Why Intentional Communities Fail

While it may seem as though communal or collective ownership of the means of production is the ideal scenario, it appears that it only works under a certain set of conditions and circumstances.

What brought this realization was reading numerous accounts of how attempts to found voluntary subcultures, from intentional communities, to hippie “back-to-land” moments, failed. The particulars of these failures are all unique, but the basic outlines tend to follow the same general pattern.

The problem is that such communities are fundamentally artificial constructs. They are nothing like the original primordial societies that they attempted to replicate, which, as we saw before, were based around two essential factors: kinship structures and religious worship. The problem is these voluntary subcultures lack the essential ingredients that held these traditional societies together organically.

It’s why we don’t really have very many examples to point to of alternatives to the mainstream society succeeding in the long-term. I’m sure if we looked hard enough, we might find some, but they are so exceptional as to be almost not worth mentioning. Most attempts to secede from the broader society fail. Some fail quickly, and some fail slowly, but they all fail in the end.

Another observation is that nearly all of the long-term successful attempts have been based around some sort of religious affiliation; be it religious movement or cult. This ensures the requisite social cohesion.

Now, this is a bitter pill to swallow. I’m as critical of organized religion as the next person (unless the next person happens to be Sam Harris). I don’t want to have to admit that religion—with all its superstition, irrationality, hierarchic, hypocrisy, sanctimony, magical thinking, moralizing and repression—is a necessary prerequisite for living without the State. It seems like just trading one sort of oppression for another.

But, I must grudgingly admit that it does seem to be the magic ingredient that has kept voluntary subcultures alive and functional long term. The primary example is, of course, the Amish. While the Amish do not claim descent from a single common ancestor, they are united by the religion that they follow, and their basic social structure is based around their beliefs. The basic unit is the conjugal, monogamous household. They speak a common language (a German dialect), and certainly share much of their DNA due to inbreeding. Another example might be Hasidic communities. One example from the past is the Amana Colonies of Iowa. They were an alternative commune founded by German Pietists:

Amana Colonies (Wikipedia).

Concerning the Amish, here’s Patrick Deneen from that same interview as before illustrating how they represent an alternative model of society to the Liberalism he’s criticizing:

[27: 40] From the macro view, the debate really tends to be over which system of depersonalized relationship [State or Market] are we going to prefer and put into the primary position. The major desiderata of the Liberal order is to transform every form of what might have been a form of personal obligation entailing certain duties and responsibilities that you would owe to a specific person, and to transform those into depersonalized relationships. Because when you have a personal obligation to someone, you don’t feel free. You feel like you’re obligated to do something for someone. When it’s depersonalized, I’m not obligated to that particular person.

I’ll give you a really quick example of what I mean by this. I often use the Amish as an example of an opposite system. In certain Amish communities, it’s not permitted to take on insurance. To procure insurance as seen as a sort of aggression against the community. And the reason is that you withdraw yourself from the shared responsibility. When some catastrophe or some bad event happens to a person in your community, you are personally obligated as a member if that community to help those people. So if someone’s house burns down, you are personally obligated to help rebuild that house. Or, if a parent dies, the community is obligated to raise that family and to help financially with that family.

What we do in modern Liberal society is to create an insurance market that we can all contribute to, and if something happens we can make a claim on, but that claim is not on any *particular* individual, it’s rather a depersonalized mechanism that liberates us from any particular obligation to any other person.

You could say, this is the ground condition of our liberty–it’s to minimize those personal obligations. And so notice how these debates take place in our society. When we were debating the health care policy in recent years, the debate is about whether it should be provided through more private means or more public means. Should it be more of a state-based system or a market-based system? But notice that’s a debate about means, and not really ends.


[32:30] “[Liberalism] ultimately acts as a kind of solvent against almost every form of relationship that we can think of. You can talk about it in terms of community, you can talk about it in terms of family, you can talk about it in terms of religion, you can talk about it in terms of association, even today you can talk about it increasingly in terms of nation.”

“One of the interesting debates we’re having today that really comes out of this is, is there any coherent idea of what a nation is? Is there any reason why there should be borders or boundaries where they’re drawn? Or is that just ultimately arbitrary? And if a nation is really just an instantiation of the liberal philosophy, then in the end there’s probably no reason to think that borders and boundaries actually have any coherent reason to exist, because it’s really an idea that can’t be bounded. And so one of the debates that’s roiling us today is: is there something more to a nation other than simply the Liberal idea that seems to define it?”

1811 – Why Liberalism Failed w/ Patrick J Deneen (YouTube)

“It is not permitted to take on insurance…” Now we see the power of, for example, things like guilds, which provided those essential services to their initiates. And the guild system might be extrapolated to other sodalities, from the village community in India, to the tribes of the Native Americans to the oikoi households of the ancient Near East and Greece. All these were the basic functional units of society before the advent of the Liberal state and the globalized Market system.

In the failing Western Roman Empire, for example, monastic brotherhoods flourished across Western Europe. These fraternal orders acted as both colonizers and proselytizers for Christianity thriving among hostile tribal peoples while gradually converting them to the new religion—one based not upon ancestors or consanguinity, but belief. These “intentional communities” were often the hotbeds of productive activity in the post-Roman world. They kept reading and literacy alive during the Dark Ages and feudal times. Many medieval innovations in craftsmanship, fabrication, alternative energy (watermills), and even banking (e.g. Knights Templar) were originally developed in monastic brotherhoods before being extrapolated to the wider society. Clocks were invented by monks to keep track of their prayer schedule. Monasteries are still known for the quality of their beer to this day. But key to their survival was always religion.

This is why intentional communities and back-to-the-land movements almost always fail. They are attempting to recreate an older, primordial, more organic societal order without the requisite social glue that held them together. Counterculture movements are usually full of people obsessed with individualism—“just be yourself, man!” was at the heart of the hippie ethos. And before the original Jesus Freaks, hippies were often reacting aggressively against the organized religions they were brought up in, which were perceived as “oppressive” and “intolerant” (as indeed they were). Instead, the counterculture sought “liberation,” often through hedonism–sex and drugs and the like. But the overwhelming evidence is that such selfish attitudes made implementing functional, viable alternative communities effectively impossible. One can read about the failure of any number of these hippie communes or alternative communities in order to come to this sad conclusion.

The irony is, these countercultural attitudes were only made possible by living in the modern Liberal state that they were rejecting! A profound irony indeed…

Instead, the alternative communities that ultimately succeeded long-tern were suffused with religion and antagonistic to strident individualism. I don’t like that fact, but that’s what history shows. That is, they were all functionally illiberal.

All this got me thinking about a book Dmitry Orlov published several years ago called Communities that Abide. Orlov went off to the ethnographic and sociological literature to find out just was the “secret sauce” of the communities that–like the Big Lebowski’s Dude–abided. What struck me is that the one thing they had in common was that they were subcultures existing within modern nation states and at the same time co-existing with them. What held these subcultures together in the absence of either the State or the Market, and despite the often open hostility of the nation-states under which they lived towards them?

Well, as with the example of the Amish given by Patrick Deneen above, what they had in common was that they were all conceived in imitation of the family; they spoke a common dialect and shared similar values and behavioral ethics, and were often (although not always) intensely religious. Here are the major communities Orlov analyzed in his book (I’ve listed their group names along with the nominal nation-state reside in):

The Hutterites (Amish) — United States and Canada
The Roma (Gypsies) — Eastern and Western Europe
The Russian Mafia — Russia and the former Soviet Union
The Pashtuns — Afghansitan and Pakistan.
The Israeli Kibbutzim — Israel
The Mormons — Primarily the western United States
The Dukhobors — Western Canada

What do all these communities have in common? Their basic social structures are essentially identical that of all people on earth pre-state! They essentially share the characteristics as the kinds of societies described by people Maine and Morgan such as the Indian Village or the Iroquois. This effectively describes their legal systems; their social structure; their economic system. They are all illiberal according to Patrick Deneen’s description above. They are suffused with social obligations. As anthropologists have determined, this was the composition of basically the entire human race before the coming of the modern Liberal nation-state. Henry Maine writes in Lectures on the Early History of Institutions [1874]:

Cæsar’s failure to note the natural divisions of the Celtic tribesmen, the families and septs or subtribes, is to me particularly instructive. The theory of human equality is of Roman origin; the comminution of human society, and the unchecked competition among its members, which have gone so far in the Western Europe of our days, had their most efficient causes in the mechanism of the Roman State. Hence Cæsar’s omissions seem to be those most natural in a Roman general who was also a great administrator and trained lawyer; and they are undoubtedly those to which an English ruler of India is most liable at this moment. It is often said that it takes two or three years before a Governor-General learns that the vast Indian population is an aggregate of natural groups and not the mixed multitude he left at home; and some rulers of India have been accused of never having mastered the lesson at all.

Of course, when we talk about collapse, we are really taking about nation-states, which are basically legal constructs and shared fictions. People themselves don’t just disappear. I don’t know of any tribal communities that have “collapsed.” And when states do collapse, what’s left are these more primordial forms of human social affiliation and solidarity to fall back on. So while empires are fragile and ephemeral things that come and go; expand and contract, the underlying fabric of society remains (or I should say, remained) more-or-less intact before industrialism (i.e. they abided). In fact, this might be a good way of understanding ancient history. Ancient empires were merely a “layer” of power above a substrate or “traditional” society, which was organized around the family, household, lineage, and clan, and headed by patriarchs, similar to many of Orlov’s subcultures like the Roma (Gypsy)  people. According to Orlov, despite their surface differences, the underlying societies more-or-less shared the same characteristics:

  • Autonomous, refusing to coalesce into larger groups. (an anthropologist would say segmentary–ch)
  • Separatist, shunning the outsiders (and those of their own number who misbehave), and interacting with the outside world as a group rather than as individuals.
  • Anarchic in their patterns of self-governance—neither patriarchal nor matriarchal—with certain individuals granted positions of responsibility, but not positions of authority.
  • Having an oral rather than a written code of conduct. (Maine writes of the early Celts: “[Caesar] says that the Druids presided over schools of learning, to which the Celtic youth flocked eagerly for instruction, remaining in them sometimes (so he was informed) for twenty years at a time. He states that the pupils in these schools learned an enormous quantity of verses, which were never committed to writing; and he gives his opinion that the object was not merely to prevent sacred knowledge from being popularised, but to strengthen the memory. Besides describing to us the religious doctrine of the Druids, he informs us that they were extremely fond of disputing about the nature of the material world, the movements of the stars, and the dimensions of the earth and of the universe. At their head there was by his account a chief Druid, whose place at his death was filled by election, and the succession occasionally gave rise to violent contests of arms”.-ch)
  • Communist in their patterns of production and consumption, with little use for money or markets.
  • Based on a strong central ideology (or faith) which they refuse to analyze, question or debate.
  • Having lots of children, bringing them up as their replacements, and retiring as young as possible.
  • Refusing to “work jobs,” and doing little work beyond what they consider necessary.
  • Consciously rejecting much of the culture and quite a lot of the technology of surrounding society. (less relevant to ancient cultures-ch)
  • Speaking their own languages or dialects, which they jealously preserve and safeguard against outside influences.
  • Adhering to a certain protocol for interacting with outsiders, perhaps hiding in plain sight, perhaps through a certain “in your face” disguise that hides who they are behind a more conventional image.
  • Pacifist rather than warlike, refusing to carry weapons or take part in military actions of any sort, and fleeing from danger rather than confronting it.
  • Nomadic rather than settled, with minimal attachment to any one piece of land beyond its immediate usefulness to them, and willing to relocate as a group in times of danger, hardship or persecution.
  • Quite happy and generally content with their lot in life, being resigned to accepting whatever life gives, and relatively unafraid of death, neither fighting it nor seeking it.

