Our society is dominated by corporations that employ us, sell to us, and influence local, national, and global agendas. Though we may take for granted the role of corporate business and capitalism in our day to day lives and assume it is inescapable, this hasn’t always been the case. Business and Society provides a broad historical analysis of the spread of capitalism and the foundation of the corporate revolution in the late nineteenth century, while examining the challenges of regulation and ethics in contemporary business. In addition, it examines how corporate power and capitalism might be resisted, outlining a range of alternatives, from the social economy to new forms of open access or commons ownership. Written in a clear, accessible style, Business and Society offers an approachable introduction to a variety of perspectives from sociological, geographical, heterodox economic, ethical, political, legal and historical contexts.
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About the Author
Kean Birch is assistant professor, J. J. McMurtry is associate professor, and Darryl Reed teaches, all in the business and society program at York University, Canada. Caroline Hossein is sessional assistant professor of business and society at York University, Canada, where Mark Peacock is associate professor in the Department of Social Science. Alberto Salazar is assistant professor in the Department of Law and Legal Studies at Carleton University, Canada.Sonya Scott is sessional assistant professor in the program of business &and society at York University, Canada, where Richard Wellen is associate professor.
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Business and Society
A Critical Introduction
By Kean Birch, Mark Peacock, Richard Wellen, Caroline Shenaz Hossein, Sonya Scott, Alberto Salazar
Zed Books LtdCopyright © 2017 Kean Birch, Mark Peacock, Richard Wellen, Caroline Shenaz Hossein, Sonya Scott, and Alberto Salazar
All rights reserved.
The emergence of capitalism in Western Europe
Today our lives are dominated by capitalism as the economic organizing system for our societies and the global economy. However, capitalism has not always existed, which raises the questions of how, where and why capitalism emerged.
There are many approaches to explaining the development of capitalism. Mainstream approaches see the evolution of capitalism as a 'natural' process, whereby the apparently natural desire of human beings for wealth and money is allowed to flourish freely, something which results in the creation of capitalist markets as the main mechanism of economic exchange (see Wood 2002 for a critical analysis of these mainstream claims).
In the eighteenth century, Adam Smith (1776 : I.ii.1) wrote of a 'propensity in human nature ... to truck, barter, and exchange one thing for another', by which he meant that, if left unhindered, humans would instinctively enter into market exchanges with one another. This has led some historians, like Henri Pirenne (1956), to look for the origins of capitalism in urban centres of trade in medieval Europe, in cities such as Florence, Venice and Milan. Mainstream approaches account for the absence of capitalism through the existence of restrictions or restraints on commerce imposed by rulers. Without these restrictions, according to mainstream approaches, capitalism would have developed earlier, but restrictions on commerce prevented its emergence.
Mainstream approaches leave important questions unanswered which are addressed by alternative accounts of the development of capitalism. This chapter presents two such alternative accounts: one is a Marxist perspective, the other a Weberian one. They are non-mainstream because neither sees anything natural, let alone, inevitable, about the development of capitalism. Instead, both theories see capitalism unfolding only after major social upheavals.
Marxist perspectives draw on the work of the nineteenth-century thinker Karl Marx. They are characterized by the contention that social classes are the key agents of historical change because different social classes have conflicting or antagonistic interests. The conflict between classes gives rise to class struggle as a driving force in historical change. To understand the emergence of capitalism from a Marxist perspective, we must first understand feudalism in England, the country in which capitalism first developed. It is important to note that feudalism varied greatly at different times and places in Europe. What follows is a generalized account of feudalism in England which does not necessarily apply to other parts of Europe.
In feudal society, the majority of the population were peasants who lived on a lord's manor. The lord possessed the title to land and peasants were required to work for the lord. The land cultivated for the lord's use was called the demesne which could be one continuous tract of land or be divided into fields (strips). Peasants lived in cottages located in a hamlet or village located on the demesne. They, too, had access to land, in the form of strips – fewer in number and perhaps of lesser quality than the lord's – which they cultivated for their subsistence needs. Most peasants were unfree (villeins or serfs); their serf status came with various obligations to the lord which we associate with serfdom. Serfdom defines the relationship between the two central classes in feudal society: landlords and peasants.
Serfs had to work on the lord's land for a certain number of days per week. The number of days varied from manor to manor and was fixed by custom. These labour services were sometimes commuted into money payments, but whichever form they took, these obligations were a source of enrichment for the lord. Lords appropriated wealth from serfs, with as much as half the value of a peasant family's annual harvest going to the lord (Postan 1971: 603). Although they were subject to the lord's impositions, peasants did enjoy customary rights, for example, they could use common land to graze their animals (Neeson 1993).
Not all peasants were serfs. Some were free: like serfs, free peasants possessed land but were not subject to the levies of the lord. Whether free or serfs, peasants who did not own sufficient land to subsist on their own produce worked as wage labourers either on the lord's demesne or for wealthier peasants, who themselves had holdings of land. Perhaps half of peasants had to supplement their own cultivation through wage labour, especially when feudal obligations were commuted from labour services to money payments, for monetary payments to lords presupposed that peasants acquired money, either through selling their agricultural produce or their labour time in exchange for cash (Postan 1971).
