Both pillaging and slavery have limitations. When the Roman Empire fell, at the hands of the Germanic tribes, the existence of large-scale land ownership, and peasant production was easily absorbed into the mode of production of these tribes, where such land ownership already existed.
As noted earlier, money arises naturally out of commodity production and exchange. However, whilst commodity production and exchange goes back around 7,000 years, it remained a marginal activity, taking place at the boundaries of one society with another. Consequently, the use of money itself remained marginal. The use of money increases with the increase in production and exchange of commodities. As currency, money must continually flow, but, as Marx describes in A Contribution to The Critique of Political Economy, it, necessarily has points at which this flow is interrupted. Money settles into pools, in the hands of the merchant and money lenders. It becomes merchant's and usurer's capital.
This, in turn, establishes new dynamics. Merchant's capital produces commercial profit, based on unequal exchange. In order to produce more commercial profit, more commercial capital must be continually accumulated, as a portion of the profit goes to buy an additional quantity of commodities to sell. The merchant must find new sources of such commodities to sell, new types of products that others, usually the wealthy, will want to buy. To buy these new commodities, the consumers of them require money. Hence, the ruling classes and castes, increasingly, move from Labour Rents, to Rent in Kind, to eventually, Money Rent, as a mark of the transition from direct production to generalised commodity production and exchange. As Marx describes, in Capital III, Money Rent represents the final form of these pre-capitalist forms of rent, and their dissolution, as rent becomes capitalist rent, surplus profit, i.e. profit in excess of the average annual rate of profit.
“The introduction and extensive use of metallic money in a country in which natural economy was hitherto universal or predominant is always associated with either a slower or a faster revolutionisation of the previous mode of distribution, and this in such a way that the inequality of distribution among individuals and therefore the contrast between rich and poor becomes more and more pronounced.” (p 188)
The fabulous wealth of oriental potentates took the form of more or less stagnant hoards. The feudal lords were able to expand their retinues, and armies, because the Labour Rent, and Rent in Kind, provides them with the products required to maintain these growing bands. But, the range of products was limited. The wealth and revenues of the feudal lords was a function of the size of their domain. The larger the domain, the greater the rents, and the greater the number of retainers, and size of army they could maintain. But, that limits the degree of differentiation in wealth and affluence between them. Similarly, amongst “the people”, i.e. the undifferentiated mass of society, of direct producers, there is no potential for a great or growing differentiation of wealth or affluence. They each have a similar sized plot of land to farm, a cottage in which to live and undertake small-scale industrial production, to meet their needs.
“The local guild handicraft production of the Middle Ages precluded the existence of big capitalists and lifelong wage-workers just as these two categories are inevitably created by modern large-scale industry, the present day credit system, and the form of exchange corresponding to the development of both the latter—free competition.” (p 188)
It is the access to a much wider range of products, as the world is opened up, with the voyages of discovery by the merchant adventurers that are sold by them, in Europe, for money, that leads to an increased use of money, itself, as currency, and leads to the move from Labour Rent, to Rent in Kind, to Money Rent. Now, peasant producers needed to obtain money to pay rents and taxes. Rather than expending their surplus labour-time working on the land of the feudal lord, or working on their own land, producing surplus products to hand over as rent in kind, they must use their surplus time to produce commodities to sell, to obtain money to pay those rents. But, now, a large number of them must compete to sell these commodities.
At the same time, the feudal lords reduce their retinues, and serfs are freed from the land, moving to the towns, which are the hub of commerce, and commodity production and exchange. It is in the towns that these small, independent commodity producers must devote most of their time to that activity, and so where the failure of some, and success of others, first leads to the differentiation into bourgeois and proletarians. In time, this capitalist production that begins in the towns expands into rural areas, and into agriculture.
“Society divides into classes, the privileged and the dispossessed, the exploiters and the exploited, the rulers and the ruled; and henceforward the state, which the primitive groups of communities of the same tribe had at first arrived at only in order to safeguard their common interests (e.g., irrigation in the East) and for protection against the outside world, has the equal purpose of maintaining by force the conditions of existence and domination of the ruling class against the subject class.” (p 188-9)
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