Communities that Abide – Part 2 (Club Orlov)

Again, this is describing pretty much every society on earth prior to 1500! I think when we look at history, we tend to read about the exploits of conquerors, emperors, kings, generals, and rulers. We read the annals of empire building—famous battles, capital cities, court intrigue, trading patterns and the like. That’s what was written down, after all. But underneath it all, this was the fabric of daily life, from the advent of sedentism and agriculture until the time of the Industrial Revolution.

Meanwhile, in the rest of the world, older social transitions prevailed outside of the cosmopolitan port cities connected by their expanding webs of trade. Even in modern economies like the United States and China—the two biggest economies on earth—we see this rural/urban divide between traditional family structures in the countryside and the anonymous business activities in urban centers mediated by laws and contracts. Really, Liberalism at it’s heart has been a great experiment in undoing these connections to family, language and place. In it’s place, State and Market marched together hand-in-hand as conquerors rather than adversaries.

So the nation-state is little else than the ruling class and its scaffold of institutions and interlocking power webs which comes and goes (i.e. collapses), but the older, underlying social fabric remains more-or-less intact, or at least has done in the past. A big problem, as I see it, is that in Western Liberalized democracies (especially the United States), there is no underlying society. We are all atomized strangers now, and self-serving media and corporate interests have every incentive to fan the flames of division and discord to the greatest extent possible (as do the Russians), unlike an earlier generation of politicians who were obsessed with the idea of encouraging unity. If and when (more likely when) the central government in WIERD States like the U.S. falls apart, there is no underlying “village community,” “kinship structure,” “folk tradition,” or common religion (or whatever else that unites us) to fall back upon. And sorry, Libertarians, but in those circumstances, feudalism run by warlords is the most likely outcome based on historical precedent, not the flourishing of “free markets” or voluntary transactions of small independent producers mediated by lumps of intrinsically valuable gold nuggets.

Henry Sumner Maine wrote about the prototypical village communities he encountered throughout India in Ancient Law:

[T]here is a strong à priori improbability of our obtaining any clue to the early history of property, if we confine our notice to the proprietary rights of individuals. It is more than likely that joint-ownership, and not separate ownership, is the really archaic institution, and that the forms of property which will afford us instruction will be those which are associated with the rights of families and of groups of kindred. The Roman jurisprudence will not here assist in enlightening us, for it is exactly the Roman jurisprudence which…has bequeathed to the moderns the impression that individual ownership is the normal state of proprietary right, and that ownership in common by groups of men is only the exception to a general rule…

It happens that, among the [Hindus], we do find a form of ownership…respecting the original condition of property. The Village Community of India is at once an organised patriarchal society and an assemblage of co-proprietors. The personal relations to each other of the men who compose it are indistinguishably confounded with their proprietary rights, and…attempts of English functionaries to separate the two may be…some of the most formidable miscarriages of Anglo-Indian administration.

The Village Community is known to be of immense antiquity…Conquests and revolutions seem to have swept over it without disturbing or displacing it, and the most beneficent systems of government in India have always been those which have recognised it as the basis of administration.

[I]n India …As soon as a son is born, he acquires a vested interest in his father’s substance, and on attaining years of discretion he is…permitted…to call for a partition of the family estate. As a fact, however, a division rarely takes place even at the death of the father, and the property constantly remains undivided for several generations, though every member of every generation has a legal right to an undivided share in it. The domain thus held in common is…managed by the eldest agnate, by the eldest representative of the eldest line of the stock.

Such an assemblage of joint proprietors, a body of kindred holding a domain in common, is the simplest form of an Indian Village Community, but the Community is more than a brotherhood of relatives and more than an association of partners. It is an organised society, and besides providing for the management of the common fund, it seldom fails to provide…for internal government, for police, for the administration of justice, and for the apportionment of taxes and public duties.

…Although, in the North of India…the Community was founded by a single assemblage of blood-relations… men of alien extraction have always, from time to time, been engrafted on it, and a mere purchaser of a share may generally, under certain conditions, be admitted to the brotherhood. In the South of the Peninsula there are often Communities which appear to have sprung not from one but from two or more families; and there are some whose composition is known to be entirely artificial; indeed, the occasional aggregation of men of different castes in the same society is fatal to the hypothesis of a common descent. Yet in all these brotherhoods either the tradition is preserved, or the assumption made, of an original common parentage. Mountstuart Elphinstone…observes of them:

“The popular notion is that the Village landholders are all descended from one or more individuals who settled the village; and that the only exceptions are formed by persons who have derived their rights by purchase or otherwise from members of the original stock. The supposition is confirmed by the fact that, to this day, there are only single families of landholders in small villages and not many in large ones; but each has branched out into so many members that it is not uncommon for the whole agricultural labour to be done by the landholders, without the aid either of tenants or of labourers. The rights of the landholders are theirs collectively and, though they almost always have a more or less perfect partition of them, they never have an entire separation. A landholder, for instance, can sell or mortgage his rights; but he must first have the consent of the Village, and the purchaser steps exactly into his place and takes up all his obligations. If a family becomes extinct, its share returns to the common stock.”

The tokens of an extreme antiquity are discoverable in almost every single feature of the Indian Village Communities. We have so many independent reasons for suspecting that the infancy of law is distinguished by the prevalence of co-ownership by the intermixture of personal with proprietary rights, and by the confusion of public with private duties, that we should be justified in deducing many important conclusions from our observation of these proprietary brotherhoods, even if no similarly compounded societies could be detected in any other part of the world. It happens, however…that [there are] a similar set of phenomena in those parts of Europe which have been most slightly affected by the feudal transformation of property, and which in many important particulars have as close an affinity with the Eastern as with the Western world…

http://www.gutenberg.org/files/22910/22910-h/22910-h.htm (153)

Echoing H.S. Maine’s description of the Indian village community above, Dmitry Orlov writes:

There are two organizing principles that self-sufficient communities can rely on in order to succeed: communist organization of production and communist organization of consumption. Both of these produce much better results for the same amount of effort, and neither is generally available to the larger society, which has to rely on the far more wasteful market-based or central planning-based mechanisms, both of which incur vast amounts of unproductive overhead—bankers, traders and regulators in the case of market-based approaches, and government bureaucrats and administrators in the case of centrally planned approaches. History has shown that market-based approaches are marginally more efficient than centrally planned ones, but neither one comes anywhere near the effectiveness of communist approaches practiced on the small scale of a commune.

It stands to reason that communist production methods would outperform capitalist ones. On the one hand, you have a group of people driven to work together out of a sense of solidarity and mutual obligation, cooperating of their own free will, free to switch tasks to keep life from becoming monotonous, free to do what they believe would work best, using work as a way to earn respect and improve their social standing, knowing full well that their fellows will take care of them and their families should they ever become unable to work.

On the other hand, you have commoditized human beings pigeon-holed by a standardized skill set and a job description, playing the odds in an arbitrary and precarious job market, blindly following orders for fear of ending up unemployed, relying on work to keep them and their immediate family from homelessness and starvation, and discarded once “burned out” on the set of tasks for which they are considered “qualified.” The result of all this is that 70% of the workers in the US say that they hate their job, putting a gigantic drag on the capitalist economy…

Those who chafe at the use of the word “communist” should feel reassured that no military or political “communist menace” is ever likely to reassert itself: state communism is as dead as a burned piece of wood. The one remaining, ongoing attempt at unreformed state communism is North Korea, and it is the exception that proves the rule. On the other hand, regardless of your opinions, you too are a communist.

First, you are human, and over 99% of their existence as a species humans have lived in small tribes organized on communist principles, with no individual land ownership, no wage labor, no government, and no private property beyond a few personal effects. If it weren’t for communism, you wouldn’t be here.

Second, if you have a family, it is likely to be run on communist principles: it is unlikely that you invoice your children for the candy they eat, or negotiate with your spouse over who gets to feed them. The communist organizing principle “From each according to abilities, to each according to needs” is what seems to prevail in most families, and the case where it doesn’t we tend to regard as degenerate. From this it seems safe to assume that if you are human and draw oxygen, then you must be, in some sense, a communist.

Communities That Abide – Part 3 (Club Orlov)

Echoing Orlov, Nassim Taleb writes: “Today’s Roma people (aka Gypsies) have tons of strict rules of behavior toward Gypsies, and others toward the unclean non-Gypsies called payos. And, as the anthropologist David Graeber has observed, even the investment bank Goldman Sachs, known for its aggressive cupidity, acts like a communist community from within, thanks to the partnership system of governance. Much of the difference, he explains, comes down to a question of scale:

Things don’t “scale” and generalize, which is why I have trouble with intellectuals talking about abstract notions. A country is not a large city, a city is not a large family, and, sorry, the world is not a large village. There are scale transformations…

So we exercise our ethical rules, but there is a limit from scaling beyond which the rules cease to apply. It is unfortunate, but the general kills the particular. The question we will reexamine later, after deeper discussion of complexity theory, is whether it is possible to be both ethical and universalist. In theory, yes, but, sadly, not in practice. For whenever the “we” becomes too large a club, things degrade, and each one starts fighting for his own interest. The abstract is way too abstract for us.

This is the main reason I advocate political systems that start with the municipality, and work their way up (ironically, as in Switzerland, those “Swiss, rather than the reverse, which has failed with larger states. Being somewhat tribal is not a bad thing–and we have to work in a fractal way in the organized harmonious relations between tribes, rather than merge all tribes in one large soup. In that sense, an Americans federalism is the ideal system.

This scale transformation from the particular to the general is behind my skepticism about unfettered globalization and large centralized multiechnic states. The physicist and complexity researcher Yaneer Bar-Yam showed quite convincingly that “better fences make better neighbors”–something both “policymakers” and local governments fail to get about the Near East. Scaling matters, I will keep repeating until I get hoarse…

Nassim Micholas Taleb; Skin in the Game, pp. 58-59

Next time, we’ll take a closer look at some important insights into this idea provided by Taleb’s in his new book.

Then and Now

Apologies for the Dan Carlinesque posting schedule as of late, but I’ve been going through a lot of stuff this year which has affected my ability to write. I may or may not write about it; I haven’t decided yet.