The contentious relationship between lords and peasants gave rise to class conflict about the appropriation of the peasants' product – who got how much. Those peasants who possessed enough land could attain a high degree of self-sufficiency; they were neither dependent on their lord for survival, nor did they have to work for wages because they produced most of the goods (mainly food) that they consumed. Lords were parasitic; their exactions contributed nothing to agricultural output. Lords' interventions in peasants' lives were thinly disguised attempts to appropriate as much as they could from peasants. Some peasants fled from one lord to seek tenancy with another, although such attempts were not technically legal because they were not legally free to relocate. Unsurprisingly, medieval history is punctuated by episodes of peasant resistance or full-scale 'revolt' against landlords, e.g. the Peasants' Revolt of 1381.
Now that we have an idea of feudal society, let us trace some English history from the fourteenth to the eighteenth centuries. After the Black Death of 1348, which, in England, claimed one-third to a half of the population, lords acquired vacant lands. Serfs could not bequeath land to their heirs without the lord's permission, so, upon the death of a serf, the lord could claim the land. Lords rented their newly acquired lands to those able to pay what the market would bear; and as population increased, demand for land and rents rose. Renting land became a lucrative option for lords who rented larger parcels of land to each tenant, thus increasing the size of farms (Brenner 1976,1985). The development of a market for land meant that peasant tenants had to compete for land at the market rate. This led to measures which raised the productivity of farming; for those tenant farmers who were the most productive could afford to pay the highest rents (Brenner 1985: 301). As agricultural efficiency rose, the need for agricultural labourers declined. These developments provided the context of a process known as enclosure, to which we now turn (see Marx 1867: Chapters 26–28).
Enclosure involved the privatization of manorial land. It refers to the enclosing of land by landlords who erected fences around land previously accessible to peasants. This spelled the beginning of the end of the so-called 'open field system' of agriculture, as peasants were denied access to their farming strips and to common land. Peasants' means of survival was thus under threat as their customary rights were removed. Enclosure was an attempt to dispossess peasants of land, and it did not go uncontested – see Chapter 16. But by the end of the seventeenth century, England's lords had laid claim to three- quarters of the country's agricultural land (Brenner 1976).
The lords' aim in enclosing land was often to convert it to pasture, usually sheep farming. Supporters of enclosure argued that enclosure would end the independence peasants enjoyed by virtue of possessing land (Neeson 1993: 34). Without access to land, peasants became less self-sufficient and increasingly reliant on wage labour which was needed for commercial farming. Enclosure is therefore associated with the creation of a class of people whose survival depends on their ability to find work. But the transition from a country of peasants, who were relatively independent of the need to work for a wage, to a country of workers, who had no option but to seek wage labour if they were to survive, was not smooth. The immediate effect of enclosure was the creation of a mass of people who possessed no land. These people were faced with a choice between working for a wage or dying. Two opportunities for earning wages presented themselves: (1) labouring on farms in the countryside or (2) working in craft or manufacturing in urban centres. But dispossessed peasants were not free to choose between these options. In England, legislation restricted peasants' freedom and hindered the creation of a labour market.
Before we review this legislation, note that enclosure engendered a law and order problem. First, peasants resisted enclosure, for many saw their survival under attack. Peasant 'enclosure riots' became common from the sixteenth century, despite being outlawed (Manning 1988). Peasants who were unsuccessful in stopping the enclosure of land and who did not find work as farm labourers were left with the option of finding work in towns and cities. This caused a second threat to law and order, to which we now turn.
Unable to find sufficient work, migrants who left the countryside for towns resorted to begging or thievery. Such people were known as 'masterless men' because they were without employment and thus without oversight by a lord or master who might keep them in order. Legislators reacted to the hoard of masterless men with 'vagrancy laws' (a 'vagrant' being a person without dwelling or job). These laws varied 'from the savage to the merely repressive' (Manning 1988: 159): whipping, branding, mutilation and hanging were amongst the punishments for vagrants (Marx 1867: chapter 28). Vagrancy made legislators aware of a more encompassing problem: the poor. The problem of the poor concerned not only their swelling numbers but also the question of what to do with them. Poor Laws were conceived to address this problem. A poor person ('pauper') was assigned to the parish in which he or she was born and would become part of the 'sedentary poor' and thus a recipient of poor relief financed by local taxes. Vagrants received no relief. If they did not work or could find none, they were considered criminals, but being 'able bodied', they were expected to work (Beier 1985: 9). Indeed, they could be forced to work under Elizabethan legislation known as theStatute of Artificers of 1563.
The Statute of Artificers regulated the employment of labour. Under the Statute, the unemployed could be compelled to work in certain trades or in farming at wages set by local magistrates. It was an offence under the Statute of Artificers to quit one's job and leave the place in which one lived without permission of the local authorities (Beier 2008; Tawney 1914). The Statute thus hindered the development of a national labour market in England because it denied three freedoms:
freedom to decide where to work
freedom to quit one's job
freedom of employers and employees to negotiate wages.
