Understanding the Causes
- Raymond Makewell
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Raymond Makewell, School of Economic Science, Author of “Economic Wisdom”, Roseville, Australiall,
Work is a fundamental need for all human beings. Through work we may find fulfillment, dignity, happiness and prosperity. The role of the community, when unimpeded, is to allow its individual members to specialize, supporting the expression and refinement of their talents through which they may find a wide sense of common purpose, and ensuring them a degree of protection.
The global economic system under which we live allows little individual freedom. Nature produces abundant raw materials but the opportunities for productive work are scarce and the jobs available provide little satisfaction. Would-be reformers may criticize the complex business system we call ‘capitalism’ but until the causes are thoroughly understood there can be no lasting improvement.
This paper re-assesses the origins of capitalism, especially in the English-speaking world, where it has grown up not as a manifestation of economic freedom but as a demonstration of human ingenuity when confronted by an unjust system of land tenure. Attempts to mitigate this injustice have given rise to institutions whose purpose is to redress the effects of a restrictive system of production and distribution, instead of institutions to serve the people and their natural aspirations.
Today similar patterns are developing in the newly-industrialising countries. Current economic thought seeks to explain the effects of laws operating in the capitalist system. Only by rediscovering and teaching the universal principles of economics with justice will it be possible to avoid similar consequences and a widening gap between rich and poor.
Property – from propria, my own self, - is something pertaining to man. I have property in myself. I have a right to be free. All that proceeds from myself, my thoughts, my writings, my works, are property; but no man has property in land, and therefore it is not property.
Life in Anglo-Saxon England was certainly hard by our standards, but working hours were not oppressive . Early authors describe England as bountiful. There is no evidence of disproportionate wealth in the hands of a few people, although some slavery existed. Manor houses were not fortified. If the harvest failed, there may have been hunger, but the situation was shared by all. Some may have been indolent but they were so from choice. The sick and the needy were cared for by the church and there was no hopeless poverty for people could support themselves if they so chose.
There was not much international trade, and little requirement for money . There was capital in that every farmer would have stores, and tools and specialists existed in the form of millers and a number of other crafts. It appears there was little or no requirement for money lending even were it permitted.
Despite the rustic existence learning was widespread among the noble families especially during and after the rule of King Alfred.
Most supported themselves by farming. The land was held to belong to the community and individuals occupied it as tenants, with rent taking the form of duties. Tenancy was for life, but the successor was most likely to be the son of the previous tenant, enjoying the improvements of their forebears and undertaking the same duties.
There was plenty of free land available and anyone who wanted to could take a piece of suitable land, clear and cultivate it to make a living, usually on the outskirts of an existing settlement. Once the land had been cleared and the first harvest gathered in, the new settler would be expected to fulfil duties to the village community. In its turn the community would have duties to the kingdom. Exactly what these duties were is largely a matter of surmise . Almost half of the village communities appear to have had a lord or thane , whose nature was that of protector . In return for protection the villagers rendered him services, such as cultivating his land, hewing his wood, and so on. The thane was in the nature of a Scottish chieftain and not a landlord, administering the common land of the village as trustee rather than owner.
A landless man was a rarity among freemen, so much so that he was declared an outlaw. True, men did not hold land on equal terms due, but usually even serfs acquired their own landholdings.
Following the Norman Conquest the Frankish approach to land tenure was introduced. The effect was to be far-reaching. The new King proclaimed himself owner of all the land not as a trustee of the community, but in his own right by conquest. This was the first open diversion from the principle that the land belonged to no one but was for the benefit of all.
The King handed large tracts of land to his supporters, the barons, in return for fulfilment of duties or dues. The barons in turn became the new lords of the manors – often of a number of manors - and the existing landholders became their tenants in return for fulfilment of their dues. Now every landholder had a lord. To most ordinary people little seemed to have changed . The King farmed out the collection of feudal dues to the lords; they, on one hand, added to these to support themselves, and, on the other, introduced a harsher form of serfdom, thereby creating a privileged group whose appetites extended beyond what could be provided by cottage industry. Jewish traders were encouraged, to come to England to expand trade, provide currency and facilitate money lending .
But tenure of land was still largely in return for service – rent. Free land - the commons - was still available.
