cotton industry was always accompanied by violence, he prefers the term "war capitalism" over "merchant capitalism." If Beckert's view were misunderstood as signifying a theoretical category rather than a purely historical one, it might prove misleading to the reader.
VI. Discussions on the Nature of British Capitalism
Geoffrey Ingham’s Capitalism Divided? The City and Industry in British Social Development is an example of research conducted outside the self-consciously Marxist tradition that can fill the massive void left by the debate between Anderson and Tom Nairn on the nature of British capitalism that began in the 1960s. Ingham argues for the essentially mercantilist character of the City of London and its key role in sustaining British capitalism as a whole.
Furthermore, Ingham published "Commercial Capitalism and British Development" in New Left Review (1988, Vol. 172, Issue 1), which offered a powerful rebuttal to the harsh, dogmatic criticism leveled against his book Capitalism Divided? by Barrat Brown.
VII. Capital and Household Production
In 1977, Henry Bernstein published "Notes on Capital and Peasantry" in the Review of African Political Economy (Vol. 4, No. 10). This is a far-reaching work which, like the article by Michael Cowen mentioned below, was a product of the great Marxist theoretical debates [7] of the 1970s. In this piece, Bernstein wrote: "The peasantry... has to be situated in its relation to capital and the state, in other words, within capitalist relations of production mediated through forms of household production which are the site of a struggle for effective possession and control between the producers and capital/state." That is to say, maintaining household production as a key element of accumulation, rather than simply destroying the peasantry, is of great benefit to both capital and the state. This article also draws the reader's attention to this mode of accumulation as discussed by the Soviet economist Alexander Chayanov in two of his essays.
Cowen's article, "Commodity Production in Kenya’s Central Province," represents a major attempt to "creatively" apply Marxist categories to demonstrate how the integration of household commodity production with broader processes of capitalist accumulation should be understood. Cowen argues that interventions by international finance (such as British government aid agencies) stabilized the household production sector in countries like Kenya, shielding it from the potential instabilities brought about by indigenous capitalism. This essay was included in the volume Rural Development in Tropical Africa, edited by Judith Heyer, Pepe Roberts, and Gavin Williams.
An article of mine, "Merchant Capitalism, Peasant Households and Industrial Accumulation: Integration of a Model," was published in the Journal of Agrarian Change (2016, Vol. 16, No. 3). This piece, included in a commemorative collection for Bernstein, begins by summarizing Bernstein's seminal 1977 work and then uses Chayanov’s concept of "vertical capitalist concentration" [8] as a primary thesis to construct a more general classification system for the various ways capital dominates the agricultural sector (household producers). The most salient part of this article lies in its discussion of the so-called "trade in agricultural products," which was a pillar of 19th-century French and British merchant capitalism.
Robert Shenton's work, The Development of Capitalism in Northern Nigeria, highlights the extreme importance of merchant capital and is one of the few valuable Marxist research outputs on Nigerian capitalism. In the fifth chapter, "Concentration and Centralization of Capital," Shenton points out that "concentration and centralization were the only means of commercial survival," which meant carving out a living in the competitive gap between the large commercial firms controlling West African trade and the firms controlling the shipping of that trade.
VIII. The Subordination of Merchant Capital to Industrial Capital
The research of Glenn Porter and Harold Livesay in Merchants and Manufacturers: Studies in the Changing Structure of Nineteenth-Century Marketing shows that the subordination of merchant capital to industrial capital emerged primarily in the 19th century, much later than Marx had envisioned. During this period, large industrial enterprises began integrating upstream [9] to control their own sales and marketing, thereby reducing the need for "middlemen."
IX. Merchant Capital in the 20th Century
The work of Chinese economist Chen Hansheng [10], Industrial Capital and Chinese Peasants: A Study of the Livelihood of Chinese Tobacco Cultivators, is perhaps the first valuable case study ever produced on contract farming. It demonstrates how Chinese merchant capital (compradors [11]) was integrated into the supply chains controlled by large industrial firms—specifically, in this case, the Anglo-American tobacco giant British American Tobacco (BAT), headquartered in London. In Chen Hansheng’s view, price dominance was the key mechanism through which industrial capital directly exploited Chinese peasant laborers.
Susan Becker's article "The German Metal Traders before 1914" and her book Multinationality has Different Faces: Forms of International Corporate Activity of the Société Anonyme des Mines et des Fonderies de Zinc de la Vieille Montagne and the Metallgesellschaft before 1914 likewise explore 20th-century merchant capital. The former was collected in Multinational Traders, edited by Geoffrey Jones. Both works emphasize the importance of vertical integration to the commercial strategies of large German non-ferrous metal producers striving to maintain market share in their core (commercial) businesses. Becker argues that the fact that Metallgesellschaft integrated downstream to control global mining and smelting operations did not make it an industrial firm (a form of industrial capital). Aside from David K. Fieldhouse's study of the UAC, these two works are the closest results to a study of advanced merchant capitalism in its purely modern form.
Fieldhouse’s book, Merchant Capital and Economic Decolonization: The United Africa Company, 1929-1987, provides an inspiring and detailed study of the UAC, the trading arm of Unilever. As a chronicle of the extraordinary commercial history of one of the world's largest commercial companies, the value of this book is highly prominent.
Barbara Harriss-White’s book, Rural Commercial Capital: Agricultural Markets in West Bengal, is one of the best case studies on how merchant capitalists control agricultural production and exchange in India. Of particular note is that the fieldwork for this book was conducted in West Bengal when it was governed by the Communist Party of India (Marxist). Harriss’s analysis clearly demonstrates that the development of the agro-industrial sector in West Bengal was largely predicated on deals struck between merchant capital and the Left Front government.
(Author: Jairus Banaji, School of Oriental and African Studies, University of London; Translator/Compiler: Zhang Yanchen, School of Marxism, Beijing Technology and Business University)
(This article was compiled and translated from the English electronic journal Historical Materialism, originally published in the French electronic journal Période on April 24, 2017. This translation is a phased achievement of the 2019 Beijing Municipal Social Science Foundation Youth Project "Research on New Trends in Welfare Governance of Contemporary Capitalism.")
Online Editor: Tong Xin Source: Foreign Theoretical Trends (Guowai Lilun Dongtai), 2022, No. 2