Merchant Capital: Jairus Banaji


This piece was originally published in French at

In Marx the longest stretch of text that deals with merchant’s capital occurs in Part 4 of volume 3 of Capital. (pp. 379–455 of the Penguin edition). It is crucial to see at the outset that Marx treats commercial capital (one of the two essential forms into which he divides merchant’s capital) strictly as a function of the circulation of industrial capital. The merchant is simply an ‘agent’ of industrial capital. The merchant’s sole function is the buying and selling of the commodities that make up the commodity capital of industrial firms.

If Marxists think they can use this ‘theoretical definition’ (as Marx calls it, Capital, vol. 3, p. 380) as a basis for writing the history of capitalism, they will make no progress and indeed the Marxist history of capitalism has made no progress beyond largely sterile debates about ‘transition’, ‘world systems’, etc. The best pages in Chaper 20 are pp. 452–4, dealing with possible types of transition within capitalism. Apart from vol. 3, there are isolated passages in the Grundrisse, Theories of Surplus Value, and Capital vol. 2; but these are few and far between.  The most valuable are: Grundrisse, pp. 327–8 (on mercantilism), pp. 509–12 (on the putting-out system and mass production and their links with major commercial centres like Venice), Capital vol. 2, pp. 318–19 (on the merchant-controlled cottage industries of Russia). The historical treatment of merchant’s capital in Chapter 20 of Capital vol. 3 is inadequate, full of judgements that (inevitably) need to be substantially revised.   

A major unresolved issue of theory in Capital vol. 3 relates to Marx’s analysis of the position of ‘commercial workers’. See vol. 3, pp. 406-8 (and his statement of the ‘difficulty’ at p. 408). Namely, do the wage-labourers employed by commercial capitalists produce value and surplus-value?  Stated in a common-sensical way, the problem Marx confronts is simply – since their employers don’t (Marx is clear about that), how can they be said to? 


Pokrovsky, M.N., 1931. History of Russia from the Earliest Times to the Rise of Commercial Capitalism, trans. and ed. J.D. Clarkson and M.R.M. Griffiths. London: Martin Lawrence.

Barber, J., 1981. Soviet Historians in Crisis, 19281932. London: Macmillan. Includes a discussion of Pokrovsky’s significance to Soviet history and the attack Stalin mounted against him at the end of the twenties. Radek also figures on the side of those who took ‘merchant capitalism’ seriously as a category of historical analysis.

Ormrod, D., 1984. ‘R.H. Tawney and the Origins of Capitalism’. History Workshop, 18: 138–59. An interesting account of the complexity of Tawney’s work and of the importance to it of the category of ‘commercial capitalism’. The dichotomy between the commercial and agrarian sides of the English economy that became so strident in debates within the post-war Marxist tradition (Brenner, etc.) is shown to be much less evident in the more balanced way Tawney approached English history. 

Mielants, Eric H. 2008, The Origins of Capitalism and the “Rise of the West”, Second edition, Philadelphia: Temple University Press. A useful introduction that combats purely Eurocentric accounts of early capitalism. No discussion of theory.

Banaji, J., ‘Merchant Capitalism’, in  Handbook of Marxism, eds. Sara Farris and Alberto Toscano (forthcoming). Constructs a strong case for the essential modernity of merchant capital against the habitual characterization of it as ‘antediluvian’.  The chapter proposes a taxonomy of the four major forms that this regime of capital accumulation took over several centuries of development down to the 19th century.


Picon, Maurice 2008, Production artisanale et manufacturière à l’époque romaine: À propos de  L’Histoire brisée d’Aldo Schiavone ’, in L’économie antique: Une économie de marché? , edited by Yves Roman and Julie Dalaison,  Paris: ***. A brilliant critique of Aldo Schiavone and his minimalist views of the organization of the Roman economy. Picon comes from ceramic studies and uses the archaeology to devastating effect, drawing his examples from the glass and pottery industries.