The Norman Lords were ambitious. Instead of the lord of the manor being the protector of the community, acting as trustee of the common land, and receiving certain services in return, the lord began to regard himself as owner of the manor, restricted by tenants claiming troublesome rights which impeded his freedom to use the land as he would. The law was deliberately misinterpreted to make it appear that these rights were grants given at the will of the lord and that this was, consistent with ancient custom.
Services were slowly converted into money payments which, although more convenient, emphasised further the impression that land was held from an owner in return for a periodic payment.
In 1215 Magna Carta had laid down that no free man should be disseised of his free tenement except by the ordinary process of law and the following Charter of the Forest provided access for ordinary men to land that was not currently in use . This started to change in 1236 under the Statute of Merton . For some time the lords of the manor had attempted with varying degrees of success to enclose parts of the common lands, either to provide new freeholds for those to whom they were indebted, or to form sheep-walks for the growing practice of sheep rearing
Wool was mostly exported. Large quantities were sold to Italian and Hanseatic traders for money, and this and the commutation of rents to money are the genesis of the cash economy.
The Statute of Merton paved the way for the early enclosures. Initially these had little impact and the rural population in general remained comparatively prosperous. But gradually as enclosures became more frequent the population began to suffer severely. Enclosed land was used more and more for pasture, rather than supporting the community, and evicted tenants, unable to find employment in the villages, were obliged to turn to the towns. Wages fell. Laws passed to curb the enclosures achieved little for they were very ineffectively implemented.
Then in 1348 came the Black Death. One third of the population perished. Many of the lords’ lands were left untended and hired labour was very difficult to obtain – so difficult that wages doubled . Labourers could travel about seeking the highest wages. With the loss of labour the lords lost their advantages. Since sheep farming needed far less labour than arable farming the lords enclosed more land as pasture, at first the uncultivated land, then the manorial wastelands, depriving the tenants of their ancient rights of pasturage and subsistence. Sheep farming proved highly profitable for wool was in great demand across the English Channel. Enclosures also made possible the sale of holdings of land. Land had become a commodity. The major purchasers were the merchants, who were becoming very prosperous.
Enclosures continued even after most of the uncultivated common land and the wastelands had disappeared. These sometimes included actually turning out tenants and destroying their homes. Further steps taken by the King and Parliament to prevent the continuance of enclosures were half-hearted, for those in positions of power were often enclosing land themselves. Farming of all types was increasingly for the market and the importance of money grew.
By the early 16th century the great shortage of manpower after the Black Death had been made good. There was a surplus of labourers, unemployment had appeared for the first time, and the dispossessed fled to the towns and cities where they were left destitute to beg or steal a living. During the 36-year reign of Henry VIII it is estimated that 72,000 people were hanged for vagrancy.
Without the rent from the land the royal revenues were insufficient and had to be supplemented from taxation . The rights to collect customs duties were sold to private individuals. It was not enough. Henry VIII dissolved the monasteries and sold their land and treasures. The purchasers were largely the newly-rich who saw land as an income-yielding investment without obligations to the community, and tenanted it at the highest possible rent. By the end of the 16th century over half the common lands of England were enclosed. By 1601 the problem of unemployment among the landless had become so great that the Poor Law Act was passed, putting on the parish the responsibility for supporting their own poor.
With the Reformation, the focus shifted to the individual. It began to show itself as individual enterprise, but more obviously in what contemporary writers called ‘private affection’, ‘private profit’ and ‘singular lucre’. In business dealings it meant what we now call ‘competition’. It was no longer acceptable for any rights over common land to be held by the inhabitants collectively. The emphasis was now on rights of absolute ownership by individuals.
The new situation created new opportunities. Trade and manufacturing flourished. For example, in the wool trade English merchants now purchased raw wool and the practice began of ‘putting-out’ to independent craftsmen for various aspects of cloth production. Other independent workers would purchase raw materials on credit from merchants, process them, and sell the finished goods. Factory work in towns also developed. A new class of wealthy merchants arose from the proceeds of trade, town-based factories and the increasing rents to be gained from land in and around the expanding towns.
