Primitive accumulation of capital

In Marxian economics and preceding theories, the problem of primitive accumulation (also called previous accumulation, prior accumulation, or original accumulation) of capital concerns the origin of capital and therefore how class distinctions between possessors and non-possessors came to be.

Concept
Adam Smith's account of primitive-original accumulation depicted a peaceful process in which some workers laboured more diligently than others and gradually built up wealth, eventually leaving the less diligent workers to accept living wages for their labour. Karl Marx rejected such accounts as 'insipid childishness' for their omission of the role of violence, war, enslavement, and conquest in the historical accumulation of land and wealth. Marxist scholar David Harvey explains Marx's primitive accumulation as a process which principally "entailed taking land, say, enclosing it, and expelling a resident population to create a landless proletariat, and then releasing the land into the privatized mainstream of capital accumulation".

Marx viewed the colonization of the Americas, the African slave trade, and the events surrounding the First Opium War and Second Opium War as important instances of primitive accumulation.

In The German Ideology and in volume 3 of Capital, Marx discusses how primitive accumulation alienates humans from nature.

Naming and translations
The concept was initially referred to in various different ways, and the expression of an "accumulation" at the origin of capitalism began to appear with Adam Smith. Smith, writing The Wealth of Nations in his native English, spoke of a "previous" accumulation; Karl Marx, writing Das Kapital in German, reprised Smith's expression, by translating it to German as ursprünglich ("original, initial"); Marx's translators, in turn, rendered it into English as primitive. James Steuart, with his 1767 work, is considered by some scholars to be the greatest classical theorist of primitive accumulation.

Myths of political economy
In disinterring the origins of capital, Marx felt the need to dispel what he felt were religious myths and fairy tales about the origins of capitalism. Marx wrote:

"This primitive accumulation plays in political economy about the same part as original sin in theology. Adam bit the apple, and thereupon sin fell on the human race. Its origin is supposed to be explained when it is told as an anecdote of the past. In times long gone-by there were two sorts of people; one, the diligent, intelligent, and, above all, frugal elite; the other, lazy rascals, spending their substance, and more, in riotous living. (...) Thus it came to pass that the former sort accumulated wealth, and the latter sort had at last nothing to sell except their own skins. And from this original sin dates the poverty of the great majority that, despite all its labour, has up to now nothing to sell but itself, and the wealth of the few that increases constantly although they have long ceased to work. Such childishness is every day preached to us in the defence of property." What must be explained is how the capitalist relations of production are historically established; in other words, how it comes about that means of production become privately owned and traded, and how capitalists can find workers on the labour market ready and willing to work for them because they have no other means of livelihood (also referred to as the "reserve army of labour").

Link with colonialism
At the same time as local obstacles to investment in manufactures are being overcome, and a unified national market is developing with a nationalist ideology, Marx sees a strong impulse to business development coming from world trade:

"The discovery of gold and silver in America, the extirpation, enslavement and entombment in mines of the aboriginal population, the beginning of the conquest and looting of the East Indies, the turning of Africa into a warren for the commercial hunting of black-skins, signaled the rosy dawn of the era of capitalist production. These idyllic proceedings are the chief moments of primitive accumulation. On their heels treads the commercial war of the European nations, with the globe for a theatre. It begins with the revolt of the Netherlands from Spain, assumes giant dimensions in England's Anti-Jacobin War, and is still going on in the opium wars against China, &c. The different moments of primitive accumulation distribute themselves now, more or less in chronological order, particularly over Spain, Portugal, Holland, France, and England. In England at the end of the 17th century, they arrive at a systematical combination, embracing the colonies, the national debt, the modern mode of taxation, and the protectionist system. These methods depend in part on brute force, e.g., the colonial system. But, they all employ the power of the state, the concentrated and organized force of society, to hasten, hot-house fashion, the process of transformation of the feudal mode of production into the capitalist mode, and to shorten the transition. Force is the midwife of every old society pregnant with a new one. It is itself an economic power."

Privatization
According to Marx, the purpose of primitive accumulation is to privatize the means of production, so that the exploiting owner class can profit from the surplus labour of those who, lacking other means, must work for them.

