The Invention of Capitalism

The originators of classical political economy – Adam Smith, David Ricardo, James Steuart, and others – created a discourse that explained the logic, origin and, in many respects, the essential rightness of capitalism. But, in the great texts of that discourse, these writers downplayed a crucial requirement for capitalism’s creation: for it to succeed, peasants would have to abandon their self-sufficient lifestyle and go to work for wages in a factory. Why would they willingly do this? Clearly, they did not go willingly. Michael Perelman shows that they were forced into the factories with the active support of the same economists who were making theoretical claims for capitalism as a self-correcting mechanism that thrived without needing government intervention. To show how Adam Smith and the other classical economists appear to have deliberately obscured the nature of the control of labour and how policies attacking the economic independence of the rural peasantry were essentially conceived to foster primitive accumulation, Perelman examines diaries, letters, and the more practical writings of the classical economists.
He argues that these private and practical writings reveal the real intentions and goals of classical political economy – to separate a rural peasantry from their access to land.

Author Biography

Michael Perelman is Professor of Economics at California State University, Chico. His books include The Natural Instability of Markets: Expectations, Increasing Returns, and the Collapse of Markets.