Front Page Titles (by Subject) (c) the influences of money economy - The State
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(c) the influences of money economy - Franz Oppenheimer, The State 
The State: Its History and Development viewed Sociologically, authorized translation by John M. Gitterman (New York: B.W. Huebsch, 1922).
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(c) the influences of money economy
The sociological process set into motion by the system of money economy is so well known and its mechanics are so generally recognized, that a few suggestions will suffice.
Here, as in the case of the maritime states, the consequence of the invading money system is that the central government becomes almost omnipotent, while the local powers are reduced to complete impotence.
Dominion is not an end in itself, but merely the means of the rulers to their essential object, the enjoyment without labor of articles of consumption as many and as valuable as possible. During the prevalence of the system of natural economy there is no other way of obtaining them save by dominion; the wardens of the marches and the territorial princes obtain their wealth by their political power. The more peasants who are owned, the greater is the military power and the larger the scope of the territory subjected, and thus the greater are the revenues. As soon, however, as the products of agriculture are exchangeable for enticing wares, it becomes more rational for every one primarily a private man, i. e., for every feudal lord not a territorial prince—and this now includes the knights—to decrease as far as possible the number of peasants, and to leave only such small numbers as can with the utmost labor turn out the greatest product from the land, and to leave these as little as possible. The net product of the real estate, thus tremendously increased, is now taken to the markets and sold for goods, and is no longer used to keep a forcible body of guards. Having dissolved this following, the knight becomes simply the manager of a knight’s fee.∗ With this event, as with one blow, the central power, that of king or territorial prince, is without a rival for the dominion, and has become politically omnipotent. The unruly vassals, who formerly made the weak kings tremble, after a short attempt at joint rule during the time of the government of the feudal estates, have changed into the supple courtiers, begging favors at the hands of some absolute monarch, like Louis XIV. And he furthermore has become their last resort, since the military power, now solely exercised by him as the paymaster of the forces, alone can protect them from the ever-immanent revolt of their tenants, ground to the bone. While in the time of natural economy the crown was in nearly every instance allied with peasants and cities against nobility, we now have the union of the absolute kings, born from the feudal state, with their nobility, against the representatives of the economic means.
Since the days of Adam Smith it has been customary to state this fundamental revolution in some such form, as though the foolish nobles had sold their birthright for a mess of pottage, when they traded their dominion for foolish articles of luxury. No view can be more erroneous. Individuals often err in the safe-guarding of their interests: a class for any prolonged period never is in error.
The fact of the matter is, that the system of money payments strengthened the central power so mightily and immediately, that even without the interposition of the agrarian upheaval, any resistance of the landed nobility would have been senseless. As is shown in the history of antiquity, the army of a central government, financially strong, is always superior to feudal levies. Money permits the armament of peasant sons, and the drilling of them into professional soldiers, whose solid organization is always superior to the loose confederation of an armed mass of knights. Besides, at this stage, the central government could also count on the aid of the well-armed squares of the urban guilds.
Gunpowder did the rest in Western Europe. Firearms, however, are a product that can be turned out only in the industrial establishments of a wealthy city. Because of these technical military reasons, even that feudal landlord who might not care for the newly established luxuries and who might only be desirous of maintaining or increasing his independent position, must subject his territories to the same agrarian revolution; since, in order to be strong, he now before all else must have money, which in the new order of things, has become the nervus rerum, either to buy arms or to engage mercenaries. A second capitalistic wholesale undertaking, therefore, has come into being through the system of payments in money; besides the wholesale management of landed estates, war is carried on as a great business enterprise—the condottieri appear on the stage. The market is full of material for armies of mercenaries, the discharged guards of the feudal lords and the young peasants whose lands have been taken up by the lords.
There are instances where some petty noble may mount to the throne of some territorial principality, as happened many a time in Italy, and as was accomplished by Albrecht Wallenstein, even as late as the period of the Thirty Years’ War. But that is a matter of individual fate, not affecting the final result. The local powers disappear from the contest of political forces as independent centers of authority and retain the remnant of their former influence only so long as they serve the princes as a source of supplies; that is, the state composed of its feudal estates.
