EXPLAINING THE TRANSITION FROM FEUDALISM TO CAPITALISM:
           THE JAPANESE CASE AND ITS THEORETICAL SIGNIFICANCE 



                          Stephen K. Sanderson 
                   Indiana University of Pennsylvania 


                                     
                                           
                 Paper submitted for consideration for 
                 publication in Review, November, 1992 
                                                           
      This paper is a reworking of portions of Chapters 4 and 5 of
Social Transformations: A General Theory of Historical
DevelopmentBasil Blackwell, forthcoming





 
         EXPLAINING THE TRANSITION FROM FEUDALISM TO CAPITALISM:

           THE JAPANESE CASE AND ITS THEORETICAL SIGNIFICANCE


Numerous scholars have commented on the striking historical parallels
that seem to have existed between Europe and Japan from late medieval
times through to the development of industrial capitalism in the
nineteenth and twentieth centuries.  Medieval Japan has been seen as
having a form of feudalism that most closely resembled European
feudalism, and Japan also seemingly underwent a transition from
feudalism to capitalism that was remarkably similar to the European
transition to modern capitalism (Duus, 1969; Reischauer, 1956; Jacobs,
1958; J.W. Hall, 1970; T.C. Smith, 1959; P. Anderson, 1974b; Halliday,
1975).  However, despite the parallels that are often drawn between
the historical trajectories of Europe and Japan, virtually no scholar
has ever used the Japanese case to develop a general theory of the
origins of modern capitalism.  All of the theories that have been
developed to explain the rise of capitalism have focused exclusively,
or near exclusively, on the European situation.  In fact, many
scholars who have discussed the capitalist transition have seen it as
a unique occurrence, possibly even as an extraordinary historical
accident or "miracle" (Mann, 1986; E.L. Jones, 1987).  But what kind
of miracle is it that occurs twice, in two widely separated regions of
the world, and largely on an independent basis in each region?  In
this paper I argue that all major theories of the capitalist
transition are deficient in one way or another, and substantially
because they concentrate on Europe and ignore that other great
instance of the emergence of capitalism, the Japanese case.  I then
present a new interpretation of the rise of modern capitalism.  This
theory will identify the basic similarities between Europe and Japan
that made these world regions unusually well suited to the takeoff
into modern capitalism at a particularly crucial juncture in world
history.
     
                   THE ORIGINS OF JAPANESE CAPITALISM

Although the Japanese transition from feudalism to capitalism has been
much less studied and is less well understood than the European
transition, enough is now known about the development of capitalism in
Japan so that a fairly detailed story can be told.  Japanese culture
and civilization owe much to China, but politically Japan has
developed in a very different way.  Japan was the one society outside
Europe to develop a genuine feudal system (Anderson, 1974b).  Many
Japanese scholars see Japanese feudalism beginning with the Kamakara
Shogunate in 1185, although it is commonly argued that the full
development of feudal institutions occurred only with the
establishment of the Ashikaga Shogunate in 1338 (J.W. Hall, 1970;
Reischauer, 1956).1 Edwin Reischauer (1956) calls the feudalism of the
Kamakara period "protofeudalism" and argues that the period from 1338
to 1600 was the age of classical feudalism in Japan.  With the
establishment of the Tokugawa Shogunate in 1603 Japan entered into its
late feudal period, which was to last until the middle of the
nineteenth century.
     During its feudal period the Japanese nobility was divided into
an upper nobility, the daimyo or great lords, and a lower nobility
known as the samurai, who were vassals of the daimyo.  Japanese
merchants, or chonin, were an important part of the economic situation
in feudal Japan, but, as in all agrarian states, they were generally
looked down upon, if not despised, by the nobility.  As we shall see,
however, they played a critical role in the economic evolution of
medieval Japan.
     European contact was established with Japan by the middle of the
sixteenth century.  Some trade was carried on between the two regions,
and Christian missionaries established themselves in Japan.  However,
not long after the establishment of the Tokugawa Shogunate Japan began
to embark on its famous policy of isolation from the West.  This
seclusion policy took effect in several stages (Pearson, 1991).  In
1606 Christianity was forbidden, in 1623 the English left, and in 1624
this was quickly followed by the expulsion of the Spaniards.  In 1630
Japanese were no longer allowed to engage in foreign trade or travel.
The Dutch were allowed to stay, but in 1639 they were restricted to a
small area and were very closely supervised.  It is usually assumed
that after 1639 the Japanese were virtually totally isolated from the
rest of the world, but Ronald Toby (1984) has shown that this is a
false assumption.  Japan continued to carry on important trade
relations with China and other nearby parts of Asia, and was thus
still involved in foreign trade.  Daniel Spencer (1958:212) suggests
that the remaining trade was "still quite comparable to a good sized
colonial trade of the period."  Indeed, the Sino-Japanese trade may
actually have increased by the end of the seventeenth century (Atwell,
1986).
     The Tokugawa regime seemed to be motivated by several factors in
establishing its seclusion policy.  One of these was fear of
Christianity and its influence.  However, economic and political
factors probably played a bigger role.  As Charles David Sheldon
(1958) has suggested, the Tokugawa regime suspected the Europeans of
having designs on Japanese territory, and the regime also feared the
potential for growing power on the part of those daimyo involved in
significant trade relations with Europeans.  Whatever the exact
reasons, the isolationist policy had become a firm reality by 1639,
and this policy would come to have a major influence on the course of
Japanese economic development.

     Until about the 1960s it was generally assumed by scholars of
Japan that the Tokugawa period was one of economic stagnation that was
only overcome with the arrival of the Europeans and the reopening of
Japan in the mid-nineteenth century.  Recent scholarship, however,
shows that this older view was wrong, and badly so.  Many scholars now
stress the economic vitality of the Tokugawa period and see it as
contributing significantly to Japanese economic developments in the
second half of the nineteenth century.  One of the first to adopt this
newer view was Daniel Spencer (1958).  Spencer described a series of
interrelated processes involving large-scale urbanization,
commercialization of agriculture, increasing flight of peasants into
the towns and cities, the worsening economic condition of the
nobility, growth in the wealth and economic importance of the merchant
class, increased monetization of the economy, and the beginnings of
the factory system.  He concluded that Japan experienced a level of
economic growth during this period that paved the way for the even
greater economic development of the Meiji era (Spencer, 1958:213):

     By the end of the seventeenth century, Japan was a money economy
whose high development led Kaempfer, that astute observer from the
then leading country of Europe, to marvel at its cities, its highways,
commerce and general conditions.  Here is the broad foundation for
later growth.
     The essence of this preparation was the institutional change
which mobilized the social surplus in the hands of a monopolistic
class of entrenched big merchants.

     In a more recent study Kozo Yamamura (1980) has shown that the
period from 1550 to 1650 witnessed an agricultural and commercial
revolution.  The large rise in agricultural productivity during this
century was made possible by several proximate conditions: increasing
effectiveness of water use, development and dissemination of
higher-yielding varieties of rice, availability of inexpensive hoes,
and increased use of fertilizers.  Yamamura stresses in particular the
importance of better methods of water management involving irrigation
dikes, banks, and dams.  Lurking behind these proximate causes of
increased agricultural productivity, Yamamura claims, was a change in
property rights involving giving peasants more individual control over
their land.  What Yamamura is essentially describing is the beginning
of a shift toward more capitalistic land tenure.  With these changing
property rights there arose a class of independent farmers closely
akin to the yeoman farmers of early modern Europe.  Yamamura holds
that greater control over their own land gave peasants increased
incentives to make the land productive.

     The commercial revolution of the mid-sixteenth century involved
deliberate measures undertaken by the state to promote commerce.
These measures included such things as decrees to protect merchants,
decrees designed to eliminate various restrictions on the operation of
markets, active development of transportation networks and facilities
(which eventually involved the creation of a nationwide network of sea
and river transportation), and standardization of measurements.

     Yamamura is quick to point to the parallels between Japanese and
English economic development in this period.  Indeed, for Yamamura
these parallels are close enough to allow him to assert that "what
becomes increasingly evident is the fact that, as our knowledge of the
earlier period of Japanese economic history increases, the crucial
question which we should have asked is not why Japan was the first to
industrialize in Asia, but why did the Japanese industrialization
begin so late in the nineteenth century?" (1980:104).  So, from
Yamamura's research we learn not only that there are important
parallels between Japan and Europe, but that these parallels can be
found even before the beginning of the Tokugawa period.
     Sheldon (1958) has traced the rising economic importance of the
merchant class throughout the Tokugawa period, but, like Yamamura,
notes that important economic developments were taking place in the
century before Tokugawa.  Sheldon sees the Genroku period (1688-1703)
as the critical one in the merchants' economic evolution.  By this
time there was a vigorous money economy and the merchant class had
finally become strong enough to force the nobility to regard it as a
serious economic competitor (Sheldon, 1958:99):

     The general prosperity and increased standard of living
experienced in the Genroku period meant a great increase in the
manufacturing and sale of commercial goods.  Not only did the
merchants benefit from this, but the Genroku period saw the draining
of feudal treasuries into merchant coffers.  The daimyo and ordinary
samurai alike became more deeply indebted to the merchant money
lenders.  This gave the merchants a high degree of economic security
and permitted the development of a type of merchant nobility.

     John Whitney Hall (1970) sees the growth of mercantile activities
during the Tokugawa epoch in similar terms, pointing out that it was
during this time that a bourgeoisie first rose to national prominence.
Like Sheldon, he is concerned to trace the general outlines of the
evolution of the merchant class (1970:208-09):

The merchant community of Tokugawa times went through certain stages
of development in its rise to economic prominence.  In the early
years, the important merchants were those specially patronized by the
Shogun and daimyo, the so-called "house merchants."  By the eighteenth
century a number of great commercial houses had grown up in Osaka and
Edo [modern Tokyo] whose diversified activities focused upon
moneylending and exchange.  By the nineteenth century, houses based on
manufacturing and cottage industry had begun to make their appearance.
The growth of commercial capital is revealed in the estimate that by
1761 there were in Japan over two hundred commercial houses each
valued at over 200,000 gold ryo. .  . . Thus in total capital worth
the great merchants had become the equivalent of many daimyo.
     By the middle Tokugawa period most of the outstanding chonin
houses which were to retain their status into modern times had been
established.

