Reformism or Revolution: 4. History and economics

Marxism deals with history concretely, not in the abstract. Historical materialism carefully deals with the different historical stages through which humankind has developed and explains the particular laws that govern different socio-economic formations.

Does Marxism deal with economics ‘in general'?

Marxism, as we have seen, deals with history concretely, not in the abstract. Historical materialism carefully deals with the different historical stages through which humankind has developed and explains the particular laws that govern different socio-economic formations. The laws governing slave society are not the same as the laws that govern feudalism, and the latter cannot be equated with the law of motion of capitalist society. Each must be examined separately, and the task of historical materialism is not to impose a preconceived theory on history but to derive the laws of motion from a careful study of each particular case. This is clearly explained by Trotsky in his masterly Introduction to The Living Thoughts of Karl Marx:

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"It was not Marx's aim to discover the ‘eternal laws' of economy. He denied the existence of such laws. The history of the development of human society is the history of the succession of various systems of economy, each operating in accordance with its own laws. The transition from one system to another was always determined by the growth of the productive forces, i.e., of technique and the organization of labour. Up to a certain point, social changes are quantitative in character and do not alter the foundations of society, i.e., the prevalent forms of property. But a point is reached when the matured productive forces can no longer contain themselves within the old forms of property; then follows a radical change in the social order, accompanied by shocks. The primitive commune was either superseded or supplemented by slavery; slavery was succeeded by serfdom with its feudal superstructure; the commercial development of cities brought Europe in the 16th century to the capitalist order, which thereupon passed through several stages. In his Capital, Marx does not study economy in general, but capitalist economy, which has its own specific laws. Only in passing does he refer to the other economic systems to elucidate the characteristics of capitalism.

"The self-sufficient economy of the primitive peasant family has no need of a ‘political economy,' for it is dominated on the one hand by the forces of nature and on the other by the forces of tradition. The self-contained natural economy of the Greeks or the Romans, founded on slave labour, was ruled by the will of the slave-owner, whose ‘plan' in turn was directly determined by the laws of nature and routine. The same might also be said about the mediaeval estate with its peasant serfs. In all these instances economic relations were clear and transparent in their primitive crudity. But the case of contemporary society is altogether different. It destroyed the old self-contained connections and the inherited modes of labour. The new economic relations have linked cities and villages, provinces and nations. Division of labour has encompassed the planet, having shattered tradition and routine, these bonds have not composed themselves to some definite plan, but rather apart from human consciousness and foresight, and it would seem as if behind the very backs of men. The interdependence of men, groups, classes, nations, which follows from division of labour, is not directed or managed by anyone. People work for each other without knowing each other, without inquiring about one another's needs, in the hope, and even with the assurance, that their relations will somehow regulate themselves. And by and large they do, or rather were wont to." [1]

These lines explain with admirable conciseness and clarity the essence of Marx's method of historical materialism. How does this scientific clarity compare with the method of Dieterich? On page 39 of his book Socialism of the XXI Century, he takes us for a brisk run through human history, beginning with the first stone tools approximately 800,000 years ago. He calculates that the division of labour (in the form of division of activities within the family) began about 80,000 years ago. He then jumps to the domestication of animals and the discovery of agriculture, which he dates at approximately 12,000 years ago. He then immediately introduces barter and exchange. All this seems to be taken from Arno Peters, but the lack of quotation marks makes impossible to know where Peters ends and Dieterich begins. But since they share the same confused ideas this is purely a secondary matter.

In a completely unscientific and unhistorical manner, Dieterich divides the whole of human history into two parts: the early phase of primitive tribal communism, which he claims was based on the principle of "equivalents", and all the rest. Without the slightest basis, he lumps together slave society, feudalism and capitalism. All these societies, he claims, were based upon moneymaking ("chrematistics") and "unequal exchange", whereas previously exchange was conducted on an equal basis.

This completely unhistorical view comes from Arno Peters, who succeeds in mixing everything up and getting into a hopeless mess. It is completely wrong to lump together different socio-economic systems with different economic laws of motion, and different ways of extracting surplus value. It is also completely wrong to describe barter, the earliest form of trade, as the exchange of equivalents. It is equally false to say that the capitalist market economy is based on unequal exchange. Marx says precisely the opposite in the first volume of Capital. We will return to this question later.

Dieterich's presentation of the stages of human development is extremely sketchy and superficial. In particular, the origins of trade are presented in a very confused manner. On pages 41-2 of the same book, we are informed that the transition from barter to trade commence about 7,000 years ago, and that more than 5,000 years ago "[...] this new economic order, created by commerce and war, imposed itself in such a large part of the populated world of those times, that we can speak of the beginning of a new epoch of national economy, which slowly replaced the local economy. In this context, we understand by ‘nation' a state entity which has grown up historically with its own tradition and hegemonic orientation; we therefore include here all communities which surpass the framework of local self-sufficiency, which have been maintained from the formation of the first city states about 5,000 years ago, in their character and structure, up to the present day.

"This new epoch, the national economy began about 3,000 years before our epoch when in the river valleys of the Nile, Euphrates and Tigris, the Indus and the Huang-Ho a large quantity of people combined to tame the force of the rivers and use their water for their ends.

At this point, according to Dieterich, "trade and the private appropriation of the land lead to the domination of man by man." As a matter of fact, there was no private ownership of land in the early civilizations of Mesopotamia, Egypt, China and the Indus valley. In all these states land was held by the state, which was in the hands of the monarch and the priest caste. In Egypt under the Ottomans the sultan (that is, the state) owned almost all agricultural land. The state taxed the peasants and controlled irrigation by means of compulsory labour (corvée). At the base, as was usually the case with the Asiatic mode of production, the clans had control of the land and the state allowed them to carry on subsistence agriculture and did not interfere except to extract taxes and corvée. Private ownership of land was only introduced in the 19th century through the reforms of Muhammad Ali, although the old system had already been undermined by the encroachment of private property through mortgages, pawning, etc. However, all this took place in the late eighteenth and nineteenth centuries and not "3,000 years before our epoch".

True private ownership of land begins, not with Egypt, Mesopotamia, China and India 5,000 years ago, but with Greece and Rome at a far later date. Engels explains in The Origin of the Family, Private Property and the State, that landed property in ancient Athens was originally held by the gens, but that in the higher stage of barbarism this broke down:

"In the Heroic age the four tribes of the Athenians were still settled in Attica in separate territories; even the twelve phratries composing them seem still to have had distinct seats in the twelve towns of Cecrops. The constitution was that of the heroic age: assembly of the people, council of the people, basileus. As far as written history takes us back, we find the land already divided up and privately owned, which is in accordance with the relatively advanced commodity production and the corresponding trade in commodities developed towards the end of the upper stage of barbarism. In addition to grain, wine and oil were produced; to a continually increasing extent, the sea trade in the Aegean was captured from the Phoenicians, and most of it passed into Athenian hands. Through the sale and purchase of land, and the progressive division of labour between agriculture and handicraft, trade, and shipping, it was inevitable that the members of the different gentes, phratries, and tribes very soon became intermixed, and that into the districts of the phratry and tribe moved inhabitants, who, although fellow countrymen, did not belong to these bodies and were therefore strangers in their own place of domicile. For when times were quiet, each tribe and each phratry administered its own affairs without sending to Athens to consult the council of the people or the basileus. But anyone not a member of the phratry or tribe was, of course, excluded from taking any part in this administration, even though living in the district." [2]

The undermining of the old gentile constitution gave rise to private property of the land, a growing social differentiation and the class struggle, which in the later history of Athens reached a very acute level. This was hardly the case in the older civilizations mentioned by Dieterich, where class differentiations existed but only in an undeveloped form. We find occasional manifestations of class conflict in ancient Egypt (the first recorded strike was a strike of builders working on the pyramids), but nothing remotely similar to the class struggles and political revolutions that shook Greece and Rome.

It is no accident that the development of feudalism and capitalism took place in Europe, and not in Asia, where the ancient mode of production remained until quite recently and held back social and economic development. As a matter of fact, the "Asiatic economy", in which private ownership of land was virtually unknown, was only overthrown by capitalism in the 19th century. In his celebrated articles on India, Marx pointed out that when the English conquered India they could not understand the system of landed property, which was completely different to the capitalist relations that existed in their own country.