English merchants abroad had become bolder too. Known as merchant adventurers. they formed companies which were at first created for a single voyage and then dissolved. Substantial funds were required to furnish both ships and cargoes, but if the expedition was successful there were considerable rewards for those with sufficient wealth to take the risk. The sources of finance appear to be rents of land in and near towns, previous merchant ventures and, later, private tax collections . Much of this trade was made possible by the very high levels of unemployment: sailors on merchant ships risked life and limb but unlike fishermen did not share the bounty.
As the formation of companies grew, trading companies became permanent and enjoyed privileges granted by the monarch, including, in some cases, the removal of liability of owners for the actions of their company – limited liability
In the 16th and 17th centuries manufacturing developed in England across a wide range of industries old and new. Some enterprises required substantial funding for the acquisition of land at the right location, construction of large-scale, purpose-built premises, and equipment. In many cases cottage industry was equally competitive. New industries such as cotton and coal mining tended to be established in the capitalist mode and often used new technologies. In the early 19th century wage levels recovered and working hours decreased. Vast amounts of previously unusable land was made available in the Pennines and by draining the Fens.
The prosperity of the labourers was relatively short-lived. During the late 18th century a greater wave of enclosures began which finally engulfed virtually all the remaining common land, this time largely legitimised by Acts of Parliament. In theory, the enclosures were by the consent of the community or for the common good. In practice, parliamentarians were often the beneficiaries and villagers lost almost everything. Wages plummeted, unemployment was rife. Petty crime was punished by transportation of criminals to America and later Australia. ‘Competition among the workers was strong enough to force wages down to the minimum, but there was never sufficient competition among the masters to force wages up to the maximum the industry could afford to pay’. In fact, it is highly probable that many industries could not have been established had wage levels remained as earlier that century.
Innovation was rapid: canals transported large volumes of produce - especially coal - across the country, the steam engine, and ever-larger factories often manufacturing only for export. Railways and steamships followed canals. The enormous construction costs were minimised by the very low costs of labour. The primary beneficiary was invariably the holder of the land required.
Owners became investors with increasingly less responsibility, happy to secure for themselves the fruits of the new venture. The device of limited liability was becoming virtually universal, so that those with money or land could extract rewards without any involvement in production.
The capitalist system requires a number of factors:
1. Sophisticated knowledge in the form of engineering skills and/or scientific insight.
2. Confidence and the propensity to take risks.
3. Large amounts of money to secure land and build the infrastructure, invariably more than a single person or a small group can provide.
4. For both the construction and operation of enterprises, large numbers of labourers prepared to accept very low wages.
Wages are low because workers have no opportunity to employ themselves – they have no access to land. The funds invested are effectively the spoils from low wages and high rents which arise because land is not free.
The industrial revolution was not the beginning of modern prosperity from which all advances should be measured, but instead the lowest point in the prosperity of the common people. The land, instead of belonging to the community for the benefit of all, had become the private property of the few. The majority were left landless and poverty was rampant. Wages were very low and hours very long as families competed with one another for employment. Successful new ventures not only provided enormous profits to their investors, but increased the value of adjacent lands. Those with control of land became increasingly wealthy, those without became increasingly poor.
The capitalist system requires cheap labour. Cheap labour results from unemployment or the fear of unemployment. In the West where employment is taxed, labour has become expensive. Manufacturing is moving to countries where wages are low, and low because people are being alienated from the land in ways similar to those that occurred in England three hundred years ago.
Anglo-Saxon England provided reasonable economic equality and the means for people to support themselves. The functions of community were met by a levy on the privilege of occupation of land, but free land was available. The land belonged to the whole community.
In time, individual property in land was accepted. With that, the duties hitherto inseparable from occupation were disregarded, and the community thus deprived. The powerful were able to acquire land at the expense of the remainder of the population. These acquisitions came in waves. Each wave caused social and economic upheaval, creating new economic opportunities for those with resources and initiative, and poverty for those without. After each wave some degree of economic stability returned and the material situation of working people improved, but improvement was slow, and not universal.
Material prosperity in the United Kingdom today may seem relatively high to many people. But at what expense? Unemployment is around 10% and earned incomes (before taxation) are only 55% of total production. There is an imminent prospect that the cycle may be turning down.
In truth the land belongs to no one. Over time the community has accepted private ownership of land by the few to the exclusion of the many who need it. Yet the duties which our Saxon forefathers recognised have neither changed nor lapsed. The community has a duty to ensure that land is free and the citizens safe; the duty of the tenant is to keep the land in good condition and recompense the community for alienation of the land.