     It is interesting to note that an especially important commodity
in Japan in the sixteenth and seventeenth centuries was silver ore
(Flynn, 1991; Barrett, 1990).  Japan exported this silver to Korea and
China.  Only Spanish America was a bigger producer of silver during
this time (Flynn, 1991; Barrett, 1990).  Flynn (1991) notes that this
made Spain and Japan major competitors in the world market.  Once
silver waned, Japan became a major exporter of copper, with the
biggest buyer being China.

     An inextricable part of Japanese economic development during the
Tokugawa era was extensive urbanization.  This was particularly the
case during the seventeenth century.  Hall (1970) calls the
urbanization of this time "astounding," and suggests that it is quite
possibly without historical precedent (cf. Goldsmith, 1987).  Gilbert
Rozman (1974:98) puts the matter this way:

     While rural Japan shared in the dynamism with respect to
population growth, to commercial specialization, and to social
differentiation in the seventeenth century, it was overshadowed by the
unparalleled transformation within the urban sector.  With Edo, Osaka,
and Kyoto leading the way, new patterns of consumption and new modes
of social organization developed in Japanese cities.  If any period of
premodern history anywhere can properly be labeled urban-centered, it
is this period from about 1600 to the 1720's in Japan.

     The growth of Edo was truly spectacular.  At the end of the
sixteenth century it was not much more than a small village, but by
the early eighteenth century it had reached half a million persons and
by the end of that century it was well over a million in population
(Spencer, 1958).  Edo had become the world's largest city.  Spencer
(1958) estimates that in the eighteenth century between 10 and 13.3
percent of the Japanese population lived in large towns or cities, a
remarkable figure, he suggests, when we recognize that in the United
States in 1790 the urban population constituted only 3 percent of the
total, and only 16 percent of the total as late as 1860.  Japan was
even more urbanized than Europe, which in 1800 had only 22 cities
above 100,000 in population, and these cities together constituted
only 3 percent of the total population (Spencer, 1958).
     The full extent to which capitalism was emerging in Tokugawa
Japan can also be seen by examining one of the most important aspects
of capitalist development: proletarianization of the labor force.
Gary Leupp (1992) argues that during the Tokugawa period Japan was
becoming an increasingly impersonal, money-dominated society with a
larger and larger part of its labor force being compensated in the
form of wages.  In fact, by the end of the Tokugawa period Leupp
suggests that wage labor had become the major form of compensation, at
least with respect to urban workers.

     Thomas Smith (1959) has shown that wage labor became increasingly
important during the Tokugawa period even in agricultural work, and
that by the end of the period feudal peasants were no longer the
predominant form of farm worker.  Agricultural workers gradually
became hokonin, workers who were part way between traditional feudal
peasants and fully free workers.  Smith distinguishes between three
grades of hokonin.  The least free of the hokonin were workers who
were given to a family for an indeterminate period of time in return
for a loan.  The worker received no compensation other than his keep
and had to work until the loan was repaid.  A second type of hokonin
was like the first except for the fact that he received at least some
compensation.  However, he was not paid an hourly or daily wage;
instead, a sum was agreed on in advance and this sum was then deducted
from the debt remaining at the end of the loan period.  Obviously
neither of these types of labor is much like wage labor, but
nonetheless the second type does show an economic value of its own
that could be rationally calculated.  Moreover, both types of hokonin
possessed at least some degree of freedom denied the traditional
peasant.  Smith tells us that the second type of laborer became
increasingly common as the Tokugawa period advanced.

     The third type of hokonin marked a further advance toward free
labor.  This type of worker was still "bound by debt for the duration
of the loan, but his labor during that time constituted repayment of
it in full: at the end of the stipulated period neither any part of
the principal of the debt nor unpaid interest remained to hold him"
(T.C. Smith, 1959:114).  Smith goes on to note that throughout the
Tokugawa era there was a gradual shortening of the length of time for
which workers were bound.  It may once have been of indefinite
duration, then shortened to 10 or 15 years, then to no more than 3
years, and then finally to only one year or possibly even a single
season.  Smith argues, correctly in my opinion, that this shortening
of the employment period shows that work was increasingly regarded as
having its own economic value (i.e, a value independent of particular
social relations), and that the worker was increasingly being regarded
as a hired hand to be employed just for the time that his labor was
needed.  Eventually, true wage labor in agriculture evolved after
having first been applied to industry and trade.  Smith suggests that
by the end of the Tokugawa era it was quite common, although certainly
by no means the universal form of labor.

     It is only in recent decades that scholars have recognized the
deep historical roots of Japan's development of industrial capitalism
in the twentieth century.  At one time virtually no one thought of
looking backward in time beyond the Meiji Restoration (1868) in order
to trace Japan's modern transformation.  Of course it is now
recognized that the entire Tokugawa era contained major economic
changes, and that many of these changes began even in the century
before Tokugawa (Yamamura, 1980).  But even the sixteenth century may
be starting too late, for there is evidence that important economic
developments were occurring in Japan as early as the thirteenth
century.  Several scholars have shown that Japan was deeply enmeshed
in a network of foreign trade with other parts of Asia at this early
period (Sansom, 1961; Reischauer, 1956; J.W. Hall, 1970).  Edwin
Reischauer (1956) notes that trade with China and Korea became an
important part of the Japanese economy in the thirteenth century.  The
lead in financing the larger commercial ventures was taken by Buddhist
monasteries, but these ventures had been taken over by the shogun and
feudal lords by the end of the fourteenth century.  During the
fifteenth and sixteenth centuries foreign trade grew rapidly in
intensity and trade ventures were extended to other parts of the Far
East, even as far as the Straits of Malacca.  Some feudal lords,
especially those in coastal areas, depended on foreign trade for much
of their income.  Japanese traders became a virtual part of the
warrior nobility and came to be renowned throughout the Far East for
both their martial abilities and their commercial endeavors.

     John Whitney Hall has also not overlooked the importance of the
economic developments of the three centuries before Tokugawa.  He
notes that (1970:113; emphasis added):

     One of the fascinating and seemingly paradoxical aspects of the
history of the fourteenth and fifteenth centuries in Japan is that,
despite the instability of the political order, the country at large
gave evidence of remarkable cultural and economic growth. . . . The
same centuries saw Japan emerge as a major maritime power in East Asia
activated by a vigorous internal economic expansion.

And he continues (1970:121, 123, 126):

     We should not suppose that Japan remained economically stagnant
during the Kamakura period, and it is in the early years of the
Ashikaga period that our attention is again attracted by evidence of
dramatic economic growth in Japan. . .  .
     The increase in trade, of which the spread of money was a
symptom, brought with it a number of major consequences.  Wealth, for
instance, was no longer tied solely to the land but could be
accumulated in other ways and stored in the form of precious metals or
goods.  A merchant class, congregating in a few important
administrative and trade centers, was able to establish itself as a
class of wealth outside of the confines of aristocratic society. . . .
     In Japan as in Europe the growth of the commercial and service
classes was marked by the rise of new towns and cities which
contrasted sharply in their prime functions with the older
administrative centers. . . .
     . . . The trade also reveals a great deal about the state of the
Japanese economy.  Exports to China were now mass commodities and
artifacts such as refined copper, sulfur, folding fans, screens,
painted scrolls, and above all swords.  Single missions carried tens
of thousands of Japanese steel swords to China.  In return the
Japanese ships returned with strings of cash (50,000 strings in 1454),
raw silk, porcelains, paintings, medicines, and books.  All of this
gave evidence that Japan was no longer an underdeveloped member of the
Chinese world order.  In fact the limited trade permitted by a
reluctant China was eventually to prove too restrictive for the
Japanese.  After 1551 the tally trade broke down, and Japanese traders
in unrestrained numbers began to ply the China seas.

     It is important to situate this early Japanese economic thrust in
its world-systemic context.  It seems that Japan was involving itself
in a vigorous Far Eastern trade at basically the same time that late
Sung and early Ming China was withdrawing from world trade and
declining economically.  These events are undoubtedly connected.  A
large economic vacuum was created, and Japan was quick to fill it
(Collins, 1990).  Japan picked up the Asian economic impetus where
China left off.

     No one should think I am suggesting that Japan was becoming a
capitalist society in the thirteenth and fourteenth centuries.  Far
from it.  But it was involving itself in economic networks and
undergoing economic changes that would be of momentous importance in
the centuries to come.