My posts on the history of guilds was just supposed to be a brief overview of the work of Prateek Raj, and how it once again explains how the intersection of geography and technology shapes history. I kind of fell down a rabbit hole in researching that subject; but I did manage to stumble across a lot of interesting old books online. This was part of my ongoing fumbling attempts to write history from a perspective that is more than the “Great Man” theory, or just a sequence of unrelated events—“one damn thing after another.”

My larger point comes from reading a lot of the very early anthropological literature of the late nineteenth century. In particular I’m intrigued by the writings of Sir Henry Maine on the history of ancient laws and the development of ancient institutions, and of course Lewis Henry Morgan, the “father” of anthropology. The more I read from this time period (as well as from the 1970’s) the more I’m convinced that they had everything already pretty much already figured out, and a lot of modern scholarship is just restating or rediscovering what they already knew but has been forgotten or deliberately obscured in the interest of keeping people from questioning the status quo.

I think we Westerners tend to think of the ancient world as a bastion of free markets, unfettered individualism, and limited government. This historical amnesia is crucial to the libertarian argument. They tend to cast “free markets” as spontaneous and natural, while collectivist institutions such as armies and governments are Johnny-come-lately impositions on otherwise happy-go-lucky individuals freely transacting without the horrible burden of the state which does nothing but allow an unproductive bureaucratic elite to skim off wealth so that they can make capricious laws and sit round and do nothing all day. Anything else is derided as “statist.”

The reality, of course, is much different. “Individualism” is, in fact, a fairly recent phenomenon. For most of human history, your identity derived from your group membership. It had to be this way: we are the social animals to the core. No man is an island, despite what Libertarians claim. The basic functional unit of society was some form of social group, and it was largely self-governing and self-regulating. All centralized governments did was basically facilitate interactions, provide a modicum of personal safety, and keep the peace between these various groups, whether they be households, extended families, clans, tribes, craft guilds, sodalities, confraternities, military regiments, crime syndicates, monastic brotherhoods, trading companies, secret societies, cliques, or whatever. From the introduction to Maine’s book Ancient Law by Professor J. H. Morgan (no relation to L.H. Morgan):

The political philosophers…had sought the origin of political society in a “state of nature”—humane, according to Locke and Rousseau, barbarous, according to Hobbes—in which men freely subscribed to an “original contract” whereby each submitted to the will of all. Maine deduced the basic social fabric of ancient societies from studying their legal codes. In addition, he gained first-hand knowledge of how family-based village communities work by serving as a jurist in India…

It was not difficult to show…that contract—i.e. the recognition of a mutual agreement as binding upon the parties who make it–is a conception which comes very late to the human mind…he shows that early society, so far as we have any recognisable legal traces of it, begins with the group, not with the individual. This group was, according to Maine’s theory, the Family—that is to say the Family as resting upon the patriarchal power of the father to whom all its members, wife, sons, daughters, and slaves, were absolutely subject…Moreover, all the members of the family, except its head, are in a condition best described as status: they have no power to acquire property, or to bequeath it, or to enter into contracts in relation to it…

The traces of this state of society are clearly visible in the pages of that classical textbook of Roman Law, the Institutes of Justinian, compiled in the sixth century A.D., though equally visible is the disintegration wrought in it by the reforming activity of the praetor’s edicts. That reformation followed the course of a gradual emancipation of the members of the family, except those under age, from the despotic authority of the father. This gradual substitution of the Individual for the Family was effected in a variety of ways, but in none more conspicuously than by the development of the idea of contract, i.e. of the capacity of the individual to enter into independent agreements with strangers to his family-group by which he was legally bound—an historical process which Maine sums up in his famous aphorism that the movement of progressive societies has hitherto been a movement from Status to Contract.

In the chapter on Property Maine again shows that the theory of its origin in occupancy is too individualistic and that not separate ownership but joint ownership is the really archaic institution. The father was in some sense (we must avoid importing modern terms) the trustee of the joint property of the family. Here Maine makes an excursion into the fields of the Early Village Community, and has, too, to look elsewhere than to Rome, where the village community had already been transformed by coalescence into the city state. He therefore seeks his examples from India and points to the Indian village as an example of the expansion of the family into a larger group of co-proprietors, larger but still bearing traces of its origin to the patriarchal power. And, to quote his own words, “the most important passage in the history of Private Property is its gradual separation from the co-ownership of kinsmen.” Ownership is itself a late abstraction developed out of use. We may say with some certainty that family “ownership” preceded individual ownership, but in what sense there was communal ownership by a whole village it is not so easy to say.

Maine was on surer ground when, as in his studies of Irish and Hindu law, he confined himself to the more immediate circle of the family group. In his Early Institutions he subjects the Brehon Laws of early Ireland to a suggestive examination as presenting an example of Celtic law largely unaffected by Roman influences. He there shows, as he has shown in Ancient Law, that in early times the only social brotherhood recognised was that of kinship, and that almost every form of social organisation, tribe, guild, and religious fraternity, was conceived of under a similitude of it. Feudalism converted the village community, based on a real or assumed consanguinity of its members, into the fief in which the relations of tenant and lord were those of contract, while those of the unfree tenant rested on status.

Ancient Law, by Sir Henry James Sumner Maine (Project Gutenberg Ebook)

American lawyer Lewis Henry Morgan had a much more immediate method—he was inducted into the Hawk Clan of the Seneca tribe, a member of what we call the Iroquois Confederation (i.e. the Haudenosaunee) for his help with issues related to land ownership.

It became obvious to Morgan that that primordial basic unit of the Iroquois—indeed, of all human societies—was the clan, which consisted of descent from an apical ancestor, whether real or imagined. Each clan was made up of various households, had its own totems and ceremonies, elected it own leaders, owned their lands in common, redistributed goods among themselves, and made collective decisions at tribal councils—what has been called “campfire democracy“.

Clans were organized an intermediate grouping called a phratry, and phratries were organized into tribes. Exchanges and redistribution were not carried out between individuals via contractual arrangements, but within and between tribes, clans and households, often surrounded by ceremonial requirements (e.g. bridewealth). Sometimes there were even distinct spheres of exchange. Everyone had their place within the extended family, with the eldest males taking the most important managerial positions–i.e. patriarchy. A number of tribes could combine into larger groups, which he called confederations. In a confederation, cooperation was based on relative equality between the various units, without one dominating the others.

While the authorities of patriarchs over the household (Patria potestas) was more-or-less absolute (in theory more than actual practice), there was no way to extend that control over the broader society. Instead, forms of democratic governance prevailed. While top-down, command-and-control arrangements (concentrated power) were necessary for a variety of social goals (notably defense), most tribal societies were very hesitant to establish any form of institutionalized power. And so they resisted it as much as possible. Often leadership roles were temporary, and based on common agreement. Tribal leadership was not hereditary and leaders were merely “first among equals” (primus inter pares).

Morgan found that the nuclear family living off by themselves in their own separate household as in Western Europe wasn’t the norm either; in fact it was highly exceptional. In addition, whom one considered to be their mother and father, and whom one considered to be their brother or sister or cousin or aunt or uncle varied considerably across cultures, even within Native American cultures. Some cultures also added distinctions based on relative age. For simplicity, Morgan identified a few typical arrangements (although not an exhaustive list) based on the ethnographic writings he had access to:

  • Hawaiian Kinship
  • Eskimo Kinship
  • Sudanese Kinship
  • Iroquois Kinship
  • Crow Kinship
  • Omaha Kinship

These arrangements established the ground rules for social interactions and interpersonal obligations, including—crucially—whom one could and could not marry. And indeed, anthropologists found that every culture had some sort of marriage ties, although the tightness and “sacredness” of that bond varied quite considerably, as did expectations concerning sexual fidelity. The conjugal, monogamous family was hardly universal or “natural.” What was universal, however, was the notion of affinal kinship—social relationships based around marriage, pair bonding and child-rearing (what we call “in-laws” in English—-a telling phrase). Each household (oikos) might be thought of as a sort of mini-corporation with joint ownership and unlimited life; with the eldest male functioning as CEO and his wife as COO. Each member of the family, whether by birth or adoption is “vested” in proportion to their age and gender, and their distance from the common ancestor. Professor A. Moret writes:

Contrary to what might have been expected…[t]he village community or, in a still less artificial manner, spatial proximity does not in fact seem to be a primary mode of grouping among men. That is intelligible when we recall that agricultural and sedentary civilizations are not the first that are known, and so it is quite natural that before their appearance the relation organization that it was subsequently to become…before geography, religion was called upon to decide the manner in which men should be grouped. The original constitutional right is mystic in nature.

The first grouping which we meet in the lower societies, the clan, is in fact a grouping, the function of which is at once — without there being any priority to seek — political and domestic, but the nature of which is mystical. Its cohesion arises from the fact that its members regard themselves as bearers of one common totem and consequently one common name, made of one common mystic substance — that of their totem. All share therein and none monopolizes it, all are sprung from one common source, to which later mythology will give individual appearances, imagining that in a fabulous past the totem has been revealed to an illustrious ancestor of the clan who became, for that reason, the eponymous ancestor.

In his memoir on the prohibition of incest, Durkheim defines the clan thus: 1 “A group of individuals who regard themselves as mutually related but who recognize this kinship exclusively by the very peculiar mark that they are all bearers of one common totem. The totem itself is a being, animate or inanimate, most commonly an animal or a plant, from which the group is held to be descended and which serves at once as emblem and collective name. If the totem be a wolf, all the members of the clan believe that they have a wolf for ancestor and consequently they have something of the wolf within them. That is why they apply to themselves this denomination: they are Wolves.”

From Tribe To Empire by A. Moret (Archive.org)

When L.H. Morgan’s work dropped in Europe, it became clear to scholars that isolated individuals forming an explicit social contract was not the true origin of governments, and that the primordial arrangement of human societies before centralized governments or the nation-state was based around kinship systems and collective ownership of land and property. Furthermore, such systems were often federal and democratic. In fact, some vestiges of this way of life persisted even in Europe. Most notable were the Swiss cantons, and the region of Dithmarschen in modern-day Germany (see: Frisian Freedom). In Switzerland’s case, the high mountains had isolated them and preserved their way of life from the prevailing feudal system; with Dithmarschen it was the bogs, swamps and marshlands which had protected them. Ireland, too, had preserved something of its ancient clan system into relatively modern times (as evidenced by Irish and Scottish surnames). But the most relevant examples were to be found in Eastern Europe:

The Zádruga of southern Slavonia offers the best still existing illustration of such a family communism. It comprises several generations of the father’s descendants, together with their wives, all living together on the same farm, tilling their fields in common, living and clothing themselves from the same stock, and possessing collectively the surplus of their earnings. The community is managed by the master of the house (domácin), who acts as its representative, may sell inferior objects, has charge of the treasury and is responsible for it as well as for a proper business administration. He is chosen by vote and is not necessarily the oldest man. The women and their work are directed by the mistress of the house (domácica), who is generally the wife of the domácin. She also has an important, and often final, voice in choosing a husband for the girls. But the highest authority is vested in the family council, the assembly of all grown companions, male and female. The domácin is responsible to this council. It takes all important resolutions, sits in judgment on the members of the household, decides the question of important purchases and sales, especially of land, etc.