The infinite increase in the power of the crown is then enhanced by a second creation of the system of payment in money, by officialdom. We have told in detail of the vicious circle which forced the feudal state into a cul-de-sac between agglomeration and dissolution, as long as its bailiffs had to be paid with “lands and peasants” and thereby were nursed into potential rivals of their creator. With the advent of payments in money, the vicious circle is broken. Henceforth the central government carries on its functions through paid employees, permanently dependent on their paymaster.135 Henceforth there is possible a permanently established, tensely centralized government, and empires come into being, such as had not existed since the developed maritime states of antiquity, which also were founded on the payments in money.
This revolution of the political mechanism was everywhere put into motion by the development of the money economy—with but one exception, as far as I can see, viz., Egypt.
Here, according to the statement of experts, no definite information is to be had, and it seems that the system of money exchanges appears as a matured institution only in Greek times. Until that time, the tribute of the peasants was paid in kind;136 and yet we find, shortly after the expulsion of the Shepherd Kings, during the New Empire (circa sixteenth century B. C.), that the absolutism of the kings was fully developed: “The military power is upheld by foreign mercenaries, the administration is carried on by a centralized body of officials dependent on the royal favor, while the feudal aristocracy has disappeared.”137
It may seem that this exception proves the rule. Egypt is a country of exceptional geographic conformation. Jammed into a narrow compass, between mountains and the desert, a natural highway, the River Nile, traverses its entire length, and permits the transportation of bulky freight with much greater facility than the finest road. And this highway made it easy for the Pharaoh to assemble the taxes of all his districts in his own storehouses, the so-called “houses”138 and from them to supply his garrisons and civil employees with the products themselves in natura. For that reason Egypt, after it has once become unified into an empire, stays centralized, until foreign powers extinguish its life as a “state.” “This circumstance is the source of the enormous and plenary power exercised by the Pharaoh where payments are still made in kind; the exclusive and immediate control of the objects of daily consumption are in his hand. The ruler distributes to his employees only such quantities of the entire mass of goods as appears to him good and proper; and since the articles of luxury are nearly all exclusively in his hands, he enjoys on this account also an extraordinary plenitude of power.”139
With this one exception, where a mighty force executes the task, the power of circulating money seems in all cases to have dissolved the feudal state.
The cost of the revolution fell on peasants and cities. When peace is made, the crown and the petty nobles mutually sacrifice the peasantry, dividing them, so to say, into two ideal halves; the crown grants to the nobility the major part of the peasants’ common lands, and the greatest part of their working powers that are not yet expropriated; the nobility concedes to the crown the right of recruiting and of taxing both peasantry and cities. The peasant, who had grown wealthy in freedom, sinks back into poverty and therefore into social inferiority. The former feudal powers now unite as allies to subjugate the cities, except where, as in Upper Italy, these become feudal central powers themselves. (And even in that case they for the most part all fall into the power of captains of mercenaries, condottieri.) The power of attack of the adversaries has become stronger, the power of the cities has diminished. For with the decay of the peasantry, their purchase power diminishes and with it the prosperity of the cities, based thereon. The small cities in the country stagnate and become poorer, and being now incapable of defense, fall a prey to the absolutist rule of the territorial princes; the larger cities, where the demand for the luxuries of the nobles has brought into being a strong trading element, split up into social groups and thus fritter away their political strength. The immigration now pouring into their walls is composed of discharged and broken mercenaries, dispossessed peasants, pauperized mechanics from the smaller towns; it is in other words a proletarian immigration. For the first time there appears, in the terminology of Karl Marx, the “free laborer,” in masses, competing with his own class in the labor markets of the cities. And again, the “law of agglomeration” enters to form effective class and property distinctions, and thus to tear apart the civic population. Wild fights take place in the cities between the classes; through which the territorial prince, in nearly every instance, again succeeds in gaining control. The only cities that can permanently escape the deadly embrace of the prince’s power are the few genuine “maritime states,” or “city states.”
