Since the 50s economic historians have gone back and forth over how to break down the puzzle of this shift in growth. Much of the debate has centered on figuring out why farms were so slow to produce food for such a long time. Some argued it was about a lack of access to markets for selling goods, so there was no incentive for producing more than what one family could consume. But then figures like James T. Lemon gathered data on output and family consumption (based on yield and family size estimates) revealing the presence of farm surpluses above and beyond what a family would need to sustain itself, which he believed proved the existence of early markets for agricultural output in the 1700s.
Others took a more anthropological approach, arguing that it wasn’t about market access at all, but a sociocultural “mentality” that was divorced from the idea of maximizing profit. These “moral economy” historians, borrowing from the anthropologist Clifford Geertz’s accounts of non-entrepreneurial Indonesian peasant villages saw early New England as a pre-capitalist, community-oriented system of exchange where norms, gifts and tradition mattered much more than efficient management and production to advance crop or meat output. In the words of historian Marc Bloch, “The society was certainly not unacquainted with either buying or selling. But it did not, like our own, live by buying and selling.”
This position is partly ideological. Marxist-minded historians like to think of peasant societies as having a non-capitalist ethics grounded in communal ideals. But there’s also some interesting evidence in its favor. Vickers, in his paper, “The culture of credit in rural New England, 1750-1800” describes farming communities as immersed in non-monetary exchanges– neighborly solidarity networks that helped families manage risk and allocate resources. Vickers provides some useful data based on farmer’s accounting books that offer a glimpse of how these informal networks of sharing, reciprocal gift-giving and mutual aid may have operated in rural American communities.
Some of the reports describe swapping casual labor or lending out farming equipment. One interesting data point comes from the diary of the midwife Martha Ballard. Nearly 78 percent of the transactions recorded in her journal account are purely non-monetary, with no mention of money or price value. In many cases, Martha provided lodgings and meals to travelers, or offered her abilities as a nurse. In exchange, members of the community would bring her foods or agree to watch her children, but in total Martha remained a major creditor to the community:
Vickers argues that Martha never expected to be paid back in full, but rather believed that, “the final unit of accountability in non-monetary exchanges was not the individual but the community.” It was only in the monetary world, in her work as a midwife, where she expected to be paid a regular fee. Similar results are found for male farmers who loan out labor and equipment without expecting exact monetary compensation. In his conclusions, Vickers notes that while these non-monetary exchanges were not explicitly quantified, exchanges did reflect a sort of balance based on ethical beliefs such as duty to kin, respect for the elderly, and pity for the disadvantaged.
So if we take the “moral economy” historians at their word, the American capitalist transformation was largely about a change in values and attitudes, whereby farmers were suddenly inspired to begin thinking like entrepreneurs, to efficiently allocate resources and produce goods for a market. As for what exactly created that change, no clear mechanism is presented besides a few vague references to “energies” generated in the American Revolution.
Winifred Rothenberg, first in a paper and then in her book From Market-Places to a Market Economy, made one of the most compelling cases for why the moral economy position is unrealistic, or at least not the best explanation for how we moved from low to high productivity on our family farms. For her, development occurred when a lot isolated farming networks began to connect together to form cohesive markets for goods and labor. Instead of looking at changing attitudes, Rothenberg considers a series of indicators of a gradual cohesion and consolidation of markets, including convergences in wage rates and farm prices, the extension of credit networks to further and further partners, and the proliferation of market towns. For Rothenberg, the Revolution did play a role, but it was in the form of catalyzing the emergence of commodity, labor and capital markets as established entities. In one analysis, Rothenberg charts how prices for staple crops began to converge and fluctuate in unison; an indicator of increased market connectivity. Price data was gathered from 54 manuscripts for the price of corn, potatoes, rye oats, hay, beef, pork and cider:
Her results showed a clear convergence of prices moving towards the 1800s in several commodities including corn and rye. Rothenberg writes, “The people who settled this land came from a tradition of Market Crosses, Market Days, Corn Markets, cattle, wool, cheese, silk and produce markets, stalls, shops, fairs, itinerant peddlers, and cattle drovers.” In other words, the farming families were never non-trading ethical peasants, but were instead just slow to develop the extensive networks needed to facilitate their entrepreneurial, labor productive spirit. The cultural changes that did occur (sons stopped spending their whole life on the family farm, the neighborly networks of mutual aid began to diminish in importance) were the result of market changes, not the other way around.
That’s not to say that we should completely discount culture-centric theories of capitalist transition. Jan De Vries has done important work documenting how changing aspirations for leisure products helped drive the consumption and productivity boom in the Netherlands. Vickers favors a view of America’s transition as an interplay between changing cultural values and impersonal market convergences. For him, people “engaged widely in marketplace dealings but conducted them on credit based on evaluations of personal character, which were inevitably cultural constructions…the concern over neighbourly reputation was actually a product of market growth, not its victim.” So mutual aid networks and moral economies actually helped facilitate the growth and expansion of interregional markets.
Following Vickers, we might conceive of America’s transition to capitalism as a case of New England farmers who for years relied on kinship and community norms to survive in a harsh, spartan climate, slowly and deliberately making way for market forces that incentivized productivity and wealth accumulation. The Revolution shook up labor and capital, and farmer’s sons began moving into the city looking for profitable work off the farm; technical improvements to roads and storage solidified generalized commodity prices, paving the way for railroads and new migrant workers to expand the manufacturing base, and the rest is history. It’s probably not a coincidence that during this period Adam Smith’s two major works on the entrepreneurial and sympathetic spirits of man, The Wealth of Nations and The Theory of Moral Sentiments were making the intellectual rounds. In his great paper “The Two Faces of Adam Smith,” Nobel laureate Vernon Smith argues that the two books come together to produce, “one behavioral axiom, ‘the propensity to truck, barter, and exchange one thing for another,’ where the objects of trade I will interpret to include not only goods, but also gifts, assistance, and favors out of sympathy … whether it is goods or favors that are exchanged, they bestow gains from trade that humans seek relentlessly in all social transactions…It explains why human nature appears to be simultaneously self-regarding and other-regarding.”
B.S. Economics/Mathematics '17