Marx says that primitive accumulation means the expropriation of the direct producers and, more specifically, "the dissolution of private property based on the labour of its owner... Self-earned private property, that is based, so to speak, on the fusing together of the isolated, independent labouring-individual with the conditions of his labour, is supplanted by capitalistic private property, which rests on the exploitation of the nominally free labour of others, i.e., wage labour (emphasis added).

Social relations of capitalism
In the last chapter of Capital, Volume I, Marx described the social conditions he thought necessary for capitalism with a comment about Edward Gibbon Wakefield's theory of colonization:

"Wakefield discovered that in the Colonies, property in money, means of subsistence, machines, and other means of production, does not as yet stamp a man as a capitalist if there be wanting the correlative – the wage-worker, the other man who is compelled to sell himself of his own free-will. He discovered that capital is not a thing, but a social relation between persons, established by the instrumentality of things. Mr. Peel, he moans, took with him from England to Swan River, West Australia, means of subsistence and of production to the amount of £50,000. Mr. Peel had the foresight to bring with him, besides, 3,000 persons of the working-class, men, women, and children. Once arrived at his destination, 'Mr. Peel was left without a servant to make his bed or fetch him water from the river.' Unhappy Mr. Peel, who provided for everything except the export of English modes of production to Swan River!"

This is indicative of Marx's more general fascination with settler colonialism, and his interest in how "free" lands—or, more accurately, lands seized from indigenous people—could disrupt capitalist social relations.

Ongoing primitive accumulation
Marx's description of primitive accumulation may also be seen as a special case of the general principle of capitalist market expansion. In part, trade grows incrementally, but often the establishment of capitalist relations of production involves force and violence. Transforming property relations means that assets previously owned by some people are no longer owned by them but by other people, and making people part with their assets in this way involves coercion. This is an ongoing process of expropriation, proletarianization and urbanization.

In his preface to Das Kapital, Vol. 1, Marx compares the situations of England and Germany and points out that less developed countries also face a process of primitive accumulation. Marx comments that "if, however, the German reader shrugs his shoulders at the condition of the English industrial and agricultural labourers, or in optimist fashion comforts himself with the thought that in Germany things are not nearly so bad, I must plainly tell him, "De te fabula narratur! (the tale is told of you!)

Marx was referring here to the expansion of the capitalist mode of production (not the expansion of world trade) through expropriation processes. He continues, "Intrinsically, it is not a question of the higher or lower degree of development of the social antagonism that results from the natural laws of capitalist production. It is a question of these laws themselves, of these tendencies working with iron necessity towards inevitable results. The country that is more developed industrially only shows to the less developed the image of its own future."

David Harvey's theory of accumulation by dispossession
David Harvey expands the concept of "primitive accumulation" to create a new concept, "accumulation by dispossession", in his 2003 book, The New Imperialism. Like Mandel, Harvey claims that the word "primitive" leads to a misunderstanding of the history of capitalism: that the original, "primitive" phase of capitalism is somehow a transitory phase that need not be repeated once commenced. Instead, Harvey maintains that primitive accumulation ("accumulation by dispossession") is a continuing process within the process of capital accumulation on a world scale. Because the central Marxian notion of crisis via "over-accumulation" is assumed to be a constant factor in the process of capital accumulation, the process of "accumulation by dispossession" acts as a possible safety valve that may temporarily ease the crisis. This is achieved by simply lowering the prices of consumer commodities (thus pushing up the propensity for general consumption), which in turn is made possible by the considerable reduction in the price of production inputs. Should the magnitude of the reduction in the price of inputs outweigh the reduction in the price of consumer goods, it can be said that the rate of profit will, for the time being, increase. Thus:

"Access to cheaper inputs is, therefore, just as important as access to widening markets in keeping profitable opportunities open. The implication is that non-capitalist territories should be forced open not only to trade (which could be helpful) but also to permit capital to invest in profitable ventures using cheaper labour power, raw materials, low-cost land, and the like. The general thrust of any capitalist logic of power is not that territories should be held back from capitalist development, but that they should be continuously opened up."

