Chapter 1.
Medieval and Early Modern Economies had Bourgeois Capitalists

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Dear Reader: This is a rough draft (Jan. 2010) of The Bourgeois Revaluation: How Innovation Became Virtuous, 1600-1848. Three asterisks *** or the bold or NNN (for a name) or DDDD (for a date) and the many pages with “items [perhaps] to be inserted” indicate only some of the numerous things to be done. I welcome comments.

[Mention BV, too.] The usual explanations for the modern world, Marxist or anti-Marxist, do not work very. What does work is a story of innovation by the bourgeoisie, a bourgeoisie revalued 1600 to the present, first in Holland and then in Britain and then the world. That’s what was argued in Bourgeois Dignity: Why Economics Can’t Explain the Modern World (2010).

Where then to look for the springs of innovation? The place to look, I say, is in the innovative activities of the urban middle class, that fifth or a quarter part of an eighteenth-century city on the shores of the North Sea which ran economic matters and constituted the middling sort.¹ But it is not enough merely to have a bourgeoisie, even a big one. What tipped the world were the sharply changing ideas 1600-1848 about the urban middle class and their material and institutional innovations. Bourgeoisies, even big ones, had always existed. What mattered were the attitudes towards them.

Markets and exchange appear to have existed always, or at any rate since the invention of full language in Africa sometime around, give or take a dozen millennia, 50,000 B.C.E. Long-distance trade is the most glamorous, Marco Polo, Kublai Khan, and all that. Amber from the shores of the Baltic Sea ends up in Egyptian grave goods. From the earliest times the obsidian for knife blades from Central America and from central Turkey turns up hundreds of miles away from its source. Lapis lazuli is a blue gemstone (it was for a long time in the Old World the sole source of blue paint, which is why purple, or blue plus red, was so royally expensive). It came only from Afghanistan — yet it litters archaeological sites far away in the Mideast and South Asia. Such sparkling objects suggest to people that what must matter the most is trade over long distances. We still believe it — witness the recent obsession over the U.S. trade balance with far China.

But local “penny capitalism,” as the anthropologist Solomon?*** Tax once called it, occurs in every society, and matters more to the lives of people.¹ I offer my big piece of cloth for ten of your fine bone needles. It’s penny stuff, but not trivial because there is so much of it. After all, most American competition and cooperation — trade involves both — is with other Americans, even with the Americans down the street. Local markets and exchange, always, dominate the trade in exotic goods, quantitatively speaking. You spend more dollars on plumbing repair and police work and school teaching and dry cleaning provided by people in your own neighborhood than on hammers and answering machines made by people in China. People living on three dollar or so a day, as most people did before 1800, spent their pennies more on bread than on lapis lazuli. When penny capitalism was translated as it was in the eighteenth century into an ideology of free markets it had the power therefore to transform the world.

Most of us nowadays are local and export-import traders, many even in hunter-gatherer societies, and certainly always in conditions of settled agriculture. As Adam Smith said, “when the division of labor has been once thoroughly established. . . . every man thus lives by exchanging, or becomes in some measure a merchant, and the society itself grows to be what is properly a commercial society.”³ The modern anti-capitalist intellectual may if she wishes defame as “greedy” the oldest profession — of being a kind of merchant in trade with those around us. But it seems prejudicial to name after a prideful and idolatrous sin the ordinary exchanges made by all of us, even the modern anti-capitalist intellectual herself. Looking for a bargain at T. J. Maxx is to be no less a trader than speculating on the foreign exchanges. We are being merely prudent to specialize and trade. We all do it nowadays, and we always have. So did some of the cave men, after language.

The running of markets and exchange in towns, and therefore what I am calling the bourgeois life, is of course not so ancient, because towns date from settled agriculture. But from the earliest strata at Jericho in 9000 B.C.E. the towns have traded, because — to speak of sheer human geography — no town above a couple of thousand in population can live entirely on cultivating the land without trading its services for food. With large numbers crammed into a town not everyone could live by trudging out to the local grain field each morning. The fields get too far away. In well-watered Europe in the Middle Ages the area of two football fields in grain could support a person for a year, and perhaps could likewise in irrigated Mesopotamia. The average round trip per day would then be one mile for a town of 1000, two miles for a town of 2000, and so on in proportion. It gets onerous fast, though in fact to this day many a weary peasant worldwide does the commute.

