Of all the catchwords used by capital’s paid and unpaid defenders, ‘freedom’ is surely the most used and the least understood. “Capitalism is freedom” according to Turning Point UK. Milton Freedman’s Capitalism and Freedom remains a holy text for those faithful to the church of Free Enterprise. In fact, it is impossible even to begin a discussion on the nature of capitalism without hearing, ‘individual freedom’, ‘free choice’, ‘free trade’ or ‘free markets’.


The more individuals are left to trade and enrich themselves, the more capitalism thrives and consequently, the more free and prosperous everyone in society becomes – this argument is simple, familiar, and completely false. In reality, capitalist freedom has always had a deeply contradictory nature from the very beginning.

What the birth of capital required was that the owners of money, land and industry should be confronted by a mass of ‘free’ workers, liberated from any property of their own and completely reliant on the market. This is the real foundation of the capitalist system, and its history is “written in the annals of mankind in letters of blood and fire”, in the words of Karl Marx.

The decline of feudalism

It was amongst the crumbling ruins of feudal Europe that the foundations for a new social order were laid. But the first blows against the old order were struck neither by the merchants nor the money lenders, but by the poorest and most oppressed layer in feudal Europe: the serfs.

Medieval Europe was built on the unpaid labour of this class of semi-slaves, who were granted a small patch of land in return for which they were forced to work for free on the estates of the church and feudal nobility for several days a week. Added to this was ‘boon work’ or corvee, which required the serfs to perform specific tasks for the benefit of their lords. In England at the time of the Domesday Book (1086), it is estimated that as much as 70% of the population were classed as serfs. It is in the struggle of this oppressed class of peasants to free themselves from bondage that the pre-history of capitalism can be traced.

There is an old German saying, “Stadtluft macht frei”, which means “town air makes you free”. Its source is a customary law from the Middle Ages under which any escaped serfs who remained in a town for a year and a day would no longer be subject to the claims of their former lords and hence would become free. But this custom did not simply descend from heaven or come about by a gentlemen’s agreement between the rulers and their slaves. It was the product of years of bitter class struggle.


A serf was considered a part of the lord’s property, as if he and his family had grown out of the soil itself. He was consequently completely under the jurisdiction of his lord, meaning he had little opportunity to seek justice from anyone else. The king was himself just another landlord and the church was the biggest landlord of all.

The easiest and most effective defence against the lords’ exploitation was flight, and throughout the Medieval period a constant struggle thundered between serfs striving to escape the snatching grasp of the lords and their man hunters who roved the country in search of their lost property.

One result of this clash was many of the free towns of Europe. These ramshackle settlements, from such humble beginnings, would in some cases become powerful independent cities. Born out of feudalism and yet in opposition to it, the town dwellers, known in France as ‘bourgeois’, organised themselves into city councils and guilds, which served as local organs of power through which these collection of individuals, thrown together by common struggle, would be transformed into a class.

The growth of these towns and the rapid rise in population up to the Black Death contributed to a powerful upturn in trade, which began gradually to undermine the foundations of feudalism.

Engels remarks that “long before the ramparts of the baronial castles were breached by the new artillery, they had already been undermined by money” in his article, The Decline of Feudalism and the Rise of the Bourgeoisie. As early as the Crusades, some lords were beginning to demand money rents from their subjects in place of labour services, so that they could access the various luxuries and exotic products this trade brought into view.

But the more the lords exacted money rents from their tenants, the more both parties became dependent on the towns. Previously, the feudal manor had been a self-sufficient unit, combining both handicrafts and agriculture. The growth of the towns brought with it more specialised products such as tools and cloth for the masses as well as silks for the nobility. From this growing division of labour sprang a new relationship between the rural peasants and the bourgeois in the towns – a relationship mediated through commodities.


The 14th century represents a point of no return in the struggle against serfdom, which was already in decline in most of Europe. Rather than strengthening the lords against the peasantry, the crisis caused by the Black Death – which reduced the population of Europe by at least a third – actually gave the peasants themselves a great deal of bargaining power. The response of the lords was to try to impose a legal maximum on the wages of labourers and to crush the peasantry with taxation, of which the Poll Tax was the most infamous example.

