Capital III, Chapter 20 - Part 5

The merchants continue in their independent function, expanded greatly as the discoveries of the middle ages open up new trade routes across the globe to China, India, Africa and America. They are able to deal with whatever mode of production they encounter. Their activities as pirates and adventurers makes them highly suited to act as the pioneers of the feudal rulers, in establishing colonies in these different regions, so that the process of dissolving the existing forms of production into slavery is speeded up by direct action.

Everywhere that merchant capital dominates, therefore, is marked by reaction. Yet, it is the condition also for the introduction of capitalist production, which spells the death knell for that reaction. Once capitalist production is itself firmly established, merchant capital's independent role comes to an end. It is merely an agent of industrial capital, a stage in its overall circuit.

“Within capitalist production merchant's capital is reduced from its former independent existence to a special phase in the investment of capital, and the levelling of profits reduces its rate of profit to the general average. It functions only as an agent of productive capital. The special social conditions that take shape with the development of merchant's capital, are here no longer paramount. On the contrary, wherever merchant's capital still predominates we find backward conditions. This is true even within one and the same country, in which, for instance, the specifically merchant towns present far more striking analogies with past conditions than industrial towns.” (p 327)

Marx elaborates.

“In modern English history, the commercial estate proper and the merchant towns are also politically reactionary and in league with the landed and moneyed interest against industrial capital. Compare, for instance, the political role of Liverpool with that of Manchester and Birmingham. The complete rule of industrial capital was not acknowledged by English merchant's capital and moneyed interest until after the abolition of the corn tax, etc.” (Note 46, p 327)

And we see the same today. Wherever commerce dominates, for example in big commercial centres like London and New York, this is where the representatives of these past ideas dominate. But, also in those areas where production itself remains undeveloped, where small peasant producers, rather than large capitalistic industries, there too the role of the merchant continues and the reactionary ideas that go with it.

“The independent and predominant development of capital as merchant's capital is tantamount to the non-subjection of production to capital, and hence to capital developing on the basis of an alien social mode of production which is also independent of it. The independent development of merchant's capital, therefore, stands in inverse proportion to the general economic development of society.” (p 327- 8)

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