Book review: Origins of Capitalism by Jean Baechler

Murray Rothbard quickly
mentions baechler's book Origins of Capitalism in
one of his lectures, saying that this book talks about how the west became
wealthy because of separating religion from the economy.
This caught our attention and after failing of finding it online we got our
hands on a used copy of it from oxford.
We have of course digitalized the book and you can find a copy of it at the
end of this article.

This book was written by Jean as an extended version of a smaller piece he wrote
called “Essai sur les origines du système capitaliste”(roughly translated to
Essay on the origins of the capitalist system in 1975)
explaining how capitalism succeeded in the west.
And what economical factors have lead to the west being like no other
economy is today.

Key points to take from this book:

the way to achieve a good economy is to have a free market with global trade
limitation of trade due to political differences/restrictions is hurting the market

Capitalism the social system of free association and private ownership

“Capital is the production of products designed not for consumption but for
further production” Jeffrey A Tucker

The author taking the approach of first talking about Karl Marx who has tried to
explain the economical evolution in the west.
The author then makes a nice touch by saying that critique of an already
established thought is a great way to start to paint a new picture.

A famous critical approach to Karl Marx theory can be found in
Walt Whitman Rostow's stages of economic growth(linked at the end).

Part one

Marx Theory

Karl Heinrich Marx the communist
thought leader has several opinions on capitalist's
systems.

Marx growing up in the 1800 where the economic climate was

at the end of 1700 century and in to the 1800 century the entities that was
winning where the once controlling the borders, tariffs and
laws which was controlling competition
control over the regulation was gained throw force,violence and wars, leading to England

Side notes on pre 1700 century economy

Bullionism

Being a way to describe a countries economical value by the
amount of precious metals such as gold and silver
you can think of it like the country with the biggest gold reserve wins.

Mercantilism (1600-1800)

Mercantilism is a concept of maximizing a countries economic growth
by reducing a countries import and increasing the export by
forcing control with protective tariffs,
heavy border regulation and so on.
Here is a link to it:
https://en.wikipedia.org/wiki/Mercantilism

Marx has written a book called “Grundrisse” which tries to determine
the specific features
of the capitalistic system, which actually never got 100% finished.

A key point Marx pushes is that the value of a product is based on the
amount of labor put behind it.
This has been debated a million times and often boils down to that the value
of products are subjective
and based on how much the person is willing to pay for the product or service.

After reading the communist manifesto which is written by Karl Marx and
Frederick Engels, Skepticism
on their combined views on the economy will acquire.
Link:
http://www.slp.org/pdf/marx/comm_man.pdf

The book then goes deeper in to the economical evolution of Europe,
talking about the western bourgeois.
Without spoiling the book here is the conclusion by the author:

Conclusion

The author draws the following conclusions:

1.

The specific feature that belongs only to the capitalist system
is the privileged position accorded to the search for economic efficiency.

2.

The first condition for the maximization of economic efficiency
is the liberation of civil society with respect for the State

3.

The condition is fulfilled when a single cultural area is divided
into several sovereign political units

4.

So That all these potential factors lead to all their
consequences, it is also necessary that the value-system be
modified to the detriment of religious, military and political
values, and that demand be liberated

5.

The west is the only continent where all the above conditions were met. The devaluation of religious, political and military functions concentrated
men's energies on economic activities. and finally the destruction of
traditional ways of life liberated demand and produced the modern consumer.

Our reflections when reading it:

Reflections:

p.52

War is a duel by which we intend to impose our will upon an  
adversary through the use of violence.

“Winning” when the adversary is not able to fight back anymore, often leading to death.
Congratz, you have won the death of your enemy, you never
won the acceptance of your ideas and your will to change their minds.

p56-58

Personally, I would rather tend to think that in every society there 
exists individuals who have an excessive desire to posses and to take risks,
for these two passions coexist within the capitalist spirit. 
However unfavorable the circumstances such men can assert themselves and display
their cleverness. What inclines me to this interpretation is- 
apart from my conviction about the unity of human nature and the limited number
of modes by which human destinies may be fulfilled.
each time reality is suited for him, the capitalist is there.
Nothing suggest that his appearance necessitates a basic change in 
mentality: quite simply, he is there, entirely formed and adapted to his task.