The economic logic of course runs the same way, and more powerfully. As Adam Smith said in 1776, “the division of labor is limited by the extent of the market.” The bigger the place, the higher the proportion of people who find it prudent to specialize in pottery or weaving or keeping accounts. Even in an unspecialized hunter-gatherer band the women specialize in hearth-linked activities, the men in venturing forth, or smoking. The crippled man among the Ilongot who specializes in being a little factory for scrapers and arrow points, or the spiritually gifted woman in being a shaman, get their food from exporting their manufactures or services. Such a nascent middle class grows larger as the town does. You may be 30% faster at throwing pots relative to your speed at plowing than other people, but the comparative advantage does you little good in an isolated village of 100 souls, because after all there are too few people to buy your great output of pots. In a big town of 10,000, however, it will be worth your while to hang out a shingle and specialize. And in a metropolis of 100,000 you will hire apprentice potters, make each year 70,000 big pots with your own handsome design, and become well and truly bourgeois.

And so if the archaeologist’s spade uncovers a big town, it is a sure thing that many non-peasants lived in it. No surprise, of course: our image of towns from ancient and not-so-ancient writings such as the Hebrew Bible or The Thousand and One Nights, or from historical accounts of life in Athens, or, truth be told, from movies by Cecil B. DeMille, are not populated by field-bound peasants.

Towns such as Ur, Kish, and Nippur dotting Mesopotamia south of modern Baghdad began around 5000 B.C.E. as agricultural villages with peasants clustered to protect their stored grain and to honor their gods. By 3000 B.C.E. the typical substantial town would be two to four thousand, as one “Eresh” was.⁴ In Eresh there would still be quite a few peasants, if not only them. But a great city like Uruk, with a wall 9 km round which Gilgamesh himself claimed to have had built, would have held 40,000 to 160,000 people, most of them not walking to any field.⁵ Lagash was 120,000. Around 2000 B.C.E. the ur-city of Ur seems to have had a population of about 200,000.⁶

And so to Changan (X’ian), China in 195 B.C.E. at 400,000, with then the 52 cities of late Sung [Song?***give dates] China of over 100,000 households, and Rome in 25 B.C.E. at 450,000 souls, down to Beijing in 1500 C.E. at 672,000 and Istanbul in 1500 at 900,000. The capital of China in the seventh century C.E. had a million people.⁷ These are not huge by modern standards — Chicago proper is about 3 million and the metropolitan area 8.6 million, enabled first by the tram and bus and then by the automobile, not to speak of Mexico City’s metropolitan area population approaching 20 million, and Lagos in Nigeria 17 million. But anyway the city people of any time were mainly neither peasant cultivators nor aristocratic rulers, and neither priests nor bureaucrats. Almost all were traders in an extended sense — not growing anything and not taxing anything, but trading to live. They bought low and sold high, made finished goods from purchased raw materials, serviced the rest of economic activity in jobs as scribes, lawyers, surveyors, teamsters, manufacturing workers. Remove from the big-town total the proletarians and slaves, and putting the taxing aristocrats and tithing priests and their bureaucrats in the category of a clerisy, what’s left is a commercial bourgeoisie, the substantial minority in the town that made its living managing by bitter or sweet words the markets for goods and labor and land.

Immediately, though, one runs into a gigantic scholarly controversy fueled by politics. It is that way with all writing about the bourgeoisie since Rousseau and especially since Marx. You can’t mention the word “bourgeoisie” without raising blood pressures all around.⁸ You can’t defend innovation and a market society without someone claiming that they are both modern, and nasty.

During the late 1930s Karl Polanyi (1886-1964), a refugee in London from the chaos of interwar Central Europe, researched what he believed was the history of markets, publishing the results in 1944 while financed by the Rockefeller Foundation at Bennington College in Vermont, as The Great Transformation. The book is still read eagerly, and has never gone out of print. Googling it in 2007 yielded fully 123,000 entries. Compare that with smaller numbers for similar and similarly long-lived books from the time: 97,200 for Joseph Schumpeter’s Capitalism, Socialism, and Democracy (1942), 64,700 for Friedrich Hayek’s The Road to Serfdom (1944), and 19,000 for Eric Williams’ Capitalism and Slavery (1944). (Though we academic scribblers need to remember in humility that Ayn Rand’s, The Fountainhead (1943) gets 351,000 hits, and still sells 100,000 new copies a year. Not further academic scribbling, alas, but good or bad art, highbrow or low, is what makes ideas big.)

Polanyi was a lifelong socialist — his beloved wife Ilona Duczynska Polanyi (1897-1978) was one of the founders of the Hungarian Communist Party (from which in 1923 she was expelled; and later from the Austrian Party, too: she was a radical activist, and detested authoritarians)-and believed that markets, the bourgeoisie, and capitalism were mere vulgar novelties, mere interruptions in more civilized ways of getting our daily bread. That is, contrary to what I have been suggesting with talk of Ur and ancient Rome, the Polanyists believe that bourgeois behavior is recent.