In June 1853 Engels wrote to Marx: "The key to the whole East is the absence of private property in Land". And he attributes the difference to climatological factors: "How comes it that the Orientals did not reach to landed property or feudalism? I think the reason lies principally in the climate, combined with the conditions of the soil, especially the great desert stretches which reach from the Sahara right through Arabia, Persia, India and Tartary to the highest Asiatic uplands. Artificial irrigation is here the first condition of cultivation, and this is the concern either of the communes, the Provinces or the Central Government." [3]

This is just another example of Dieterich's impressionism and his unscientific and slipshod presentation of historical stages. We will see many more, as he jumps, without even blinking, 5,000 years to the 20th century completely ignoring all the intervening stages (slave society, feudalism, and the Asiatic mode of production) taking us immediately from the first city states to the present day. For a man capable of hurtling in a couple of pages from bacteria to the invasion of Kosovo, the description of the whole of human history is obviously mere child's play. Heinz Dieterich displays the same rigorous approach in relation to human evolution that he showed to the rest of the universe. With the same cheerful exuberance, Dieterich merely skates over 5,000 years of history. He cheerfully lumps together entirely different socio-economic systems, without the slightest regard to historical accuracy.

This confused method is not an accident. On page 49 of the aforementioned book we read the following: "If we analyse the economy and its history with respect to the totality of the principles which created its base, we find only two archetypes: the equivalent economy, under which humanity has lived for almost 800,000 years from the beginning of its economic history, and the non equivalent economy, which approximately 6,000 years ago began to place the economy on a new base, and which subjected the entire world to its system."

Here, as everywhere else in his book, Dieterich stands reality on its head. The different productive systems that characterise human society from its beginnings in the dawn of history right down to the present day have never been constructed on the basis of principles of any kind. That is an entirely idealist way of approaching human history. On the contrary, the principles of political economy have in every period been derived from existing productive and social relations. In the second place, what does Dieterich mean by a "equivalent economy"? He is referring to the exchange of equivalents. In the period to which he refers - the entire period of 800,000 years from the production of the first crude stone implements to the beginnings of class society in the Neolithic period - there was no systematic exchange, either of equivalents or anything else, as we shall see.

Marx on barter

Trade is believed to have taken place throughout much of recorded human history. There is evidence of trade even earlier than 7,000 years ago. Peter Watson dates the history of long-distance commerce from about 150,000 years ago. [4] But such exchange that took place had an accidental character. There was no money and no merchant class, and trade necessarily took the form of barter. In the first volume of Capital, Marx deals with barter. It is worth quoting what he has to say on this subject at length:

"The direct barter of products attains the elementary form of the relative expression of value in one respect, but not in another. That form is x Commodity A = y Commodity B. The form of direct barter is x use-value A = y use-value B. The articles A and B in this case are not as yet commodities, but become so only by the act of barter. The first step made by an object of utility towards acquiring exchange-value is when it forms a non-use-value for its owner, and that happens when it forms a superfluous portion of some article required for his immediate wants. Objects in themselves are external to man, and consequently alienable by him. In order that this alienation may be reciprocal, it is only necessary for men, by a tacit understanding, to treat each other as private owners of those alienable objects, and by implication as independent individuals. But such a state of reciprocal independence has no existence in a primitive society based on property in common, whether such a society takes the form of a patriarchal family, an ancient Indian community, or a Peruvian Inca State. The exchange of commodities, therefore, first begins on the boundaries of such communities, at their points of contact with other similar communities, or with members of the latter. So soon, however, as products once become commodities in the external relations of a community, they also, by reaction, become so in its internal intercourse. The proportions in which they are exchangeable are at first quite a matter of chance. What makes them exchangeable is the mutual desire of their owners to alienate them. Meantime the need for foreign objects of utility gradually establishes itself. The constant repetition of exchange makes it a normal social act. In the course of time, therefore, some portion at least of the products of labour must be produced with a special view to exchange. From that moment the distinction becomes firmly established between the utility of an object for the purposes of consumption, and its utility for the purposes of exchange. Its use-value becomes distinguished from its exchange-value. On the other hand, the quantitative proportion in which the articles are exchangeable, becomes dependent on their production itself. Custom stamps them as values with definite magnitudes." [5]

In primitive societies the predominant mode of production is either local subsistence agriculture or hunting and gathering. People do not produce articles for exchange (commodities) but primarily articles for their own consumption (use-values). Occasionally these products may be exchanged for the produce of other communities. This takes the form of barter, and has a purely accidental character. Only gradually, after a long period, do the goods exchanged acquire through custom a certain accepted value. Marx continues:

"In the direct barter of products, each commodity is directly a means of exchange to its owner, and to all other persons an equivalent, but that only in so far as it has use-value for them. At this stage, therefore, the articles exchanged do not acquire a value-form independent of their own use-value, or of the individual needs of the exchangers. The necessity for a value-form grows with the increasing number and variety of the commodities exchanged. The problem and the means of solution arise simultaneously. Commodity-owners never equate their own commodities to those of others, and exchange them on a large scale, without different kinds of commodities belonging to different owners being exchangeable for, and equated as values to, one and the same special article. Such last-mentioned article, by becoming the equivalent of various other commodities, acquires at once, though within narrow limits, the character of a general social equivalent. This character comes and goes with the momentary social acts that called it into life. In turns and transiently it attaches itself first to this and then to that commodity. But with the development of exchange it fixes itself firmly and exclusively to particular sorts of commodities, and becomes crystallized by assuming the money-form. The particular kind of commodity to which it sticks is at first a matter of accident. Nevertheless there are two circumstances whose influence is decisive. The money-form attaches itself either to the most important articles of exchange from outside, and these in fact are primitive and natural forms in which the exchange-value of home products finds expression; or else it attaches itself to the object of utility that forms, like cattle, the chief portion of indigenous alienable wealth. Nomad races are the first to develop the money-form, because all their worldly goods consist of moveable objects and are therefore directly alienable; and because their mode of life, by continually bringing them into contact with foreign communities, solicits the exchange of products. Man has often made man himself, under the form of slaves, serve as the primitive material of money, but has never used land for that purpose. Such an idea could only spring up in a bourgeois society already well developed. It dates from the last third of the 17th century, and the first attempt to put it in practice on a national scale was made a century afterwards, during the French bourgeois revolution.

"In proportion as exchange bursts its local bonds, and the value of commodities more and more expands into an embodiment of human labour in the abstract, in the same proportion the character of money attaches itself to commodities that are by Nature fitted to perform the social function of a universal equivalent. Those commodities are the precious metals." [6]

The accidental nature of barter means that products were exchange on a more or less haphazard basis. Gradually, through experience and custom, it might be possible to establish a rough calculation concerning the value of different products: so many beaver skins in exchange for so much tobacco, salmon, or maize. Whether or not these relations really reflected an exchange of equivalents it would be difficult to say. The point is that at this stage in human development, we are dealing not with the exchange of exchange values but of use values. The members of a tribe living inland are greatly attracted by the coloured shells offered to them by people living near the coast, who in turn are attracted by the beaver skins offered by the former. They haggle and eventually arrive at a satisfactory deal. Are they exchanging equivalents? Not at all. What are being exchanged are use-values. Value here has an entirely accidental expression. This has nothing in common with exchange under capitalism.

In the passage quoted above Marx expresses himself with the utmost clarity. What are exchanged in barter are use-values. At this stage, therefore, the articles exchanged "do not acquire a value-form independent of their own use-value or of the individual needs of the exchangers". Use-values are articles for use, and therefore their value is confined on the one hand to their physical characteristics, on the other to the fact that another person wishes to possess them. The way in which such things are exchanged has a largely arbitrary character. Only at a late stage, when trading becomes the norm, and money (the "commodity of commodities") emerges, does this situation begin to change. It is possible to speak about a universal exchange of equivalents only under capitalism. This is precisely the opposite of what Dieterich and Peters argue.

Dieterich bases his entire historical analysis on the idea of an era of equivalence (pre-capitalist modes of production), which was followed by unequal exchange (capitalism). Where does he get this from? Certainly not from Marx who explained in great detail in the pages of Capital that capitalism is based on commodity production - the production of exchange values - and the exchange of equivalents. To fail to understand that exploitation takes place under capitalism through equal exchange and by means of equal exchange shows a fundamental misunderstanding of Capital. Unlike capitalism, pre-capitalist modes of production are dominated by the production of use values. Exchange is occasional; the ratios of exchange are accidental. Gift giving and ritual donations are more important than hard calculation of self-interest. Yet according to Dieterich and Arno Peters this was the age of equivalence. Thus, they stand reality on its head.