The later middle ages/early modern period

Cracco, Giorgio 1967, Societa e stato nel medioevo Veneziano (secoli xiixiv), Florence: Olschki. Marx described Venice and Genoa as urban republics where the merchants ‘subordinated the state more securely to themselves’ (Capital, vol. 3, p. 737). Although not written from an explicitly Marxist standpoint, Cracco’s monograph deals with capitalism in Venice from the twelfth to the fourteenth centuries.  It demonstrating the extent and forms in which the grandi mercanti exercised control over the Venetian state. Cracco shows that by the thirteenth century the concentration of mercantile capital had advanced sufficiently to destroy the earlier solidarity of the classes involved in maritime trade. 

Ouerfelli, M., 2008. Le Sucre. Production, commercialisation et usages dans le Méditerranée médievale. A superb account of the medieval Mediterranean sugar industry, which starts with its early evolution in Egypt (expansion under the Fatimids and Ayyubids) and then moves systematically across the various sectors of the Mediterranean in a line running from east to west, since that is how the industry moved. Ouerfelli shows that Mediterranean sugar declined by the end of the 15th century as cheaper sugar began to flow into Mediterranean markets from the eastern Atlantic. Ouerfelli repeatedly underscores the role of merchant capital (Italian capital especially) in expanding and organizing markets, investing in refineries, and giving the industry an international character from the very beginning. 

Tognetti, Sergio 2002, Un’industria di lusso al servizio del grande commercio, Florence: Leo S. Olschki. A concise case study of the silk industry of Florence that uses archival material from the business papers of merchant houses. Tognetti underlines the modernity of merchant firms thanks to the scale of resources they commanded, to their managerial skills and their profound knowledge of international markets.

Braudel, Fernand 1975, The Mediterranean and the Mediterranean World in the Age of Philip II, 2 volumes, translated by Siân Reynolds, London: Fontana. Certainly the most lucid and lively economic history of the sixteenth century ever written. Part 2 (vol. 1, pp. 355ff.) is the economic heart of the two volumes. Braudel shows how seamlessly capitalists moved between the main sectors of the Mediterranean economy (other than agriculture itself), in other words, between trade, finance and industry.  

Braudel, Fernand  2002, Civilization and Capitalism 15th–18th Century: Volume 2, The Wheels of Commerce, London: Phoenix Press. Lots of interesting material in this volume especially.

Noordegraaf, L., 1997. ‘The New Draperies in the Northern Netherlands, 1500–1800’. In The New Draperies in the Low Countries and England, 13001800, ed N.B.Harte, 173–95. New York: Oxford University Press. An excellent (Marxist) discussion of the putting-out system and the transition to more centralized forms of production in the Dutch woollen textiles sector.

Poni, C., 1976. ‘All’ origine del sistema di fabbrica: tecnologia e organizzazione produttiva dei mulini da seta nell’Italia settentrionale (sec. xvii–xviii)’. Rivista storica italiana, 88: 444–97. A seminal study of the Bologna-style hydraulic silk mills (alla bolognese) that spread across northern Italy in the seventeenth century. Poni argues that these large-scale, mechanized sites of production anticipated the 19th-century English factories by some 200 years. He also shows that investment in the silk mills came mainly from the bigger merchants. This was Poni’s most Marxist work from the 1970s, with considerable emphasis on the control of labour.

Brenner, Robert 1993, Merchants and Revolution: Commercial Change, Political Conflict, and London’s Overseas Traders, 15501653, Cambridge: Cambridge University Press. Brenner’s best work, largely focused on divisions within the merchant classes of England in the reign of Elizabeth and later, but striking for its refusal to characterize those merchants as merchant capitalists whereas the agrarian aristocracy is of course repeatedly described as a capitalist class. Perry Anderson has a brilliant review of the book.