     By the end of the Tokugawa Shogunate in 1868 Japan had become an
essentially capitalist society in economic terms despite retaining
basically feudal social and political arrangements.2 But this is not
surprising: superstructures commonly lag behind and change more slowly
than infrastructures.  I say that Japan had become essentially
capitalist for several reasons.  The merchant class had grown
tremendously in economic importance.  Japan had undergone tremendous
commercialization, both in agriculture and in industry, and had become
one of the most urbanized societies in the world.  Spencer (1958)
claims that by the end of the eighteenth century fully fifteen
sixteenths of Japan's wealth was in the hands of the merchants, a
remarkable indication of the extent of the economic changes.  It was
the merchant class that was in economic if not political control of
late Tokugawa Japan.
     The rising economic significance of the merchants meant the
simultaneous decline of the nobility, both the great daiymo and the
lesser samurai.  The samurai eventually became little more than paid
administrative officials of the daimyo, thus losing their former close
association with the land.  Both the samurai and the daimyo had to
rely increasingly on loans from the merchants, and their indebtedness
grew throughout the Tokugawa period.  The worsening plight of the
nobility caused many of them to go over to the merchant class, with
many former nobles becoming bankers, manufacturers, and other types of
entrepreneur.  This situation in which many nobles turned bourgeois to
adapt to the changing economic conditions is highly reminiscent of the
situation in Europe, and yet one more important parallel between the
European and Japanese transitions to capitalism.
                 THEORIES OF THE TRANSITION TO CAPITALISM

We are now faced with the formidable task of explaining the capitalist
revolution that took place in Japan (and, by implication, in western
Europe as well) in the fifteenth, sixteenth, and seventeeth centuries.
It is important to say at the outset that this is a problem to which a
great deal of attention has been given, but one that has seemingly
been intractable to our best theoretical efforts.  Numerous theories
have been set forth, but there is little consensus concerning them.  A
further problem is that most of these theories have been constructed
with only the European case in mind.  I should like to run through all
of the major theories in some detail, pointing out their strengths and
weaknesses, and in the end I will advance my own interpretation.  This
interpretation is based on the assumption that any good theory of the
capitalist revolution must apply to both the European and the Japanese
cases.  I reject the notion, set forth by historical particularists,
that different historical events must be explained by different
concepts and theories.  Any social science worthy of the name must
push nomothetic explanation as far as it can go.  It is my view that,
although there were important differences, the European and Japanese
trajectories toward modern capitalism were sufficiently similar to
constitute essentially the same kind of event occurring more or less
independently in two different world regions at approximately the same
period of world history.  This cannot be an accident of history, and
thus the European advance cannot be a "miracle," as some scholars have
argued (E.L. Jones, 1987, 1988).  I have no patience at all with the
incredible dismissal by Eric Jones (1987) of the relevance of the
Japanese case to an understanding of the rise of the modern capitalist
world, especially inasmuch as he himself has recognized the existence
of important parallels between Europe and Japan.  Jones may rest
content with his version of Eurocentrism, but for me it is a serious
barrier to understanding the rise of modernity.
      
Marxian Theories

A variety of contrasting Marxian theories have been put forth to
explain the European transition from feudalism to capitalism.  Let us
start with the famous debate between the Marxists Maurice Dobb and
Paul Sweezy that was conducted shortly after the end of the Second
World War.  In his classic Studies in the development of capitalism
(1963; first edition 1947), Dobb set forth a theory of the transition
that emphasized the internal contradictions of feudalism as a mode of
production.  What led the feudal system into crisis and ultimately
tore it apart, Dobb argued, was the growing class struggle between
landlords and peasants.  By late feudal times landlords had
significantly increased their exploitation of the peasantry, and this
intensified exploitation provoked a peasant flight from the land that
created a "crisis of feudalism" and set in motion a transition to a
capitalist mode of production.

     Sweezy (1976[1950]) questioned the basic logic of this theory by
asserting that it improperly concentrated only on endogenous forces.
He argued that there were no forces within feudalism strong enough to
transform it and went on to propose as an alternative a basically
exogenist theory.  It was the revival, from about the eleventh
century, of long-distance trade between Europe and other world regions
that he saw as the impetus for the feudal crisis and the move toward
capitalism.  The revival of trade caused feudalism to be increasingly
involved in a market economy.  As towns grew in size and importance,
serfs were increasingly attracted to them and they fled the land in
large numbers.  Moreover, feudal lords themselves were increasingly
attracted by the possibilities inherent in the market economy for the
generation of large fortunes.  For Sweezy, a market economy was
inherently superior in efficiency to a feudal one, and it is his view
that this greater efficiency was clearly recognized by landlords.  In
a sense, then, Sweezy was saying that it was the inefficiency of
feudalism that led it to be destroyed in the end by a capitalist form
of economic organization.
     One serious difficulty with Dobb's theory is that he provides no
convincing explanation of landlords' increased exploitation of the
peasantry over time.  His basic argument is that nobles were caught up
in a game of spiralling status emulation that required greater and
greater levels of surplus extraction from the peasantry, but I do not
find this argument persuasive.  The game of status emulation was
played by landlord classes throughout the agrarian world without
necessarily resulting in increased levels of exploitation and peasant
flight.  Peasant flight from the land was an important aspect of the
breakdown of feudalism and the shift toward capitalism, but it will
need to be explained in another way.

     Sweezy's purely exogenist theory suffers from a serious
underappreciation of the dynamics of feudalism.  Sweezy argued that
feudalism was an inherently stagnant mode of production.  On its own
it lacked any mechanism that could transform it, and thus it could
only be transformed from the outside.  But as Wallerstein (1974) has
argued, feudalism should not be thought of as necessarily antithetical
to a system of trade.  We have learned in recent years that feudalism
was a lot more dynamic than was once thought.  Considerable growth and
change occurred within European feudalism, and by no means can all of
this be attributed to external influences.  Nonetheless, as we will
see later, Sweezy's theory is particularly useful in pointing us in
the direction, if only implicitly, of the importance of rising world
commercialization for the transformation of feudalism.

     Wallerstein has offered an interpretation of the transition to
capitalism that, unsurprisingly, fits neatly into his general
world-system perspective.  Wallerstein gives special emphasis to the
"crisis of feudalism" that many scholars of late medieval Europe have
referred to.  For Wallerstein, this crisis was primarily one of
revenue collection on the part of the feudal nobility.  The severely
declining ability of feudalism to create wealth necessitated the shift
to a new mode of production, and this was the creation of a capitalist
world-economy based on the world market.  A critical aspect of the
creation of this world-economy was geographical expansion into areas
outside Europe.  What caused the feudal crisis in the first place?
Wallerstein says it was the result of the simultaneous occurrence of
three basic events.  First, there was the downside of an economic
cycle.  The feudal system had been expanding between 1150 and 1300 but
had reached a point beyond which it could no longer go.  A contraction
then set in.  Second, there was a long-term secular trend.  After
nearly a millennium of surplus expropriation within the feudal mode of
production a point of diminishing returns had been reached.  Finally,
there were unfavorable climatological conditions that lowered the
productivity of the soil and increased epidemics.

     Like Sweezy's theory, Wallerstein's is not a Marxist one in any
orthodox sense.  It contains some obvious Marxian elements but also
imports notions foreign to the Marxian tradition.  It has been
severely criticized by more orthodox Marxists for concentrating on
"exchange relations" rather than relations of production (Brenner,
1976, 1977; cf. Holton, 1981, 1985; Mooers, 1991).  In two famous
articles, Robert Brenner (1976, 1977) has referred to Wallerstein as a
"neo-Smithian Marxist" for his alleged neglect of production (class)
relations in favor of exchange relations.  Brenner's own preferred
interpretation stresses the role of class relations and levels of
class power.  The breakthrough to the self-sustaining development of
capitalism was made possible by the creation of a set of capitalist
class relations, and this in turn depended upon the outcome of class
struggles within feudalism.

     My sympathies lie much more with Wallerstein rather than Brenner.
Brenner seems to view class relations as somehow self-levitating
because he ignores the larger social, economic, and political context
in which they emerge, exist, and get transformed.  He has made a
shibboleth of the Marxian notion of class struggle.  I do, however,
see two problems with Wallerstein's argument.  First, there is what I
regard as his undue emphasis on the role of a feudal crisis.  As we
shall see more clearly later, it is sensible to talk of the existence
of a feudal crisis in Europe between approximately 1300 and 1450, but
the extent to which this crisis was critical for the transition to
capitalism is by no means clear.  Doubt is cast on this possibility
when we recognize that there was no feudal crisis in Japan, at least
of the sort that occurred in Europe.  Second, the capitalist
world-economy seems to be virtually a creation ex nihilo.  Wallerstein
discounts the prior role, emphasized by Sweezy, of long-distance world
trade as an explanation of the expansion of European commerce in the
sixteenth century.  This trade, Wallerstein says, was based on
preciosities, and only a trade in bulk goods could have sustained the
expansion of the Atlantic economy and the formation of something as
large as a capitalist world-economy.  Perhaps so, but the earlier
world trade, which had become globally both extensive and intensive by
the thirteenth century, could still have provided a context for the
kind of expansion that Wallerstein is talking about.  I will show the
significance of this point in the presentation of my own
interpretation of the rise of modern capitalism.


Weberian Theories

Numerous Weberian interpretations of the rise of modern capitalism
have been presented.  Of course, the most famous Weberian explanation
is the one offered in 1904 by Weber himself in The Protestant ethic
and the spirit of capitalism (1958[1904]).  This argument is so well
known that it needs no elaborate elucidation.  Weber's basic point was
that the rise of capitalism was a unique Western occurrence that
benefitted greatly from the Protestant Reformation of the sixteenth
century.  The Protestant work ethic, particularly in its Calvinist
form, stimulated an entrepreneurial attitude toward the world on the
part of believers because it glorified hard work, devotion to one's
"calling," frugality, avoidance of the ostentatious display of wealth,
and the continuous reinvestment of profits in one's business.  Success
in the world of business through strict adherence to the work ethic
did not gain one salvation, but nonetheless it served as a sign from
God that one had been placed among the elect.  Weber, of course, never
argued that Protestantism was the sole cause of the rise of
capitalism, only that it was one crucial stimulus among others.

     Robert Bellah (1957) has applied Weber's thesis to Japan in order
to explain its unique economic development in the Asian world.  He
claims that the Japanese versions of Buddhism and Confucianism
displayed a strong inner-worldly asceticism of the type Weber closely
associated with Protestantism, and that this religious outlook had a
powerful effect in conditioning an entrepreneurial attitude.  Bellah's
argument is a somewhat ironic twist on Weber inasmuch as the latter
considered Eastern religions to hold to an other-worldly outlook that
inhibited economic development.