In Capital, volume I, Marx shows that exchange originated from communities exchanging with communities, not individuals with individuals. Why would they bother to exchange if they could produce the same goods themselves? But communities involved in different types of economic activity are scarcely likely to know the value of goods they never produce. It is said that the Native American Indians sold Manhattan to the Europeans for a handful of beads. In what way this represented an "exchange of equivalents" nobody knows. As on every other question, so on economics Dieterich and Peters adopt a moralistic and sentimental attitude instead of a scientific approach. They are following not in the footsteps of Marx but of Proudhon. In a footnote in the Grundrisse, Marx ridicules the theories of Proudhon and exposes their utopian character:

"Proudhon begins by taking his ideal of Justice, of ‘justice éternelle,' from the juridical relations that correspond to the production of commodities: thereby, it may be noted, he proves, to the consolation of all good citizens, that the production of commodities is a form of production as everlasting as justice. Then he turns round and seeks to reform the actual production of commodities, and the actual legal system corresponding thereto, in accordance with this ideal. What opinion should we have of a chemist, who, instead of studying the actual laws of the molecular changes in the composition and decomposition of matter, and on that foundation solving definite problems, claimed to regulate the composition and decomposition of matter by means of the ‘eternal ideas,' of ‘naturalité' and ‘affinité'? Do we really know any more about ‘usury,' when we say it contradicts ‘justice éternelle,' équité éternelle ‘mutualité éternelle,' and other vérités éternelles than the fathers of the church did when they said it was incompatible with ‘grâce éternelle,' ‘foi éternelle,' and ‘la volonté éternelle de Dieu'?" [7]

In another footnote he writes: "From this we may form an estimate of the shrewdness of the petit-bourgeois socialism, which, while perpetuating the production of commodities, aims at abolishing the ‘antagonism' between money and commodities, and consequently, since money exists only by virtue of this antagonism, at abolishing money itself. We might just as well try to retain Catholicism without the Pope." [8]

Reading these lines we must ask ourselves: is the Peters-Dieterich approach to the economic history of society closer to Marx or to Proudhon? The answer is fairly obvious. In an interview entitled In Venezuela the Conditions for building XXI Century Socialism have been established, published in Rebelión (2/1/07) we read:

"Q. Is the economy of socialism of the 21st century, then, a barter economy?

"A. No. That is as erroneous as the pronouncement that nobody knows how to build Socialism of the 21st Century. The problem of economic injustice does not lie in money. It has nothing to do with whether economy is monetized or functions through exchange in kind (by barter). In the exploitative relation between slave and master, once the initial payment is amortized, money does not intervene, and yet it is one of the worst brutalities in history.

"Injustice exists when a product ‘A' is exchanged for a product ‘B' and their values - the labour time necessary to produce each one of them - are not equal, that is to say, when equivalents are not exchanged. Whether that exchange of unequal values (unequal labour efforts) is monetized - that is to say, whether it is expressed in monetary or natural form - is secondary."

Although in every class society the owners of the means of production expropriate the surplus value created by the exploited classes, the mode of exploitation is very different in each case and must be analysed concretely. It is necessary to analyse the different forms of exploitation from a scientific point of view, not from the standpoint of abstract morality and sentimentality. Dieterich does not do this. Instead he lumps together slavery, serfdom and wage labour under a general heading of a purely moralistic character ("injustice"). From such a method we can learn precisely nothing about the phenomena under consideration. We have already seen that wage labour in slave-owning society was the exception, not the rule. Whereas the modern working class produces the surplus value that constitutes the base of all wealth, the ancient Roman proletariat was a parasitic class that lived on the labour of the productive class - the slaves. The ancient proletariat and the modern proletariat therefore have very little in common.

When Dieterich quotes an authority in support of his economic theories, whom does he choose? Not Marx, Adam Smith or David Ricardo, not the French Physiocrats, Hobbes or Locke, but Aristotle! This great thinker, the most encyclopaedic mind of antiquity, was probably the first to deal with political economy. The economy of Greece, like that of Rome, was a slave economy. Most of production was based on agriculture (although there was significant development of the ceramics industry in Athens) and was carried out by slave labour.

On pages 50-51 of El Socialismo del Siglo XXI, Dieterich refers to Aristotle as the founder of the science of economics (Marx had already pointed this out long ago). Heinz is very impressed by the fact that Aristotle had a negative attitude towards "chrematistics". "Chrematistics" comes from the Greek word for money, and Dieterich uses it as a synonym for the pursuit of wealth or profit. The great philosopher regarded this as an unnatural use of human ability, and a disturbance of the economy. He quotes Aristotle's words:

"It is justifiably criticised because it is not based upon nature, but only exploitation. Together with it is found the business of usury, which is hated for good reason because it obtains its profits from money itself and not from the things for the sale of which money was invented, since the latter was only intended to facilitate exchange, but interest means that this is multiplied by itself. For this reason, this type of gain is the one which is most directed against nature."

Heinz Dieterich gives us other quotations against selfishness. He tries to trace the origin of all our ills to a kind of economic equivalent of Original Sin, and quotes Aristotle approvingly as his first witness for the defence. The conclusion that we are presumably intended to draw from this is that Aristotle was some kind of early socialist - in fact, a precursor of Socialism of the 21st Century. Such a conclusion, however, would be entirely false and unhistorical. Why was Aristotle hostile to moneymaking? Because the society in which Aristotle lived was not based on trade, exchange or usury, but on slavery. For the Greek aristocracy, whose ideological expression Aristotle was, moneymaking was regarded with contempt. The selfish pursuit of money for its own sake was seen as an abomination. At a time when the centre of one's universe was the city-state, the highest aim in life was not to make money but to serve the state.

Therefore, when Aristotle expressed a negative attitude towards money making, he was merely expressing the psychology of the ruling class of his own period. The same Aristotle who denounced money making also defended slavery. We should not blame him for this any more than we should praise him for attacking greed. In both cases he was only expressing the accepted ideas and morality of his age, and even this great thinker was unable to rise above this standpoint. Our Heinz has as little understanding of Greek society as of the English Revolution or the shape of the universe. But this does not matter, since in the night all cats are grey. His point of view is that of vulgar abstract super-historical moralizing, which found its expression in the words of the old song: "money is the root of all evil".

Capitalism in the ancient world?

If Dieterich wants to find allies in his crusade against "Chrematistics" he can find plenty of people to quote, not only from Aristotle and other writers from slave society but from both earlier and later socio-economic formations. According to the Peters-Dieterich theory of history, all these formations for the last 6,000 years were based on the same thing: "chrematistics" and "unequal exchange".

In fact, most of the societies of antiquity were not based on trade and exchange. In fact, they were not money economies at all. Insofar as trade existed it was on the margins of ancient society, although there were, by way of exception, some trading nations like Phoenicia. But they were not the norm. Insofar as money and trade begin to develop in the ancient world they served to undermine it and paved the way for its dissolution. In the Grundrisse Marx writes:

"Among the ancients, we discover no single enquiry as to which form of landed property, etc., is the most productive, which creates maximum wealth. Wealth does not appear as the aim of production, although Cato may well investigate the most profitable cultivation of fields, or Brutus may even lend money at the most favourable rate of interest. The enquiry is always about what kind of property creates the best citizens." [9]

In the light of all this it should be no surprise to anybody except our friend Heinz that Aristotle speaks about trade and all economic activity carried on for a profit in negative terms. Ancient economic thought was in general hostile to enrichment and the private accumulation of wealth. This attitude was coherent with an economy mainly closed and static, based on agriculture and on slave labour. Usury (in the original sense of any interest) was denounced by a number of spiritual leaders and philosophers of ancient times, not only Aristotle but Plato, Cicero, Cato, Seneca, Plutarch, Muhammad (interest of any kind is forbidden by Islam) Philo, Buddha and Moses. In Cato's De Re Rustica we read: "And what do you think of usury?" - "What do you think of murder?" We will find the same negative attitude towards trade and profit, not only throughout antiquity but also in the Middle Ages. Only with the dissolution of feudalism and the emergence of capitalist economic relations do we find the beginnings of a change.

The Ten Commandments condemn covetousness (Exodus 20:17). Solomon warned that wicked people are "greedy for gain" (Proverbs 1:10-19). The prophets railed against selfish material acquisition: "Woe to those who devise iniquity [...] they covet fields and take them by violence, also houses, and seize them [...] Behold, against this family I am devising disaster." (Micah 2:1-3.) The prophet Amos warned the Israelites that because of their rampant greed and exploitation of the poor: "I will destroy the winter house along with the summer house; the houses of ivory shall perish, and the great houses shall have an end." (Amos 2:6-7; 3:1, 14-15) Amos warned Israelite leaders, who lived in luxury: "Behold, the days shall come upon you when He [God] will take you away with fishhooks [...] and Israel shall surely be led away captive." (Amos 4:1-3; 5:27; 6:7; 7:11, 17.)

Egyptian capitalism?

There was no capitalist class in Egypt. There were small traders and moneylenders, but they did not constitute a separate economic class with influence based on commercial wealth. There was money but no money economy. Things were given a value in gold, silver and copper in fixed weights. In order to facilitate trade temple treasuries stamped silver ingots, but this did not lead to a monetary system worthy of the name. Trade was mostly conducted on the basis of barter. The economic life of the country was measured, not in money, but by the number of ships belonging to the state treasury. Artisans were paid, not in money, but in kind - in corn, barley, fish, beer, etc.