Likewise among Germans, the economic unit according to Heussler (Institutions of German law) is not originally the single family, but the “collective household,” comprising several generations or single families and, besides, often enough unfree individuals. The Roman family is also traced to this type…Similar communities are furthermore said to have existed among the Celts of Ireland. In France they were preserved up to the time of the Revolution in Nivernais under the name of “parçonneries,” and in the Franche Comté they are not quite extinct yet. In the region of Louhans (Saône et Loire) we find large farmhouses with a high central hall for common use reaching up to the roof and surrounded by sleeping rooms accessible by the help of stairs with six to eight steps. Several generations of the same family live together in such a house…In India, the household community with collective agriculture is already mentioned by Nearchus at the time of Alexander the Great, and it exists to this day in the same region, in the Punjab and the whole Northwest of the country…In Algeria it is still found among the Kabyles. Even in America it is said to have existed. It is supposed to be identical with the “Calpullis” described by Zurita in ancient Mexico. In Peru… at the time of the conquest a sort of a constitution in marks, with a periodical allotment of arable soil, and consequently individual tillage, was in existence…[note: he is referring to an ayllu – ch]

The Origin of the Family, Private Property, and the State (Project Gutenberg)

Europeans began to analyze these distant cultures for clues as to how pagan tribal Europe was organized before the imposition of the Roman State. Based on the study of ancient laws, scholars realized that early Classical civilization must have also originally functioned along similar tribal principles as the Iroquois, most notably N. Fustel de Coulanges, whose book The Ancient City caused a rethinking of the basic social structures of ancient Greek and Roman civilization. In Greece, these descent groups were called genē (γένη), and in Rome, gens (the Sanskrit Gana and the English kin are cognates).

We now come to another discovery of Morgan that is at least as important as the reconstruction of the primeval form of the family from the systems of kinship. It is the proof that the sex organizations within the tribe of North American Indians, designated by animal names, are essentially identical with the genea of the Greeks and the gentes of the Romans; that the American form is the original from which the Greek and Roman forms were later derived; that the whole organization of Greek and Roman society during primeval times in gens, phratry and tribe finds its faithful parallel in that of the American Indians; that the gens is an institution common to all barbarians up to the time of civilization—at least so far as our present sources of information reach. This demonstration has cleared at a single stroke the most difficult passages of remotest ancient Greek and Roman history. At the same time it has given us unexpected information concerning the fundamental outlines of the constitution of society in primeval times—before the introduction of the state. Simple as the matter is after we have once found it out, still it was only lately discovered by Morgan…

The Origin of the Family, Private Property, and the State

Each Roman gens was bequeathed its own tillage land and ancestral burial grounds, and, according to Coulanges, was united by the worship of its own ancestral deities and the “sacred fire” of its domestic hearth. Each had its own proprietary rituals and feast days. The glue that held the gens—and the whole society—together, was that of religion, specifically ancestor worship:

Every family had its tomb, where its dead went to repose, one after another, always together. This tomb was generally near the house, not far from the door “in order,” says one of the ancients, ” that the sons, in entering and leaving their dwelling, might always meet their fathers, and might always address them an invocation.” Thus the ancestor remained in the midst of his relatives; invisible, but always present, he continues to make a part of the family, and to be its father. Immortal, happy, divine, he was still interested in all of his whom he had left upon the earth. He knew their needs, and sustained their feebleness; and he who still lived, who labored, who, according to the ancient expression, had not yet discharged the debt of existence, he had near him his guides and his supports — his forefathers. In the midst of difficulties, he invoked their ancient wisdom; in grief, he asked consolation of them; in danger, he asked their support, and after a fault, their pardon.

Certainly we cannot easily comprehend how a man could adore his father or his ancestor. To make of man a god appears to us the reverse of religion. It is almost as difficult for us to comprehend the ancient creeds of these men as it would have been for them to understand ours. But, if we reflect that the ancients had no idea of creation, we shall see that the mystery of generation was for them what the mystery of creation is for us. The generator appeared to them to be a divine being; and they adored their ancestor. This sentiment must have been very natural and very strong, for it appears as a principle of religion in the origin of almost all human societies. We find it among the Chinese as well as among the ancient Getæ and Scythians, among the tribes of Africa as well as among those of the new world.

The sacred fire, which was so intimately associated with the worship of the dead, belonged, in its essential character, properly to each family. It represented the ancestors; it was the providence of a family, and had nothing in common with the fire of a neighboring family, which was another providence. Every fire protected its own and repulsed the stranger. The whole of this religion was enclosed within the walls of each house. The worship was not public. All the ceremonies, on the contrary, were kept strictly secret. Performed in the midst of the family alone, they were concealed from every stranger…

The Ancient City, pp. 44-45 (Archive.org)

Thus, Marx could tell from the developing field of anthropology that neither “private property” nor “free markets” were natural or the primordial forms of human social organization. These were later developments, private property especially. Rather then separate individuals or families making a conscious decision to unite their property, collective ownership, whether by families, houses, clans or tribes, was the initial form of ownership over land and property—the “means of production.” This bolstered his historical narrative of “primitive communism” being steadily eroded via a process of “accumulation by dispossession” om the part of elites down through the ages.

Furthermore, he reasoned that the original “gentile constitution” (arrangements based on consanguinity and affinity) was gradually overthrown—replaced by a class structure based on occupation, wealth, land ownership, formal office, or place of residence. Thus, Marx and Engels reasoned, pairing (nuclear) families, social classes, money and private property all came into being at approximately the same time, each strengthening and reinforcing the other, culminating in Market capitalism and the class struggle of their own time. Collective inheritance was supplanted by individual agnatic inheritance (overthrowing earlier matrilineal forms of decent). Centralized governments were established a way of replacing organic solidarity with a means of enforcing contractual agreements that inevitably favored a rich landowning class over everyone else, and institutional position reinforced that hierarchy. Thus, Marx reasoned, the arbitrary divide between “government” and “the wealthy” was a fiction—they are actually two sides to the same coin. As Marx put it, “The executive of the modern state is nothing but a committee for managing the common affairs of the whole bourgeoisie.”

If one looks closely at history and anthropology, one cannot help but conclude that people like Maine, Morgan, and Lavaleye were basically correct. Marx himself took extensive notes on L.H. Morgan’s work, which were later published by Engels as The Origin of the Family, Private Property and the State.” Many of its assertions have been confirmed by subsequent scholarship, although it suffers from Morgan’s unfortunate characterizations of society as an inevitable progression through definite and predicable stages from Savagery to Barbarism to Civilization (something modern anthropology soundly rejects).

{as an aside, this is why some right-leaning academics like Jordan Peterson are so openly hostile to entire disciplines like anthropology or sociology that they claim are run by “Marxists” or “Neo-Marxists.” They don’t like their conclusions.}

In order for a modern economy based solely on “free and open” markets to work, the traditional forms of human social bonds and organic solidarity had to be broken up. Furthermore, for markets to organize all production and distribution, things like land and labor had to be turned into saleable commodities exchangeable via centralized currencies, the quantity of which would be managed by the state. Doing this was a top-down political project from the get-go, and it required powerful centralized states, the kinds of which developed in Western Europe. This is why capitalism originated in where it did. In Western Europe, commerce was widespread and decentralized, but government institutions could penetrate deeper into the underlying societies than they could in other parts of the world, thanks to the breakup of the clan system. The Catholic Church, too, played a crucial role in breaking up kinship structures, as had the high mortality rates of the Black Death and the existence of communes (free cities outside of the feudal system). By contrast, in the villages and towns that Maine, Morgan, Lavaleye, and others studied at all over the world—the Americas, India, Eastern Europe, China, Java, Africa, Micronesia and the like—the “traditional” forms of social life prevailed, like the buried skeletons of human ancestors, or flies in amber, frozen in time. Even Ireland provided examples: “It cannot be doubted…that the primitive notion of kinship, as the cement binding communities together, survived longer among the Celts of Ireland and the Scottish Highlands than in any Western society, and that it is stamped on the Brehon law even more clearly than it is upon the actual land-law of India.” wrote Maine in Lectures on the Early History of Institutions.

Furthermore, not only were ancient economies not a golden age of “limited government,” they were much more restrictive than today! The moral economy regulated the distribution of essential goods for the peasantry, while it was chiefly the distribution of high-end luxury goods for wealthy burghers and aristocrats that was set by impersonal forces of supply and demand, carried out by international wholesalers. Anything else would have led to social chaos, and ancient leaders knew it.

It is, however, utterly erroneous to regard all these provisions, which constitute some of the chief points of the craft organization solely as the independent work of the guilds themselves “which stood like loving mothers providing and assisting at the side of their sons in every circumstance of life.” This view could only have arisen through a total neglect to observe the general economy of mediaeval society, and through a failure to see that the guilds were no purely private and independent unions, but mere stones in the structure of industrial life, apart from which they cannot be comprehended.

The middle ages were a period of customary, not of competitive prices, and the idea of permitting agreements to be decided by the individual preferences of vendor or purchaser was absolutely foreign to the jurisprudence of the times. The higgling of the “market” was an impossibility simply because the laws of the market were not left to the free arbitrament of the contracting parties. Under the supposition that the interests of the whole community would be best subserved by avoiding the dangers of an unrestricted competition, the government interfered to ordain periodical enactments of customary or reasonable prices — reasonable, that is to say, for both producer and consumer.

Tabulated tariffs and official regulations of all things, from beer to labor, filled the statute books, and it would have seemed preposterous for the producer to ask as much as he could get, or on the contrary to demand less than his neighbor and thus undersell him. The three great offences of mediaeval trade were regrating, forestalling and engrossing—buying in order to sell at enhanced prices, intercepting goods and provisions on the way to market to procure them more cheaply, and keeping back wares purchased at wholesale in order to strike a more favorable bargain subsequently. But above all great solicitude was shown for the interest of consumers and every precaution was observed to preclude the possibility of deceiving purchasers. It was deemed of paramount importance to watch over every stage of the production, and the government, far from being antagonistic to the formation of the crafts, usually compelled the workmen to frame ordinances in keeping with this economic policy. The authorities went even further, and in those cases where no anterior organization had existed or where the guild administration was imperfect, imposed general regulations on the artisans which they were compelled to follow in their guilds.

Three Phases of Cooperation in the West, pp. 454-456 (Archive.org)

In the world they lived in, this arrangement made perfect sense. Letting impersonal forces of supply and demand dictate the distribution of essential goods and services would have been a recipe for disaster. Not only that, but the idea that various parts of society should be—indeed must be—in constant unremitting competition with one another, would have also stuck them as absurd. They knew it would undermine the organic solidarity that any culture depended on in order to be viable. One could argue that the unleashing of these destructive social forces did, in fact, contribute to the downfall of various societies over time, such as ancient Rome and many others. I would even argue that our current Western society—which appears to be in a near-constant state of anomie and social breakdown—is a consequence of the ignoring these principles. Instead of a moral economy, we get only the anarchy of the market—a “warre of all against all,” where any hindrances to the  Market and profits for the elites—including familial relationships and custodianship of place, must be done away with in the name of productivism. In fact, to say someone behaves “economically” is to say that one is free to behave without morals in the pursuit of self-interest alone.