Dias, Manuel Nunes 1963, O Capitalismo monárquico Português, 14151549. Contribuição para o estudo das origens do capitalismo moderno, 2 vols., Coimbra: Faculdade de Létras da Universidade de Coimbra. Sees Portugal as the front runner of European capitalism, the first truly capitalist state, even though monarchical in form. Portugal encapsulated a form of the partnership between state and (commercial) capital that was quite differently configured from the later French and British joint-stock companies that expanded into Asian markets. 

Kriedte, Peter 1983 (orig. 1980), Peasants, Landlords and Merchant Capitalists: Europe and the World Economy 15001800, Oxford: Berg. One of the first Marxist accounts to return to and rehabilitate merchant capitalism after the Stalinist drought.

Xu, Dixin and Wu, Zhengming 2000, Chinese Capitalism, 1522–1840, New York: St. Martin’s Press.  Some very interesting chapters on the ‘shoots of capitalism’ in various industrial and commercial sectors under the Ming and Qing dynasties.


Goubert, Pierre 1960, Beauvais et le Beauvaisis de 1600 à 1730. Contribution à  l’histoire sociale de la France du XVIIe siècle, Paris: SEVPEN. Goubert shunned theory, yet the history he wrote of this largely rural part of France bristled with issues about the nature of seventeenth/eighteenth-century capitalism in France, not least in the way the putting-out system could integrate the countryside into international trade circuits.

Miller, Joseph C. 1988, Way of Death: Merchant Capitalism and the Angolan Slave Trade, 17301830, London: Currey. A detailed study of the Portugese slave trade and of the role of other merchant capitals in establishing control over it later. The 18th century was a watershed in the internationalization of capital, the general perspective within which M. conducts his analysis.

Lyashchenko, Peter Ivanovich 1998 (Russian orig. 1927), ‘The Development of the Russian Grain Economy during the Crisis of 1880–1890’, in Commercialization and Agriculture in Late Imperial Russia: Essays on Russian Economic History, edited and translated by Hari Vasudevan, Calcutta: K. P. Bagchi & Co.  A fine example of how Russian Marxists had no problem with the category of ‘trading capitalism’ till this was driven out of Marxist theory in the late twenties.

Beckert, Sven 2014, Empire of Cotton: A New History of Global Capitalism, London: Allen Lane. Practically the only work (next to Veyssarat’s study of the Swiss textile industry) to show how pivotal merchant capitalists were to the expansion of industrial capitalism in the branch of industry it deals with, viz. cotton textiles. B. says he prefers the term ‘war capitalism’ to ‘merchant capitalism’ because of the violence involved in the global expansion of the industry. Possibly misleading if this is misconstrued as a theoretical rather than purely historical category.    

Debates on the Nature of British Capitalism

Ingham, G. 1984, Capitalism Divided? The City and Industry in British Social Development, London: Macmillan. A good example of the way scholars working outside any self-consciously Marxist tradition could fill the huge gap left by Anderson and Nairn in the debate on the nature of British capitalism that started in the sixties. I. argues for the essentially mercantile character of the City and its pivotal role in sustaining British capitalism as a whole.

Ingham, G. 1988, ‘Commercial Capitalism and British Development’, New Left Review, 1/172: 45ff.  A good rejoinder to Barrat-Brown’s absurdly dogmatic review of his book.

Capital and Household Production

Bernstein, H., 1977. ‘Notes on Capital and Peasantry’. Review of African Political Economy, 4 (10): 60–73.  A seminal paper and, like Mike Cowen’s work, a product of Marxist debates in the seventies.  Bernstein argues that ‘peasants have to be located in their relations with capital and the state, in other words, within capitalist relations of production mediated through forms of household production which are the site of a struggle for effective possession and control between the producers and capital/state”. In other words, capital and state both have a major interest in retaining household production as a key element of accumulation, not just in destroying the peasantry. The paper also draws attention to two passages in Chayanov that allowed for this model of accumulation to be constructed.

