What is the natural economy

Historians who try to describe the rupture between capitalism and pre-capitalist modes of production face a dilemma. The predominant narrative that describes this rupture places capitalism in a teleological position vis-à-vis what came before it, and this makes it hard to describe pre-capitalistic economies in their own terms. This is especially true in as much as the clerks who existed in these pre-capitalist economies did not conceptualize the economy in the same way that economists conceptualize economies. The grounding condition for economics as a science is a recognition of economics as a social fact – and this conditions indissolubly binds together economics and capitalism.

Even anti-capitalist economics, given its most systematic form by Marx, often falls prey to the teleological assumption that history slouches, inevitably, towards capitalism – although Marx backed away from that interpretation, as is clear from the letters he exchanged with Russian populists, where he confines the history he sketches in Capital to Western Europe, and declines to provide a ‘general philosophico-historical’ theory – in other words, Marx quits the universal history business. But universal history, disguised as the World Market, had by this time has armed itself with gunboats and penetrated into Chinese ports and taken up machetes and gone into Congolese jungles. The world market, celebrated in the Communist Manifesto, was not giving a-capitalist societies much choice in the matter.

In Germany, the attempt to find terms with which to conceptualize pre-capitalist systems revolved around the idea of the “natural economy.” This would be an economy dependent on in kind exchange – barter. It was an economy in which credit was not developed, and money was treated with suspicion. It was an economy, moreover, pervaded by a non-individualistic mentality. The latter is what makes it natural, because it takes the dynamics of the household – whose “naturalness” was assumed by Aristotle, but of which the wild varieties of form were known to the 19th century sociologists – and projects it upon the world.

The natural economy is associated with the historical school in Germany, but in the contemporary study of peasant societies, it is associated with theory of A.V. Chayanov, the economist who wrote a very influential book about peasant economies that was re-discovered in the 1960s – although Chayanov himself was not, for by that time his bones had long decayed in some Gulag camp. Chayanov infused it, as well, with suggestions from Rousseau’s brilliant reconstruction of the primitive economy in the Discourse on Inequality. Rousseau’s keen sense of the function – the necessary function – of idleness, revery and sleep in the existence of his primitives finds its economic language in Chayanov’s thesis. This is how how Charles Perrings, in “The Natural Economy Revisited”, describes it:

“He proposed … that the objectives of the head of such a household are qualitatively different from those of a capitalist enterprise, in that the former seeks not to maximize either output or profits but to balance the marginal utility of income and the marginal disutility (the drudgery) of the work of all members of the household. In general, he claimed, the intensity of labor expended by members of the household is inversely related to its productive capability, implying a sharply declining marginal utility of income in excess of that deemed

On the other hand, there is a line of French anthropological thought that dismisses the concept of the natural economy. Marcel Mauss, for instance, in his essay on the gift, writes that this category deforms the notion of the gift and counter-gift that forms the economic background, in his view, of not only primitive, but also modern societies. From the German historicists to Chayanov, there is an insistence on the supreme value of utility as the basis of all calculation, even if these calculations are not made with well defined units.

Mauss summed up his comparisons and analyses of various rites and customs of gift and counter gift in a last chapter that reads like a blast at utilitarian economic thinking and its projection upon all forms of human activity:

“These facts respond as well to a crowd of questions concerning the forms and reasons that one names so inappropriately exchange, the barter, the permutatio of useful things, that following the prudent Latins, who were following themselves Aristotle, a economic history puts at the base of the division of labor. It is something other than the useful that circulates in these societies of all types, the most of which have already been illuminated. Clans, ages and generally sexs – due to the multiple relations to which contacts give rise – are in a state of perpetual economic effervescence and this excitement is itself very little material; it is much less prosaic than our sales and purchases, then our wages of service or our plays on the stock market.”

Mauss, I think, is approaching economics not through the calculation of advantage as the economists see it, which is even prevalent in the historical school’s nostalgia for a natural economy, but instead as a form of life in which advantage encloses qualities and adventures that quantity does not cover.

It is against this background that I’d like to look at a controversy in the historiography of ‘peasant economies’ and proto-industrialisation in an upcoming post.