For example, land—the ultimate source of wealth and primitive survival before the rise of the industrialism—was governed by a complex series of mutual social arrangements, not just pure supply and demand or fee simple contracts. This has been testified to by all the ancient sources. As stated earlier, it was customarily owned by extended families and passed down to descendants. And even families held it only by usufruct—by law, tribal lands “belonged” to the entire tribe. Tribal lands were periodically repartitioned, but arable land was not something that was bought or sold except under exceptional circumstances. The only things owned outright by individuals were various chattels. Emile de Laveleye summarizes the gradual transformation in land and property ownership in his book Primitive Property:

So long as primitive man lived by the chase, by fishing or gathering wild fruits, he never thought of appropriating the soil; and considered nothing as his own but what he had taken or contrived with his own hands. Under the pastoral system, the notion of property in the soil begins to spring up. It is however always limited to the portion of land, which the herds of each tribe are accustomed to graze on, and frequent quarrels break out with regard to the limits of these pastures. The idea that a single individual could claim a part of the soil as exclusively his own never yet occurs to any one; the conditions of the pastoral life are in direct opposition to it.

Gradually, a portion of the soil was put temporarily under cultivation, and the agricultural system was established; but the territory, which the clan or tribe occupies, remains its undivided property. The arable, the pasturage and the forest are farmed in common.

Subsequently, the cultivated land is divided into parcels which are distributed by lot among the several families, a mere temporary right of occupation being thus allowed to the individual. The soil still remains the collective property of the clan, to whom it returns from time to time, that a new partition may be effected. This is the system still in force in the Russian commune; and was, in the time of Tacitus, that of the German tribe.

By a new step of individualization, the parcels remain in the hands of groups of patriarchal families dwelling in the same house and working together for the benefit of the association, as in Italy or France in the middle ages, and in [Serbia] at the present time.

Finally individual hereditary property appears. It is, however, still tied down by the thousand fetters of seignorial rights, fideicommissa, retraits-lignagers, hereditary leases, Flurziuang or compulsory system of rotation, etc. It is not till after a last evolution, sometimes very long in taking effect, that it is definitely constituted and becomes the absolute, sovereign, personal right, which is defined by the Civil Code, and which alone is familiar to us in the present day.

In fact, ancient societies took explicit steps to restrict unrestrained competition as well as the unpredictable price swings of anarchic markets. This made perfect sense in the world that they lived in—one of localized markets with limited resources and natural constraints. To not do so would be to threaten social stability. Only with the later abundance created by the channeling extra-continental resources of Africa, Asia, and the New World on a very large scale did the ideas of “Classical Liberalism” make any sense at all. Europe needed “ghost acreage for Liberalism to be viable. We tend to forget this in hindsight. For example, in my research on guilds I found this exchange on NPR’s Planet Money with medieval historian Philip Daileader (I’ve cleaned up the transcript a bit):

ADAM DAVIDSON: So thinking about this economically, what I’m finding confusing is that there is so much money left on the table. I mean, we now know – with the benefit of hindsight – that if the shoemakers or the coffin makers or whoever else got together and said, hey, guys, forget this controlling our production. Let’s make as much as we possibly can. Let’s flood the market. We’ll make a lot less on each one, but we’ll sell a lot more units. People will not buy one pair of shoes every 10 years. They’ll buy one pair of shoes every season. Or every few months. Eventually, we can start selling it to those neighboring towns and even to other countries. And we’ll all be much richer. And according to, you know, a basic principle of modern economics, is if there’s a situation where everybody could be made much richer, someone will think of it, and someone will take advantage of it.

So on the one hand, I can see why each guild member doesn’t want any other guild member to do that. But why didn’t anybody think of this, when a few hundred years later, everybody’s thinking about this?

DAILEADER: Right. Well, two factors – one, cultural and the other, technological.

The cultural one is that the Christian milieu of the time regards moneymaking as a sordid activity. The usurers, those who lend money at interest, are considered among the worst sinners out there. And Thomas Aquinas, in the 13th century, says there’s something sordid about selling and buying goods; that it’s easier for a camel to pass through the eye of a needle than for a rich man to enter heaven. So you have these strong cultural constraints working against trying to amass as much wealth as possible.

The technological problem is transportation costs. The idea of mass-producing goods and then flooding markets with them and trying to maximize profits by having razor-thin profit margins but large number of sales, it’s not possible when overland transportation is as expensive as it was in the 12th and 13th centuries. You couldn’t move green profitably over land probably more than 40 or 50 miles. At that point, it was just too expensive.

Many times, there were famines in the twelfth and thirteenth century where there was plenty of food 50 miles away, but it cost too much to load up carts and move it over land. The only economical way to move goods was by water during the Middle Ages. And until those transportation problems were overcome, it really I think was not possible to conceive of a world where instead of trying to make a few sales and make as much profit on those few sales and abandon that for a world where you’re just going to make a large number of sales and a small amount of profit on each one.

DAVIDSON: I see, because Adam Smith wrote about how there will be specialization to the extent of the size of the market.


DAVIDSON: And the market was effectively 50 miles or even less.

DAILEADER: Yes–it was intensely local.

DAVIDSON: And when you do see goods being shipped long distances, it’s things that have huge value for the weight – spices and…

DAILEADER: Precisely, that’s right. Even cloth – which was Europe’s main export to the rest of the world in 12th and 13th century – even cloth is starting to – you’ve reached the limit of what it’s economically profitable to ship, considering the value versus the weight. And certainly, medieval merchants – they wanted to deal in items, such as pepper and spices, that weighed very little and that were quite valuable.

Medieval Economics (Planet Money)

Which is the major reason why proto-capitalism developed first in the cloth industry as we saw last time. It developed last in the market for essential commodities like foodstuffs. Britain’s Corn Laws are an example of the debate of letting food prices be set by supply and demand. But, of course, it was only when transportation was good and cheap enough and surpluses were high enough that this could even be considered.

So, put simply, the ancient guild’s desire to limit competition and regulate prices—so pilloried and ridiculed by modern economic thought—made perfect sense in the world they lived in where raw material supplies and land acreage were inherently limited. They knew that unlimited competition would inevitably lead to a fall in the quality of durable goods and a “race to the bottom” in wages and living standards. They knew that it would tear apart the social fabric. They knew that scarce resources had to be conserved, otherwise it would lead to disaster. They knew that letting supply and demand just take its course and “letting the chips fall where they may,” would result in the “demolition of society” as Karl Polanyi trenchantly put it. That’s why they made their durable goods to last—one high-quality pair of boots made by a cobbler’s guild to last ten to twenty years, rather than a shoddy new pair made by sweated foreign labor to be thrown out every year.

In fact, the whole concept of “fashion” started a way to get people to buy more than they otherwise would have! And it’s no coincidence it started with clothes for the noblemen and burghers. First it was sort of “conspicuous consumption” by the upper classes—showing you could afford the latest fabrics, so that you were rich enough throw away or simply not wear what you were wearing last year. Being imitative, status-conscious creatures, soon it was a way to differentiate oneself as part of the prosperous urban upper class. Sumptuary laws were even put in place in many countries to try and regulate this behavior. Eventually the desire for the latest fashions spread throughout the whole society when mass consumption came into being thanks to mechanization, along with planned obsolescence and advertising to shape consumer behavior. The TV played as big a role in establishing mass consumption as did the assembly line. But none of this would have made any sense in the ancient world, which is why capitalism was simply not viable. When “market society” was imposed by British imperial overlords over the traditional village societies of Ireland and India, millions died—something the “Classical Liberals” would just like us to forget (while waving the bloody shirt against Communism at every opportunity).

{as a side note, the ‘right to repair’ has become something of a movement, and wearing second-hand clothing has now become a status symbol as we have become steadily poorer.}

So it is clear that it is modern Libertarianism (along with “Classical Liberalism”) which is ahistorical, unprecedented, novel, an aberration, and totally at odds with natural human instincts of social cooperation and communal solidarity. This point is well made in this interview with Dr. Patrick Deneen, the author of Why Liberalism Failed:

PATRICK DENEEN: “In an older society–think of an aristocratic society–Who you are, your identity, and what you will be, is defined by who you’re born to.

The way I usually illustrate this to students is, think of the classic WASP kind of names like ‘Smith’ or ‘Weaver’ or ‘Tailor’ or ‘Cooper.’ All of those things were once professions. They weren’t just random last names. It meant that’s what you’re going to be doing when you grew up. That was the profession that you inherited. It wasn’t just a name, it was who you were going to be. Or more easily identified at places where I teach [such as] the University of Notre Dame, if your name is O’Shaugnessy or O’Leary or McWilliams–those names indicated *who* you were from. So that you were the child of Leary, or the son of John–Johnson or something like that.”

“And you could say Liberalism, in addition to being a political program, was the effort to liberate people from any kind of defined, inherited form of identity. We live in a world today in which we assume–in fact it’s kind of the ground condition of what we think of as our liberty–that we assume that we define who we are and that we define what we will do, where we will live, who we will be with.

But the nub of the issue is that in order to create the conditions that liberate us from not only, we could say, oppressive political structures, but even what come to be seen as unchosen forms of ascribed identity like one’s profession, one’s familial ties that can define one and so forth, that there’s a kind of need to remake society so that we become ever more and more individuated, more and more freed from those defining bonds. To the point that now we are the most disconnected and atomized people ever to exist since those things have been measured in extraordinary forms of declines of rates of marriage, reproduction, fertility, and so forth, and as well as forms of associational life–joining voluntary associations, political parties, churches. Even patriotism is kind of in decline as you move from older generation to younger generation.”

“So the ground condition of our liberty makes it more and more difficult for us to see that we have anything in common; that there is any such thing as a common good other than the securing of our individual self-making selves. But there’s a question of whether you can base a society on that aim or ambition.”

[…] “I revisit some older arguments in the book that talk all about the creation of a market society. I think we do have this–I would regard this as a kind of mythos–that’s propounded by the libertarians that suggests our kind of natural condition is to exist in a kind of perfect free-market environment, and it’s only with the creation of the state that this perfect, what’s called sometimes ‘spontaneous order,’ a spontaneous market system would just pop up if there were no government, if people could just run their own affairs.

But in fact if you look back at economic history, what you see is actually a pretty extensive investment by the state in the creation of the modern market system, and in some cases violent efforts by the state to reorder society so that you would begin to legitimize the idea that all property was essentially private, or any property that was considered to be not owned by the government was private property. Whereas in medieval England there were lots of spaces that were just considered common spaces.”