Under the Ramessides things were valued in sacks of barley. Even in Egyptian literature wealth was not expressed in terms of gold and silver but always in terms of full granaries, fine herds or marshes abounding in game. From all this it is clear that we cannot speak of an exchange economy in Egypt, but only an exchange of use values. Does this mean that there was no exploitation? Of course it does not. Exploitation did not need to be disguised in exchange. It took place openly, either as slavery or, more commonly, as obligatory labour-service (corvée) to the temple or the state.

What we are dealing with here is what Marx referred to as the ancient or Asiatic mode of production. The main factors were the national distribution of manpower (public works), the stockpiling of food to avoid the worse social consequences of years of poor inundation, providing for the gods (that is, Pharaoh and the priest caste) and, lastly, foreign trade. As the population of Egypt was relatively small and the flooding of the Nile created favourable conditions for agriculture, it usually produced a surplus above its immediate needs that could be exchanged. This was the prior condition for trade, but this was conducted with foreign merchants outside the frontiers of Egypt. Inside the frontiers the great majority of economic life was conducted on the basis of a subsistence economy and barter.

A good example of this foreign trade was the expedition that was sent as far as the land of Punt exclusively to obtain incense to burn at the temple. Trade was entirely monopolized by the state, which practiced a policy of strict protectionism. In the Bible we read that Joseph's brothers could not trade without informing the vizir in charge of granaries. Egypt's main imports were wood (from Lebanon), and spices, copper and bronze (from Asia). Trade was mainly conducted by barter, although gradually, in the New Kingdom, gold and silver were used as a standard of value.

There were, of course, classes in Egypt. The Egyptian language had a complex vocabulary to describe the difference between the son of a man of substance and one who had nothing. The Egyptian ruling class lived in conditions of great luxury on the basis of the exploitation of the peasantry. But when a pharaoh or a noble died his worldly wealth was buried with him, almost as if it formed part of his body. The difference with capitalism is most clearly revealed by this detail. The purpose of accumulation was extravagant personal display and finally to be buried in a tomb in preparation for the after-life. In this way huge amounts of wealth were effectively removed from the economy, and this seemed perfectly natural to the ancient Egyptians.

A similar situation existed, with certain peculiarities, in all the other early societies that functioned on the basis of the Asiatic mode of production. The village commune, the basic cell of these societies, was almost entirely self-sufficient. The few luxuries accessible to a population of subsistence farmers were obtained from the bazaar or from travelling peddlers who lived on the margins of society. Money was scarcely known. Taxes to the state were paid in kind. There was no connection between one village and another and internal trade was weak. The real cohesion came from the state.

People's mental horizons were extremely limited. The most powerful force in their lives was not the "nation" (which is really a product of capitalism) but the family or the clan, which educated them and taught them about their history, religion and traditions. About politics and the world at large they knew little or nothing. Their only contact with the state was the village headman who was responsible for collecting taxes. The tax system, and other methods of exploitation such as obligatory labour service for the state were oppressive but accepted as inevitable and the natural order of things sanctioned by tradition and religion.

In such a society, classes could not develop in the way they did in Western Europe, and capital accumulation remained on a primitive basis, as merchant capital and usury (hoarding). These societies were not based on money, which existed normally on the margins of society, as Marx points out in Capital. Wealthy merchants were constantly menaced by extortionate taxes, confiscation, imprisonment and torture. At best the merchants were tolerated and taxed, and worst they were stripped of everything. Even without this, there were problems due to the legal system. Laws on inheritance usually decreed that the property of the deceased be parcelled out among his heirs, producing a tendency to fragmentation of capital. Therefore, the Asiatic mode of production was an historical dead end.

Although internal trade was weak, external trade played an important role in these ancient empires. The rise and fall of ancient civilizations are very often connected with changes in the trade routes. The great empires of the East were connected to the West by trade (the Silk Road). This eventually led to their downfall as a result of the spread of capitalism in the 18th and 19th centuries. When European navigators sailed round the tip of Southern Africa to avoid the Turko-Mongol invaders, Asia was rapidly opened up. Tsarist Russia (itself half-Asiatic in character) pushed eastwards to the Pacific Ocean, conquering the Khanates of Central Asia, while the British moved steadily up through India. The Dutch, French, Portuguese and Spanish occupied the rest.

After a feeble resistance, China was reduced to the status of a semi-colony of the various imperialist powers. Empires need bureaucrats and bookkeepers. These had already existed for thousands of years. The imperialist merely took them over and used them for their own purposes, as the Mongols had done centuries earlier. But this time things were different. The capitalist system was on a higher level than the Asiatic mode of production, and therefore undermined and destroyed it.

Pre-Columbian America

Matters are no better for the "economy of equivalence" when we turn to the peoples of the American continent. If the comparison with ancient Rome with modern capitalism is misleading, the attempt to include the societies of ancient America in the equation gives a still more misleading impression. Before the arrival of Columbus in 1492, most of the peoples of this continent did not know what money was, and even private property existed only to a very limited extent.

The Incas were still in the Neolithic stage when the Spaniards invaded. They did not know what money was. These pre-Columbian societies resemble to some extent those based on the Asiatic mode of production. The supreme Inca was seen as the descendant of the Sun. His officials managed the storehouses and temples and organized the cultivation of the temple lands.

Although slavery existed (prisoners of war), these were not slave societies. In the Mexico of the Aztecs, prisoners of war were sacrificed to the gods, and the main purpose of war was the capture of prisoners for this purpose. Labour service was not free, but those who performed it were not slaves. There was certainly an element of coercion, but the main thing was habit, tradition and religion. The community served the god-king (or queen). It served the temple (as in ancient Israel). This was associated with the state, and was the state. The origins of the state are here mixed up with religion, and this religious aura is maintained to the present. People are taught to look up to the state with feelings of awe and reverence, as a force standing above society, above ordinary men and women, who must serve it blindly.

This is not to say that these people were backward. They had attained a very high level of economic and cultural development. Even before the Incas, the Peruvians constructed huge walls and fortresses. They were built by the state with incredibly large teams of labourers. Equally striking are other public works such as road building. Hernando Pizarro wrote that he had never seen roads like the roads built by the Incas in the high Andes in the entire Christian world. Communications were highly developed and the Incas were very well informed about even the most remote parts of their empire.

The Mexicans had their relay stations set two leagues apart (six miles) along their roads. In pre-Colombian Mexico, there were written codices that recorded forms of land holdings and the obligations attached to them. In Peru there seems to have been no such thing, however, the Incas kept records in the form of knots (quipus), which, according to some experts, may have been a form of writing.

Despite all these achievements, it is wrong to idealize these societies. The whole gigantic structure was supported by the exploitation of the peasantry at the bottom. Although not slaves, the peasants were subjected to a form of obligatory labour service (corvée), sanctioned by custom and if necessary upheld by force. Like all other societies based on classes, the ancient pre-Columbian societies of Central America and Peru depended on the exploitation of the labour of the peasants, who were obliged to give up part of their surplus labour to the state that was in the hands of a privileged priest caste, as in Egypt.

Thus, the pre-Columbian societies were also based on the exploitation of labour and the alienation of surplus labour. The results of this labour were often spectacular, and have left us some of the grandest monuments of antiquity. These monuments were intended for the aggrandisement and glorification of the rulers of society. In ancient Mexico, the king of Tezcoco, the second largest component of the Aztec federation, is said to have employed more than 200,000 workers in the construction of a magnificent palace and park. But the mode of appropriation was totally different to that which exists under capitalism. No more than Egypt were they based upon exchange, whether equal or unequal.


Hegel says that in the East, the ruling spirit was freedom for the One (i.e. for the ruler, the god-king), but in Greece it was freedom for the many, though he correctly qualified it to mean freedom for the citizens of Athens who did not happen to be slaves, foreigners or women. All the grandeur of Greek civilization was based ultimately on the labour of the slaves. Unlike Egypt, Greek mining was in the hands of licensed capitalists (slave owners).

A slave, as a chattel, could be bought and sold as an object of production, or a tool with a voice (instrumentum vocale) as the Romans put it. Athenian democracy was based on slavery. But for the free citizens it was a most advanced democracy. This new spirit, infused with humanity and individualism, affected Greek art, religion and philosophy, which are qualitatively different to that of Egypt and Mesopotamia. Not until October 1917 did the world see a more advanced form of participative democracy.