     There are good reasons for being highly suspicious of Weber's
argument and its extension to Japan.  One of the early core powers of
European capitalism was France, a largely Catholic country.  Moreover,
Jere Cohen (1980) has shown that Renaissance Italy, the heartland of
Catholicism, gave rise to a vigorous merchant capitalism that
contained most of the elements of modern rational capitalism pointed
to by Weber.  So Protestantism could not have been a necessary cause
of capitalism.  Moreover, Janet Abu-Lughod (1989) has suggested that
it is difficult to draw much of a connection between religion and
economics.  She has pointed out that "Christianity, Buddhism,
Confucianism, Islam, Zoroastrianism, and numerous other smaller sects
often dismissed as 'pagan' all seem to have permitted and indeed
facilitated commerce, production, exchange, risk taking, and the like.
And among these, Christianity played a relatively insignificant role"
(1989:354-55).
     Wallerstein is also skeptical of drawing too close a connection
between religion and economics, but suggests that if there is one it
is more likely to be one in which the causal arrows are pointing from
economics to religion (1974:151-53):

     The central pan-European ideological controversy of the sixteenth
and seventeenth centuries -- Reformation versus Counter-Reformation --
was inextricably intertwined with the creation both of the strong
states and of the capitalist system.  It is no accident that those
parts of Europe which were re-agrarianized in the sixteenth century
were also those parts of Europe in which the Counter-Reformation
triumphed, while, for the most part, the industrializing countries
remained Protestant. . . .
     This is no accident, not because, following Weber, we think
Protestant theology is somehow more consonant with capitalism than
Catholic theology.  No doubt one can make a case for this argument.
On the other hand, it seems to be true in general that any complex
system of ideas can be manipulated to serve any particular social or
political objective.  Surely Catholic theology, too, has proved its
capacity to be adaptable to its social milieu.  There is little reason
at the abstract level of ideas why one couldn't have written a
plausible book entitled "The Catholic Ethic and the Rise of
Capitalism."  And Calvinist theology could be taken to have
anticapitalist implications.  The point I am making is a different
one.  By a series of intellectually accidental historical
developments, Protestantism became identified to a large extent in the
period of the Reformation with the forces favoring the expansion of
commercial capitalism within the framework of strong national states,
and with the countries in which these forces were dominant.  Thus when
such forces lost out in Poland, or Spain, or "Italy," or Hungary,
Protestantism declined too and often rapidly.  The factors which
favored the expansion of export agriculture favored the reassertion of
Catholicism.

     Weber's Protestant ethic argument was put forth relatively early
in his career, and in later work he seems to have given the Protestant
ethic a smaller role and moved in the direction of emphasizing the
role of the nation-state (Collins, 1980).  In his General economic
history (1981[1927])he gives the nation-state a prominent role in the
development of capitalism because it rationalized law, freed land for
the capitalist market, eliminated barriers to markets, and
standardized taxation and currencies.  The nation-state also helped
lay the foundations for a reliable system of banking, investment,
property, and contracts.  In general, it was the key to the
development of the basic institutional structures of modern rational
capitalism (Collins, 1980).

     This later theory, though, has its own difficulties, the most
significant of which is that it begs the question as to what gave rise
to the modern state.  Weber argues that the early-modern nation-state
arose because it was the most effective means available of pacifying a
large territory (Collins, 1980).  Such an argument, though, leaves us
wondering why this kind of highly efficient state did not arise in
other places and at other times.  It would seem just as logical, if
not more logical, to argue that the early-modern nation-state was the
product of a system that was already becoming capitalist.

     The spirit of Weber has been kept alive in recent years by
various scholars who have proposed neo-Weberian interpretations of the
rise of modern capitalism.  Daniel Chirot (1985, 1986) offers a
multidimensional explanation that emphasizes three main factors:
Europe's unique geographical conditions, the highly decentralized
character of feudalism, and the increasing rationalization of law and
religion in late feudalism.  Similar interpretations have been offered
by John A. Hall (1985) and Michael Mann (1986), who give particular
emphasis to the role of religion.  Both go beyond the Protestant ethic
thesis to claim that it was Christianity in general, and not just
Protestantism, that played a major role in the emergence of
capitalism.  Mann claims that Christianity was important because it
led to the "normative pacification" of Europe, which allowed economic
activity a freer rein, and because it contained an ideology or spirit
of "rational restlessness."  This restlessness, Mann claims,
stimulated a strong orientation toward rational human action in the
world, one part of which was religious action.

     These theories contain some insights, but in general their highly
eclectic nature seems to complicate unnecessarily the search for a
coherent and parsimonious understanding of the transition to
capitalism.  This is carrying multidimensionality too far.  And
serious doubts can be raised about some of the proposed factors,
especially Christianity.  As we have already noted, there is no
necessary connection between religion and economics, and other
religions besides Christianity have been seen to stimulate forms of
rational economic growth.  It is also difficult to accept Chirot's
claim that capitalism was spurred along by some sort of spirit of
rationality that was unique to Europe.  This argument simply begs the
question as to the origins of such a spirit.  What is to prevent us
from arguing that it was capitalism itself that spurred along a new
spirit of rationality?
     
World-System Theories

Some of the most recent and provocative theories of the rise of
capitalism employ a world-system approach similar to Wallerstein's
(Schneider, 1977; Ekholm, 1981; Abu-Lughod, 1989; Frank, 1990, 1991).
These theories are similar to Sweezy's in emphasizing the importance
of world trade external to Europe, but they go considerably further.
     A rather extreme version of this kind of theory has been
developed by Andre Gunder Frank (1990, 1991; Gills and Frank, 1991).
Frank rejects the very notion that there was a qualitative shift from
feudalism to capitalism in the sixteenth century, claiming that there
has been a continuous process of capital accumulation within a single
world system for some 5,000 years.  He even argues against continued
employment of terms like feudalism or capitalism to identify distinct
modes of production in world history.  What happened in Europe in the
sixteenth century was simply the quantitative continuation of a very
long-term historical process.  Frank puts his case most forcefully
(1991:24):

     Is it still possible or sensible to argue that there was a
qualitatively different "transition" to and creation of a
"modern-world-capitalist-system" around 1500?  Or that this
"transition" arose essentially out of the "transition from feudalism
to capitalism" in Europe?  No! and No again!  It is time to relegate
the latter debate to the parochial European history to which it
rightly belongs. . . .
     Then is it still sensible to hold on for dear life to the
supposedly scientific historical categories of . . . feudalism,
capitalism, socialism -- or indeed any such "scientifically" defined
"modes of production" or ideologically defined "systems" and "isms?"
I believe NOT!

So for Frank there really is nothing special about the sixteenth
century, and thus nothing particularly worth explaining concerning
that time.  What is worth describing and explaining in great detail is
the general process of world capital accumulation since 5000 BP.

     A more typical world-system approach to the rise of the modern
world is that of Janet Abu-Lughod (1989).  In her Before European
hegemony, Abu-Lughod argues that Wallerstein's world-system argument
starts too late and that there was a major world-system in effect as
early as 1250.  For Abu-Lughod this system was truly global and
consisted of eight interlocking subsystems combined into three
regional trade networks.  The core of the system was Asia, especially
China, and Europe was in a peripheral position.  By 1350 the system
had substantially distintegrated, with China withdrawing from
participation and declining economically.  To understand the rise of
Wallerstein's capitalist world-economy in the sixteenth century we
cannot focus our attention only on Europe, as has typically been the
case.  There was nothing special about Europe, and indeed
concentration on it has reflected a kind of obsessive Eurocentrism.
To understand the emergence of the modern world-system we must look at
the global system that preceded it.  Europe rose not because of any
internal characteristics that made it special, but because of major
geopolitical shifts within the world as a whole.  The "rise of the
West" was simultaneously the "fall of the East."  Trade links between
the eastern Mediterranean and the Orient were ruptured at the same
time that trade relations between the Mediterranean and northwest
Europe were deepening.  These phenomena were not independent events
but simply two different sides of the same world geopolitical coin.
     These theories are especially valuable in calling our attention
to the importance of world trade networks prior to the sixteenth
century.  Frank's argument is particularly important in that it points
to an important process of world commercialization going on for
several millennia.  Nonetheless, his argument goes much too far in
identifying this process as one of capital accumulation essentially
like the process of capital accumulation after 1500.  It also goes too
far in rejecting the notion of a qualitative shift in the sixteenth
century, as well as the notion of distinct feudal and capitalist modes
of production.  While in some sense what happened after the sixteenth
century was a quantitative extension of what had been going on for a
very long time, in another sense there was a massive break with the
past.  There was a huge acceleration of the intensity of commercial
activity and the shift to a mode of economic production in which
capitalism became the dominant activity for the very first time.  A
truly "world-transforming" capitalism was coming into existence and it
would set in motion processes never seen before in the world.  There
is indeed something vital about the sixteenth century that has to be
explained.
     Abu-Lughod's analysis is much more measured, and her notion that
there was a thirteenth-century world-system is of great importance.
However, the real problem with her explanation of the
sixteenth-century transition is that it is really no explanation at
all.  It is simply a new way of describing certain processes.  If the
relations between the eastern Mediterranean and the Orient frayed
while those between the Mediterranean and northwest Europe deepened,
then we need to know why such geopolitical shifts occurred, and
Abu-Lughod never tells us.  To identify the existence of a system
within which different things go on at different times is only the
beginning of the analysis.  To stop things at that point is to make no
contribution to a theory of economic development.  Moreover,
Abu-Lughod is quite wrong when she suggests that there was nothing
distinctive about Europe.  It was indeed different from the rest of
the world, or at least most of it, since Japan was different too.  It
is not a matter of distinguishing the West from the East, but of
distinguishing the particular combination of characteristics found in
Europe and Japan on the one hand from the rest of the world on the
other.  No Eurocentrism in that!
     