“So there’s a transformation precisely as you described that creates a market system. So this is correct, there’s a deep linkage ultimately between the modern state and the modern market. And what we tend to debate about is, how extensive should the market be relative to the state and how extensive should the state be relative to the market. But in fact both tend to grow in conjunction with the rise, and indeed the realization of this ‘individual’—this creature that’s supposed to exist by nature, but in fact only exists by artifice, only exists by extensive creation both of the state and the Market.”

1811 – Why Liberalism Failed w/ Patrick J Deneen (YouTube)

Finally (tangentially), I had never mentioned this publicly, but one of my “secret” desires was to get one of my posts listed on my favorite blog—Naked Capitalism. And in the middle of August, I saw this:I don’t know how or why this happened, but I’m very grateful to the folks over at NC for posting it, and to whomever brought it to their attention. It was the only birthday present I received this year. I only wish it had come when I was a bit more productive, LOL. They’re having a fundraiser over there right now, so contribute if you can.

And finally, GO BREWERS, GO!!!

The Fall of the Guilds

Last time we saw that ancient societies were defined by the interactions of various social groups and the networks they created. Such groups, usually based on the family/kinship structure, were created to overcome the limitations which arose from the lack of government institutions that we take for granted in our modern, market-oriented societies. In pre-modern society, business was conducted mainly “by reputation.” This presented certain problems, as Randall Collins notes in Sociological Insight:

…the fact is that successful business contracts are a relatively recent innovation. Business dealings in traditional societies were carried out either in a highly ceremonial and distinctly noneconomic fashion or else with a high level of suspicion.

On the one hand, there were traditional systems of trade between particular families, or ceremonial objects, which circulated among different tribes in a prescribed manner. Here there was plenty of trust but little real economic calculation. A certain household had to deliver a basket of yams to their in-laws on a certain festival day and received a basket of fish upon the birth of a child.

It was this sort of tradition that made up much of tribal economics and not really buying and selling; there was no encouragement at all to increase productivity or devise new products.

On the other hand, in societies like medieval Europe or China, there were real economic transactions. Long-distance traders would arrive with goods that were produced not for subsistence but in order to make a profit.

This constituted a real market; but since the partners to transactions were strangers to one another, they carried out their dealings with a high degree of suspicion on both sides. Everyone wanted to have goods in hand before they delivered the cash, and no one in their right mind would have extended any kind of credit without taking extreme precautions. It is for this reason that ancient and medieval societies around the world could not produce a modern-style capitalist society. [1]

The word company gives us an idea of this. We previously noted the power of sharing a common meal. The word company comes from the Italian com + pagnia, meaning literally “with bread.” That is, the company was the people you broke bread—i.e. shared a meal—with. Outside of that narrow circle of familial relationships, the bonds of trust were just too weak to conduct large-scale business operations in the ancient world.

Groups such as guilds were created as a means of overcoming these limitations. While Hans the individual merchant might be irresponsible, the word of the merchant guild is unassailable. While Lars the cobbler’s credit might be shaky, the credit of the Banco di Rialto is solid and credible. This allowed medieval commerce to take place at much larger scales, as Felix Martin notes when describing Bills of Exchange:

…there was, by definition, no sovereign authority to coordinate commerce between countries, and no sovereign money with which to transact. So it was here, in the international sphere, that banking’s potential to accelerate the commercial revolution was first fully realised. The central innovation was the perfection, by the mid-sixteenth century, of the system of “exchange by bills”: a procedure for financing international trade using monetary credit issued by the clique of pan-European merchant bankers, denominated in their own abstract unit of account, recorded in bills of exchange, and cleared at the quarterly fair of Lyons…

An Italian merchant wishing to import goods from a supplier in the Low Countries could purchase a credit note known as a bill of exchange from one of the great Florentine merchant houses. He might pay for this note either in the local sovereign money or on credit. By buying such a bill of exchange, the Italian merchant…transformed an IOU backed by only his own puny word for one issued by a larger, more creditworthy house, which would be accepted across Europe. He transformed his private credit into money…[2]

We previously saw that there were four different types of guilds, the two most important ones being the merchant guild and the craft guild. So what caused the downfall of the guild system? Well, from what I can tell, there were several major decisive factors which came to head in the sixteenth century:

1) The needs of long distance trade and the development of transnational markets and banks. That is, guilds could not scale. The scale of commerce in the later Middle Ages became trans-national, even global. Merchant guilds, by contrast, were confined to a single territory specified in their charter. When you have a large volume of goods flowing to-and-fro all over the European continent and beyond, there is just no way a single craft or merchant guild can assert control over such an international trade. Just like today, the free mobility of capital undermined local labor solidarity. As historian Henri Pirenne put it, “It is capital which rules in inter-local commerce, which determines the forms of credit, and which, fastening itself on all the industries which produce not for the city market but for exportation, hinders them from being controlled, as the others are, by the minute regulations which in innumerable ways cramp the activity of the craftsmen.”

A new range of financial instruments came into being making this possible, as we saw above with bills of exchange.

A number of significant innovations in business methods, developed in medieval Italy–commercial credit, double-entry bookkeeping, maritime insurance, the transfer of funds by bills of exchange and letters of credit–were by the beginning of the sixteenth century united in a powerful combination that bankers and businessmen could use to forge enterprises on a scale previously unheard of.

In certain industries the old guild organization had long since lost its original character. Even in the Middle Ages the weavers of Flanders, subject to the putting-out system, were little more than factory workers whose “factory”-their own hovels-was scattered through the town. The proprietors of such “factories” held in their hands the direction of both the production and commercial sides of the business. [3]

The major commodity traded over long distances was cloth. Of the three major necessities: food, clothing and shelter; only cloth was nonperishable and easily transportable (save for a few foodstuffs like wine and cheese). Thus, while most markets in the Middle Ages were local, cloth quickly developed into the first international market, with England playing a central part in it due to its highly-desired wool exports.

The history of English wool and cloth has a two-fold interest: it explains the origin of the wealth of England, and it illustrates, with peculiar clearness, the development of industry.

In the latter middle ages wool was the one important article of export from England, an article of which that country practically enjoyed the monopoly, so that its control formed a most powerful weapon of diplomacy, and its taxation was an easy resource for our kings.

But England was not content, thus, to furnish Europe with the raw material; its government made continuous and strenuous efforts to gain for it the manufacture also, and its measures succeeded. Cloth became “the basis of our wealth; “and at the end of the seventeenth century, woollen goods were “two-thirds of England’s exports.”

Still more interesting is the woollen industry from the point of view of the economist. Food and clothes are the two primary necessaries of human life, and play a correspondingly important part in social history. It is significant that the bakers and weavers stand side by side in the earliest notices of craft guilds in England. No one who is acquainted with mediaeval legislation needs be reminded of the care with which the public authorities supervised the sale of corn and bread.

But bread could only be made in comparatively small quantities; it could not be made for a distant or for a far-future market. This, of course, was equally true of all articles of food, before the creation of modem means of rapid transit; and since the division of labor is limited by the extent of the market, it was not in food that any considerable manufacturing development could take place.

With clothing material it was far different. A necessary, but a necessary which would “keep,” it was the very first article for the manufacture of which a special body of craftsmen came into existence. And from the first, a strong tendency towards further specialization showed itself among those employed in the industry. Wherever the conditions were favorable, especially in the supply of the raw material, the manufacture soon came to supply a more than merely local demand; and this not only encouraged that division of processes which had been early seen to be advantageous, but tended also to create a class of dealers as distinguished from the actual makers.

To these causes it was due that the woollen manufacture was the first to take the form of the guild, and the first to break through its limits; that it became the most widely spread of the “domestic” industries, and therefore that in which the factory system gained its most hardly-won and signal victory. [3]

As noted above, in cloth manufacture there were many, many steps between the procurement of the raw material (wool, cotton, linen, flax, silk, etc.) and the finished product. Thus, the concept of a single master craftsman making a bespoke item from scratch, and then selling and marketing that same product himself, was quite impossible in that industry. Which leads to the next blow to the guilds: 2.) The increasing division of labor. It was here, in the cloth industry, that the relationship between workers and employers first achieved something like it’s modern form – wages paid in cash for a specific amount of work in a specific amount of time, specified by the owner of the product.

This was best exemplified by the “putting out,” or domestic system of manufacture (Verlaggsystem). These were the first “independent contractors”—the ancestors of today’s Uber drivers. While labor was out in the fields, women were often at home tending to children inside the cottages. To earn extra money, they kept a loom in their quarters and spun cloth. In the down season of winter, often both sexes worked from the home for a cloth merchant for money wages. In the tug-of-war between the craft guilds and the merchant guilds, the merchant guilds—in the cloth trade, anyway—gained the upper hand.

Despite the outward rigidity of its economic system, the… Middle Ages proved extraordinarily dynamic and capable ….of growth. The merchant guilds, formed to represent…the purely trading classes, exhibited an aggressive vitality that led to their absorption or domination of the craft guilds that produced the merchandise they sold. Masters in many guilds grew rich and despite the guild regulations succeeded in controlling sizable manufacturing operations.

The outstanding example of this tendency toward big business in a world formally dedicated to small business is the development of the putting out system of textile production, especially in the wool-cloth manufacturing region of Flanders. Wool cloth was one of the great staples, almost the great staple, of medieval long-distance commerce…Perhaps beginning as a fill-in method of utilizing peasants’ time during winter months and other periods when field labor was slack, the putting-out system grew into an urban industry centered in Flemish towns that by the twelfth century had grown large and rich: Ghent, Bruges, Ypres, Arras, Lille, and others.

The Flemish wool manufacturer bought his fleece, usually from England, and ”put it out” to a weaver, who in his own house, with the aid of his family, spun and wove it into cloth and returned it to the manufacturer, who then either fulled and dyed it in his own establishment or sold it to be finished elsewhere. The form of putting out was a sale and a resale; the manufacturer sold the fleece to the weaver, and the weaver sold the cloth back to the manufacturer. In reality, however, the manufacturer enjoyed a highly advantageous position. He made a profit on the fleece sold to the weaver even if he never saw it again; if war interrupted the flow of commerce he was under no obligation to buy back the wearer’s finished cloth, or could buy it back at a low price. Though they worked at home, at their own pace, without being subjected to factory discipline, the weavers were as much at the mercy of the cloth merchants as if they were employees, and it is not surprising that history’s first strike was by the weavers of Douai, one of the principal Flemish towns, in 1245 [4]

With their international operations and dispersed employee base, the cloth traders became the first modern capitalists.

Yet the putting-out system represented a significant advance in the organization of production. The large quantities of cloth manufactured under it formed one of the main elements in the long-distance commerce between northwest Europe and the Mediterranean that flourished throughout the high Middle Ages. An international division of labor grew up by which undyed Flemish cloth, woven from English fleece, was sold to Italians who took it home to Florence and other cities to be finished and dyed and sold it in the Muslim ones of the Mediterranean. The Florentine wool finishers guild, the Arte di Calimala, named for Calimala Street in Florence where the craft centered, became renowned throughout the western world for the beauty and excellence of its products. The craftsmen of Calimala Street did no spinning or weaving whatsoever; the cloth came into their hands already woven, but mere wool cloth, and left Calimala Street a luxury commodity and a work of art.