The History of Landholding in England.
2Working hours for men were probably less than working hours are today.
3Although the Saxon Kings certainly minted coins.
4Capital here meaning tools, which could be a barn or a mill as well as simpler tools used in agricultural production and all the crafts.
5Although it is certain that for freemen this included military service.
6Thanes and earls appear to have been elected for life by the community.
7 Although the houses of these people were not fortified and populated with soldiers and they became in later Norman times.
8And manors became castles, fortified and populated by soldiers.
9Although some came under the Norman concepts of serfdom and became effectively slaves of the Norman barons.
10Early money lending being mainly for kings to fight wars and for barons to acquire land.
11Disseised meaning dispossessed particularly in relation to land.
12Both the Magna Carta and the Statute of Merton arose from power struggles between the king and his barons. In both cases the king was forced by his nobles to sign the document. Magna Carta is better known as the basis in English law of the freedom of the individual against the arbitrary authority of government. Both documents however also include sections regarding the rights of the nobles to land.
13The Charter of the Forest (1217) re-established rights to unused royal and private lands for free men, that had been usurped by the Norman barons, forests being unused land of various types.
14The Statute of Merton, the first statute law, legalised the enclosure of common land, providing only that sufficient land was left to meet the needs of the commoners. The onus of proof was on the commoners if they considered that their rights had been infringed.
15It has been estimated that 1.5 million people died between 1348 and 1350 from a population of about 4 million.
16Not without resistance from employers. Laws were passed to limit wages but these proved ineffectual.
17Fisher, History of Landholding in England, page 60.
18In many cases rents continued even into the 20th century, but at the original monetary rate. Some lapsed simply because it was not worth the effort of collecting them. Some duties of service still survive. One of the Channel Islands was sold recently and it was reported that the purchaser was obliged to provide pikemen to the Queen for a number of days each year. Remnants of the tradition of service still exist, for instance in the duty to fulfil the role of magistrate.
19The Poor Law Act 1601 stipulated that the parish should provide the ‘impotent poor’ (those too sick and old to work) with items of food and clothing and for them to be cared for in ‘almshouses’. The ‘able bodied poor’ were to be set to work in a house of industry more commonly known as a ‘workhouse’. The ‘idle poor’ were sent to a ‘house of correction’. Pauper children were to become apprentices
20At the extreme this involved state-sanctioned piracy and bucaneering as well as trade.
21Such as ‘The Company of Merchant Adventurers’ and later ‘The Russia Company’, ‘The Levant Company’ and a little later the ‘The East India Company’. The first joint stock company in England was formed in 1553 and called ‘The Mystery and Company of Merchant Adventurers for the Discovery of Regions, Dominions, Stands and Places Unknown’ – to wit Russia.
22Including some who engaged in piracy and bucaneering.
23In view of the then current laws against usury the high risk involved in these ‘adventures’ was used as a basis to justify the profit from lending money.
24Woollen manufacture in Yorkshire was mostly conducted by family businesses owning their looms and using credit from the supplier to acquire raw materials. In the West of England establishments ‘employing 100 hands’ were not uncommon with the master owning all the tools.
25Coal had been imported until this point. One of the major obstacles to English coal mining was the need constantly to drain the mines. Some of the earliest applications of steam power were used for this.
26To less than at present – See Fast Food Nation for details??
27Estimated to be 400,000 acres of new rich, fertile land as a result of draining the Fens, and the Pennine Moors.
28Note that landholding was a requirement for having a seat in Parliament and even for voting. To have a bill brought before Parliament was expensive and opportunities for corruption rife. For details of the effects see John and Barbara Hammond, The Village Labourer.
29Briggs and Jordan.
30It also requires mass markets.
31Which is to say that in real terms more than half of production goes to those holding some form of property rights, in land, shares or interest earnings. See UK, Office of National Statistics (GDP by Type of Income, Series A2302467A & A2302401K).
BRIGGS, MILTON AND JORDAN, PERCY (1960); Economic History of England, University Tutorial Press Ltd, London.
FISHER, JOSEPH (1876); The History of Land Tenure in England, Longmans Green, London
HAMMOND, JOHN AND BARBARA (1911): The Village Labourer, Longmans, London