CHAPTER 7 THE CAPITALIST EUROPEAN SUBSYSTEM Because of all the excellent work already done on European capitalism from a world-system perspective (Wallerstein, 1974, 1979) this section can be short, addressing a few primarily theoretical problems. One of the semi-peripheries of the Eurasian world-system was the former core area of the Roman empire, and Northern Europe was a periphery to the great Eurasian world-system. This conclusion is not mine alone. Amin has suggested it, and Ekholm and Friedman (1980: 68) also contend that, "The rise of European capitalism cannot be separated from the decline of the previous Arab dominated world economy within which Europe functioned as a periphery." And in a footnote (1980: 74, Note 3) they continue, "The Arab centers were not, of course, alone. The centers of China and Southeast Asia and the urban commercial economy of coastal India reveal a large scale international system in which there were several interconnected center/periphery structures." The Moslem states, fighting amongst themselves, let their blockade of the Mediterranean lapse, and the littoral trade network was reconnected to Christian Europe, as was the long distance trade with the East. The Venetians, inheritors of the Phoenecian path of development, established themselves as the premier merchant shippers of the Mediterranean (Lane, 1973). A commercialized economy rapidly reestablished itself in Europe in a very decentralized political context which we refer to as feudalism. The "parcellization of sovereignty" which Perry Anderson (1974b) sees as the key difference between Occident and Orient, was in fact nothing more than a politically decentralized area which had formerly been integrated by an empire, a network of trade, and a cultural heritage. In this context merchants were able to take power in relatively autonomous cities. In Italy city-state dominated by merchants established control over its own hinterland, while in Northern Europe most of the cities were sovereign only within their own walls. In Italy the Venetians specialized in the profits of trade and production for export using their war-galleys to protect access to the sea lanes (Lane, 1973), while Florence was more of a traditional land-based power, although it too was heavily involved in commodity production for the regional market (Cox, 1959). Other cities prospered as well in a regional economy which was benefitting from its central location in the larger Mediterranean trade network. Another regional sea-based trade network integrated by merchant capitalist cities emerged in the Baltic. The German cities of the Hanseatic League carried both bulk and prestige goods in a commercialized network around the Baltic and North Sea littoral. On the body of the continent nation-state formation was facilitated by the growing long distance and regional markets (Polanyi, 1944). The wealth of the capitalist cities was an important source of revenues for the larger states, and, though the state-building monarchs sometimes sided with aristocratic landholders against the cities, they generally reduced the local constraints on trade and paved the way for the emergence of unfettered national markets. Thus capitalism became dominant, not in a world-system, but in a semi- peripheral regional sub-system of the Eurasian world-system. What was different about this subsystem? It was very multicentric, very commercial- ized, and the core areas came to include capitalist states. This shifted the balance of the game in favor of competition for shares of surplus value carried on by means of commodity production rather than conquest and tribute-taking. Not that this more traditional logic of accumulation disappeared, but it was displaced to a secondary function, and was increasingly conditioned to be a partner of capitalist accumulation. Incorporation or peripheralization? One reason for the success of the European core states was the already highly commercialized character of much of the Eurasian world-system. The Portuguese entry in the Indian ocean was an attempt at insertion in the profitable East-West trade. The peripheralization of parts of the old world and parts of the new world by semi-capitalist states was aided, in part, by already existing market economies and trade ecumenes in some of these areas. The hardest people to exploit (but not to conquer) were those who had no familiarity with commerce, or even worse, were innocent of classes and states. And Europe's rise to become the core area of the entire Eurasian world-system was slow. For a long time Europe engaged in equal exchange with the older core areas. The process described by Wallerstein as incorporation was really a process of peripheralization of areas which had long been part of a single system. Even by the Wallersteinian definition of fundamental goods, Mediterranean Europe had long been pat of the Eurasian world-system.17 And when we include bullion and prestige goods, most of continental Europe was heavily involved in the Eurasian economic network. Europe was, thus never a separate world-system, at least from the first millenium B.C. But it was a subsystem in two senses. The circuits of food in continental Europe were partly separated from the East, but, more importantly, Europe was a civilization, developing its own cultural identity based around the Western Christian church and the Latin languages. It is this civilizational aspect, long emphasized by historians of the West, which divides