#books This is an introductory text that draws on earlier works to understand how capitalism came to be. While that may be the intention of the text, it is a highly biased reading of the earlier works with an almost predetermined view of capitalism and its supposed contradictions. It is not a simple historical review. ## Part 1: Histories of the Transition Proponents of capitalism do themselves no favors by arguing that it is rational, inevitable, or even virtuous. In this section Woods selectively reviews various histories of the transition to capitalism, whatever that means, to reveal how capitalism has become a broad, ambiguous, and complex term used to encompass many different ideas and concepts: >There was, in fact, no need in the commercialization model to explain the emergence of capitalism at all. It assumed that capitalism had existed, at least in embryo, from the dawn of history, if not in the very core of human nature and human rationality. >[...] >There is, of course, a major paradox here. **The market was supposed to be an arena of choice, and 'commercial society' the perfection of freedom.** (p.16) This is simply not the case; no social construct where absolute freedom is enjoyed can result in anything other than chaos. Throughout history laws and different legal systems have been widely adopted because the nature of individuals is self-interest and the fallacy of composition demonstrates how individual actors acting rationally can lead to an outcome that is irrational for society at large. Therefore, an ordering of social intercourse is required which creates social relations, which beget relationships both social and economic. We require resources to live. Resources therefore become a form of property which can be held by different parts of society in different forms. Once again we find that individually we are weak, but collectively we are strong and whether we form property relations through trade, markets, or other constructs we find we are better together than apart which is individually irrational, but rational on the whole while also introducing many contradictions and complex social and economic relations. Eurocentric histories of capitalism and the author's review of them all fail to account for the unique geography of European countries and how that played a large part in how social and property relations were formed in that part of the world. Why feudalism rose in Europe after the fall of the Roman Empire and not in other parts of the former empire is most likely due to the causal forces of geography. Marx's definition of capital not simply as wealth or profit but also as a social relation is an important insight that is later used to define capitalism as unique social and property relations that originated in England in the 17th century. That these relations may have formed the specificity that they did is unfortunately never addressed as being related to the unique geographic position of England, however many of the causes that are cited for capitalism's rise there can been seen to have their root in geography. Woods takes certain liberties to extend this definition of capital to explain how wealth is transformed into capital by these new social property relations which is an important precondition of capitalism: >"The specific precondition of capitalism is a transformation of social property relations that generates capitalist 'laws of motion': *imperatives* of competition and profit-maximization, a *compulsion* to reinvest surpluses, and a systematic and relentless *need* to improve labour-productivity and develop the forces of production." (pp.36-37) However, capitalism is, just like any belief system, not bound by any set of immutable laws like the laws of nature. While the forces she cites are certainly contained within the broad array of forces we associate with capitalism today, to suggest these forces result from only capitalism and take on the importance of 'laws' is taking the argument too far. We can agree on the heart of Marx's argument as Wood relays it: >At the heart of this argument was Marx's insistence on the historical specificity of capitalism. This meant that capitalism had a historical beginning, in very specific historical conditions, and therefore it had a conceivable end. Capitalism was not the product of some inevitable natural process, nor was it the end of history. (p.37) Woods comes back to her objective of understanding the history of the 'transition' to capitalism to understand the thing itself by citing different historical reviews of the transition from feudalism to capitalism in Europe, but she gives far too little weight to the geopolitical imperatives of the middle ages in her historical examination which seems to be a major oversight given the overall objective. To her credit she briefly touches on Sweezy's proposition: >...it might be more accurate to say that the decline of western European feudalism was due to the inability of the ruling class to maintain control over, and hence to exploit, society's labour power. (p.40) Woods then begins to hone in on what she calls the unintended consequence of producers becoming subjected to market imperatives. She cites Robert Brenner's 1976 argument: >Brenner's whole argument was predicated on the important observation, proposed originally by Marx, that pre-capitalist societies were characterized by 'extra-economic' forms of surplus extraction, carried out by means of political, juridical, and military power, or what Brenner now calls 