The result was the Peasants’ Revolt in 1381 which, allied with the poorest layer of the London masses, took the form of a national uprising. Despite its brutal suppression this revolutionary movement succeed on two fronts: there was no further levying of the Poll Tax (until Thatcher’s ill-fated attempt to resurrect it), and serfdom in England was dead. In its place was an exhausted nobility, increasingly dependent on money rent, independent smallholding peasants and a growing bourgeoisie in the towns.

Engels remarks that in history the actions of the men and women who make history “ultimately have consequences quite other than those intended”. The struggle of the peasants and town dwellers had set the stage for a dramatic new act in world history, but no sooner had their freedom been won, so began a new wave of enslavement out of the fruits of their victory.

The world market

The decline of feudalism gave a powerful spur to the production and exchange of commodities. The developing division of labour between the craft industry in the towns and rural agriculture created an expanding demand for goods of all kinds. And this demand was fed by an increasingly complex and powerful web of commercial routes across Europe and the Mediterranean.

First in Egypt then taken up by the Italian city-states, sophisticated legal instruments such as insurance contracts and trading companies were introduced to cover the risks associated with regular long-distance trade. And along with the growing power of the merchants came the rise of “that common whore of mankind”: money. The founding of merchant banks in the great trading cities of Italy, such as Venice, originally as a response to the needs of merchant ‘capital’ would then act back on this development, pushing it to greater heights.


By the 15th century the burgeoning commodity economy in Europe was straining against what appeared to be a natural limit. The production and exchange of greater and greater masses of commodities created a dire need for money as a means of circulation and payment. Further, producers of much sought-after luxuries in Asia would often only take payment in silver, having no need for European cloth.

The growing thirst for precious metals to feed the developing market could not be quenched by the relatively scanty produce of European mines. The result was the infamous ‘gold lust’ that drove European adventurers on a quest of global pillage we now call the ‘Age of Discovery’.

One particularly quaint myth associated with this period is that it came about as a result of some uniquely European spirit of enquiry and adventure. This would certainly come as a surprise to the Chinese and Arab explorers of the period. But Engels offers us the swiftest rebuttal of this romantic nonsense:

“It was gold that the Portuguese sought on the African coast, in India and the whole Far East; gold was the magic word which lured the Spaniards over the ocean to America.” (ibid.)

This fact was not lost on the native ‘savages’ who encountered our intrepid European adventurers, one of whom remarked of Cortes’ conquistadors in Mexico:

“They lifted up the gold as if they were monkeys, with expressions of joy, as if it put new life into them and lit up their hearts.... They crave gold like hungry swine.” (quoted in Galeano, Open Veins of Latin America: Five Centuries of the Pillage of a Continent)

Everywhere the Europeans landed they discovered new wealth to bring home to sell at an enormous profit. Like old Midas, whatever they touched turned to gold, with calamitous results for the native peoples they encountered. Marx remarks (in Capital, vol. 3) that, “Merchant's capital, when it holds a position of dominance, stands everywhere for a system of robbery, so that its development among the trading nations of old and modern times is always directly connected with plundering, piracy, kidnapping slaves, and colonial conquest.” Nowhere can this be more clearly seen than in the period following the discovery of the New World.

On 3 August 1492, Christopher Columbus sailed out of the Spanish port of Palos. His goal was to reach Asia by sailing west over the Atlantic. Instead, on 12 October he stumbled upon the Bahamas and a people called, in their own language, the Lukku-Cairi. In his diary, Columbus wrote:

“They go as naked as when their mothers bore them, and so do the women, although I did not see more than one girl. They are very well made, with very handsome bodies, and very good countenances."

Historians estimate there were 1 million Tainos (of which the Lukku-Cairi were part) in 1492. 56 years later there were only 500.

This became a model for the colonisation of the rest of the Americas. Wiped out by unfamiliar diseases (sometimes deliberately), sent to an early death in poisonous mines, almost 100 million human beings were sacrificed at the altar of Commerce. The price of their lives was the 100,000 metric tonnes of silver exported to Europe from Latin America between 1492 and 1800.

Then as now, defenders of this genocide pointed to the benefits of European freedom that were being forcibly administered to the natives. One such pious servant of God, Archbishop Liñán y Cisneros explained:

“The truth is that they are hiding out to avoid paying tribute, abusing the liberty which they enjoy and which they never had under the Incas.” (quoted in Galeano, ibid.)