The model of a society where efficiency would be maximized may be constructed: 

1. That the producers have as their sole objective the search for maximum 
profit, not at all in order to enjoy the goods of the world. 

2. That the intellectual activity if the society be entirely devoted to the 
creation of scientific and technical procedures that 
permit the lowering of costs

3. That the laborers reduce their lesure and rest time to the
minimum compatible with survival
Thus there is no question of denying that freedom of labor plays a 
role in the industrial system, but one cannot accord it 
the central role that Marx and, in the end Weber as well, give to it.
In my opinion, freedom of labor is an aspect, but  
only one among others.   

4. 


5.  That these four confitions are submitted to no limitation of any kind:
neither cultural, nor moral, nor intellectual, Nor can there be any 
political limitation, for it is necessary that the  
confrontation of efficiencies be done freely, in a free market.
The most efficient system thus, is the one that establishes
perfect competition on a world scale.  
And finally there can be no social obstacle.

p.54

A second example is political power.
All power essentially consists in the possibility of a man or
a group to influence the behavior of others according to their own will.   
In this sense, all power tends towards absolute power, for the imposition of   
one will knows no other natural limit than the annihilation of the will of others.  
This is achieved when the annihilated will 
welcomes with joy and gratitude the violence that   
is done to it. The prince reaches supreme power when his 
subjects give their lives enthusiastically for a secret cause that he alone knows,    
which means that the value of sacrifice belongs entirely to the sacrifice itself.

Slavery is always going to be more attractive then freedom, because
when you have freedom you also have more problems and abilities.
A lot of people are attractive to slavery because its easy for
them, someone tells them what to do, eat, feel and think.
No responsibility and responsibility is needed.

Some of today's examples of limitation of global trade that is hurting the market

United kingdom's ban for all banks in the UK to do business with Cuba
This is a good example in where one political entity is not happy over the
other and punishing it by banning trade
which is affecting Cuba's export and UK's demand for Cuba produced products.
The EU cigar regulations
EU has gone in and say ed that all business need a license per cigar version
being imported from non-EU sources.
So say that a cigar shop is importing cigars from Honduras
or Nicaragua(two of the worlds best cigar making countries)
and imports 9 different cigars from one brand, then its 9 different licenses a
company need in order to sell them.
Driving smaller stores out of business and making it harder for new brands
to make a name, basically limiting trade.

Stability

The book makes a great point pointing out that there is no perfectly stable human society, stability is heavily resting on culture, political, economical and the order to
regulate the exchange or trade(of women, information, goods,
commandments, etc.. as the book points out). due to differences in social/cultural groups in society you will have
a lot of wills that will want to have their way of rules
which creates instability, if humans never where to interact with each
others that would obviously be bad.
Then who is going to give the police officer a sexy wink when
they cross the street when there is a red light.
a constant and effective way of introducing unstability is
throw human contact, by war, by borrowing, or by trade. This can be viewed as a foundation of human society (p.74)

Connecting the dots to capitalism in a global system where everyone trades and are happy

Let us return to capitalism. Within a unified and stable political whole, 
the social order has time to establish rules that, in the 
diverse settings of human activity, guarantee stability

Rules, not a totalitarian leader

The book points out how America profited from international trade
1929 the state responded to the great depression by limiting and
restricting trade which was not so good.
In 1945 a twenty year fixer upper was put in charge and as the author
describes it “like a free gift from Adam Smiths invisible hand”
the American economy opened up the doors to more internationalization
of trade which was a success.