Demographic Theories

A particularly prominent line of thought concerned with the breakdown
of feudalism and the rise of capitalism in Europe has been devoted to
demographic factors.  A demographic explanation has been put forward
by such scholars as Postan (1972), Wilkinson (1973), Le Roy Ladurie
(1974), Harris (1977), and Perry Anderson (1974a).  The argument is
not always completely clear, but it seems to go something like this.
From about the eleventh until the end of the thirteenth century,
European feudalism was undergoing significant economic, ecological,
and demographic expansion.  As population grew new and more marginal
lands were increasingly brought under cultivation until eventually
Europe became "filled up."  By about 1300 a serious state of
population pressure had been reached, and this led to declining yields
from the land and increasingly severe economic difficulties for both
landlords and peasants.  An economic, ecological, and demographic
"crisis of feudalism" had developed.  Nonetheless, in a sense the
demographic aspect of this crisis turned out to be its own "cure."
Increasing famine, malnourishment, and other disease -- especially the
Black Death that first swept Europe in 1348-50 -- led to a sharp
population decline that continued until around 1450.  The demographic
collapse generated a severe labor shortage, which caused a dramatic
fall in the incomes of the landlord class and shifted the balance of
class power in the direction of the peasantry.  Economically, this
made matters even worse for the feudal nobility.  The nobles reacted
to their worsened economic fortunes in a number of ways, but
especially by expropriating the peasantry from the land and turning
their estates over to the raising of sheep in order to sell their wool
on the market.  Landlords were moving more in the direction of
becoming capitalist farmers.  The increasing power of the peasantry
allowed many peasants to flee into the towns where their labor was
much in demand by the merchants, whose economic power was growing.
However, many of the peasants who stayed on the land did not do so as
traditional serfs (feudal social relations were essentially dead by
1450, at least in England).  They were transformed into wage-earning
farmhands who assisted their former landlords in running a capitalist
agricultural enterprise.  Some peasants even became transformed into
capitalists -- yeoman farmers -- themselves.

     A critical question concerns why the demographic and economic
crisis of feudalism got resolved in the particular way that it did.
Why did the nobles react to their worsening economic situation by
gradually transforming themselves, and many of their serfs, into
capitalists?  Why did they not respond to the growing power of the
peasants by intensifying their repression and exploitation of this
class?  Michael Mann (1986:411) has offered a very plausible answer to
these questions:

     If the feudal mode of production gave to the lords a monopoly of
the means of physical violence, could they not respond with military
force at times when relative product and factor values did not favor
them?  . . . This is not an idle question, for in many other times and
places the response of lords to labor shortages has been to increase
the dependency of their laborers.  . . . The immediate answer to these
questions is that the European lords did try repression and they
nominally succeeded, but to no avail.  Returning to the example of
late-fourteenth-century labor shortages, there was a wave of landlord
reaction.  The lords attempted with violence and legislation to tie
the peasantry to the manor and to keep down wages (just as late Roman
landlords had).  All across Europe the peasantry rose up in rebellion,
and everywhere (except Switzerland) they were repressed.  But their
lords' victory proved hollow.  The lords were compelled not by the
peasants but by the transformed capitalist market and by
opportunitiesfor profit, and threat of loss, within it.  The weak
state could not implement legislation without the local cooperation of
the lords; it was the lords.  And individual lords gave in, leased out
their demesnes, and converted labor services into money rents.  . . .
The feudal mode of production was finally broken by the market.

Marvin Harris (1977) has asked a similar question.  Why, Harris wants
to know, did the demographic decline of the fourteenth and fifteenth
centuries not become part of a cyclical process of demographic and
economic ups and downs?  Why was there not a return to feudalism
instead of a forward movement into capitalism?  Here is Harris's
answer (1977:173):

     In the crisis of European feudalism . . . the problem lay in the
landlessness of the victims of enclosures and the raising of animals
on lands that were needed to raise food crops.  The first order of
business of the manorial lords turned merchants and manufacturers
could not be to drive out the sheep, restore the peasants to the land,
and stop manufacturing woolens.  The maximization of their own
immediate political and economic welfare lay not in going backward but
in going forward into larger and more uninhibited attempts to make
money and accumulate capital by raising more sheep and manufacturing
more woolens.

In other words, a new economic path had already been set, and under
the circumstances it was more rational to follow the logic of that
path than to return to the earlier path.  And Mann shows us one of the
major reasons why: the changes within late feudalism were occurring
within the context of an expanding world economic market -- a major
new phase of world commercialization that developed after AD 1000 --
and this market drew feudal lords into it like a magnet.
     One difficulty with the demographic argument is that it is never
completely clear whether the demographic crisis of feudalism was due
to overpopulation, underpopulation, or both.  Harris (1977) seems to
be giving more emphasis to overpopulation, while Postan's (1972)
analysis seems to focus more on the underpopulation that occurred
after 1300 (cf. Brenner, 1976).  Perry Anderson (1974a), on the other
hand, seems to be talking about both.  This question is especially
critical in view of the different demographic patterns displayed by
Japan throughout its feudal and early capitalist periods.
     Less work has been done on the demographic history of Japan than
on Europe, but we now seem to have a fairly good picture of the
former.  Between the end of the twelfth and the end of the sixteenth
century the population of Japan essentially doubled, rising from
approximately 9.75 million in the period 1185-1333 to about 18 million
in the period 1572-1591 (Taeuber, 1958).  Major population growth
continued throughout the first half of the Tokugawa era, with the
population increasing to perhaps 30 million by 1725 (Jannetta, 1987).
It used to be thought that population stagnated after this time
throughout the remainder of the Tokugawa period (Hanley, 1972), but a
new consensus has emerged that population continued to grow, albeit
more slowly, from 1721 to 1868 (Hanley and Yamamura, 1972).  Hanley
and Yamamura (1972) estimate that during the period 1721-1872 the
Japanese population grew at an average annual rate of 0.16%.
     Ann Bowman Jannetta (1987) claims that in 1600 Japan already had
one of the world's most densely settled populations, and it would
appear that this pressure intensified during the Tokugawa era.  There
is much evidence of infanticide during this time, and, as in Europe,
considerable land reclamation was carried out.  Hanley and Yamamura
(1972) have summarized the evidence for a generally increasing rate of
land reclamation from before the beginning of the Tokugawa period.
Between 1551 and 1600 there were 28 shinden ("new fields") created.
This number rose to 243 during the period 1601-1650 and to 434 during
the period 1651-1700.  During the eighteenth century the number of
shinden dropped sharply, but then rose again to 788 during the period
1801-68.  Land reclamation during the Tokugawa period approximately
doubled the amount of total arable land.  As in Europe, it is likely
that a large portion of this land reclamation was due to population
pressure, although we must acknowledge that a certain amount would
have resulted from economic changes such as the growing
commercialization of agriculture, or from the government's efforts at
increasing its tax base (Hanley and Yamamura, 1972).
     The picture so far of Japanese demographic change is remarkably
similar to the European picture before 1300.  But at this point the
picture changes drastically.  There never was a period of significant
decline in the Japanese population even remotely comparable to the
European demographic collapse of 1300-1450 (Jannetta, 1987).  The
reason for this appears to be that Japan was never subjected to the
two great killer diseases that beset medieval Europe, bubonic plague
and typhus.  The absence of these diseases no doubt stems from Japan's
relative isolation from Europe.  The black rat that carried the flea
responsible for bubonic plague followed the overland caravan trade,
and there was no caravan trade to Japan (Jannetta, 1987).


     The demographic regimes of Europe and Japan are different, then,
in one crucial respect.  And this means that a "crisis of
underpopulation" that would have shifted the balance of class power
away from the nobility in favor of the peasantry could not have been a
causal factor in Japan's capitalist transition; that should make us
doubt that the population crash of late medieval Europe played an
important role in the European transition.  However, it is still
possible that overpopulation could have been a factor in Japan, and in
the European capitalist transition as well.


                           A NEW INTERPRETATION

All of the theories we have discussed have significant weaknesses that
preclude any of them offering a satisfactory explanation of the
transition to capitalism.  However, some of the insights of these
theories can be drawn on in constructing a new interpretation.  I
proceed in a twofold manner.  I shall begin by identifying several
basic characteristics of Europe and Japan that I think operated as
important preconditions facilitating their transition from a feudal to
a capitalist economy.  These preconditions, however, did not operate
in a vacuum, but occurred only within the context of a particular
historical juncture that marked the conclusion of a great historical
trend.  It was the interaction of these factors -- the five
preconditions on the one hand and a major historical trend on the
other -- that combined to produce the transition to modern capitalism
when and where it occurred.

Five Similarities between Europe and Japan
     Size.  Japan and two of the three leading capitalist countries of
early modern Europe -- England and the Netherlands -- were small, and
as such contrast markedly with such Asian societies as China and
India, which were large empires.  This is very significant.  Fernand
Braudel (1984) has argued that the reason France lagged behind England
and the Netherlands in her capitalist development was because she was
"a victim of her size."  France was thirteen times as large as the
Netherlands and three or four times the size of England.  Braudel
points out that France's size created problems of transportation that
England and the Netherlands did not have.  Moreover, it is costly to
maintain a large state because resources are drained away that could
be used more directly for economic development.  I think there is a
parallel situation with large Asian societies like China and India.
They were simply so big that obstacles were put in the way of economic
development.  In Asia Japan's much smaller size gave her a decided
advantage.

     Geography.  Japan and the leading capitalist countries of
northwest Europe were located on large bodies of water that allowed
them to give predominance to seaborne rather than overland trade.
Samir Amin (1991) has noted that the societies containing the greatest
amount of capitalism (what might be more accurately described as
"protocapitalism") in the long agrarian era tended to be those in
which seaborne trade was characteristic.  And Braudel has pointed to
the greater capitalist possibilities of seaborne trade specifically
with respect to Japan (1982:582):
     If Japan seems rather different from the rest of eastern Asia, it
is in the first place because it is surrounded by the sea, which made
communications easier; the Seto no Uchi was a tiny Japanese
Mediterranean and a very lively one.  (Imagine an inland sea between
Lyons and Paris.)  I am not seeking to explain the entire development
of Japan by the virtues of salt water -- but without them, the
processes and sequences of events in this singular history would be
almost impossible to imagine.