But these European liberators didn’t just free the indigenous population of their lives and treasure; each site of human sacrifice became a fresh link in the chain of the growing world market, demanding an intensification of production by the most barbaric means. As the native population of the Caribbean dwindled, it was replaced by African slaves and sugar plantations first trialled by the Portuguese on Cape Verde.

Rather than developing production on a higher level, the original achievement of the world market was to extend and intensify the slavery of old on an ever expanding scale. By the end of the slave trade in 1853 between 12 and 15 million Africans had been transported, of whom as many as 2.4 million died on route.

This horrific slaughter was an integral part of the early development of capitalism. This was not lost on Marx, who emphasised (in Capital vol. 1):

“The discovery of gold and silver in America, the extirpation, enslavement and entombment in mines of the indigenous population of that continent, the beginnings of the conquest and plunder of India, and the conversion of Africa into a preserve for the commercial hunting of blackskins, are all things which characterise the dawn of the era of capitalist production.”

And yet, this period confronts us in one respect as an immense contradiction. On the one hand we see a developing world market with the ever-expanding production and exchange of commodities; but on the other, the methods used to produce these commodities remain nothing more than the intensification of pre-existing forms of exploitation to an agonising pitch.

Capitalism without commodities or money is unimaginable, but these still do not equate to capitalist production. What is required is for labour-power, the ability of human beings to work, to itself become a commodity. This final, decisive, stage in the birth of the capitalist system took the form of an immense social revolution which began in England in the 16th century.

The agrarian revolution

In 1516, the famous Tudor lawyer and writer Thomas More observed:

“Yea and certyn Abbottes, holy men no doubt…leave no ground for tillers, thei enclose al into pastures: they throw downe houses: they plucke downe townes and leave nothing standynge but only the church to be made a sheephowse…” (quoted in Morton, A People’s History of England)

What he was describing was a revolution, waged by the rich against their own people.

The end of serfdom had dealt a heavy blow to the power of the lords, but they still retained ownership of great swathes of land. It was from this position that the old masters began their counter-offensive against the free peasants of England.

https://www.marxist.com/images/cache/b7da2a4749acda21ee5cc1978e2f3309_w720_h615.jpg" alt="Feudal London Image public domain" width="720" style="box-sizing: border-box; display: block; max-width: 100%; height: auto; width: 750px; margin: initial; float: none;">In the 17th and 18th centuries, the expropriation and displacement of the rural masses took on an official form through the passing of a series of Enclosure Acts in Parliament / Image: public domain

The expansion of trade in the 14th century had also created a growing demand for wool, of which England was a major exporter. In response to this demand, landlords began forcibly evicting their feudal tenants in order to convert entire villages into sheepwalks. The importance of this lucrative trade for the English nobility can even be seen today in the woolsack upon which the Lord Speaker still sits in the House of Lords.

The result of this barefaced robbery was on the dispossession of thousands of peasants, many of whom had no choice but to roam the land looking for work or charity. The problem had already become so widespread that in 1489 Henry VII passed the first of a series of Acts which sought to curtail the depopulation of the countryside.

The discovery of the Americas and the gigantic upswing in trade that came with it only added fuel to the fire. Throughout the Tudor period, agricultural production was shifted towards cash crops for the market, with a new breed of capitalist farmers employing landless paupers as labourers.

Even this new mode of production proved insufficient to soak up the flood of poverty, however. Eventually, the class of pauperised ‘vagabonds’ became so large that it caused Queen Elizabeth I to introduce a special “Poor Rate” as early as 1601 whilst at the same time providing for “unlicenced beggars” to be executed “without mercy” as felons.

In the 17th and 18th centuries, the expropriation and displacement of the rural masses took on an official form through the passing of a series of Enclosure Acts in Parliament. This was catastrophic for the rural population – it had effectively driven the English peasantry to extinction by the 19th century – but it provided an enormous army of propertyless labourers for the growing industries in and around the towns. It was this process of legalised theft that gave birth to the capitalist ‘property rights’ so admired by modern defenders of capitalism.