In Greece there was a sharp division between the classes, based on property. The main division was between free men and slaves. The free citizens did not usually pay taxes, which were regarded as degrading (as was manual labour). When Athens was mistress of all Greece, she had neither a treasury nor a regular system of taxation. This was completely different to the Asiatic system in Persia and other earlier civilizations. In the latter, as Hegel points out, all men were the slaves of one ruler, the god-king. Thus, class divisions were poorly developed in comparison to Greece.

The superiority of the Greek system was shown in the most decisive arena - that of war. They routed the Persians and then invaded and conquered the most powerful Empire of the East. The Greeks recognized the high quality of the Oriental elite warriors, but held in contempt the poorly trained mass of auxiliary soldiers who were obviously conscripted. Most of them therefore lacked the discipline and combativity that was the pride of the Greek citizen armies.

Ancient Greece had a different socio-economic structure, and consequently a different spirit and a different outlook, to the Asiatic mode of production. This was not the same as in Egypt, Mesopotamia, Peru or Mexico. Greek society was formed under different conditions. The small city-states of Greece lacked the vast expanses of cultivatable land, the great plains of the Indus Valley and Mesopotamia. Hemmed in by barren mountain ranges, they faced to the sea, and this fact determined their whole course of development. Ill suited to agriculture, they were pushed in the direction of the sea, becoming a trading nation and an intermediary, like Phoenicia earlier. This was the reason for the growth of trade and, to a certain extent, of industry (Athenian ceramics).

It seems that money was first developed by the Lydians of Asia Minor. At first precious metals were used as a means of calculating value, then personal seals, originally introduced to make documents, were used to stamp precious metals, producing coins. By around 600 BC coins had developed as a medium of exchange. Improved methods of engraving and manufacture made possible the creation of a mass coinage system, in place of the more cumbersome system of stamped ingots.

By the late 6th century BC new techniques permitted the separation of silver from lead ore. This led to a huge increase in the production of the Athenian silver mines in Laurion. The central Greek states were among the first to introduce silver coins. And yet every city had its own coinage. This means that exchange had not yet acquired a universal character at this stage. Athens developed as a manufacturing and trading centre, specializing in the production of pottery, especially the famous black figured vases, which reached a peak of refinement in about 600-530 BC.

There was a permanent shortage of good agricultural land and, with a growing population, constant land-hunger. This was partially solved through emigration and the establishment of Greek colonies in Sicily, Italy, France and Spain. But despite the rise of industry and trade, the Athenians still looked on wealth fundamentally in terms of land, which was worked by slave labour and dominated by a few wealthy families. This explains the contemptuous and distrustful attitude shown by Aristotle towards the pursuit of wealth.

Roman capitalism?

Terms such as the Roman proletariat and Roman capitalism are equally misleading. They are based on a superficial historical analogy. In the latter period of the Republic, the Roman victories, especially in the wars with Carthage, added new territories to its growing empire, including the prosperous Greek and Phoenician colonies on the coast of Spain. This gave a further impetus to the class of Roman capitalists, involved in trade in the Mediterranean. Spain opened up her valuable iron and silver mines - which were also worked by slave labour in terrible conditions.

Rome simply took over this business from Carthage. It also led to a further development of trade and exchange and therefore the rise of a money economy. In some respects, this calls to mind the rise of capitalism in Europe in the 18th century, and indeed the word "capitalism" is frequently used when speaking of this phase of Roman development. Yet, though there are certain analogies, the comparison is not exact. Modern capitalism depends on a free market for goods and labour. Large-scale slavery is incompatible with modern capitalism, which abolishes slavery as it develops. The American Civil War is sufficient proof of this assertion.

The basis of modern capitalism is the accumulation of capital for the purpose of re-investment. Such a conception would have been totally incomprehensible to a Roman capitalist. One of the most striking contradictions of the ancient world is that, having come so close to a capitalist economy, it always drew back on the edge and failed to develop, when it would seem that a potential existed. Take just one example: the Alexandrine Greeks invented a steam engine that worked. But they regarded it as a mere curiosity - a toy. Its productive potential never occurred to them.

Why should it? With a mass of cheap slave labour, there was no need to develop technology. Moreover, technology is incompatible with slave labour. Slaves working under compulsion will not treat delicate instruments with care - they will break them on purpose. The mule was developed in the slave states of the Southern USA because the slaves could not be trusted with a horse, which was too delicate to survive in their hands. Only the crudest, most resistant implements and tools could be entrusted to the slaves.

Thus, for the whole period of slavery, no great advances were made in technology and productivity remained on a low level. The slave owners, like the feudal lords who succeeded them, were not in the least interested in accumulating for investment. The purpose of accumulation was for their own personal enjoyment and consumption on a most lavish scale. The description of the extraordinary banquets, parties and orgies that have come down to us, the consumption of such things as stuffed lark's tongues and pearls dissolved in wine, are the end result of the labour of the slaves, along with extravagant games and festivals, silk dresses, colossal public buildings and - last but not least - the free handout of grain to the unemployed mob in Rome.

Just as the nomenclature of "capitalist" is not really adequate to describe the functions of the Roman slave owners, so the word "proletariat" is misleading when applied to the city-dwellers in the late Roman Republic and Empire, for reasons we have explained. There is a fundamental difference between the modern proletariat and that of the ancient world. The modern working class is the only really productive class (together with the peasantry, insofar as it still exists), but the Roman proletariat did not work - it had an entirely unproductive and parasitical character.

In the early days of Rome money played an unimportant role in the economic life of society. The early Republic was an agricultural economy based upon subsistence farming. Its backbone was the class of free peasants. But a long period of wars and foreign conquests had radically transformed it. Money then assumed an ever-greater role, first as silver, later as copper and gold. Money relations became more important with the rise of trade on an international scale. And together with trade and money economy, the Roman capitalists' power also increased.

With the rise of money economy the old equality was destroyed and in its place we see an increasing polarisation between rich and poor that no longer corresponds to the old tribal divisions between plebeians and patricians, noblemen and commoners. Very often the new men of money are commoners, and even freedmen - former slaves. In this way was born the class of Roman "capitalists" - the knights or equites, who were given political power by the Gracchi and became an important force in Roman society and politics.

To the extent that one can speak of capitalism in the later Roman Republic and Empire, it existed only in the margins of the Roman economy, which was based not on trade and exchange but on landed property and slavery. As for the Roman proletariat, this consisted of landless peasants who were ruined by the rise of slavery and the big latifundia after the Punic Wars (264-241, 218-201 and 149-146 BC). The human and economic cost of these wars was immense. In the first Punic war, in a five-year period, the census of Roman citizens fell by about 40,000 - one sixth of the total population. And these figures do not include the devastation suffered by Rome's allies, who suffered big losses at sea. It was a deadly, bloody slogging match, which lasted decades.

At this time the position of the Roman and Italian small farmer was inexorably eroded by a fatal combination of debt, slavery and the encroachment of the big estates. The free peasantry entered into a process of decay, being unable to compete with slave labour. Constant wars, debt and impoverishment ruined them. Attempts were made to force through legislation to protect the peasants. The Licinian laws stipulated that the landlords had to employ a certain proportion of free labourers alongside the slaves and that the burden of debt was to be reduced. But it was impossible to reverse the process. Slave labour on a large scale drove out free labour. All the laws designed to halt this process were in vain. Economic necessity tore up the laws before they could be enacted.

Over a long period of time, the dispossessed peasants flocked to Rome, where they could at least obtain handouts from the state. Although they were reduced to the status of proletarii - the lowest layer of propertyless citizens - they remained Roman citizens and had certain rights in the state. The presence of a large number of impoverished citizens gave a fresh impetus to the class struggle in Rome. There were violent insurrections against the burdens of debt. But despite the existence of a class struggle in the later Republic it is quite wrong to conclude that the Roman proletariat was the same as the modern working class. The term lumpenproletariat would be far more appropriate in this case. At one time, the emperor was importing grain to feed more than 100,000 people in Rome alone. Marx pointed this out long ago. In 1877 he wrote to the Editor of the Otchecestvenniye Zapisky:

"In several parts of Capital I allude to the fate which overtook the plebeians of ancient Rome. They were originally free peasants, each cultivating his own piece of land on his own account. In the course of Roman history they were expropriated. The same movement which divorced them from their means of production and subsistence involved the formation not only of big landed property but also of big money capital. And so one fine morning there were to be found on the one hand free men, stripped of everything except their labour power, and on the other, in order to exploit this labour, those who held all the acquired wealth in possession. What happened? The Roman proletarians became, not wage labourers but a mob of do-nothings more abject than the former ‘poor whites' in the southern country of the United States, and alongside of them there developed a mode of production which was not capitalist but dependent upon slavery. Thus events strikingly analogous but taking place in different historic surroundings led to totally different results. By studying each of these forms of evolution separately and then comparing them one can easily find the clue to this phenomenon, but one will never arrive there by the universal passport of a general historico-philosophical theory, the supreme virtue of which consists in being super-historical." [10]

The whole system depended upon a steady supply of slaves, and that depended on successful foreign wars. When the Empire reached its physical limits, the supply of slaves dried up, leading to what is known as the manpower crisis of the later Roman Empire. In this period, the bureaucratic-military state imposed a heavy burden on Roman society, which was crushed by the burden of taxation. Once the Romans stopped conquering new lands, the flow of gold into the Roman economy decreased. Yet huge quantities of gold were being spent by the wealthy parasites on luxury items. In the time of Nero, Seneca estimated that it cost Rome five million dollars a year to import its luxuries from the east (a colossal sum when translated into modern money). This meant that there was less gold to use in coins. As the amount of gold used in coins decreased, the value of the coins decreased.