It is noteworthy that the protocapitalism of China tended to be
located along its southern coast, and that the great Indian Ocean
trade linking the Mediterranean and East Asia between the rise of
Islam in the seventh century and the beginnings of early modern Europe
was indeed centered precisely there -- in the Indian Ocean (Chaudhuri,
1985).  And where was the greatest economic development in late
medieval Europe concentrated but in the city-states of Italy on the
Mediterranean.  The presence of seaborne trade by itself determines
nothing, but it is a very important precondition for capitalist
development.
  
     Climate. Europe and Japan both had temperate climates.  This is
important when we recognize that the bulk of the world colonized by
Europe had tropical or subtropical climates.  These regions were most
suitable for the development of the kinds of peripheral economic
activities -- production of raw materials for export using forced
labor -- European states wanted to pursue in those zones.  Alfred
Crosby (1986) has argued that an important reason for the economic
success of the British settler colonies -- the United States, Canada,
Australia, and New Zealand -- was the fact that the settlers were
inhabiting regions climatologically very similar to western Europe.
Most of North America and Australia had climates poorly suited to
peripheral economic activities (the southern United States is the
exception that proves the rule: its warm climate was suitable for
plantation agriculture, and it was peripheralized).  Japan may have
escaped peripheralization by Europe at least partly because of its
climate or its distant northerly location.  In any event, it wasn't
climatologically suited for peripheral development.
     Demography: Both Europe and Japan underwent dramatic population
growth during their feudal regimes.  The buildup of population
pressure may have contributed to the declining efficiency of feudalism
and the shift toward capitalism.


     Political structure.  Europe and Japan had the only true feudal
regimes in world history (Anderson, 1974b).  In fact, there is more
similarity than that.  The feudal systems of Europe and Japan arose at
about the same time in world history and persisted for remarkably
similar lengths of time.  If we use the earliest and latest dates
ordinarily given for feudalism in Europe and Japan, we arrive at the
following results.  The earliest date ordinarily given for the
emergence of feudalism in Europe is 768, the beginning of the
Carolingian state (Anderson, 1974a), and it is generally agreed that
feudalism proper did not last beyond 1450.  This gives a feudal period
lasting 682 years.  For Japan, the earliest date given is normally
1185, the beginning of the Kamakura Shogunate (Sansom, 1961;
Reischauer, 1956; J.W. Hall, 1970).  It is a bit difficult to date the
end of Japanese feudalism, but everyone would agree that it was
finished no later than 1868, the year of the Meiji Restoration.  This
gives a feudal period lasting 683 years, remarkably only one year more
than the length of feudalism in Europe!  Now I am not suggesting that
we can really date the length of Japanese and European feudalism that
precisely, but a striking similarity is clearly there.
     The significance of the feudal experiences of Europe and Japan
lies in the substantial freedom they gave to their merchant classes to
operate economically.  As I shall show later, there is widespread
agreement that large bureaucratic empires stifle mercantile activity
because it is a threat to the tributary mode through which the state
extracts surplus.  Europe and Japan were strikingly different from the
rest of the agrarian world.  Their high levels of political
decentralization meant that mercantile activities could not be
controlled as they normally were in large bureaucratic states.
Anderson (1974a,b) has called attention to the freedom of the towns in
medieval Europe and Japan, their remarkably independent role within
the total economies of these societies.  Likewise, Norman Jacobs
(1958) has stressed the remarkable freedom and independence of
Japanese merchants in contrast to the tight control of merchants in
China.  Indeed, it was not just that the Japanese merchants enjoyed
considerable economic freedom, but that the whole conception of the
importance of mercantile activity was distinctive in Europe and Japan.
As Jacobs (1958:118-19) has remarked by way of a comparison of China
with Japan and Europe,

     in China, commerce -- and its successor, industry -- were viewed
as necessary but morally inferior, and not primary to the operation of
the division of labour.  The occupational interests of commerce were
subordinate to those of the literati and agriculture. . . .
     In Japan (as in western Europe) in contrast, the significance of
commerce and of the merchant, even under feudalism, derived from an
appreciation of the role of the merchant and his money in the struggle
for control of independent political or economic power.  Consequently
the merchant, and his successor, the capitalist-industrialist,
received in return a respected and sought-after position in the
division of labour.

In my view, the freedom given to merchants was the most important of
the five preconditions that helped push Europe and Japan forward as
the first states to undergo a capitalist revolution.  Differences
Between Europe and Japan

     There were of course differences between Europe and Japan, the
two most important of which seem to be the following:

     1. There was no demographic collapse in late medieval Japan as
there was in late medieval Europe.  The Japanese population remained
large and dense and continued to grow throughout the Tokugawa period.

     2. One does not really get a sense of a crisis of feudalism in
Japan that corresponded to the European crisis.  Perry Anderson
(1974b) suggests that there was a feudal crisis in
early-nineteenth-century Japan, but what he is describing looks more
like a crisis of capitalism, probably induced by the relative
isolation of the country from foreign markets.  In any event, even if
there was a Japanese crisis, it could not have been of the same type
as the European crisis.
     These differences between Europe and Japan provide some
suggestions about what won't work in explaining the capitalist
transition.  The absence of an underpopulation problem in Japan raises
doubts about the importance of such a factor in Europe.  There was a
labor shortage in Japan in Tokugawa times, but it was not the result
of insufficient population.  Rather, it was an urban rather than a
rural problem and stemmed from the rapid commercialization and
urbanization of the country.
    
Social Change in Agrarian States In order to introduce the second
major part of my theory, a long digression is necessary.  This
digression concerns the most important forms of social change that
occurred during the some 4500 years between the rise of the first
agrarian states and civilizations and the sixteenth-century capitalist
takeoff.  Once this digression has been completed, the second half of
the theory can be connected with the first half and the entire theory
made plain.
      Agrarian states: growth versus evolution.  The economic
historian E.L. Jones (1988; Goudsblom, Jones, and Mennell, 1989) has
drawn a distinction between extensive growth and intensive growth in
world history.  By extensive growth Jones means an increase in
economic productivity sufficient merely to provide for an expanding
population at roughly the same standard of living.  Intensive growth,
on the other hand, involves a rise in economic productivity that
exceeds the rise in population so that the economic output per capita
rises.  Using this distinction, Jones notes that extensive growth has
been overwhelmingly the norm throughout world history; there have been
relatively few instances of intensive growth.  Jones nominates early
modern Europe, Tokugawa Japan, and Sung China as history's leading
candidates for intensive growth.
     Useful though Jones's distinction is, I should like to introduce
a similar though importantly different one between social growth and
social evolution.  Social growth occurs when there is a quantitative
change in one or more dimensions within a system of social
organization.  Increases in, say, the size of a population, military
might, technological efficiency, or political power may be regarded as
social growth so long as they do not lead a society into a
structurally new mode of organization.  Jones's extensive growth
therefore belongs within my category of social growth.  However,
intensive growth may also be social growth rather than social
evolution if it is not sufficient to produce a qualitative shift to a
structurally novel mode of life.  The case of Sung China was just
that: a powerful economic thrust that petered out before it could
generate a new mode of social organization.  This makes it obvious,
then, that by social evolution I mean a qualitative transformation,
the development of something new rather than simply something greater.
     The crucial question obviously becomes, Was there much social
evolution during the so-called agrarian era?  The answer is no, there
was not.  There was considerable social growth in the spheres of
political power, military force, economics, and technology, a lot more
in fact than is ordinarily supposed.  But throughout some 4500 years
there was no leap forward to a structurally new form of social
organization.
      This theme of the absence of any real "evolutionary potential"
to agrarian states has been enunciated by numerous scholars, indeed,
has become the standard wisdom.  There is also a standard wisdom
regarding how to explain this "evolutionary inertia," and that is to
argue that it resulted from the peculiar system of social
stratification and state power so characteristic of these societies.
This point of view was adopted by Max Weber (1981[1927],
1976[1896/1909]) early in this century, and has been promoted by such
recent social scientists as Immanuel Wallerstein (1974), John A. Hall
(1985), Gerhard Lenski (1970), Dietrich Rueschemeyer (1986), John
Kautsky (1982), and E.L. Jones (1988).  The argument is essentially
that the two basic social classes, the aristocracy and the peasantry,
had no incentive to alter the underlying mode of economic production.
The aristocracy had no incentive for change because they benefitted
enormously from the prevailing tributary arrangements.  Indeed,
commercial activity or technological advancement could be positively
threatening to their means of extracting wealth from the subject
population.  They therefore kept a close watch on the activities of
specialists in production-for-exchange, the merchants, and generally
acted so as to keep their activities within certain bounds.  On the
peasants' side, they too had little incentive for change because
whatever improvements they may have introduced into the productive
process would have gone for the benefit of their lords rather than for
themselves.  Many scholars have focused mainly on technological
advancement in general when addresssing this issue, but others have
spoken specifically of capitalist development.  In The Agrarian
Sociology of Ancient Civilizations, Weber waxed eloquent on how
agrarian bureaucratic states stifled capitalism
(1976[1896/1909]:62-63): The public finance of the ancient states
could . . . retard private capitalism in various ways.  Above all the
general political basis of ancient states typically reinforced the
great instability of capital structure and formation inherent in the
ancient economies.  There were many pressures working in the same
direction . . .  .  Furthermore there was the danger of confiscations,
which occurred at every political upset and change of parties in
ancient communities . . . .
     However, much more important than these catastrophes which
affected only particular interests or communities, was the general
limitation imposed by public administrations on the profits of private
capital, and thereby on capital formation.  . . .  The ancient monarch
and members of his court were always great agrarian lords.