Though Italy itself grew fleece, the sheep of the rocky Italian countryside did not compare with the longfleeced animals belonging to the great Cistercian monasteries in England’s Cotswold hills and Lincolnshire, which supplied the weavers of Ghent and Ypres. The Italians therefore preferred to buy the Flemish cloth, which formed the basis of the great Fair of Champagne, a year-round international market held almost continuously at one or another of four towns in the French province of Champagne, east of Paris. Thus, medieval Europe’s best export was a thoroughly international product involving English shepherds, Belgian weavers, a French trading center, and Italian merchants, dyers, finishers, and navigators.

There were many variations in putting out, and the old peasant household production. Putting out, and the old peasant household production survived in many places, but the great Flemish cloth ones developed a distinct industrial system dominated by a wealthy entrepreneurial class that in many respects foreshadowed the capitalist entrepreneurs of the Industrial Revolution. A sort of pre-industrial revolution was in fact effected by them, in which the craftsmen were subordinated to the control of men who acted solely as merchants and managers of production. [5]

The growing power of the international merchant turned workers, even guild-members, into employees dependent on large amount of capital for survival, as historian Fernand Braudel writes:

In the heyday of the guilds, they controlled the bulk of trade, labour and production. When economic life and the market developed, and the division of labour required new creations and distinctions to be made, there were of course many demarcation disputes. But the number of guilds nevertheless increased, in order to keep up with developments. There were 101 in Paris in 1260, under the strict supervision of the Provost of merchants, and the fact that there were a hundred trades indicates that there was already a high degree of specialization. New sub-divisions later appeared…The same process occurred in Ghent, Strasbourg, Frankfurt and Florence, where the woollen industry as elsewhere, became a collection of trades. In fact it would be true to say that the boom of the thirteenth century arose out of this newly-created division of labour as it proliferated.

But the economic upturn It brought was soon to threaten the very structure of the guilds, now endangered by the triumph of the merchants. From this violent opposition… there naturally emerged a civil war for control of power within the city…But the age of violent clashes was comparatively short and in the undeclared war that was to follow, the merchant eventually emerged victor. Collaboration between merchant and guild could never be conducted on a completely equal footing, since what was at stake here was the conquest of the labour market and economic domination by the merchant, not to say by capitalism.

The purpose of the guilds was to bring together the members of a single trade which they defended against all others, in quarrels that were often petty but which had an impact on everyday life. The eagle eye of the guilds was trained above all on the town’s market, of which every trade wanted its fair share. This meant security of employment and profit and ‘liberties’ in the sense of privileges. But money, the money economy and external trade – in other words the merchant – were now beginning to intervene in a process that was never simple….There were clear distinctions between different trades, between rich and poor within a given trade, and also between ‘mean streets’ often wretchedly poor, and certain others unusually privileged.Above the mass rose the profile of a whole community of money-lenders and merchants, Milanese, Venetian, Genoese and Florentine…one could hardly claim that this combination of merchants and shopkeeping tradesmen (shoemakers, grocers, mercers, drapers, upholsterers, coopers etc.) was already producing some form of micro-capitalism at its upper levels, but this seems quite probable.

The money was certainly there at any rate, showing that it could be accumulated, and that once accumulated it could play its role. The unequal struggle had begun: some guilds were to become rich; others, the majority, remained modest. In Florence, they were openly distinguished: the Arti maggiori and the Arti minori– already there was il popolo grasso and il popolo magro. Everywhere differences and disparities became more marked. The Arti maggiori progressively fell into the hands of the wealthy merchants, as the Arti system became no more than a way of controlling the labour market. The organization it concealed was the system known to historians as the Verlaggsystem or putting-out system. A new age had dawned.

In this system, there is a Verleger, a merchant who ‘puts out’ work: he provides the artisan with the raw materials and a part-wage, the remainder being paid on delivery of the finished product. The system appeared very early – much earlier than is usually reckoned and certainly by the time of the thirteenth century boom.

In the putting-out system, the master of a guild was often himself a wage, earner too. He was dependent on the merchant who provided raw materials, often imported from abroad, and who would afterwards handle the sale and export of the doth, fustians, or silks he had woven. In this way, all the sectors of craft life were touched, and the guild system was gradually being destroyed, although outward appearances were maintained. By obliging the craftsmen to accept his services, the merchant was imposing his choice of activity, whether in iron-work, textiles or ship building…[6]

The fact that wool production was so central to the English economy would actually determine the course of later economic history. With the weakening of feudal bonds after the Black Death, the international cloth trade beckoned to many as a much much more attractive proposition than being a serf. If one could flee to a town, where international trade was centered, and live there for a year and a day, all feudal bonds would be dissolved. Of course, familial bonds were dissolved as well, hence the “surrogate family” nature of the various guilds.

It seems that about the time of Henry VIII, England’s began to adopt what we today call an industrial policy–they wanted to develop a domestic cloth manufacturing industry instead of just being a raw materials exporter for French and Flemish merchants where the real money was made. In turn, a lot of native English merchants who did manage to make a pile of money in the cloth trade began to reinvest it back into the expansion of the raising of sheep for wool to ensure sufficient supplies of raw material. With the dissolution of the monasteries, Henry VIII unwittingly introduced a real-estate market, and a lot of that new real estate was subsequently bought up by merchants and turned into sheep runs. In turn, established landowners throughout England saw that growing wool for export was potentially more profitable than growing grain for the domestic market, especially since their were much less restrictions on the export and sale of wool than of grain. New farming techniques also made it more efficient, lessening the need for manual labor.

A lot of those deracinated farmers ended right back in the cloth industry, but this time, instead of weaving it in the comfort of their cottages alongside their familes part-time, they now worked in the new factories that were springing up alongside fast-flowing streams where water could drive the increasingly mechanized production process. So the putting out system eventually gave way to workers who became wage labor—the first proletariat. In time these factories would increasingly turn to cotton production for export markets, with cotton imported first from Egypt and India, and then later from the thirteen colonies and Dixie in the southern United States.

…despite the undoubted advantages possessed by capitalists even in the early eighteenth century, especially in directing manufacture to meet the special needs of the different markets, the domestic workers might have held their own for some time longer, for they were accustomed to eke out their industrial earnings in many cases by tilling a patch of ground in their leisure moments. But three blows fell upon them in rapid succession: the Agricultural Revolution introduced a new system of farming, and the rapid growth of enclosures deprived many of them of their patches of land and free pasture; the Mechanical Revolution during the latter part of the eighteenth century ruined first the spinners and then the weavers under the domestic system, who were able neither to compete with the cheaper machine-made products nor to buy the new machinery; finally, the French Revolution led to a long period of war, during which the domestic workers suffered from the resulting industrial crises, and, in common with the lower classes generally, were demoralised by the cruel charity of a badly administered poor law. [7]

3.) Over time, guilds became increasingly self-serving and oligarchical. While initially anyone could join, eventually the “ladder was pulled up” and the costs to join the guilds became onerous. Guilds became more about keeping people out of the trades than facilitating them. The guilds merged with the town governments and enacted burdensome rules and regulations to help themselves and handicap others (sound familiar?). This created a “two-tier” job market similar to today, but instead of protected union workers versus everyone else, it was guild members versus the industrial workers. And as more economic activity became done by “everyone else,” this lead to widespread resentment against the guilds and their privileges, even by the common folk. Even sources sympathetic to the guilds acknowledge that they eventually became increasingly corrupt, greedy, and self-serving, contributing to their downfall (as indeed happens to just about every human institution over time). In fact, it seems they may have been a victim of their own success:

In the fourteenth century the craft guilds of Europe may be said to have attained the height of their prosperity. But the privileges they had won by their mighty contests with the aristocracy were not destined to continue long in their possession. Supremacy weakened instead of strengthening them. When fighting the common enemy there was universal cohesion among the crafts. When victory perched upon their banners, disintegration began.

Many causes may be, and have been, assigned for the loss of the liberties they had gained. Internal dissensions may have assisted in their downfall. Their lack of appreciation for the necessity of their existence may have tended to their gradual decline. Numbers may have made them unwieldy and difficult to govern. Their desire to accomplish too much may have prevented them from accomplishing anything. But over all, and above all other causes the corrupting influence of money and power led to their final disintegration and gradual decline.

The overbearing spirit of the old craft guilds is everywhere apparent in the fifteenth and sixteenth centuries. It became common to require from an apprentice an oath that when his apprenticeship was ended he would not carry on his trade on his own account without the consent of the master. Large sums of money were exacted for purchasing the freedom of the guilds. The price exacted by the guild for binding an apprentice at length became so exorbitant that only the rich could afford to pay it. It increased from 10 to 20, 40, 60, 100, and finally, in 1720, 800 was demanded by the guildmasters for the freedom of the guilds. [8]

For example, in French guilds:

There was an aristocracy among workmen as unyielding as among the nobles against whom they waged a ceaseless warfare. The young artisan, anxious to turn his hand to a trade which promised him support and advancement, found his first step hampered by a host of preliminary conditions which were established by the union for the very purpose of discouraging young candidates. A ‘prentice, wishing to become a master workman, must first fabricate and present to the guild his chef-d’oevre, which was a completed article of the class manufactured by the workmen of the order to which he desired entrance. Sundry and other tests were required of the aspirants, all of which were int themselves just and proper, but the great injustice of the whole system lay in the fact that sons of members were absolved from any preliminary tests and were members by virtue of their parentage. Thus did the workmen in their own organizations reproduce the worst feature of an hereditary aristocracy which, as practiced by the nobles, they roundly denounced. [9]

There are, of course, parallels with the downfall of labor unions in our contemporary world. Unions became increasingly oligarchical and self-serving over time, with their leaders more and more concerned with their own benefits and status rather than their duties to members of the wider society, leaving themselves vulnerable to attack from capitalists determined to undermine them in the name of higher profits and more control over labor conditions.

I am also reminded of professional associations today with their ever-greater and more onerous requirements to enter the various skilled professions. Consider the AMA, the ABA, or my own association, the AIA. Every profession erects barriers to entry, insulating themselves from competition by scrappy upstarts. This usually starts for a logical reason—keeping incompetent practitioners out to protect the public, for example—but over time becomes self-serving and corrupt. Professions that used to open to everyone now require Masters degrees from expensive universities, for example. In the above paragraph one certainly sees the shades of “legacy” admissions to elite colleges and universities for the privileged and  well-connected. Note that the “Classical Liberals” were not against government, nor against rules or regulations per se, but against corrupt rules and cronyism. This is all too often forgotten.

What this meant was that more and more work would inevitably end up being done outside the guild system, removing its relevance and making it an outmoded institution. Eventually, new products and methods led to the guilds’ irrelevance, and it just withered away. In a few trades—most prominently building and construction—guilds would morph into the earliest trade unions, but that’s another story.