The state

Another myth that surrounds the birth of capitalism is that it was achieved by the pioneering economic activity of enterprising individuals, in opposition to the dead hand of the state. This fairy tale is regularly dusted off whenever the modern state is forced to pass reforms by the pressure of the workers, but nothing could be further from the truth. At all points our future captains of industry and commerce depended on the most brutal state repression to protect their class interests.

Absolutism arose out of the contradictions of dying feudal society: a feudal monarchy resting alternately on landowners, bourgeois and peasantry. With one hand it placed checks on the expropriation of the peasantry but with another, usually acting in its own interests, actually hastened the development of capitalism.

The sale of lands expropriated from the Church after the Reformation at cut down prices, for example, was an enormous gift to the nascent capitalist farmers of the 16th century. Likewise, the establishment of colonial monopolies by all the absolutist monarchies of Western Europe, provided essential protection for the early development of manufacture.

https://www.marxist.com/images/cache/7e687f589a6788aaef2c81f623fe1d27_w720_h500.jpg" alt="English reformation Image public domain" width="720" style="box-sizing: border-box; display: block; max-width: 100%; height: auto; width: 500px; float: none; margin: initial;">Absolutism arose out of the contradictions of dying feudal society: a monarchy resting on landowners, bourgeois and peasantry / Image: public domain

However, precisely because of its transitional and contradictory nature, at a certain point this form of the state comes into a stark conflict with the interests of the bourgeoisie. Once the bourgeois had seized economic dominance, it must be able to rule in its own interests. And so the last vestige of the feudal political system became just another fetter on the great drive for accumulation which was taking root.

Beginning with the Dutch War of Independence a wave of revolutions swept Europe as the bourgeoisie took the road to political power. In its struggle against the old order, it united all that was healthy and progressive in society behind its call for ‘liberty’. Sweeping away the particularism of the past, the revolutionaries cleared the way for the development of a truly national market. In place of the arbitrary privileges of absolutism, they demanded the ‘rule of law’, which in practice has always meant the rule of the bourgeoisie.

But the great and tragic contradiction of all these movements lay in the fact that, as in the English Revolution, they ultimately delivered power not to the peasants and artisans who formed the ironsides of the revolutionary armies, but a new, even more powerful class of exploiters – something our modern lovers of liberty tend to forget.

Following the burial of absolutism the state came fully into the possession of the new landed aristocracy, ‘bankocracy’ and large manufacturers, either in the form of a republic or, more commonly a ‘constitutional’ (that is, tame) monarchy.

Anyone who doubts the significance of this for the development of capitalism need only look at the measures taken by the English Parliament after the so-called Glorious Revolution in 1688: Enclosures were transformed from a widespread abuse to a deliberate policy; the Bank of England was created along with the ‘National Debt’ – a debt to none other than capitalist speculators; further legislation to impose a ‘maximum wage’ was imposed, while combinations of workers to negotiate better pay and conditions were, of course, forbidden.

The concentrated power of the state was used “to hasten, hot-house fashion, the process of transformation of the feudal mode of production into the capitalist mode, and to shorten the transition,” Marx writes in Capital (vol. 1), adding, “Force is the midwife of every old society pregnant with a new one. It is itself an economic power.”

It might also be noted that in this Golden Age of Liberty and Enlightenment, not a single worker or poor peasant had either a vote or political representation in any form. In reality the rising capitalist landowners and manufacturers needed the power of the state to ‘regulate’ wages and lengthen the working day.

In fact, it is only when their own miniature tyranny in the workplace is secured that the capitalist class will tolerate any political freedoms on the part of the workers, and even then, these are to be limited so as not to infringe upon their sacred right to ‘private property’, that is, the fruit of centuries of theft.

The birth of the working class

The development of society is in the last instance determined by the development of humanity’s productive forces. But on its own technology is incapable of changing society – it is itself socially determined. The ancient Greeks had discovered steam power long before bourgeois Europe. Even the German inventor, Anton Müller produced a loom capable of weaving several pieces of cloth at the same time as early as 1529. The result was not the industrial revolution but, on the contrary, the murder of the inventor by the local city council.

In England, the agrarian and political revolutions of the 16th and 17th centuries laid the basis for the industrial revolution. Without the creation of a ‘surplus’ population of proletarians, the rising productivity of agriculture, and the gigantic boons granted to the capitalists by their conquest of political power, such an enormous social transformation would have been unthinkable.