what is actually a single land mass from France to China, into regional subsystems. This, of course, is also a gradient rather than a discrete border. Russia is European because it adopted the Orthodox version of Christianity and turned toward the rising West during its period of empire formation. Turkey is "oriental" because it adopted Islam.18 Again, many of the processes which have been discussed as incorporation (Wallerstein, 1979, 1985; Cizaka, 1985), were really the conversion of equal exchange with older core areas--the Ottoman, Mughal and Chinese empires--into unequal exchange as Europe became the core of an expanding and eventually global world-system. The exchange of European silver for Chinese porcelain, although it was not based on coercion, represented an unequal exchange (benefitting China) which was reduced by European import substitution. Meissen, in Saxony, began the production of porcelain in the seventeenth century using Chinese methods and improving upon them. The substitution of opium for silver as payment for Chinese goods was a later instance of Europeans improving the terms of trade with an old core area. The Portuguese were partly motivated by the glories of conquest, having recently expelled the Moors from Iberia. And also the Spanish, who tried to recreate the Incan and Aztec empires with themselves as the ruling class (Padden, 1967). With the Dutch we have the first almost purely capitalist core state--a state in the core of a regional system, and dominated by both merchant and production capitalists. With the Dutch hegemony we can say that capitalism became dominant in the European subsystem. But potential core areas remained in other regions of the Eurasian world-system until the end of the 19th century, when China finally fell to the periphery of a now Euro-centric and global capitalist world-economy. The epigenesis of European capitalism So what was so unique about Europe which allowed capitalism to become dominant there? In our terms, how did a capitalist state completely committed to profitable commodity production become a core state in a regional subsystem? First, following the analysis of progressive commercialization in the Eurasian world-system, we have little reason to search for exceedingly unique European features. If capitalism had not become the dominant mode of production in Europe it would certainly have done so somewhere else. As we have seen, China nearly became a capitalist empire nearly a millenium ago. The trend toward commodification long predated the European transformation, and may have eventually emerged elsewhere if, say, Spain had defeated the Dutch revolution. India, China and the Arab region were possible candidates before they were underdeveloped by European colonialism, and economic imperialism. The brief period during the Moslem expansion in which Europe was cut off from the Eurasian world-system is not sufficient for us to consider Europe a separate world-system. In addition to infeudation and the self- subsistant manorial economy, this provoked an attack on the blockade which sent squads of crusaders toward the bottleneck. Rather than portraying European feudalism as a mode of production in its own right, I think it is better understood as a period of systemic devolution which followed the political demise of the Roman tributary mode of production and the involutio of the market network which followed the Islamic conquests. Thus, for a while, Europe was not connected by trade with the Eurasian world-system, but neither was it, within itself, an integrated world-economy by the "food" standard. The manors did not exchange either manufactures or surplus food in the most involuted period of classical feudalism. It was the reemergence of long distance trade bringing prestige goods from the East to the cities which spurred the growth of production for exchange in the countryside. The "crisis of feudalism" was, as Wallerstein (1974) has argued a switch from accumulation through exploitation of an enserfed peasantry to accumulation on the basis of "agrarian capitalism" provoked by the emergence of a strong market economy. Cities attracted a workforce from the manors and feudal lords were unsuccessful in their efforts to politically sustain serfdom, at least in Western Europe. A new core area based on commercialized agriculture and capitalist manufacturing emerged. The process of nation-state formation was stimulated and the territorial states were larger than the city-states of Italy, a feature which gave them the upper hand in political-military confrontations and also permitted the emergence of relatively large "home" markets. As Perry Anderson (1974b) has shown, state formation in parts of Eastern Europe was stimulated by political-military threats from Western Europe. And Poland became a peripheralized commodity producer of grain grown by serfs for export to the new core areas. This process undermined state-formation in Poland and led eventually to its partition by stronger powers. Slavery was employed in the peripheral capitalist plantations of the New World, producing sugar, and etc. for export to core areas. And in some areas of Spanish America "precapitalist" institutions of corvee were bent to the purpose of mining silver and gold for the Europeans. The development of underdevelopment has been amply documented in the case of the expanding European capitalist core (Wofl, 1982; Wallerstein, 1974, 1979). An interesting case of the devolution of