Cowen, M.P., 1981. ‘Commodity Production in Kenya’s Central Province’. In Rural Development in Tropical Africa, eds J. Heyer, P. Roberts and G. Williams, 121–42. London: Macmillan. A major attempt to apply Marxist categories ‘creatively’ to show how we might try and understand the integration of household commodity production into the wider process of capitalist accumulation. Cowen argued that the intervention of international finance (e.g. UK government aid agencies) stabilized the household sector in countries like Kenya against the potentially destabilizing influences of indigenous capitalism.

Banaji, J. 2016. ‘Merchant capitalism, peasant households and industrial accumulation: integration of a model’. Journal of Agrarian Change, Vol. 16 No. 3, July 2016, pp. 410–431. Part of the recent Festschrift for Henry Bernstein which starts by summarizing a seminal paper that Bernstein published in 1977 (see above) and moves out from there to construct a more general taxonomy of the ways in which capital dominates the agrarian sector (household producers), using Chayanov’s idea of ‘vertical capitalist concentration’ as a major plank of its argument. The best part of the paper is its discussion of what it calls the ‘produce trades’, the backbone of French and British mercantile capitalism in the 19th century . 

Shenton, Robert W. 1986, The Development of Capitalism in Northern Nigeria, London: James Currey. Among a mere handful of valuable Marxist studies that assigns central importance to merchant’s capital. Chapter 5 is called ‘Concentration and Centralization of Capital’, Shenton arguing there that ‘concentration and centralization were the only means of commercial survival’, meaning survival in the battle of competition between large mercantile firms in control of West Africa’s trade and of the shipping connected with it.

The Subordination of Commercial to Industrial capital

Porter, G. and H.C. Livesay, 1971. Merchants and Manufacturers: Studies in the Changing Structure of Nineteenth-Century Marketing. Baltimore, MD: The Johns Hopkins University Press. Shows that the subordination of commercial to industrial capital only came about in the main part of the 19th century (much later than Marx supposed) as large industrial firms began to integrate forward to handle their own sales and marketing, cutting out the ‘middleman’.

Merchant Capital in the Twentieth Century

Chen, H.-S., 1939. Industrial Capital and Chinese Peasants: A Study of the Livelihood of Chinese Tobacco Cultivators. Shanghai: Kelly and Walsh. Probably the first substantial case-study of contract farming ever written. It shows how Chinese merchant capital (the compradores) were integrated into supply chains controlled by large industrial companies, in this case by the Anglo-American tobacco giant BAT. Price domination was for Chen the key mechanism through which industrial capital directly exploited Chinese peasant labour.

Becker, S., 1998. ‘The German Metal Traders before 1914’. In The Multinational Traders, ed G. Jones, 66–85. London: Routledge.

Becker, S., 2002. Multinationalität hat verschiedene Gesichter. Formen internationaler Unternehmenstätigkeit der Société anonyme des mines et des fonderies de zinc de la Vieille Montagne und der Metallgesellschaft vor 1914. Stuttgart: Franz Steiner.

Both works by Susan Becker underscore the importance of vertical integration to the business strategies of large German non-ferrous metal producers struggling to retain market share in their core (mercantile) businesses. The fact that Metallgesellschaft integrated backward to control of mining and smelting operations worldwide didn’t make it an ‘industrial’ company (a form of industrial capital), Becker argues. Next to Fieldhouse’s study of UAC, this is the closest we come to very advanced, purely modern forms of commercial capitalism.

Fieldhouse, D.K., 1994. Merchant Capital and Economic Decolonization: The United Africa Company, 19291987. Oxford: Clarendon Press. An illuminating and detailed study of the UAC, Unilever’s trading arm. Especially valuable as a fine business history of one of the world’s biggest merchant companies. (Note the title!)

Harriss-White, B., 2008. Rural Commercial Capital: Agricultural Markets in West Bengal. New Delhi: Oxford University Press.  One of the only case studies of how commercial capitalists control agrarian production and exchange in India. Especially interesting because the fieldwork was done in a state controlled at the time by the Communist Party of India (Marxist). The clear implication of her analysis is that much of the development in the agro-industrial sector of Bengal was premised on the deals struck between merchant capital and the Left Front government.