The debasement of the currency led to inflation, which disrupted trade and led to increasing misery and economic chaos. After the reign of Marcus Aurelius the increase in prices became inexorable. To make up for this loss in value, merchants raised the prices on the goods they sold. No longer wanting to be paid with debased coinage, soldiers and wealthy citizens chose instead to be paid with actual objects of value. Many people stopped using coins and began to barter to get what they needed. Eventually, salaries had to be paid in food and clothing, and taxes were collected in fruits and vegetables.

It became difficult for the government to retain any money for itself, and it began to resort more and more to cheaper mercenaries to defend it. Since it was impossible for the government to keep track of its large grain supply, the landowners were legally required to collect taxes. The collapse of the slave economy was rooted in these conditions. In fact, the feudal system already existed in outline when the slave-owners converted their slaves into coloni (serfs). The colonus was formally free but was legally bound to his role of tenant farming to facilitate the collection of taxes. The Imperial government collected fixed grain taxes from tenant farmers. Gradually, the whole top-heavy system began to implode, creating the conditions for collapse. The barbarians merely gave the Empire a last push. But the structure was already rotten to its foundations, and ready to fall.

In The Communist Manifesto Marx explains that the class struggle can lead to a revolutionary reconstruction of society, or else to the common ruin of the contending classes. The fate of Rome is a graphic example of the second variant. It would be an interesting exercise to speculate on what could have happened if Spartacus and the slaves had succeeded in conquering Rome. But this did not occur because the only way the slaves could have succeeded was by uniting their forces with the Roman proletariat. This did not happen and there are concrete reasons why it could not have happened.

Although the dispossessed masses in Rome were in constant conflict with the upper classes, and this class conflict assumed a particularly violent character in the latter stage of the Republic, preparing the way for Caesarism, the only productive class were the slaves. In the last analysis, the Roman proletariat almost always united with the slave-owning ruling class to suppress slave uprisings. From this fact alone we can see how incorrect it is to approach history from the standpoint of superficial analogies, or to try to impose upon the past categories and concepts derived from the present. But this is just what Dieterich does all the time.

‘Chrematistics' under feudalism

The possessors of surplus value in the pre-capitalist epoch were not the merchants but the slave-owner, the feudal lord, and the state (for instance, the oriental despot). They were interested not in productive investment but in the consumption of wealth and luxury. But even in those societies the wealth was obtained in the last analysis through production, not exchange. With capitalism the conservation and accumulation of money becomes an end in itself. We see this even in the early days of capitalism when money was accumulated as the miser's hoard. Even in the ancient world these elements existed at certain periods, but only exceptionally, as Marx points out:

"The trading nations of ancient times existed like the gods of Epicurus in the intermediate worlds of the universe, or rather like the Jews in the pores of Polish society. The trade of the first independent flourishing merchant towns and trading nations rested as a pure carrying trade upon the barbarism of the producing nations, between whom they acted the middleman." [11]

Under feudalism, which was a hierarchal society based in the ownership of land and the exploitation of the labour of the serfs, money making was also regarded with distain. The Catholic Church, which was the ideological bulwark of feudalism prohibited usury (lending money at interest), which is considered a mortal sin. From 1179 the Catholic Church prohibited usury on pain of excommunication. It is not at all difficult to find quotations from churchmen and nobles of the Middle Ages denouncing money making and greed in similar terms to those used by Aristotle. Saint Anselm thought that charging interest was the same as theft.

Saint Thomas Aquinas maintained that charging of interest is wrong because it amounts to "double charging", charging for both the thing and the use of the thing. Aquinas said this would be morally wrong in the same way as if one sold a bottle of wine, charged for the bottle of wine, and then charged for the person using the wine to actually drink it. Simply to invest the money and expect it to be returned regardless of the success of the venture was to make money simply by having money and not by taking any risk or by doing any work or by any effort or sacrifice at all. This is usury. St. Thomas quotes Aristotle as saying that "to live by usury is exceedingly unnatural".

All this did not prevent the same nobles and churchmen from borrowing large sums of money from the Jews (which they frequently did not repay). Neither does it make them the precursors of Socialism of the 21st Century, or any other kind of socialism. The reason that usury became associated with the Jews is that they were effectively excluded from the feudal system. Forbidden to own land and excluded from most professions, they were pushed into marginal occupations considered socially inferior, such as tax and rent collection and money lending. This was how the Jews got the reputation as greedy usurers. The tensions between creditors and debtors, added to religious strains, were the source of the anti-Semitism of medieval Europe, which was very useful to the kings, princes and aristocrats who used periodic pogroms as a convenient way of liquidating their debts.

In his great poem the Inferno, Dante places the usurers in the inner ring of the seventh circle of hell, below suicides, where the usurers had the pleasure of spending all eternity in the company of the blasphemers and sodomites. In Shakespeare's play, The Merchant of Venice, written in the 16th century, the Jew Shylock had to convert to Christianity and renounce usury before he could be redeemed. As late as the 18th century, the Catholic Church continued to condemn usury, although the development of capitalism, and banking forced it to modify its stance.

In 1745 Pope Benedict XIV in his encyclical Vix Pervenit strictly forbade charging interest on loans, but adds that "entirely just and legitimate reasons arise to demand something over and above the amount due on the contract" through separate, parallel contracts. All these people were opposed to "chrematistics". What does this tell us? Does it mean that the ideas of Heinz Dieterich are as old as Aristotle and Moses? No, it tells us that the moneymaking economy about which our Heinz complains so bitterly, is not so old after all. It developed in the course of the 17th century in England and Holland, and finally became dominant in the early 19th century as a result of the Industrial Revolution in Britain.

Commodities are all expressions of social labour. But they are not values of equal magnitude. At first the quantitative ratio in which products are exchanged is quite arbitrary. But with the expansion of trade and the consequent development of money this arbitrariness is reduced more and more. It is capitalism that establishes equivalence. In the third volume of Capital Marx deals with the question of the conversion of Commodity-Capital and Money-Capital into Commercial Capital (Merchant's Capital) from a historical perspective.

The merchant's profit is made from the circulation process, from buying and selling. The merchant's ideal is to buy cheap in order to sell dear. This is clearly not the exchange of equivalents! Before the real development of capitalism in the 18th century, trade was closely linked to plundering, piracy, kidnapping slaves, and colonial conquest; as in Carthage, Rome, and later the Venetians, Portuguese, Dutch. [12]

The rape of Latin America

The history of what we call civilization (that is, class society) is characterized on the one hand by the development of the productive potential of humankind, of art, science and technology. On the other hand, it is characterized by the material and cultural expropriation of the great majority of humankind. In The Communist Manifesto Marx explains the role of the "discovery" of America in the development of capitalism:

"The discovery of America, the rounding of the Cape, opened up fresh ground for the rising bourgeoisie. The East-Indian and Chinese markets, the colonisation of America, trade with the colonies, the increase in the means of exchange and in commodities generally, gave to commerce, to navigation, to industry, an impulse never before known, and thereby, to the revolutionary element in the tottering feudal society, a rapid development." [13]

But this development was achieved at the cost of the indigenous peoples of America. They suffered what can only be described as genocide. Precise pre-Columbian population figures are impossible to obtain, and estimates must be extrapolated from limited data. According to William Denevan about 54 million people perished, although some estimates put the real figure at more than 100 million. If we take an estimate of approximately 50 million people in 1492 (including 25 million in the Aztec Empire and 12 million in the Inca Empire), the lowest estimates give a death toll of 80 percent at the end of the 16th century. Latin America only recovered this level of population at the beginning of the 19th century, with 17 million in 1800; 30 million in 1850; 61 million in 1900; 105 million in 1930; 218 million in 1960; 361 million in 1980 and 563 million in 2005.