As in the case of the maritime states, the pivot of the state’s life has again shifted over to another place. Instead of circling about wealth vested in landed estates, it now turns about capitalized wealth, because in the meantime property in real estate has itself become “capital.” Why is it that the development does not, as in the case of the maritime states, open out into the capitalistic expropriation of slave labor?
There are two controlling reasons, one internal, the other external. The external reason is to be found in this, that slave hunting on a profitable scale is scarcely possible at this time in any part of the world, since nearly all countries within reach are also organized as strong states. Wherever it is possible, as for instance, in the American colonies of the West European powers, it develops at once.
The external reason may be found in the circumstance that the peasant of the interior countries, in contrast to the conditions prevailing in the maritime states, is subject, not to one master, but to at least two∗ persons entitled to his service, his prince and his landlord. Both resist any attempt to diminish their peasants’ capacity for service, since this is essential to their interests. Especially strong princes did much for their peasants, e. g., those of Brandenburg-Prussia. For this reason, the peasants, although exploited miserably, yet retained their personal liberty and their standing as subjects endowed with personal rights in all states where the feudal system had been fully developed when the system of payments in money replaced that of payments in kind.
The evidence that this explanation is correct may be found in the relations of those states which were gripped by the system of exchange in money, before the feudal system had become worked out.
This applies especially to those districts of Germany formerly occupied by Slavs, but particularly to Poland. In these districts, the feudal system had not yet been worked out as thoroughly as in the regions where the demand for grain products in the great western industrial centers had changed the nobles, the subjects of public law, into the owners of a Rittergut,∗ the subjects of private economic interests. In these districts, the peasants were subject to the duty of rendering service only to one master, who was both their liege lord and landlord; and because of that, there came into being the republics of nobles mentioned above, which, as far as the pressure of their more progressed neighbors would permit, tended to approach the capitalistic system of exploiting of slave labor.140
The following is so well known that it can be stated briefly. The system of exchange by means of money matures into capitalism, and brings into being new classes in juxtaposition to the landowners; the capitalist demands equal rights with the formerly privileged orders, and finally obtains them by revolutionizing the lower plebs. In this attack on the sacredly established order of things, the capitalists unite with the lower classes, naturally under the banner of “natural law.” But as soon as the victory has been achieved, the class based on movable wealth, the so-called middle class, turns its arms on the lower classes, makes peace with its former opponents, and invokes in its reactionary fight on the proletarians, its late allies, the theory of legitimacy, or makes use of an evil mixture of arguments based partly on legitimacy and partly on pseudo-liberalism.
In this manner the state has gradually matured from the primitive robber state, through the stages of the developed feudal state, through absolutism, to the modern constitutional state.
[∗]See reference as to the meaning of Rittergutsbesitz, ante, page 84.—Translator.
[∗]In mediæval Germany the peasants pay tribute in many cases not only to the landlord and to the territorial prince, but also to the provost and to the bailiff.
[∗]See foot-note on page 84.
[131.]Thurnwald, l. c. p. 712.
[132.]Inama-Sternegg, l. c. II, p. 61.
[133.]Thurnwald, l. c., p. 705.
[134.]“The larger camps of the army of the Rhine obtained their municipal annexes partly through army suttlers and camp followers, and particularly through the veterans, who after the completion of their services remained in their accustomed quarters. Thus there arose distinct from the military quarters proper, a distinct town of cabins (Canabæ). In all parts of the Empire, and especially in the various Germanias, there arose in the course of time, from these camps of the legionaries, and particularly from the headquarter stations, cities in the modern sense.”—Mommsen, l. c. V, p. 153.
[135.]Eisenhardt, Gesch. der National Oekonomie, p. 9: “Aided by the new and more liquid means of payment in cash, it became possible to call into being a new and more independent establishment of soldiers and of officials. As they were paid only periodically it became impossible for them to make themselves independent (as the feudatories had done) and then to turn on their paymaster.”
[136.]Thurnwald, l. c., p. 773.