a regional empire, that of the Kongo kingdom on the Congo savanna zone, is described by Ekholm and Friedman (1980: 65-66). They describe how twentieth century ethnographers studying the Lower Congo region find "hundreds of village societies, sparsely populated, and organized matrilineally with strong patrilocal tendencies. The large majority of these small societies practice varying forms of reciprocal exchange, some of them rather complex. Yet several centuries earlier, this area was organized into the large Kongo kingdom. The recent ethnography represents the ultimate transformation of the collapsed kingdom and several lesser kingdoms that were originally organized in vast hierarchies of martrilines.... In such kingdoms, the central power monopolized external trade, the imports of which functioned as a kind of primitive money known as prestige goods whose control was the source of power in the kingdom, necessary for dowries and other socially necessary payments as well as being exchangeable for slaves. The articulation of the Congolese regional system to the expanding mercantile trade of Europe was the cause of its downfall. After an initial expansion due to the King's monopoly over the Portuguese trade (cloth and glass beads for such goods as ivory, copper and slaves obtained by exchange with other kingdoms), increasing numbers of European traders began establishing themselves along the coast and dealing directly with local chiefs. The Kongo hierarchy was one in which local goods moved upwards to centra points of distribution and where imported prestige goods moved down in return. The asymmetry of the structure consisted in the monopoly at nodal points of the inflow of socially essential goods. The establishment of coastal trade effectively bypassed the royal monopoly so that European-produced prestige goods became available directly, without royal intervention. The result was a disintegration of the older hierarchy and the emergence of the slave trade. Since slaves were exchangeable for presstige goods in the Kongo system, the Europeans could simply pump in cheap cloth and beads and pump out slaves. The final result was one where increasingly petty chiefs and their gangs of vassals raided each other for captives to be traded to the coast in exchange for European goods, which now included increasing numbers of guns. The formerly internal circulation of slaves in the Congo area turned into a massive export of millions, so much so that the very subsistence base collapsed, and the vast homogenous culture area fragmented into a great number of small political units in regions so depopulated that many his- torians and anthropologists treat the great Congo savanna zone as a natural phenomenon instead of a human product. Thus state-formation spurred by commercialization and peripheralization of new areas enabled Europe to move from semi-periphery to the formation of a new core area in the Eurasian world-system. Equal exchange with the older core areas further stimulated European capitalism, and within Europe previously semi-peripheral areas such as the Netherlands and England developed strong core economies by specializing in capitalist production and ocean-borne trade. During the era of mercantile capitalism Europe was able to peripheralize many of the areas of the Earth, but only during and after the blooming of industrial capitalism were the old core areas of the Near East, India and China peripheralized. Wage labor and European capitalism For those who define wage-labor as central to capitalist production, which it has certainly become, the crucial turning points come later, in the eighteenth century, when the factory system and industrial production using wage labor became important in England. Wage labor has existed in pre- capitalist world-systems for millenia and was certainly important in many industries and sectors at various times and places, as we have seen. It is also relevant to point out again that labor may become commodified in other ways, as with chattel slavery, contract indenture, and etc. But the wage system is perhaps superior for some types of capitalism because it is more flexible, and it may provide an effective demand for the commodities which capital produces. All this explains why we have a preponderance of wage labor in core areas of the capitalist world-economy. But here the question I want to ask is whether or not an institutional proclivity for the emergence of wage labor was an important cause of the coming to dominance of the capitalist mode of production in Europe? Or was this rather a consequence of a prior transformation to merchant and production capitalism? The expansion of wage labor may have been easier in England and the Netherlands than in other areas of Europe. The Netherlands was located in newly claimed lands in which no prior institutions of serfdom or tenantry existed. Those which were imported were weak, and yeoman-based capital- intensive agriculture was brought into being from the start, as it was in the institutionally virgin lands of colonial New England. In old England true serfdom had never been firmly established and village communities had managed to retain some of their collective resources because of only partial infeudation by the Normans. Tenantry and the expansion of yeoman-based farming, as well as the enclosures of common land resulting from the tran- sition to agrarian capitalism pushed peasants out of the villages toward the cities, where they