The claim that property didn’t properly exist until modern times came out of Romantic and Marxist tales in the nineteenth century by Georg Hanssen, August von Haxthausen, Georg von Maurer, Marx, Engels, Sumner Maine, and Lewis Morgan. Their work has proven to be mistaken, but continues to inspire an anti-modern faith. The “Romantic theory, based on the thinnest evidence, most of it subsequently discredited,” the history of Russia Richard Pipes observes in discussing the matter, “became henceforth mandatory in the socialist literature and in much of general literature.”⁹ Polanyi wrote for example that the labor market in England did not exist until the nineteenth century. Until then, he claimed, English people did not work under the discipline of supply and demand. Wages, he said, were conventional, decided in a social contract of reciprocity, as it were. He said the same of land sales, and indeed he did not think that so-called “markets” in grain and the like before recent times were anything other than administrative methods for provisioning the people. The bourgeoisie was recent, the market was a parvenu, capitalism was an ethical catastrophe of recent origin.

Polanyi’s economic history of England is utterly, completely, even embarrassingly mistaken. Half of southern Englishmen were laborers as early as the thirteenth century, with wages and especially non-wage compensation varying markedly by supply and demand. Land in large and small plots was vigorously traded by all levels of society.¹⁰ The Marxist axiom is that feudalism was inconsistent with markets in commodities and labor and land — I repeat that Marx himself is to be excused for the bad history because he wrote so long before the evidence was in. Especially since 1900, when the German ideology of medievalism started to break down in the face of the evidence, historians have found that it is mistaken.

Markets eroded a system of military service based on holding estates “of” the king. So-called “scutage” had already in the twelfth century allowed knights to pay instead of play, and every form of feudal tenure dripped with money. Feudal tenures early became taxes and rents. And beneath such doings of free men recorded in the King’s courts, the mass of serfs could buy and sell land and labor and whatever they wished with only modest let and hindrance from their lord. The shift to financial substitutes for feudal duties in kind occurred at all levels of English society, in other words, centuries before the Marxist dating of the sixteenth century, not to speak of Polanyi’s of 1800. If means of production involving paid labor and bought land and purchased goods “contradicts” a pre-capitalist feudalism, the contradiction arose shortly after William conquered England, and indeed looks like it was working at the time of Alfred the Great. We have the documents, and have gotten more and more and more of them as the intellectual haze surrounding the Middle Ages has lifted.¹¹ The legal historian Harold Berman is not saying anything that a historian of medieval Europe would find shocking when he asserts that “not only capitalism but bureaucratism [in the Church], rationalism [in the universities], and indeed ‘modernity’ in all its forms [postmodern carnival, for example] were characteristic of European society to one degree or another from the twelfth century on.”¹² As a great student of such matters, David Herlihy, wrote in 1971, “research has all but wiped from the ledgers the supposed gulf once considered fundamental between a medieval manorial economy and the capitalism of the modern period.”¹³ Markets pervaded all of Europe from the earliest times, as they have pervaded much of the world always. Kingdoms, wives, and immortal salvation in Europe were bought and sold. Everything was for sale.

Contrary to what most educated people believe, Europe and certainly England was from the earliest times thoroughly “monetized” and was nothing like a “subsistence” or “barter” economy. It would be difficult otherwise to explain, to take an early sort of evidence, the English danegelt beginning in 991, assessed in silver and paid to the Vikings, or hoards of precious metals found at every chronological level from the pre-Roman era on, or the ubiquity of money measures in the earliest records, such as the Domesday Book of 1086. Such facts have been known for a long time, and recently their meaning has become still clearer. As the leading scholar of trade in the “Dark Ages” before the eleventh century wrote in 2001, “economic historians are moving increasingly to the view that the advanced regions of the Frankish economy [that is, of Charlemagne and his son Louis the Pious, ruling over all of France, most of Germany, and the north of Italy 771-840] were more monetized than almost anyone dreamed three decades ago.”¹⁴

