Preface: I previously studied a rough overview of Introduction to Political Economy, so I wanted to learn History of Bourgeois Political Economy based on political economy. Due to various reasons, I only read the beginning before stopping. Now I am picking it up again, using my knowledge of political economy to continue learning. Since my understanding of political economy is quite superficial, I may have mistakes, and I welcome everyone’s criticism and correction.
Chapter 1 The earliest theoretical research on the mode of production of capitalism—Mercantilism
Section 1 Overview of Mercantilism
Historical Background:
- Since the 15th century, Western Europe’s feudal system disintegrated, which is the dissolution of the self-sufficient natural economy. During this process, producers and means of production separated, with producers transforming into free labor, while the means of production were owned by the bourgeoisie. This is the process of primitive accumulation of capital. After the separation of laborers and means of production, the need for commodity exchange increased, making this process also a further development of commodity-money relations.
Therefore, the bourgeoisie is not relying on thrift and frugality to get rich as they claim, but rather they violently plunder small producers internally, leaving them with nothing; externally, they accumulate capital through plunder, slavery, and even extermination of colonial peoples, with external plunder being especially important. - Commercial capital played a significant role. Merchants act as intermediaries in commodity exchange. The development of commercial capital promoted and consolidated commodity-money relations.
At that time, new merchants in Western Europe sought to get rich and expand their capital; the declining feudal aristocracy indulged in luxury, was in debt, and faced economic difficulties, also desperately pursuing wealth; absolute monarchies, to maintain their rule, maintained a large bureaucracy and army, and also needed money. They fantasized about plundering gold and silver treasures in the rich East. This was the historical background of the Age of Discovery and the opening of new sea routes.
Initially, capital was mainly concentrated in the form of large amounts of currency, and foreign trade combined with piracy and brutal colonial plunder led merchants in various countries to accumulate large amounts of monetary capital, promoting the development of handicraft workshops. “Getting rich without exploiting the poor is impossible”. Capitalism entered the world through brutal plunder.
However, the development of commercial capital itself is not the same as the development of production because its role is in circulation (production—circulation—consumption). The material basis for circulation is the production of material goods. When we talk about the development of capitalism, we mainly refer to the development of the capitalist mode of production (the mode where the bourgeoisie owns the means of production and purchases labor to exploit). - As commercial capital strengthened, some feudal kings and bourgeois capitalists in Western Europe formed alliances. To fix and develop capitalist production relations politically, the bourgeoisie studied these relations and formulated policies aligned with capitalist development, leading to the doctrine of political economy. These doctrines necessarily bear the marks of their historical stage and political background, hence called “Political Economy”. Unlike the vulgar economists today, who see capitalist production relations as eternal and try to exclude political and historical factors from “economics”.
Basic Ideas of Mercantilism
- Mercantilism’s research only stays within circulation and does not penetrate into the essence of commodity exchange phenomena to understand capitalism.
- Mercantilism considers money as the only form of wealth, reducing the purpose of national economic policies and activities solely to acquiring gold and silver. This reflected the European obsession with gold and silver at the time, when European silver mines had been exploited but could not meet the demand for money caused by the development of commodity production. They also believed domestic commerce was beneficial but could not increase the money supply; additionally, they thought domestic trade would benefit some at the expense of others (we all know that if supply and demand are stable, exchange occurs based on commodity value, which reflects a narrow view of commercial capitalists. Their activities often involve buying cheap and selling dear, like an unequal exchange of commodities). The nation’s wealth did not increase. Therefore, they advocated for foreign trade, which could export goods for money and buy cheaply to make profits.
Thus, they argued: to become rich and prevent poverty, a country must develop foreign trade, sell more than it buys (trade surplus); domestic production should also serve export, and the government should intervene in economic life to vigorously develop handicraft factories conducive to this. - They believed that once gold and silver were mined, they naturally became wealth, but this is not true.
A commodity is a unity of use value (the usefulness of the thing, human labor as a specific form) and value (the general human labor condensed into the commodity, with the socially necessary labor time determining the value). The value of a commodity is only expressed when it is exchanged; only through exchange can the producer’s labor be socially recognized.
The value form of exchange begins with simple value form (thing—thing), expanded value form (one thing—many things), general value form (many things—one fixed thing). From this, a specific commodity is used to fix the amount of human labor involved in producing commodities, finally gold and silver replaced this commodity, transforming the value form into the money form (many things—money). The use value of money is to represent the amount of value contained in commodities.
Therefore, only under certain historical conditions are gold and silver considered money and can serve as a form of social wealth. - Causes of the errors of mercantilism:
Although commodity-money relations developed at that time, natural economy still held the dominant position. Because money could buy any commodity, commercial activities were very extensive, leading to the belief that the purpose of commodity circulation was to obtain money. However, this is not entirely wrong; they acknowledged that the mission of capitalism is to make money.
In the late feudal period within capitalism, it was not production that dominated circulation, but circulation that dominated production. Mercantilists observed the G—W—G’ process and concluded that circulation was the source of wealth.
Additional: Differences between early and late mercantilism from History of Economic Doctrines
- Early mercantilism: 15th century - mid-16th century
Advocated prohibiting the export of money and accumulating monetary wealth through administrative means, aiming to hoard money domestically. Countries like Britain, Spain, and Portugal adopted this, using administrative and legislative measures to restrict money outflow. For example, in 1478, Edward IV of England made the export of gold and silver a serious crime. Early mercantilists are also called monetary difference theorists, Marx called them monetarists. - Late mercantilism: late 16th century - 17th century
Believed that the state could allow the export of money but needed to control the amount spent on purchasing foreign goods to be less than the money gained from exports. For example, the state did not impose tariffs on exported goods, and protected domestic industry through import taxes and bans on raw material sales. To encourage expanding export production and develop domestic handicraft industries, they promoted increasing population and free labor supply. This idea is called trade surplus theory, Marx called it aggressive industrialism. - The difference between early and late mercantilism shows the stage of capitalist development. In early mercantilism, commodity circulation was just developing, credit systems were not yet established, and the development of commodities led to a demand for large amounts of circulating money. Early mercantilists believed that at all times, the country’s income from money exceeded expenditure, aiming to accumulate money in hoarding form. This clearly showed mercantilist traits, equating money with wealth.
By the late period, as handicraft industry had developed, it was acceptable for the country’s foreign trade to run a deficit as long as exports exceeded imports. This already reflected the bourgeois view of money as a function of capital (capital generates surplus value), and money was seen as a means to increase wealth. Money only increased within the movement of capital, so late mercantilism did not restrict this movement. Marx thus called late mercantilism the true mercantilism.
History of Bourgeois Political Economy – compiled by Lu Youzhang et al. – 1975 – Beijing_Renmin Press – 10539403 – 10c8131f29d622ab83f1c6706ca39713 – Anna’s Archive (1) (1).pdf (10.8 MB)