The newly created proletariat was quickly put to work, usually under the whip of brutal repression, but one more obstacle to the unfettered freedom of capitalist exploitation remained: the guilds. By imposing strict rules and restrictions on the industry the guild system, which was itself a product of the struggle of the early bourgeoisie, became a suffocating fetter on the free development of the capitalist mode of production. In fact, the first manufacture of woolen cloth recorded in 16th century was shut down by the local guilds precisely because it threatened their monopoly.

The first cotton spinning mill was actually set up outside of any major town, in Royton, Lancashire, in order to avoid the resistance of what remained of the guilds in 1764. This quickly established a pattern for what would become the factory system. As one writer noted in 1773:

"Working-men are driven from their cottages and forced into the towns to seek for employment; but then a larger surplus is obtained and thus capital is augmented." (J Arbuthnot, quoted in Marx, Capital, vol. 1)

Here lies the secret of capital: Not private enterprise but the sweated labour of others; not property rights but the absence of property for the many.

Eventually, the wage limitations which had been in place for centuries were finally repealed in 1813. They were now “an absurd anomaly” according to Marx, as the capitalists could freely dictate their workers’ wages and conditions as they pleased. The advance of capitalist production (helped by the mailed fist of the state) had finally developed “a working class which by education, tradition and habit looks upon the requirements of that mode of production as self-evident natural laws.”

As this newer, more ‘civilised’, form of exploitation took over more and more spheres of production, the British ruling class suddenly discovered that the slaves working its colonial plantations were human beings too. But when it finally abolished slavery in its colonies in 1833, the British government paid out £20m to compensate not the slaves but the 3,000 families that had owned slaves for their loss of ‘property’. This figure represented in today's terms around £16.5bn: an enormous gift to the slave-owners, which they promptly put to use in English factories, Irish farms and Indian plantations.

Slavery was not abolished because it was immoral; it was abolished because it was unprofitable. It would be foolish to persist in such an expensive and unproductive enterprise when a shrewd investor could squeeze a never-before-seen profit from the blood of the ‘free-born slaves’ of Britain and its colonies.

But the creation of the working class gave a double gift to the capitalists. Not only did it create their profits from the workers’ surplus labour; it also created the means by which those profits could be realised – the first ever truly mass consumer market.

The average peasant never tended to buy much food or clothing because he would grind his own corn and weave his own cloth. The dispossession of the peasantry meant that not only were they dependent on the capitalists for work and wages, they also had to spend those wages on basic necessities like food and clothing from none other than the same capitalists (looked at on a national scale).

Later, in the 19th century, the British state used tariffs to destroy the Indian home-spinning industry and flood the market with cloth, often spun from Indian cotton. The role of India as a colony thus shifted from solely being a source of loot (which it remained) to also being an enormous captive market. In this way, the Indian masses, like their British counterparts, paid twice for their exploitation by the British capitalists.

This played an important role both in the rise of British capitalism and the struggle for Indian independence. In 1921, the Indian National Congress adopted a flag containing a picture of a spinning wheel to symbolise the home industry destroyed by British-rigged competition. This spinning wheel still survives (in part) in the Indian flag today, although it was changed into a Buddhist chakra wheel.

The importance of mass consumption to capitalism can be seen today on an even grander scale. The effect of this in our culture is the rampant consumerism and debt which bears down on us as individuals like a force of nature. We must not only work; we must buy. In this sense, supply determines demand as much as demand determines supply.

A new fight

Capital now emerged, fully formed and “dripping blood from every pore” (to use Marx’s expression). Ever since, the freedom of capital has continued to find its reflection and source in the unfreedom of human beings. But it has also laid the basis for a new and greater fight.

Just as the bourgeoisie, a class born of the struggle between the feudal lords and serfs, was eventually able to seize power, transform the state to its own ends and wield it to eliminate the old order, so too can the working class, itself created by capitalism’s infinite drive to exploit human labour-power.

Like the medieval serfs, the workers of today give up most of their lives for a parasitic class of property owners. But by taking the immense productive forces created by their own labour into the hands of society as a whole, the workers of the world can put an end to class oppression for good, and usher in a new era of genuine freedom for the whole of the human race.

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