Really, now, most of what you think you know about how things worked in the Middle Ages — a hazy theory that Polanyi and you and I and Monty Python’s Flying Circus acquired from schoolbooks and journalism and movies reflecting the earliest generations of historical scholars, especially nineteenth-century German scholars — has proven to be quite mistaken. Medieval peasants in fact, it has been discovered since 1900, were profiteering and rational.¹⁵ So they are for example in the Grimms’ fairy tales, first published in 1812, and the source of much Romantic elaboration, but dating in their first (and sometimes it must be admitted rather different) versions from centuries before. The alert Three Apprentices in the tale are to answer all questions in sequence, “All three of us. For money. And quite right, too.” In repeating such a collective admission of capitalist guilt they ensnare an innkeeper who has murdered a rich merchant for his money, and are rewarded (by the Devil) in money for the rest of their lives.¹⁶ A foolish peasant in another tale

had driven his cow to the fair, and sold her for seven thalers. On the way home he had to pass a pond, and already from afar he heard the frogs crying, “Aik, aik, aik, aik.” [That is, as he imagines, acht, acht, acht, acht: eight.] . . . . He cried to them, “Stupid animals that you are! Don’t you know better than that? It is seven thalers and not eight.” The frogs, however, stood to their, “aik aik, aik, aik.” . . . . “What,” cried the peasant, quite angry, “since you are determined to know better than I, count it yourselves,” and threw all the money into the water to them. . . . . But the frogs maintained their opinion and cried continually, “aik, aik, aik, aik,” and besides that, did not throw the money out again.¹⁷

The tale laughs at a economic imprudence of throwing money around, in a thoroughly monetized economy. A version of the popular theory believes they were nice to each other: Hanawalt to the contrary. The denizens of rural Europe were not in the Romantic sense “peasants” at all. One would have thought that the Romantic historians would have listened more intently to Jacob and Wilhelm Grimm.

In 1979 the historical anthropologist Alan Macfarlane summarized critically the long-exploded theory as “a progression from small, isolated communities inhabited by ‘peasants’ . . . towards the market, monetized, ‘open’ structure of the eighteenth century,” and showed that for England at any rate it was entirely mistaken.¹⁸ Macfarlane has done ample work himself on the primary documents exposing the mistakes. But the point here is that in 1979 he was building also on 70 years of revisionism in medieval economic and social history.

One could go on and on about the errors in Polanyi’s European economic history in detail and in gross, but that would be tedious and cruel. Perhaps you can believe me when I say that it is embarrassingly feeble stuff.¹⁹ I urge you not to indulge an understandable tendency to sympathize with Polanyi just because he is being criticized — the man himself was apparently a sweetie, and was much loved. His scientific errors are not so embarrassing in Polanyi himself, trained as a lawyer and journalist and not as a scholar, and whose great book was written in the late 1930s and early 1940s, and written astonishingly well in a newly acquired language. But the hundreds of books on medieval and early modern Europe since 1944 that flatly contradict his views are now readily available to his latter-day followers. The Polanyians do not appear to have studied them, which is a greater embarrassment.²⁰

Some very perceptive scholars have fallen for Polanyi, because some of what he says — that ideology and rhetoric matter — is so obviously true and important. Therefore they have believed the rest of what he says — that societies were not organized by markets until the nineteenth century — which in light of the scholarship since he wrote, and a good deal of it before he wrote, is mistaken. The emotional pattern seems something like, “Polanyi, a leftist like me, says many true things, beautifully. Therefore his fairy tales about what happened in economic history must be true.” Marx before him gets similar treatment. So on the other side of the political spectrum, conservatives write in the same way about their fellow conservatives, such as Carlyle: “Carlyle is a sneering conservative like me, and writes in an engaging and idea-filled, if not exactly beautiful, style. Therefore his fairy tales about the warmth of the relationship between master and slave, or lord and peasant, must be true.”

A brilliant young political scientist, Sheri Berman, for example, acknowledges her debt to Polanyi in the first page of her book of 2006, and goes on to retail the story so comforting to the left, that “only in the eighteenth century [Polanyi actually said the early nineteenth] did economies in which markets were the primary force in the production and distribution of goods begin to emerge.” Like her favored social democratic welfare states of the post-War, she claims that before modern times “decisions about the production and distribution of goods were made not by markets but by those with social and political power.”²¹ This is factually mistaken. Yet she says correctly, citing Polanyi and a paper that Santhi Hejeebu and I wrote attacking Polanyi’s economic history, that “capitalism meant an end to a world where one’s position and livelihood were defined primarily by membership in a particular group” — the society of status as against the society of contract.²² And still more correctly she says that “perceived failures. . . of the reigning intellectual paradigms create a demand for new ideologies.”²³ That’s exactly right, and quite disturbing to “many Marxists, rational-choice theorists, and realists, . . . [for whom] ideologies are best understood as mere tools or ‘cover’.”²⁴ It is at the level of ideas that society changed, out of demands for replacements for institutions perceived to have failed. Yes. The perception of failed institutions therefore inspired, as she goes on to relate, the move to social democracy in Sweden and Holland and England and France.