offered their labor to capital and threatened the guilds. The cities were never very autonomous of the monarchy in England, and so the transition to production for exchange came later than on the continent, and was based primarily, at first, on the export of wool. Sheep didn't really eat men, but they displaced them from the villages. In England the cities were not autonomous and thus guilds had weak political bases of protection from putting out or peasant wage labor. This became an advantage when merchant adventurers sought to hire seamen and producers of manufactured goods searched for cheap labor. Thus, perhaps a differential in terms of the possibility of expanding wage labor did exist in the Netherlands and England, but more important was the existence of an already expanding world market within which Dutch and English commodities could find buyers. Surplus populations have existed and still exist in many areas where there are few obstacles to wage labor and they would take jobs if they were offered them. But the existence of such jobs requires also capital and demand. Some of the Dutch and English capital came from state piracy (privateering) and smuggling. They both preyed on Spanish shipping from the New World. And the markets were found not only in Europe and its newly peripheralized areas, but also in the Mediterranean, India and China. Thus I would argue that wage labor, cheap, relatively skilled, and hard-working, is helpful to capitalism and comes to be the most prevalent form of labor control in the core areas of a capitalist world-economy, but it does not by itself explain why capitalism became dominant in Europe. So my explanation is epigenetic. The Eurasian world-system was moving toward capitalism, and it was due mostly to conjunctural rather than internally systemic reasons that Europe happened to have the breakthrough first. Of course, it helped that the European subsystem was politically constituted as an interstate system rather than an empire. This allowed for freer military and economic competition and thus stimulated innovation and transformation. As Wallerstein (1974) has pointed out, one reason China squelched its expansionary phase was that the emperor was concerned to defend the border of the whole empire. Nomads were threatening Europe when Henry the Navigator went to sea, but there was no emperor of Europe to dissuade him. But interstate systems, as we have seen, are by no means unique. Weber (1958) focused on the autonomy of the European cities, their control by merchants and the rational nature of their legal systems in comparison with those of the Orient, and he also stresses the importance of Protestantism. We have already established that autonomous cities dominated by capitalists occurred in many other areas at earlier times. As for rational legal systems and Protestantism, I doubt that they mattered much. But others have argued that Islamic cities had similarly or equally rational standards of law. And Wallerstein (1974: 61-62) has reported that a Protestant-like individualistic ethical system was ironically used to beat down the pro-capitalist elements in China. Cohen (1980) demonstrates the high development of capitalist institutions in Catholic Italy during the Renaissance. Europe's politically decentralized but culturally integrated territory, the result of the devolution of the Roman empire, was fertile ground for the strong growth of market forces. The strength of the regional market was spurred by the reopening of the long distance trade with the East and the opportunities for participation in the Mediterranean market. The weakness of the empires of the Near East after the Islamic expansion subsided left Europe free from exploitation by the old core area. The expanding Indian Ocean economy presented profitable opportunities, as did the discovery and exploitation of the New World. Markets were already well-developed in Mexico. In Peru they were brought into existence by fiat, although the use of corve'e (long practiced by the Andean empires) proved more effective. So what were the unique characteristics which allowed capitalism to emerge in Europe? The conditions which facilitated capitalism were not unique to Europe. Europe was simply the semi-peripheral area most suited to pursue capitalist accumulation during a period in which the larger Eurasian world-system was itself becoming increasingly commercialized. Geography helped. The linkage of Mediterranean and Baltic Seas and then expansion into the Atlantic reinforced the waves of transformation. Much was contingent. The Habsburg's attempt to convert the burgeoning regional economy into an empire failed, partly due to France's alliance with the Ottoman empire, a power in the old Near Eastern core. The Spanish attempt to squash Dutch independence, and thus the emergence of the first capitalist core state, was foiled by the English and by bad weather. The most important and unique thing about Europe, as well as about Rome, Greece and ancient Israel, is that "we," that is most of the readers of this book, reckon our cultural identity and genesis in this line.19 Thus "we" have searched long and hard for the unique qualities which led to "our" success and which differentiated us from the rest of the world.20 Without wishing to sleight the accomplishments of the Europeans, I will contend that capitalist transformation and eventual global domination stemmed mainly from having been in the right place at the right time.