- David Harvey

Harvey's theoretical extension encompasses more recent economic dimensions such as intellectual property rights, privatization, and predation and exploitation of nature and folklore.

Privatization of public services puts enormous profit in capitalists' hands. If it belonged to the public sector, this profit would not exist. In this sense, profit is created by the dispossession of peoples or nations. Destructive industrial use of the environment is similar because the environment "naturally" belongs to everyone, or to no one; factually, it "belongs" to whoever lives there.

Multinational pharmaceutical companies collect information about how herbs or other natural medicines are used among natives in less-developed countries, do some R&D to find the materials that make those natural medicines effective, and patent the findings. By doing so, multinational pharmaceutical companies can now sell the medicine to the natives, who are the original source of the knowledge that made the production of medicine possible. That is, dispossession of folklore (knowledge, wisdom, and practice) through intellectual property rights.

David Harvey also argues that accumulation by dispossession is a temporary or partial solution to over-accumulation. Because accumulation by dispossession makes raw materials cheaper, the profit rate can at least temporarily go up.

Harvey's interpretation has been criticized by Brass, who disputes the view that what is described as present-day primitive accumulation, or accumulation by dispossession, entails proletarianization. Because the latter is equated by Harvey with the separation of the direct producer (mostly smallholders) from the means of production (land), Harvey assumes this results in the formation of a free workforce. By contrast, Brass points out that in many instances, the process of depeasantization leads to workers who are unfree because they are unable personally to commodify or recommodify their labour, by selling it to the highest bidder.

Schumpeter's critique of Marx's theory
The economist Joseph Schumpeter disagreed with the Marxian explanation of the origin of capital, because Schumpeter did not believe in exploitation. In liberal economic theory, the market returns to all people the exact value they have provided it; capitalists are just people who are very adept at saving and whose contributions are especially magnificent, and they do not take anything away from other people or the environment. Liberals believe that capitalism has no internal flaws or contradictions; only external threats. To liberals, the idea of the necessity of violent primitive accumulation to capital is particularly incendiary. Schumpeter wrote rather testily:

"[The problem of Original Accumulation] presented itself first to those authors, chiefly to Marx and the Marxists, who held an exploitation theory of interest and had, therefore, to face the question of how exploiters secured control of an initial stock of 'capital' (however defined) with which to exploit – a question which that theory per se is incapable of answering, and which may obviously be answered in a manner highly uncongenial to the idea of exploitation."

- Joseph Schumpeter

Schumpeter argued that imperialism was not a necessary jump-start for capitalism, nor is it needed to bolster capitalism, because imperialism pre-dated capitalism. Schumpeter believed that, whatever the empirical evidence, capitalist world trade could in principle expand peacefully. Where imperialism occurs, Schumpeter asserted, it has nothing to do with the intrinsic nature of capitalism itself, or of capitalist market expansion. The distinction between Schumpeter and Marx here is subtle. Marx claimed that capitalism requires violence and imperialism—first, to kick-start capitalism with a pile of booty and to dispossess a population to induce them to enter into capitalist relations as workers, and then to surmount the otherwise-fatal contradictions generated within capitalist relations over time. Schumpeter's view was that imperialism is an atavistic impulse pursued by a state, independent of the interests of the economic ruling class.

"Imperialism is the object-less disposition of a state to expansion by force without assigned limits... Modern Imperialism is one of the heirlooms of the absolute monarchical state. The "inner logic" of capitalism would have never evolved it. Its sources come from the policy of the princes and the customs of a pre-capitalist milieu. But even export monopoly is not imperialism and it would never have developed to imperialism in the hands of the pacific bourgeoisie. This happened only because the war machine, its social atmosphere, and the martial will were inherited and because a martially oriented class (i.e., the nobility) maintained itself in a ruling position with which of all the varied interests of the bourgeoisie the martial ones could ally themselves. This alliance keeps alive fighting instincts and ideas of domination. It led to social relations which perhaps ultimately are to be explained by relations of production but not by the productive relations of capitalism alone."

- Joseph A. Schumpeter