     I see no reason to challenge this conventional view of agrarian
empires, but I would add to it one important point.  Assuming that the
movement out of the stage of agrarian society was going to be a
movement into a specifically capitalist system of social and economic
life -- and historically, of course, this is the way things have
worked out -- it needs to be stressed that the emergence of capitalism
could not be some sort of sudden leap forward to be achieved in a few
dozen or even a few hundred years.  It was an economic transformation
that required a long period of time because of what might be called
the "threshold effect."  Because of capitalism's requirement for
extensive markets (both foreign and domenstic), and because of the
general hostility of agrarian elites to it, it could only emerge
slowly, and as such would require a lengthy period of incubation
before it could reach a kind of "critical mass" essential to a tipping
of economic power in its favor.  In retrospect we know that the time
period actually required was approximately 4500 years from the
beginning of the first agrarian states.  What remains to be shown here
is the process whereby agrarian societies gradually built up the
critical mass needed for eventually crossing the threshold into a
genuinely (i.e., world transforming) capitalist system.


      Forms of social growth in agrarian societies.  I would like to
suggest that there have been three major forms of social growth during
the era dominated by agrarian states: political growth, which involves
both an increase in the size of political units and in the
concentration of power within these units; technological growth, with
respect to both economic subsistence and military force; and economic
growth, which has primarily been manifested in an increase in the
level of world commercialization.  I regard this third form of growth
as the most important and, because of space limitations, shall
concentrate on it.
      Economic growth during the agrarian era involved an expansion in
the scale and importance of economic exchange, which can be assessed
in terms of growth in the size and density of trade networks.  John
Kautsky (1982) has drawn a distinction between "traditional" and
"commercialized" aristocratic empires, noting that there has been a
general trend for the former to give way to the latter.  He suggests
that, given enough time, virtually all of history's traditional
aristocratic empires have tended to become commercialized, describing
this process as an almost inexorable one.  Along similar lines, Andre
Gunder Frank (1990, 1991; Gills and Frank, 1991) argues for a
long-term process of capital accumulation, based mainly on trade, that
has occurred at an increasingly global level since the origin of the
first Mesopotamian states 5,000 years ago.  Frank sees this process as
the central developmental process of world history, and one that is
needed in order to explain developments in the noneconomic spheres of
agrarian societies.
     It is possible to mark off three major stages in this process of
expanding world commercialization (McNeill, 1982; Curtin, 1984).  The
first stage begins around 4000 BP and ends around 2200 BP.  During
this phase trade was largely local or, at best, regional in scope.  By
2200 BP there emerged the first truly long-distance trade with the
establishment of a trade axis that ran all the way from China to the
Mediterranean.  After about AD 1000 there was another big leap forward
in which trade networks expanded and deepened, especially in the
period 1250-1350.  It is interesting to note that the emergence of a
worldwide trade axis after 2200 BP corresponds closely to a sudden
surge in the size of agrarian empires (Taagepera, 1978).  The two are
undoubtedly causally related, for, as E.L. Jones (1988) has argued,
truly long-distance trade networks only became possible with the rise
of very large empires.  Only empires of that size had developed the
technology of communication and transportation needed to facilitate
worldwide trade.
     Philip Curtin (1984) has described some of the basic
characteristics of the worldwide trade network that was in effect
between 2200 BP and AD 1000 (cf.  Chaudhuri, 1985).  As he notes,
during this period trade became regularized between the Red
Sea/Persian Gulf region and India, between India and Southeast Asia,
and between Southeast Asia and both China and Japan.  In the middle
Han period, Chinese merchants traveled to the west through central
Asia and established an overland trade route between East Asia and
Europe.  Chinese trade with India had become extensive by the first
century AD, and Chinese goods were being sold widely in the Roman
empire.  During Roman times trade between India and the Mediterranean
was carried on through three different routes: an overland route
through Parthia, the Persian Gulf combined with an overland route, and
the Red Sea combined with an overland route to Egypt or some part of
the Fertile Crescent region.  Maritime trade flourished in the South
China Sea and the Bay of Bengal, with Canton being an important port
for trade to the south.
      William McNeill (1982) has described what he regards as a new
and major burst of world commercialization beginning around AD 1000,
and centering heavily on China.  It was during this time that China
had by far its greatest burst of economic activity prior to modern
times, one that lags behind only late medieval Europe and Tokugawa
Japan in scale and scope.  Mark Elvin (1973) has referred to this as
an "economic revolution," most of which occurred during the period of
the Sung dynasty (AD 960-1275).  Elvin sees the Sung economic
revolution as involving agriculture, water transport, money and
credit, industry, and trade (both domestic and foreign).  Elvin argues
that improvements in agriculture gave China by the thirteenth century
the most sophisticated agricultural system in the world, and one that
provided a foundation for major thrusts forward in commercial
activity.  Commercial activity was also greatly aided by improvements
in water transport.  These improvements involved both the construction
of better sailing vessels on the one hand and the building of canals
and removal of natural obstacles to navigation in streams and rivers
on the other.  Industry flourished, especially the production of steel
and iron.  The economy became much more monetized.  There was a much
greater volume of money in circulation, and the money economy even
penetrated into peasant villages.  Foreign trade, especially with
Southeast Asia and Japan, flourished.  Markets proliferated and became
hierarchically organized.  At this time China was the world's most
economically advanced society, and many observers have suggested that
it was on the brink of the world's first industrial revolution.
However, beginning sometime in the fourteenth century China began to
decline and stagnate economically and gradually to withdraw from
foreign trade.  It became increasingly isolated and inward looking, a
process that had become fairly complete by the middle of the fifteenth
century.  The reasons for this economic downturn are still very
imperfectly understood today.
     McNeill sees the enormous economic growth in Sung China as part
of a larger picture of world commercialization.  As he says, "China's
rapid evolution towards market-regulated behavior in the centuries on
either side of the year 1000 tipped a critical balance in world
history" (1982:25).  And he elaborates (1982:50-54):

     Though the capitalist spirit was . . . kept firmly under control,
the rise of a massive market economy in China during the eleventh
century may have sufficed to change the world balance between command
and market behavior in a critically significant way. . . . Moreover,
the growth of the Chinese economy and society was felt beyond China's
borders; and as Chinese technical secrets spread abroad, new
possibilities opened in other parts of the Old World, most
conspicuously in western Europe. . . .
     What seems certain is that the scale of trade through the
southern seas grew persistently and systematically from 1000 onwards,
despite innumerable temporary setbacks and local disasters.  Behavior
attuned to the maintenance of such trade became more and more firmly
embedded in everyday routines of human life. . . .
     What was new in the eleventh century, therefore, was not the
principle of market articulation of human effort across long
distances, but the scale on which this kind of behavior began to
affect human lives.  New wealth arising among a hundred million
Chinese began to flow out across the seas (and significantly along
caravan routes as well) and added new vigor and scope to
market-related activity.  Scores, hundreds, and perhaps thousands of
vessels began to sail from port to port within the Sea of Japan and
the South China Sea, the Indonesian Archipelago and the Indian Ocean.
. . .
     As is well known, a similar upsurge of commercial activity took
place in the eleventh century in the Mediterranean, where the
principal carriers were Italian merchants sailing from Venice, Genoa,
and other ports.  They in turn brought most of peninsular Europe into
a more and more closely articulated trade net in the course of the
next three hundred years.  It was a notable achievement, but only a
small part of the larger phenomenon, which, I believe, raised
market-regulated behavior to a scale and significance for civilized
peoples that had never been attained before. .  . .
     It was precisely in the eleventh century, when China's conversion
to cash exchanges went into high gear, that European seamen and
traders made the Mediterranean a miniature replica of what was
probably happening simultaneously in the southern oceans. . . . These
separate sea networks were then combined into one single interacting
whole after 1291.

     Janet Abu-Lughod (1989) has picked up the story where McNeill
left it.  She describes in great detail for the period 1250-1350 the
structure and operation of a vast worldwide trade network from western
Europe to East Asia.  This huge "world system" contained eight
overlapping subsystems that can be categorized into three larger
circuits centering on western Europe, the Middle East, and the Far
East.  Abu-Lughod refuses to be drawn into a discussion of whether
this system was "capitalistic" or not, but she does claim that it
provided the basis for the development of modern capitalism after
about 1500.  Furthermore, she claims that this world trade network
(1989:353) was substantially more complex in organization, greater in
volume, and more sophisticated in execution, than anything the world
had previously known. . . .
     Sophistication was evident in the technology of shipping and
navigation, the social organization of production and marketing, and
the institutional arrangements for conducting business, such as
partnerships, mechanisms for pooling capital, and techniques for
monetization and exchange.