Walter McDougall’s handsome popular history of the United States (2004), to give another recent example, begins with Polanyi’s picture of an England in the sixteenth century as an “embryonic market society.” “At no time and place” than in England, declares McDougall (whose use of italics is elsewhere more restrained), “in the century preceding England’s overseas expansion,” that is, the sixteenth century, “was an entire society organized by market exchange.” His warrant for such an outdated assertion is a book from the Monthly Review Press by Ellen Meiksins Wood, whom he describes as a “renegade Marxist.” “She in turn,” he reports, “praises the insights of Karl Polanyi’s classic The Great Transformation.”²⁵ Just so. Yet in fact Greece, Rome, Gaul, Italy, the Viking lands, Germany, Poland, England from ancient to early modern times were entire societies organized by market exchange. Polanyi didn’t agree, but the evidence accumulated since he wrote tells a story of economies rich in markets in Europe (and in China and South Asia and the Moslem lands and Africa), though markets disdained by the rhetoric of the elite, and with a bourgeoisie and innovation thereby trammeled.

Polanyism still rules in a few circles, then, but against the evidence. It goes in waves. Polanyians rise up in Viking studies or West African studies, enchanted by Polanyi’s vibrant prose, and then are proven yet again to be mistaken. American historiography 1815-1848 seems to have just gone through such a cycle, which began with Charles Sellers’ brilliant Polanyist book, The Market Revolution: Jacksonian America, 1815-1846 (1991), and after much inquiry has ended with Daniel Walker Howe’s anti-Polanyist What Hath God Wrought: The Transformation of America, 1815-1848 (2007).²⁶ Sellers depended for his picture of a communalist Eden before 1815 on New Left historians of the 1960s and 1970s specializing in eighteenth-century America. Historians fortified by Polanyi such as James Henretta, Michael Merrill, Robert Murch, and Christopher Clark had after 1967 attacked the “Consensus” view that British North America was born capitalist. But then they too were proven wrong, it would seem, by such works as Winifred B. Rothenberg’s “The Market and the Massachusetts Farmer, 1750-1855″ (1981) and Mark A. Noll’s edited collection God and Mammon: Protestants, Money, and the Market, 1790-1860 (2001). ***Project, 1 hour: Here Naomi’s synthesis. Rothenberg imagines a hilarious dialogue between a capitalist Sagredo and a Polanyist Simplicio:

How do you know [that the eighteenth-century rural mentalité in the North American English colonies was not capitalist]?

From the KIND of transaction that took place.

Those transactions … all involved, didn’t they, the exchange of labor and commodities with prices? …

Yes, but the money-of-account was not money [she cites Merrill], and the price system was not sovereign [citation to Henretta], “from which it follows [quoting from Merrill] that … “the products we are dealing with are not commodities at all.”

I don’t follow you. Why not?

Because the values attached to goods and services were use-values, not exchange values.

How do you know that?

Because the eighteenth-century mentalité was not capitalist.²⁷

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1. [back] Earle 1989, pp. 80-81.
2. [back] ***Cite Sol Tax
3. [back] ***Smith 1776, Bk. 1, Chp. 4, para. 1, p. NNN.
4. [back] Postgate 1992, p. 80; the town's actual name is uncertain.
5. [back] Inferred using R. M. Adams' densities from Postgate 1992, pp. 74, 80.
6. [back] Kramer 1963, p. 89.
7. [back] Perdue 2003, p. 491.
8. [back] Some of the following appears in Hejeebu and McCloskey 2000, 2003.
9. [back] See Pipes 1999, pp. 50-51; and also pp.76-105.
10. [back] ***Postan; land evidence.
11. [back] ***For example, Postan DDDD; Raftis DDDD; McCloskey 1976.
12. [back] Berman 2003, p. 379.
13. [back] Herlihy 1971, p. 155.
14. [back] McCormick 2002, p. 681.
15. [back] ***McCloskey cites on OF
16. [back] ***Grimms, "The Three Apprentices"
17. [back] Grimms, "The Good Bargain"
18. [back] Macfarlane 1979, p. 54.
19. [back] ***As for example do Hejeebu and McCloskey 2000; 2003 correct dates???.
20. [back] ***Blyth date
21. [back] Berman 2006, p. 2.
22. [back] Berman 2006, p. 3.
23. [back] Berman 2006, p. 10
24. [back] Berman 2006, p. 9.
25. [back] McDougall 2004, p. 22, 18, 516n1.
26. [back] My approach to the subject follows the estimable Jill Lapore (2007), who tells the story of Seller's book being rejected by C. Vann Woodward for the Oxford series—in which Howe's book finally appeared.
27. [back] Rothenberg 1981 (1995), p. 75.

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