It was the misfortune of the Mexican people to come into contact with Europeans just at a time when the primitive accumulation of capital was in full swing. There is no need to repeat here the well-known story of the violence, treachery and deceit practiced by Cortez and his men. Montezuma received the Spaniards politely, believing them to be gods, but his hospitality was immediately violated. The vast and thriving lake-city of Tenochtitlan was burnt, plundered and destroyed without mercy.

The Native Americans also suffered the brutal destruction of their culture. In no country does the expression cultural expropriation hold a deeper or more tragic meaning than in Mexico. Before the arrival of the Spaniards, the Mexican people had established one of the world's greatest and most remarkable civilizations. The cause of their ruin was not any Historical Project on the part of the Spanish conquistadores but simple greed - greed for gold - "the sweat of the sun", as the Aztecs called it. "We have a disease that only gold can cure" the invaders told them, by way of explanation, before seizing their land and wealth and enslaving them. The same disease afflicts the whole world today and causes the same terrible results.

The Aztecs, although they had reached a high level of social and cultural development, had no defence against the guns, steel and horses of the Spaniards, or the germs they brought with them. After a short, sharp war, they were reduced to slavery and their amazing civilization destroyed. The last Aztec chief, Cuauhtemoc, was tortured with fire to reveal where the gold was, and then hanged when the Spaniards did not find the quantities of gold they had expected. The results of the conquest were incalculable. When the Spaniards first came to Mexico, the country was a flourishing state with a population of 25 millions. 80 years later its culture was destroyed, its economy in ruins and its people enslaved. 90 percent of the population had lost their lives, either massacred by the Spaniards and their allies or from hunger or diseases like smallpox that decimated whole communities. In the last three decades of the 16th century, the Mexican population collapsed, falling to just one million people in 1600.

Crude, ignorant and contemptuous of the culture of the natives, the Spaniards crushed it underfoot without a second thought. Priceless works of art were melted down into gold ingots and lost forever to humanity. Part of the gold and silver was recast into huge Christian relics of little or no aesthetic value. I remember the indignation I felt some 25 years ago when I was shown the tasteless gold altarpieces, silver caskets and the like in the cathedral of Cadiz. Similar grandiose monuments to idiocy and fanaticism that decorate churches in other Spanish cities were likewise made from the melted down artefacts of a culture hundreds of years old.

The Mexicans, weakened and traumatized, were unable to prevent this spiritual enslavement, but resorted to a tactic of passive resistance, which in the last analysis saved important elements of the traditions and culture of their fathers. The Mexican sculptors, artisans and builders who were forced to toil on the construction of huge churches and cathedrals, triumphal monuments to celebrate their own servitude, took their revenge by injecting native elements into the art of the Christian invaders. In this way the spirit of Mexico was preserved, in spite of everything.

The primitive accumulation of capital

"The bourgeoisie, by the rapid improvement of all instruments of production, by the immensely facilitated means of communication, draws all, even the most barbarian, nations into civilisation. The cheap prices of commodities are the heavy artillery with which it batters down all Chinese walls, with which it forces the barbarians' intensely obstinate hatred of foreigners to capitulate. It compels all nations, on pain of extinction, to adopt the bourgeois mode of production; it compels them to introduce what it calls civilisation into their midst, i.e., to become bourgeois themselves. In one word, it creates a world after its own image." [14]

The barbaric destruction of a great culture was undoubtedly a terrible crime against humanity. But this is not an exception, but part of a general process, closely connected with the genesis of capitalism, which Marx described as the primitive accumulation of capital. In order to clear the path for the establishment of capitalism, it was necessary to ruthlessly destroy all hitherto existing socio-economic forms: slavery, feudalism and other pre-capitalist economic formations. This was accomplished with extreme brutality from the 16th to the 19th centuries, both in Europe and the Americas. In the first volume of Capital Marx wrote:

"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, signalised the rosy dawn of the era of capitalist production. These idyllic proceedings are the chief momenta of primitive accumulation. [...] ‘If money', according to Auger, ‘comes into the world with a congenital blood-stain on one cheek,' capital comes dripping from head to foot, from every pore, with blood and dirt." [15]

The crimes of capitalism fill all normal human beings with a sense of horror and indignation. But horror and indignation do not help us to understand the phenomena we are dealing with, and it is unworthy of a man who describes himself as a "scientific economist" to approach history from a moralistic and sentimental point of view. If Heinz Dieterich goes to the dentist with a bad toothache, the latter may express all the horror and indignation in the world, but that will not help him extract the offending molar. Hegel once said "It was not so much from slavery as through slavery that humanity was emancipated." [16] Centuries of class oppression and exploitation have developed the means of production (science, technology, industry and agriculture) and by so doing have laid the material basis for the creation of a new and higher form of human society: socialism. As Marx wrote in a famous passage in Capital:

"Along with the constantly diminishing number of the magnates of capital, who usurp and monopolize all advantages of this process of transformation, grows the mass of misery, oppression, slavery, degradation, exploitation; but with this too grows the revolt of the working-class, a class always increasing in numbers, and disciplined, united, organized by the very mechanism of the process of capitalist production itself. The monopoly of capital becomes a fetter upon the mode of production, which has sprung up and flourished along with, and under it. Centralization of the means of production and socialization of labour at last reach a point where they become incompatible with their capitalist integument. Thus integument is burst asunder. The knell of capitalist private property sounds. The expropriators are expropriated." [17]

Dieterich against expropriation

It is well known that Marx stood for the expropriation of the capitalists. What does Heinz Dieterich think about this? In an article published in (19/02/07), Heinz Dieterich is perfectly explicit about his real intentions, which are very well conveyed by the title: Mixed Economy is the road to Socialism of the 21st Century. Here we read the following: "If state property were socialism, we would already have had socialism in Latin America at the time of (King) Charles V, because when the Spanish Monarchy arrived in America, all the property in and beneath the land was the patrimony of the king, but that was feudalism, not socialism. The only possible way is a mixed economy, which will have three subjects, the State, private enterprise and social property, like the cooperatives".

This is splendid! We now learn from our friend that - socialism is not feudalism. We had to wait for Heinz Dieterich to point this out, just as we had to wait for him to explain that caterpillars crawl and butterflies fly. But this butterfly cannot fly more than a few centimetres without making a mistake. With all due respect to our friend Heinz, feudalism is not based on state property, but private property of land, including the private estates of the king.

Actually, when the Spanish Monarchy arrived in America, all the land was held in common and private property was unknown. As soon as they landed, the conquistadors proclaimed all the lands in New Spain property of the Spanish Crown. Does that mean that Cortez carried out the nationalization of land in America? Not at all! That was only the first step in expropriating the land, which was later divided up between different groups of feudal robbers, and this is the real origin of landed property in Latin America down to the present day. What connection this has with socialism is a mystery that only a genius of Heinz Dieterich's stature can understand.

The first question that arises from this interesting historical analogy is: what does Heinz Dieterich suggest we do with landed property in Venezuela, where big estates occupy the majority of productive land? The Spanish Crown originally stole all this land from the native population. Moreover, the big latifundists have failed to develop agriculture. It is a disgrace that in such a fertile land as Venezuela most of the food has to be imported. The obvious answer is to expropriate the latifundists and nationalize the land. This is not even a socialist measure but part of the programme of the bourgeois democratic revolution. Is Dieterich in favour of this revolutionary measure, yes or no? The old discredited Menshevik-Stalinist theory of revolution by stages postponed the socialist revolution to a remote future on the grounds that it is first necessary to carry out the bourgeois democratic revolution. What Dieterich advocates is even worse. He is not even in favour of fighting for the programme of the bourgeois democratic revolution!

The latifundists constitute the backbone of the counter-revolutionary oligarchy. The expropriation of the big landowners is therefore an absolutely necessary and urgent task of the Bolivarian revolution. Some steps have been made in this direction, but so far the agrarian policy has been timid, inconsistent and slow. Despite this it has met with ferocious resistance from the landowners. What does this prove? It proves that any attempt to improve the conditions of the masses under capitalism will be opposed and sabotaged by the rich and powerful. Any suggestion of touching of the land of the latifundists will be opposed by the capitalists and bankers because it challenges the "sacred right to private property".

The Venezuelan landowners, bankers and capitalists constitute a reactionary bloc that has opposed the Bolivarian Revolution right from the beginning, long before Chávez raised the question of socialism. In order to carry out a serious agrarian reform, which is the cornerstone of the bourgeois-democratic revolution, it is necessary to overcome the resistance of the oligarchy as a whole: that means the expropriation not only of the land but also of the banks and big businesses.