     As already indicated, it is my view that expanding world
commercialization was the most important form of social growth that
occurred during the approximately four and a half millennia of the
agrarian epoch, at least in terms of its ultimate world-transforming
significance.  We are now in a position to connect this great
historical trend with the five preconditions shared by Europe and
Japan in order to understand the precise combination of circumstances
that triggered the great economic takeoff that we acknowledge as the
birth of the modern capitalist world.  Explaining the Capitalist
Takeoff My general explanation of the transition to capitalism is
this: Modern capitalism resulted from the interaction between the five
preconditions discussed earlier -- small size, location on a large
body of water, temperate climate, population growth, and feudal
political relations permitting mercantile freedom and independence --
and the fact that the level of world commercialization had finally
built up in the centuries after AD 1000 to a critical density
sufficient to trigger a massive capitalist takeoff.  A threshold of
commercialization as the result of expanding urban networks and
extensive and intensive trade density had been achieved, and this led
to an explosive capitalist takeoff in those two regions of the world,
western Europe and Japan, that were most hospitable to capitalist
activity.
     The increasing level of world commercialization over the very
long run is the truly critical factor in all this, for as Fernand
Braudel (1984:96) has said, "There could be no world economy until
there was a dense enough urban network with trade of sufficient volume
and regularity to breathe life into a central or core zone."  Braudel
is speaking of Europe, but the same argument applies to Japan.
Although Japan did not trade with Europe in the centuries before
Tokugawa, and although it was isolated from the West during most of
the Tokugawa epoch, it did carry on a very significant trade with East
Asia during this entire period, and it has been described by several
economic historians as one of the great maritime powers of East Asia
in the thirteenth, fourteenth, and fifteenth centuries (J.W. Hall,
1970; Braudel, 1982).  The seeds of capitalism had clearly been sown
by Ashikaga times (i.e., after 1338) (Jacobs, 1958; Braudel, 1982).
Of the preconditions that interacted with this expanding level of
world commercialization the most important was the freedom given to
mercantile activity by feudal political relations.  Although the other
conditions were certainly important in stimulating commercial
activity, European and Japanese merchants could not have gotten as far
as they did at the time that they did without a favorable political
climate.
     It is of the greatest importance to note that my theory holds
that capitalism would eventually have developed anyway given enough
time for the further buildup of world commercialization.  Europe and
Japan were the first to have genuine capitalist takeoffs because they
had the most suitable preconditions, and because these conditions
allowed them to contribute greatly to the whole process of expanding
world commercialization, but even if there never had been any feudal
societies in the world an explosive capitalist spurt would eventually
have occurred.  It may have taken a good deal more time -- say another
millennium or two -- for capitalism to emerge because of the lack of
highly favorable preconditions, but the expanding level of world
commercialization would eventually have gotten its way.  It was a
force that could be slowed down, but it could not be stopped.
Eventually the level of world commercialization would have become such
that the tipover into world-transforming capitalism would have
occurred even under generally unfavorable preconditions.  Capitalism
was a force that could not be denied.  Its emergence was inevitable at
some point or other.
     The rise of capitalism was a matter of the growing economic power
of the mercantile classes, a matter of these classes insinuating
themselves into the tissues of agrarian-coercive societies with their
tributary modes of production and finding the best home they could.
Since merchants were disdained (indeed, often despised) by agrarian
ruling classes, their advancement could only be difficult and slow.
Nonetheless, agrarian elites could not dispense with merchants because
they provided goods and services that agrarian elites greatly desired.
They had to be tolerated, if not encouraged.  And merchants took
whatever they could get.  Some anthropologists have said, correctly in
my opinion, that in egalitarian band and tribal societies "inequality
is always struggling to get out" (cf. Cashdan, 1980).  By analogy, I
would say that in agrarian-coercive societies "capitalism is always
struggling to get out."  Merchants could be hemmed in here and there,
could have their wealth expropriated by this and that bureaucratic
elite, but they could not be denied forever.  Gradually their economic
power grew, until, some 4500 years after the origins of the first
states and quite probably the first genuine merchants, they were able
to conquer and subdue the very kind of society that gave them birth.
It wasn't easy, and it took a long time, but eventually it happened.
It happened first in western Europe and Japan, but if it had not
happened there it would have happened somewhere else at a later time.
Again, the capitalist takeoff was inevitable.
     One aspect of my argument that I have to confess is still a
little cloudy is the role of demographic growth.  I doubt that this
was a major factor in the capitalist transition, but it may have
played some role.  Whether it did, and just how much it did, is not
completely clear.  Population pressure was surely a problem in China
and India at the time in history that we are considering, but since we
see no evidence of a capitalist takeoff there it is difficult to give
population pressure an important role.  But in a larger sense it does
not really matter all that much, for in the long run, as I have said,
even the other preconditions were not necessary to the end result.
     I regard this interpretation as a highly parsimonious one that
accomplishes the following things:
     1. It explains why capitalism first emerged when and where it
did.

     2. It explains why it took a full 4500 years for capitalism to
emerge.  This is an especially important accomplishment because the
question as to why it took so long for capitalism to emerge after the
rise of the first agrarian states has been a central one.
     3. It explains why there was such remarkably similar timing in
the emergence of capitalism in Europe and Japan.  The buildup in world
commercialization, especially in the centuries after AD 1000, was the
critical context for capitalism.  Some might think it a "coincidence"
or a mere "historical accident" that the transition to capitalism was
made in two distant parts of the world at, on a world-historical time
scale, almost the same moment.  But for any nomothetically-oriented
scholar the timing is too close to be explained in that way.
     4. It dispenses with the hoary debate concerning whether the rise
of capitalism in Japan was the result of endogenous or exogenous
factors.  Clearly it was both.  The one big external factor was the
intensified level of world commercialization, whereas the internal
factors were the five basic preconditions.  Perry Anderson (1974b)
claims that Japan made its capitalist transition only as a result of
the forced reopening of the country in the middle of the nineteenth
century, an all-too-common view even today.  Frances Moulder (1977)
also claims that Japan never could have made the transition under its
own impetus.  But both scholars seriously underappreciate Japan's
internal strengths and the degree to which it had already become
essentially capitalist by the time of Commodore Perry's arrival in
1853.  Norman Jacobs (1958) and Fernand Braudel (1982) show that there
was a substantial endogenous evolution toward capitalism in Japan.  As
Braudel puts it (1982:591-93):
     An early form of Japanese capitalism, clearly self-generated and
native to the country, did nevertheless appear of its own accord.
 . . . [E]verything conspired to produce a kind of early capitalism
which was the product neither of imitation of foreigners, nor of
initiatives by any religious community . . . .
     In short, this capitalism emerged in the first instance from the
development of a market economy which was long-standing, lively, and
expanding: markets, fairs, sea-voyages, and exchange (if only the
redistribution of fish to inland towns) and finally long-distance
trade which was also an early development, particularly with China,
and which yielded fantastic rewards (1100 per cent on the first
voyages of the fifteenth century).

     What would have happened in Japan if it had not been forcibly
reopened by the West?  Moulder's (1977) answer is that it would have
stagnated under archaic feudal relations.  My answer, though, is that
by the mid-nineteenth century Japan was extremely close to opening
itself up under its own volition.  In the nineteenth century the
Japanese had enormous interest in Western technology, and Japan was
ripe for the shift to industrial capitalism.  If this shift had not
begun in the late nineteenth century, as we know it actually did, then
it would not have taken much longer.  Japan would have opened itself
up voluntarily, inserted itself into the world capitalist market, and
begun its own independent process of industrialization.
     Consider what happened in China in the fourteenth and fifteenth
centuries.  It withdrew from world trade and declined economically,
short circuiting the advance toward capitalism that some scholars
think was soon in store for it.  Contrast this with what happened in
Japan when it embarked on its isolationist path in the seventeenth
century.  During the more than two centuries of its isolation it
underwent enormous expansion, surely an indication of the strength of
the endogenous forces pushing it toward capitalism.
     I know that some readers may be wary of my theory because the
notion of capitalism's slow but inevitable emergence will conjure up
for them an underlying image of "economic man" who has a tendency to
"truck, barter, and exchange."  The theory will be branded as yet
another type of "neo-Smithian" argument.  But this would be a serious
misreading of my intent.  I do not hold to a view of human nature that
says that humans have some sort of inborn tendency to exchange things
for profit.  Humans are not inherently "capitalistic" in their outlook
on the world.  Indeed, if I thought such a thing shouldn't I expect
capitalism to have appeared much earlier than it did, and shouldn't
there have been much less resistance to it?  My argument is that, when
after a certain historical point mercantile activity became feasible
(about 5000 BP), at least some people wanted to pursue it and at least
some other people wanted it maintained because they could benefit from
it.  Once in existence, mercantile activity tended to expand of its
own accord, and thus the economic power of the merchant classes
slowly, but surely, increased.  And at some point it reached a level
beyond which it could no longer be stopped.
     I take no particular pleasure in holding this view, which should
by no means be interpreted as tantamount to some sort of
"procapitalist" ideological position.  I am just as aware as my
Marxist friends of the unpleasant and objectionable features of the
capitalist mode of production.  To explain the rise of capitalism is
one thing, to evaluate its moral and political significance quite
another.


                                 NOTES
           

1.  Debate has raged for decades over the question of the nature of
feudalism and its degree of generality in world history (Bloch, 1961;
Coulborn, 1956; P. Anderson, 1974b; Critchley, 1978).  I accept the
argument made by Perry Anderson (1974b) that only western Europe and
Japan have had genuine feudal systems.  Anderson sees as the critical
features of feudalism vassalage, the fief, and the fragmentation of
political authority, or what he calls the "parcellization of
sovereignty."  He stresses that in both European and Japanese
feudalism there was created a "dynamic opposition" of town and
country, and that as a result medieval towns in Europe and Japan
maintained a striking economic autonomy.  Other areas of the world at
other times may have had politico-economic systems that were
"feudalistic" (cf. Coulborn, 1956), but only medieval Europe and Japan
were genuinely feudal in Anderson's sense. 

 2. By capitalism I mean essentially what Wallerstein means, and that
is an economic system in which goods are produced for sale on the
market with an eye to the earning of the maximum profit and the
accumulation of profit (capital) over time.  I do not believe it is
necessary to stipulate that the term capitalism must only be applied
to a "mode of production," as strict Marxists require.  Nor do I think
that a system of wage labor is an absolutely essential defining
characteristic.  I would argue, as did Weber (1981[1927]), that
certain degrees and forms of capitalism have existed throughout much
of world history.  However, also following Weber, I would argue that
these earlier forms of capitalism were different from modern
capitalism (i.e., the capitalism after the sixteenth century) in terms
of the much greater scale and social and economic pervasiveness of the
latter.  Modern capitalism has been truly "world transforming," and
has penetrated into the nooks and crannies of social and economic life
in a way that was never the case with earlier forms of capitalism.
For convenience and clarity I suggest that these earlier forms of
capitalism be called "protocapitalism" (Amin, 1991).

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