'politically constituted property'. In such cases, direct producers - notably peasants, who remained in possession of the means of production - were compelled by the superior force of their overlords to give up some of their surplus labour in the form of rent or tax. In the case of European feudalism in particular, lordship represented a *unity* of political and economic power. **This is in sharp contrast to capitalism**, where surplus extraction is purely 'economic' (pp.55-56) What we see in this argument is an understanding of how feudalism emerged from the ashes of the Roman Empire as Europe experienced a power vacuum and a chaos as a result. Leadership emerged locally with lords that possessed military power aggregating serfs to whom they pledged their protection in exchange for labour. The insight contained in the above quote is the distinction between this 'extra-economic' force of feudalism and capitalism's purely 'economic' force. It should be clear from this distinction that a person running for their safety is far worse than a person who is compelled by economic forces. It is easy to lose sight of this important distinction as the barbarism of the middle ages, and savagery of ancient times drifts further out of mind in the annals of history. Woods then reveals what is probably the most important feature of capitalism: the dependence on the market for subsistence. The heart of her argument is the loss of freedom from the inability to provide for your own subsistence. The importance of this insight can be felt today with the increasing popularity of people "living off the grid." This feature of capitalism contains a trade-off which Woods unfortunately does not spend a lot of time exploring: the trade-off between market dependence and the benefits of the market. Just as we are weak individually and stronger as a society, but living in a civilized society requires relinquishing some freedoms. It is easy to identify any loss of freedom, framing it as oppression, in any movement such as feudalism or capitalism and point the finger at the movement, but this would be missing the fact of this necessary trade off inherent in society. Unless you want to live alone, you must compromise. This brings us to one of my main observations of the discussion around the different organizational theories, movements, and belief systems of society: the absence of risk within any of these discussions. According to Woods, a transformation of the very nature of trade and markets took place which acquired an entirely new economic role and systemic logic. The systemic logic of markets is risk transfer. Woods suggests that direct producers becoming subject to market imperatives created a 'propertyless majority.' It is suggested that the market works only for profit which only recognizes one side of the market function. Risk transfer is facilitated by the market enabling participants to be compensated for different risks and earn profits for bearing such risks. Instead of recognizing this function of the market Wood's continues to focus on the exploitation that the market enables attributing it to the inherent need to increase productivity and profit in capitalist property relations. Indeed this is one of the costs of capitalism, it excites our natural self-interest and in doing so creates as zero-sum relation among market participants. However, this is one a single characteristic of the many varied relations in capitalism. There are many benefits that must be weighed against these costs and more effort towards better managing the costs could be taken. What do we mean by risk transfer? If we take the example of a direct producer who can sustain themselves on their own production and sell their excess on the market we need to understand the risks this direct producer holds. They take the risk of production: the cost of the raw materials required for production and they take the risk of being able to sell their excess. The market not only makes that direct producer dependent on the market for other goods and services but it allows the direct producer to sell the risk they are no comfortable or capable to hold. They receive additional compensation for this risk which serves to offset the cost of market dependence for the resources they must obtain from the market. Those resources can be risks that other direct producers cannot or do not wish to hold, so risk transfer provides an alternative avenue to the zero-sum nature of self-interested profit maximization. Or we can see the benefit of the risk transfer function of markets in the decreased occurrence of famine as society increasingly became market dependent. Woods points out that markets have always existed in one form or another and the laws of supply and demand cause prices to rise and fall in ancient societies just as in modern, however the transformation of social and property relations that took place under capitalism improved the market by adding the function of risk transfer. Now, when there were surplus crops, a speculator or other person could take the risk of warehousing that surplus for a future time. They took the risk of the cost of acquiring and storing the surplus in the hope that there would be a future need for that surplus. Jordan Peterson provides a more pre-historic example of the impact this has on social and property relations in '*12 Rules for Life*' when he talks about a hunter who chooses to share his excess mammoth with his neighbors and the implicit morality of this pre-historic market