This was an era of wage-labour without a labour market (Beier 2008), and the absence of the above three freedoms slowed the development of capitalism. It was not until the 1830s that these restrictions to the formation of a labour market were removed (Polanyi 1944 ).
The above account of the rise of capitalism is a Marxist account because it focuses on social classes and their struggles as factors driving historical change. Note that the class which Marx associates most strongly with capitalism – the capitalist class or 'bourgeoisie' – was not the driving force in the creation of capitalism. Though there existed a merchant or commercial class, particularly in English urban centres like London, the transition to capitalism was initiated in the countryside and its main driver was the class of landlords. Some of these lords became capitalist farmers in the process, just as some peasants became tenants of those lords and ran their increasingly large plots of land as commercial farms. It was through the clash of lords' and peasants' interests that capitalism and the classes of capitalists and workers came into existence. Table 1.1 summarizes the key features of feudalism and capitalism according to Marxist perspectives.
The class divide in feudal society is between peasants and lords. In capitalist society, it is between capitalists (those who own the means of production) and workers. In order better to understand the class dynamic involved, it is helpful to contrast the two subordinate classes – serfs in feudalism, workers in capitalism. Feudal serfs were unfree; they were not allowed simply to throw off their obligations to lords; insubordination from peasants could be answered by lords using military or legal power. On the other hand, peasants had direct access to the means of production – they could use land through which they could provide themselves with the means of subsistence; in theory, they could survive independently of lords. For workers in capitalist society, it is the other way around. Workers are free: they may choose which job to pursue and may quit their job if they wish. Unlike feudal serfs who, by their very status as serfs had obligations towards the ruling class of lords, workers have no obligations to the ruling class of capitalists by virtue of being a worker. Therein lies workers' freedom. The only way workers can acquire obligations toward a capitalist is by accepting a job – the capitalist cannot compel the worker to work without the worker's consent. On the other hand, workers in capitalist society are propertyless; they have no access to means of production with which to produce the means of subsistence. Only capitalists own the means of production, and workers are dependent on them for work. Unlike feudal serfs who possessed land, workers in capitalist society cannot produce anything unless they are given access to the means of production by a capitalist.
This sheds a different light onto workers' freedom. In the previous paragraph, it appeared that workers were advantaged vis-à-vis feudal serfs because they are free. Only if they want to work, do workers have to work; they are free to choose whether or not to work. Feudal serfs had no such freedom to choose whether to work for a lord. But for workers in capitalist society, the choice between working and not working is really a choice between earning the means to survive and starving, for if a worker does not work, she cannot produce anything from which to live by virtue of being propertyless. For this reason, the capitalist does not have to force or coerce workers into accepting a job; workers who do not work for a capitalist will simply die. It is therefore from economic necessity that workers sell themselves on the labour market; and it is their lack of ownership of the means of production which compels them to work for a capitalist.
Marx (1867: 874) expressed this point by noting that workers in capitalist societies are 'free' in a 'double sense': (1) workers in capitalist society are free to seek whatever work they wish and they owe nobody anything by virtue of their status; only by entering a work contract of their own free will can workers oblige themselves to work for a capitalist, and workers are even free not to work if they choose not to do so; (2) workers are also free in a second sense, free, that is, from ownership of 'any means of production of their own'; workers, that is, are 'unencumbered' by means of production; they own nothing except themselves. This 'unencumberedness' makes the freedom in the first sense hollow: workers are formally free in the sense that nobody can compel them to work. But in reality, the choice whether or not to work is a choice between staying alive and dying – not much of a choice at all.
The history of the transition from feudalism to capitalism in England which we have traced in this chapter is the history of the expropriation of the 'immediate producers' (Marx 1867: 875). The immediate producers began this transition as peasants who lived off the land and had access to the means of production. They ended it as propertyless workers with one survival option – wage labour. This history, Marx writes, 'is written in the annals of mankind in letters of blood and fire'. This was not a history many peasants would have chosen, had they known what lay at the end of it, yet it is a history that has determined the fate of most of the world's population who became propertyless workers.
Excerpted from Business and Society by Kean Birch, Mark Peacock, Richard Wellen, Caroline Shenaz Hossein, Sonya Scott, Alberto Salazar. Copyright © 2017 Kean Birch, Mark Peacock, Richard Wellen, Caroline Shenaz Hossein, Sonya Scott, and Alberto Salazar. Excerpted by permission of Zed Books Ltd.
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Table of Contents
Tables and figures vi
A note on authorship viii
Introduction: a critical introduction to business and society 1
1 The emergence of capitalism in Western Europe 12
2 The spread of capitalism 26
3 The corporate revolution 42
4 Corporate governance 57
5 Corporate responsibility 71
6 Corporate power 87
7 Global economy and varieties of capitalism 101
8 Global governance 116
9 Global environmental change 132
10 Markets and economic order 149
11 Economics, capitalism and business: the orthodoxy 163
12 Political economy and critiques of capitalism: heterodox perspectives 179
13 Business, regulation and policy 195
14 Ethics and business 211
15 Business and social exclusion 225
16 Resistance and alternatives to corporate capitalism 241
17 Social economy 258
18 Rethinking ownership: the market vs. the commons 274