After the second world war Europe's economy was basically trash and USA
came in and helped the west throw a loan that is
called the “Marshall Plan”, which created peace between America and Europe
and the most important thing:
making the market more liberal and global resulting in a large economical growth.
Due to political differences, international trade is very hard to keep it alive
where different political forces coexist

Colonization is not the answer | Centralization of economical activity is not the answer The books attacks colonization mentioning, mentioning how it ruined span

Bringing up Greek, Roman, Muslim, Mongol, Turkish conquest(ottoman) all of the
mentioned once accumulated a lot capital
which resulted in huge economical activity which we can enjoy today thanks
to all the nice building that is left.
However all of these attempts at economical colonization of the west have failed.
Making the myth that colonization helped western capitalism flourish is a myth.

Two humans can only exchange goods and/or services and make a trade if they
both agree on the rules otherwise the strongest one will win.
Thinking like Baustiat “when we have tried all these complex economical
approaches lets try the simplest as them all: freedom”

Consequently, the ultimate explanation of the extension of economic activities
in the West is the amount of shirt between the homogeneity of the cultural space and
the plurality of  political units that are part of it.
The expansion of capitalism owes its origins and its raison d'etre
to the political anarchy.

p.77

Collectivism and State management have only succeeded in school text-books

Entities that have tried and failed to control economical influence of the west:

German emperors
the popes
the Hapsburg's
Napoleon
William II
Hitler
European economical Community

Marshall Plan

After world war 2, Hitler and his war had basically destroyed the European economy.
USA sees a great opportunity for political influence and comes with basically a big
bag of money in order to help recover the European economy, open up for
more trade and stop the influence of
communism from Russia.
Several states in Europe then goes ahead and forms the Organization for
European Economic Co-operation which later becomes
OECD(Organisation for Economic Co-operation and Development) in order to
manage the funds given in Marshall plans.
The goal was to achieve a more liberal economy and a European free trade area.
Today the EU is fighting free trade, in the form of high import fees for
importing and exporting products, enforcing taxation in the form of VAT
on all trades between all companies operating in an EU country, The EU
blacklist, not allowing trade to certain countries that does not play by
their rules.

A great write up about Marshall plan by Jeffrey A. Tucker:
https://mises.org/library/marshall-plan-myth

You can see similar patterns in a lot of examples of areas that liberate and
open up their gates in order to establish a better economy by a more free market.
The republic of Georgia is doing so now by allowing free trade zones and not forcing taxation on business carried out within these free trade zones, making
the country very attractive to foreign investors who invest in local infrastructure.

https://www.urdupoint.com/en/business/commonwealth-of-independent-states-cis-free-596239.html

page 76

The discovery of America and its precious metals no doubt stimulated economic 
activity. Above all, it utterly ruined Spain.  
A counter-proof may be drawn from the examples of Greek, Roman, Muslim, 
Mongol and Turkish conquest, which liquidated enormous capital hoards, led to important 
economic activity, occasionally ruined the metropolitan economy, but did 
not lead to western capitalism.

The international market is govern by purely economical measures

The Ricardian Law of Comparative Advantage

Is something the book brings up several times, a popular economical theory quote from Wikipedia:

The law of comparative advantage describes how, under free trade, an 
agent will produce more of and consume less of a good for which they 
have a comparative advantage

https://en.wikipedia.org/wiki/Comparative_advantage

The theory is pretty simple, the one who is best at producing a certain product should sell it to the others.
Specialization is key.
If one entity is able to produce the best possible product of something then that entity is should only sell this product.
Everyone will buy this product because its the best in its class.
You can go further and say you have a market or a bazaar in a village where all the trade is committed, the best fisher sells fish, the best bread maker sells fish
and all the consumers are happily provided by services by private parties that specialize.
All this doable without government and state intervention.
https://mises.org/library/ricardian-law-comparative-advantage

Summa summarum: For a great economical growth there need to be a open, global, free trade market
where specialization is key.
There is no need for a paper or a free-trade agreement for/from anyone in order to do so.
We are moving in to more open and a more global market with great inventions such as
the internet, private developed currencies such as Bitcoin, the list goes on..
We strongly recommend that you read origins of capitalism by Baechler

Download origins of capitalism here