function. It would seem that ignoring this function of the markets leaves any analysis of the social and property relations under capitalism incomplete. The paradox of freedom is that to be truly free we must willingly relinquish our freedom. This is because individually we are weak and together we are stronger. The relations that govern our coming together require trade-offs. In the power vacuum left by the fall of the Roman Empire, people chose to relinquish their freedom for the protection of Lords in the middle-ages which gave us feudalism. Capitalism provided a similar tradeoff as society became increasingly peaceful and attention turned towards growth. Some people were natural artists, some mathematicians, others farmers. To allow the non-farmers to flourish they had to sacrifice their right to subsistence to the market. This market dependence was not and is not perfect, just as all human-made systems are, but it brought much more benefits than costs initially which explains is rapid growth and spread. ## Part 2: The Origin of Capitalism In this section Woods sets out to identify the origin of capitalism. In doing so, she initially observes that throughout history there have been a great deal of towns and trade between those towns that did not give rise to what she calls capitalism. She posits that the distinguishing feature of capitalism from these other forms of commercial society are unique social property relations that create market imperatives and capitalist "laws of motion." After identifying the insidiousness of begging the question in the first part of her work, she begins to fall prey to it herself here by claiming the existence of the market imperative of profit maximization in her exploration of the origin of capitalism. In doing so she takes a narrow interpretation of important concepts such as value and risk that make up the logic of trade. Much of the content in this section is undermined by this opening logical error. Her analysis betrays an elementary understanding of trade and the roles that speculation and speculators play in capital formation. She then makes the claim that capitalism, and its unique social property relations, was born when large parts of the population were separated from the production of life's basic necessities. This is a valid and important observation in history but to claim the market seized production skims over the complex truth of the matter. In her review of pre-capitalist societies she leans heavily on the dependence of 'extra-economic' modes of appropriation of wealth and power by these societies. In this line of reasoning she advances a capitalist argument against regulation by explaining how the pre-capitalist societies that failed to transition to capitalism did so because of these 'extra-economic' modes of appropriation. It was only the English who were free to respond to the European crisis with increased productivity. In Chapter 5 she lays out the central thesis of the work: that capitalism was not born in the city but in the countryside and was a result of "a rupture in age-old patterns of human interaction with nature." (p.95) She claims that what sets capitalism apart from all other forms of commercial society is the particular property relations between producers and appropriators; and only in capitalism is the primary means of appropriation economic. >This market dependence gives the market an unprecedented role in capitalist societies, as not only a simple mechanism of exchange or distribution but the principal determinant and regulator of social reproduction. Not only are the means of appropriation solely economic but the appropriator is the market itself. Because direct producers are "dispossessed", meaning that the average person can no longer live off the land, they only have recourse to the market for their means of survival. However insightful this may be it is unfortunate that Woods does not spend more time defining the market. A market for goods is quite well understood but the more ambiguous labor market deserves more attention than it is given in this work. While citing market dependence as a significant feature of capitalism Woods fails to go any further in describing what that means other than to cite certain "requirements", "compulsions", and "imperatives" that have been observed historically. Unfortunately, in this sort of exploration history can only provide a biased sample and we are forced to appeal elsewhere to really understand the complex nature of markets. Markets are a construct of society after all and composed of infinitely complex human actors, therefore any generalization about markets is sure to fall short. Woods hones in on the historical example of Sixteenth century England as the birthplace of capitalism without once noting the unique geographical constraints of England that gave room for capitalism to be born there as she posits. Strangely the example of England demonstrates how the lack of 'extra-economic' powers of landlords allowed for the unique imperative of continuous improvement of efficiency to take hold and propel capitalism. In essence, when regulatory power was diminished capitalism took root. Earlier Woods effectively argued against the inevitability and natural arguments of capitalism but here she gives them a second breadth. She has merely replaced Adam Smith's invisible hand with market dependence operating within unique social property relations. Once again Woods misses any discussion of risk in here historical comparisons to