This history can be generalized to a simple rule: if labor is divided, and the capitalists are united, the capitalists will always be able to break up labor solidarity, and with it, undermine working conditions. This was as true in fifteenth-century France as nineteenth century England as twenty-first century America.

4.) Much later came the mechanization of labor. Once labor was alienated from any particular craft, that labor could then be mechanized. This was the final death-blow to guilds, but it came much later in the process, long after guilds had already lost much of their membership and influence. And once again, the place this happened first was in the cloth industry. This meant that England was once again well-positioned to take the leading edge of the changes.

The spinning jenny and power loom heralded the way toward mechanization of production on an unprecedented scale. Those farmers displaced in favor of sheep-raising ended up working for wages in a factory owned by a capitalist. Once the genie of mechanization was out of the bottle, it took over more and more industries. As markets expanded, labor became more specialized. This culminated in the factory system of the production line and interchangeable parts.

The application of machinery to the arts of spinning and weaving revolutionised English industrial life. The textile industries had long been established in England, but neither the weaving of woollen cloth nor the more recent cotton and linen industries had undergone any striking development down to the middle of the eighteenth century. The wool used was largely of home production, but the cotton wholly and the linen largely came from other countries. The cotton cloth in earlier days was woven with a linen or woollen warp, for the cotton yarn spun by hand was too weak for the purpose. As has been already explained, the textile industries were largely carried on under the domestic system by the peasantry, but their hand labour was slow and the product not always of the best quality. The “spinner,” often the unmarried woman of the family (hence the word spinster), found it difficult to supply enough yarn for the weaver’s needs, and the problem was aggravated by John Hay’s invention of the “flying shuttle,” a contrivance which enabled one weaver to do the work of the two who were formerly required to weave the wider cloths.

The earlier mechanical inventions were more popular in the cotton trade, which being established around the unincorporated market-town of Manchester, was not so bound down by conservative traditions. The climate of Lancashire by its very humidity was the natural home of the cotton industry, and, despite its exotic character, the latter steadily drove out the earlier State-favoured woollen industry. However, Elay’s invention, which dated from 1738, was not widely used till it had been improved by his son Robert in 1760. A few years later James Hargreaves of Blackburn invented his famous “spinning-jenny,” by which a number of spindles could be worked at the same time by means of a belt and a treadle. Now the spinners could produce more yarn than the weavers could use, and at first they suffered from periodic spells of unemployment, until the cheapness of their product created the demand that could absorb the supply. In the meantime Hargreaves was so unpopular that he had to leave the district, and his machines were often destroyed by mobs.

However, his fate did not discourage others, and in 1769 Richard Arkwright, a Bolton barber, improved on an earlier suggestion and invented an improved spinning machine — the water-frame — worked by water power at first and later by steam. He too had to face unpopularity and the burning of his mill, but he persevered and by cleverly utilising and improving the ideas of others he made a fortune. One of his contemporaries was Samuel Crompton, who combined the inventions of Hargreaves and Arkwright in a machine called the “mule,” which enabled him to spin a much finer and stronger thread than before ; the thread produced by Crompton and Arkwright was now strong enough to be used for the warp, and pure cotton cloth became a possibility.

Fortunately for Lancashire, new supplies of raw cotton became available as required. Formerly cotton was imported from India and the East and to some extent from the West Indies. However, during the American War of Independence the Southern States had begun the cultivation of cotton on a large scale, and the output increased with the demand, thanks to the use of slave labour and abundance of land. In 1792 Eli Whitney invented a cotton gin which rendered it much easier to remove the seeds from the “ wool.” Down to the end of the nineteenth century it seemed that despite the abolition of slavery the United States would be able to supply Lancashire’s needs, but rival spinners sprang up in European countries, especially in Germany, and finally in India and Japan and the United States. The world’s cotton crop was also decreased by the ravages of the “boll-weevil” and other pests, while improved machinery increased the demand for raw material. In consequence a British Empire Cotton-growing Association has been formed under State patronage to increase the production of cotton, especially in the British African territories.

It is curious that the application of power to weaving was neither so early nor so successful. Dr. Edmund Cartwright invented the power loom in 1787, but even when two years later it could be driven by steam it made headway only by slow degrees. One reason was that steam engines were as yet few in number, but perhaps the more important reason was the fact that the labour supply made available by the improvements in tillage had already been attracted into the hand-loom weaving industry since improvements in spinning had made yarn more plentiful. The competition for work during the war kept wages at so low a rate that it was not profitable to introduce the expensive power loom. The latter certainly had advantages over the hand loom as to speed, ease of work, and uniformity of quality, but it had the disadvantage of not being suitable at first for weaving the finer kinds of cloth. It has been estimated that in 1813 there were only 2,400 power looms in use: by 1820 the number had increased to 14,000, but they probably employed not more than 7,000 girls as compared with the 240,000 workers at hand looms. However, during the nineteenth century the power loom was steadily improved, till at last the hand loom disappeared, except for a few special kinds of work. [10]

5.) As for where the merchant guilds first lost their influence, a new paper makes the case that the conditions came from a confluence of particular factors. Where they overlapped, the guild system was managed by contractual agreements among strangers rather than organized by craft and merchant guilds. Those factors were 1.) Access to the north Atlantic trade, 2.) Access to books due to the printing press, and 3.) Access to a reliable postal system. Where all of these factors first came together, the guild system was supplanted by local officials in favor of the growing power of international merchants and “free trade”:

…in the sixteenth century, the merchant guild system began to lose its significance as more impersonal markets, where traders could directly trade without the need of an affiliation, began to emerge and rulers stopped granting privileges to merchant guilds. The traders began to rely less on networked and collective institutions like merchant guilds, and directly initiated partnerships with traders who they may not have known well. For example, in Antwerp the domination of intermediaries (called hostellers) who would connect foreign traders declined. Instead, the foreign traders began to conduct such trades directly with each other in facilities like bourses…

For example, one of the first permanent commodity bourses was established in Antwerp in 1531, the first stock exchange emerged in Amsterdam in 1602, and joint stock companies became a promising form of organizing business in London in the late sixteenth century. The sixteenth century transformation was followed by the seventeenth century Dutch Golden Age, and the eighteenth century English Industrial Revolution. What made the Northwest region of Europe so different?

While the Northwest European region didn’t have a particular advantage over other regions in postal communication, it had an advantage in early diffusion of printed books. The Northwest European region was close to Mainz, the city where Johannes Gutenberg invented the movable time printing press in the mid fifteenth century…Such a high penetration of printed material reduced information barriers and improved business practices. I find that all cities where guild privileges declined or merchant guilds underwent reform in the sixteenth century enjoyed high penetration of printed material in the fifteenth century. Among cities within a 150km distance from a sea port, cities where merchant guilds declined or reformed had more than twice the number of diffused books per capita than cities where merchant guilds continued to dominate…

The combination of both the commercial revolution along the sea coast, especially the Atlantic coast, and the communication revolution, especially near Mainz, uniquely benefited Northwest Europe, as it began to attract traders who favored impersonal market-based exchange over exchange conducted via guild networks. Rulers began to disfavor privileged monopolies when they realized the feasibility of impersonal exchange and that they could have superior sources of revenue from impersonal markets. In the region, trade democratized, as more people could participate in business.

Regions like Spain and Portugal that benefited only from the commercial revolution of trade through the sea to Asia and Americas had low levels of printing penetration. In contrast, regions like Germany, Italy, and France benefited from the communication and print revolution but didn’t enjoy a bustling Atlantic coast. Thus, no other region enjoyed the unique combination of both benefits of the commercial and communication revolution.

How Markets in Europe Opened Up as Guild Monopolies Declined in the Sixteenth Century (ProMarket)

This Explains Why Modern Markets Developed Where They Did (Odd Lots Podcast)

The contrast between the German ports cities Hamberg and Lübeck is an exemplar of this:

Times became rocky for the Hanseatic system in the fifteenth century. This was in part due to the rise of the Dutch, who were once beneficiaries of trade with the Hanseatic but were now the league’s seafaring competitors. Before the arrival of the Dutch, almost all trade to and from the Baltic passed through Lübeck. Likewise, Hamburg benefited from being the sole major Atlantic port of the Hanseatic. The link between Lübeck and Hamburg was a crucial route for trade in the north. However, the Dutch began to trade with the Baltic by navigating around the Jutland peninsula and through the Sound (Øresund). Thus, the Dutch soon began to reach the Baltic shores without the need to visit Hamburg and/or Lübeck. This competition from the Dutch disrupted the two cities’ centuries-old domination over trade between the Atlantic and the Baltic.

How did the two cities respond? Differently. Lübeck responded to this competition with the Dutch by giving more privileges to its own merchants and by leading a persistent attempt to disrupt the Dutch trade through the Sound (which included taking part in the Dano Hanseatic War of 1426-35 and the Dutch Hanseatic War of 1438-41). In contrast, while Hamburg initially was an ally to Lübeck in its resistance to the Dutch (including in the two wars), it eventually began to diverge from its partner in the sixteenth century. Hamburg opened trade to all locals and non-locals, and instead of resisting this rising Dutch trade, it “adapted itself perfectly to the changing situation” and moved toward an open system of trade that welcomed diverse merchants. Thus, Hamburg internally reformed, and the centuries-old privileges that a few of its merchants enjoyed declined, especially in the sixteenth century. This made a difference…

A Tale of Two Cities: Hamburg and Lübeck (ProMarket)

Thus, it was here in Northwestern Europe and the Atlantic that old, tested rhythms of life were overthrown and the “Great Transformation” took place: money and self-regulating markets would come to control every aspect of everyday life:

…It took the creation of new bonds of trust to make [a modern contractual economy] possible. The rise of capitalism was certainly a shift away from the ultrasuspicious dealing of the Middle Ages. Businesspeople began to emphasize a slow, steady accumulation of small profits, repeated over and over again across many transactions, and that meant living up to the terms of their contracts. Long-term contracts began to replace the shady bargaining and one-shot deals of the medieval merchants.

It was this that made mass production practical. What good is it to have machinery turning out large numbers of items if there is no way of selling them? It is not industrial technology that made possible the modern economy, then, but this shift in the way in which business was carried out that made possible the technological developments of the industrial revolution. [11]

[1] Sociological Insight, pp. 19-20

[2] Money: The Unauthorized Biography, pp. 105-106

[3] Three phases of cooperation in the West p. 319

[4] Melvin Kranzberg & Joseph Gies; By the Sweat of Thy Brow, pp. 68-71

[5] Melvin Kranzberg & Joseph Gies; By the Sweat of Thy Brow, pp. 68-71

[6] Fernand Braudel; The Wheels of Commerce: Civilization & Capitalism Vol 2, pp. 315-317

[7] A Social History Of England Ed. 2 p. 249

[8] The story of manual labor in all lands and ages p. 599

[9] The Story of Manual Labor, p. 206

[10] A Social History Of England Ed. 2 pp. 260-262

[11] Sociological Insight, pp. 20-21