The reference to state property and Charles V is a deliberate attempt to confuse the issue of property. Dieterich is opposed to the expropriation of the land, just as he is opposed to nationalization in general (although he does not dare to criticize it when it has already been carried out) because he does not want the Revolution to challenge the "sacred right" of private property. He knows that the big landowners are closely linked to the bankers and capitalists, and that together they constitute a reactionary bloc that is bitterly opposed to the Bolivarian Revolution and is determined to overthrow it and reverse all its progressive measures. He is mortally afraid of the counter-revolution and sceptical of the prospects of success of the revolution, which he wishes to halt.

The essence of the matter is this: Heinz Dieterich is not opposed to capitalism per se, but only to a particular "model" of capitalism - neo-liberalism - which he finds disagreeable. This, he says, is unacceptable "because people will simple not accept it any more; the option is therefore whether I go for developmentalism (‘desarrollismo') or try to combine developmentalism with an attempt to arrive at a post-capitalist society, and the President has declared that this is his intention, but it is optional and people will decide." [18]

This is a perfect example of how Dieterich tries to water down and distort the idea of socialism. Chávez has repeatedly said that capitalism is slavery, and that the aims of the Bolivarian Revolution are incompatible with capitalism and that the only way out is socialism, nationally and internationally. But what Dieterich says here is something completely different. In the first place, he does not oppose capitalism but only neo-liberalism. And he does not advocate socialism as an alternative but only some vague and ambiguous "post-capitalist society", which can mean just about anything you choose. In case anyone is tempted to assume that this "post-capitalist society" is the same as socialism, Dieterich is careful to water this new concept down even further. It is to be combined with "developmentalism", that is to say, with a capitalist model of development.

Moreover, even this "developmentalism" is not an immediate perspective but is optional (which means you can take it or leave it, like the mustard at the side of your plate). But all history has shown that a consistent struggle for the programme of revolutionary democracy inevitably leads to the question of private property and thus to socialism. That was the lesson of Russia in 1917, of Cuba in 1959-60 and it is the case in Venezuela today.

What Dieterich is proposing is even worse than the old theory of two stages. It is the perspective of an infinite progression of stages that Dieterich has erected before the question of socialism can be posed. The complicated "theoretical" justifications for this are of no real importance. The whole point is to convince the masses that on no account must they fight for socialism now! Although he prattles on about "Socialism for the 21st Century", Dieterich is not thinking about this at all, but socialism in the far distant future - so distant that it is completely out of sight. This reminds one of those memorable words from Alice in Wonderland: "the rule is: jam yesterday, jam tomorrow, but never jam today."

A philistine conception

To make things abundantly clear, Dieterich explains that his version of Socialism of the 21st Century will not lay a hand on the property of the oligarchy but will base itself on a mixed economy. That is to say, it will be the same as capitalism! The real model for Dieterichian socialism is - Costa Rica, "where the streets are safe"! We note in passing that even the language here is that of a frightened petty bourgeois philistine who identifies revolution with anarchy and "unsafe streets". But let us press on anyway... The citizens of 21st Socialism will experience a marked improvement in their material conditions, the quality of their lives, and also in "conditions of a psychological or spiritual type." (Aporrea, 19/02/07.) What more can anybody wish for?

In the Dieterichian socialist paradise, one will be able to walk the streets of Caracas without fear, experience the benefits of Costa Rican living standards and completely dispense with the services of the psychiatrist. Everybody will be happy - except maybe for the unfortunate psychiatrists who will find themselves out of work. But then, it is not possible to please everybody, even in 21st Socialism.

What a wonderful perspective! The only problem is that, once again, our Heinz has forgotten to explain one little detail, namely, how to get from A to B. The first question that occurs to us is: how is it possible to arrive at this postcapitalist paradise while leaving the economic power in the hands of the landlords, bankers and capitalists? As long as the latter continue to own and control the means of production (the land, banks and industries) all the most important decisions concerning employment, housing, health, schools, etc., will be subordinated to the interests of the rich. The government may have every good intention, but ultimately it will come up against a solid brick wall, since you cannot plan what you do not control and you cannot control what you do not own.

We thus return inevitably to the fundamental question: the question of private property. This is the fundamental line that separates reformists from revolutionaries. Our Heinz, pleasant chap that he is, does not want conflict. He wants to please the workers but he does not want to offend the landlords, bankers and capitalists. He therefore renounces socialist revolution in favour of reformism and social democracy:

"The project has a dual strategy of development, developmentalism, which is a Social Democratic way of development, where the State utilizes its economic and legal powers to foment, for example, reindustrialization, redistributes a big part of the wealth through PDVSA, etc. creates the welfare state alongside the rule of law (‘state of right'), this leads to growth, to an improvement of the material situation, but the limit is that you do not go beyond the market economy (no sales de la economía de mercado), and that means that I always live with the fear of losing my job. One of the big gains of historical socialism was that there was no unemployment and that daily terror that you have to produce more and more because if not I will sack you disappears, it is an extraordinary liberation". [19]

We have already pointed out that the Stalinist regime in the USSR had nothing whatever to do with socialism whether historical or unhistorical. But, leaving this to one side, the question arises: why was there no unemployment in Russia? Dieterich does not ask the question much less answer it. The reason was that the Russian Revolution nationalized the land, the banks and the industries and instituted a socialist planned economy. The nationalization of the productive forces does not yet signify the existence of a classless society, but it undoubtedly constitutes the fundamental premise and the conditio sine qua non for advancing in that direction. The socialist planning of the economy represents a colossal advance over the anarchy of capitalist production.

Here our Heinz becomes entangled in contradictions. It is not possible to solve the problem of unemployment as long as key points of the economy remain in private hands. He says himself: "The mission of every enterprise is to generate profit or at least cover a social need, and when people administer a good in an optimum way there will be no reason to change it". [20] This is yet another example of Dieterich's ducking and dodging. Capitalists only invest for profit and profit can only come from the unpaid labour of the working class. That is the ABC of Marxist economics. But Dieterich has to add: "or at least cover a social need". This is enough to make a cat laugh. Since when do capitalists invest to "cover a social need"? This is a complete nonsense that has been invented by Heinz Dieterich to cover his bare backside. For if a) capitalists are working for the common good, not for profit and b) are working efficiently, why change anything? To which we answer: if pigs had wings they would fly.

Heinz Dieterich presents us with a New Historical Project, which, he assures us, will enable us to build Socialism of the 21st Century. But before we can talk about a project for building, we first have to clear away all the rubbish from the building site. Before we have a have a Project for building Socialism we first require a programme for overthrowing capitalism. For this programme we will search in vain in all the books and articles of comrade Dieterich. This is no accident, because he believes it is possible to achieve socialism without expropriating the landlords and capitalists, in other words, without the class struggle and without revolution. On this point, yet again, he makes clear his complete abandonment of Marxism and his return to the antiquated and discredited ideas of pre-Marxian socialism, to the prehistory of the movement - to utopian socialism.


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[1] Leon Trotsky, Introduction to The Living Thoughts of Karl Marx, published as a pamphlet, Marxism in our Time, Pathfinder 1970 pp. 8-10, my emphasis, AW.
[2] Marx and Engels, Selected Works, Vol.3, Engels, The Origin of the Family, Private Property and the State, Chapter V. The Rise of the Athenian State, p. 276.
[3] Engels, Letter to Marx, June 6, 1853, Marx-Engels, Selected Correspondence, p. 82.
[4] See P. Watson, Ideas: A History of Thought and Invention from Fire to Freud, Introduction, 2005.
[5] Marx, Capital, vol. 1, Penguin 1976, pp.181-2, my emphasis, AW.
[6] Marx, Capital, vol. 1, chapter 2, Penguin 1976, pp.182-3, my emphasis, AW.
[7] Marx, Capital, Volume 1, pp.178-9.
[8] Ibid. Volume 1, chapter 2, p. 181.
[9] Marx, Grundrisse, Notebook V. January 22, 1858, Penguin 1973, Chapter on capital. Continued. p.487.
[10] Marx and Engels, Correspondence, Progress Publishers, 2nd ed. 1965, p. 313, my emphasis, AW.
[11] Marx, Capital, vol. 3, Chapter 20, Historical Considerations on Merchant Capital.
[12] See Marx, Capital, Vol. III, Part IV, Chapter 20. Historical Facts about Merchant’s Capital.
[13] Marx and Engels The Manifesto of the Communist Party, Selected Works, Vol. 1, p. 109.
[14] Marx and Engels, The Communist Manifesto Ibid. p. 112
[15] Marx, Capital, Volume One, Chapter 31: Genesis of the Industrial Capitalist.
[16] Hegel, Philosophy of History, Part IV: The German World
[17] Marx, Capital, Volume One, Chapter 32: Historical Tendency of Capitalist Accumulation.
[18] See Aporrea, 19/02/07.
[19] Ibid.
[20] Ibid.