justify here argument. She demonstrates via a comparison between France and England that market opportunities did not lead to increased efficiency or production but it was market imperatives. Once again we are not entirely clear as to what market imperatives are and this is where a discussion about risk would shed a fair amount of light onto the subject. It has been shown empirically that people are risk adverse and will avoid opportunities that they judge as risky. At the same time people are also risk seeking when the uncertainty is high or they have little to lose. Given a fixed reward scheme rats will quickly learn the scheme and push the lever to gain a reward as little as possible, however once uncertainty is introduced into the scheme the rats will persist well beyond the time when any reward was possible. Any definition of capitalism which is based on an assumption of market dependence must venture into these areas of cognitive psychology to be able to have a fighting chance at a true understanding of market imperatives. Woods identifies this herself in the comparison between France and England to say that France merely formed a different solution to the crisis of feudalism. ## Part 3: Agrarian Capitalism and Beyond In part three Woods presents the thesis of her work. She starts out by suggesting that capitalism was not born in the city but instead in the countryside and caused a complete transformation in the most basic of human relations and practices, "a rupture in age-old patterns of human interaction with nature". (p.95) This transformation came about when peasant producers lost their direct access to the means of their own reproduction and to the land itself. The model presented is one of the property relations between "producers" and "appropriators." In prior periods extra-economic means (such as military power) are used to appropriate surplus labor from producers whereas the unique characteristic of capitalism is the "dominant mode of appropriation based on the complete dispossession of direct producers, who (unlike chattel slaves) are legally free and whose surplus labour is appropriated by purely 'economc' means." (p.96) This unique relationship is governed by the market and while markets have existed throughout history their importance in capitalism is elevated where both capital and labour are dependent on the market. >This market dependence gives the market an unprecedented role in capitalist societies, as not only a simple mechanism of exchange or distribution but the principal determinant and regulator of social reproduction. (p.97) So far so good, however Woods extends the model to infer specific systemic requirements and compulsions that no other mode of production has demonstrated: 1. The imperative of competition 2. Accumulation 3. Profit Maximization She then concludes that because of these capitalism can and must constantly expand, imposing its imperatives on new territories and people, effectively taking over the world like a virus. After taking that leap, Woods retraces her steps a bit and asks how did it happen that producers and appropriators, and the relations between them became so market dependent. To answer this query she launches into a historical review. Her first example is England, an island nation, that has unique characteristics unlike any other country which made land scarce and had already elevated economic powers of surplus extraction. She points out that despite the weak extra-economic powers (aka regulatory power) of landlords they encouraged and compelled their tenants to increase labour-productivity. These tenants were then forced to compete not only in the marketplace for their goods but also in a market for access to the land on which they could produce their goods. In doing so, Woods begins to show how the market came to be so central in the economy. In aristocracies the relations between producers and appropriators was a matter of law, but once those barriers were torn down the market came to regulate those relations. If we take a step back and think about what Woods is tracing out here we find that Adam Smith's invisible hand came to replace the legally defined property relations of earlier times. These relations had to be governed by something and in the absence of a legal authority the market stepped in. Woods next reviews France where the peasants enjoyed stronger property rights and were better able to resist the pressure from landlords therefore were not as productive as their English counterparts. Woods points to this distinction as evidence that it is not market opportunities that compel advances in productivity but the market imperative of competition that does so. We can agree that the opportunity alone is not enough to compel anyone into action for any sort of outcome, however it seems like a stretch to infer that the market is a sort of slave master to the peasant producers. Indeed, the words Woods uses throughout this work and her framing of the subject betray a question-begging approach to the subject, a practice she herself devotes a large amount of time to criticizing in the opening to the book. Woods continues on to argue that the propertyless masses that resulted in England's unique system created a market of no historical precedence and power that it spread like wildfire overcoming the overly complex French system of social property relations which was not as productive as England's system. This led to the rise of "Capitalist Property and the Ethic of Improvement." p108