In Marxian economics and preceding theories, the problem of primitive accumulation (also called previous accumulation, original accumulation) of capital concerns the origin of capital, and therefore of how class distinctions between possessors and non-possessors came to be.
Adam Smith's account of primitive-original accumulation depicted a peaceful process, in which some workers laboured more diligently than others and gradually built up wealth, eventually leaving the less diligent workers to accept living wages for their labour. Karl Marx rejected this account as "childish" for its omission of violence, war, enslavement and colonialism in the historical accumulation of land and wealth. Marxist Scholar David Harvey explains Marx's primitive accumulation as a process which principally "entailed taking land, say, enclosing it, and expelling a resident population to create a landless proletariat, and then releasing the land into the privatised mainstream of capital accumulation".
The concept was initially referred to in various different ways, and the expression of an "accumulation" at the origin of capitalism began to appear with Adam Smith. Smith, writing The Wealth of Nations in his native English, spoke of a "previous" accumulation; Karl Marx, writing Das Kapital in German, reprised Smith's expression, by translating it to German as ursprünglich ("original, initial"); Marx's translators, in turn, rendered it into English as primitive. James Steuart, with his 1767 work, is considered by some scholars as the greatest classical theorist of primitive accumulation.
In disinterring the origins of capital, Marx felt the need to dispel what he felt were religious myths and fairy-tales about the origins of capitalism. Marx wrote:
This primitive accumulation plays in political economy about the same part as original sin in theology. Adam bit the apple, and thereupon sin fell on the human race. Its origin is supposed to be explained when it is told as an anecdote of the past. In times long gone-by there were two sorts of people; one, the diligent, intelligent, and, above all, frugal elite; the other, lazy rascals, spending their substance, and more, in riotous living. (...) Thus it came to pass that the former sort accumulated wealth, and the latter sort had at last nothing to sell except their own skins. And from this original sin dates the poverty of the great majority that, despite all its labour, has up to now nothing to sell but itself, and the wealth of the few that increases constantly although they have long ceased to work. Such childishness is every day preached to us in the defence of property.
What has to be explained is how the capitalist relations of production are historically established. In other words, how it comes about that means of production get to be privately owned and traded in, and how the capitalists can find workers on the labor market ready and willing to work for them, because they have no other means of livelihood; also referred to as the "Reserve Army of Labor."
According to Marx, the whole purpose of primitive accumulation is to privatize the means of production, so that the exploiting owners can make money from the surplus labour of those who, lacking other means, must work for them.
Marx says that primitive accumulation means the expropriation of the direct producers, and more specifically "the dissolution of private property based on the labor of its owner... Self-earned private property, that is based, so to say, on the fusing together of the isolated, independent laboring-individual with the conditions of his labor, is supplanted by capitalistic private property, which rests on exploitation of the nominally free labor of others, i.e., on wage-labor" (emphasis added).
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"Orthodox" Marxists see primitive accumulation as something that happened in the late Middle Ages and finished long ago, when capitalist industry started. They see primitive accumulation as a process happening in the transition from the feudal "stage" to the capitalist "stage".
However, this can be seen as a misrepresentation of both Marx's ideas and historical reality, since feudal-type economies exist in various parts of the world, even in the 21st century.
Marx's story of primitive accumulation is best seen as a special case of the general principle of capitalist market expansion. In part, trade grows incrementally, but usually the establishment of capitalist relations of production involves force and violence; transforming property relations means that assets previously owned by some people are no longer owned by them, but by other people, and making people part with their assets in this way involves coercion. This is an ongoing process of expropriation, Proletarianization and Urbanization.
In his preface to Das Kapital Vol. 1, Marx compares the situation of England and Germany and points out that less developed countries also face a process of primitive accumulation. Marx comments that "if, however, the German reader shrugs his shoulders at the condition of the English industrial and agricultural labourers, or in optimist fashion comforts himself with the thought that in Germany things are not nearly so bad, I must plainly tell him, "De te fabula narratur! (the tale is told of you!)".
Marx was referring here to the expansion of the capitalist mode of production (not the expansion of world trade), through expropriation processes. He continues, "Intrinsically, it is not a question of the higher or lower degree of development of the social antagonism that results from the natural laws of capitalist production. It is a question of these laws themselves, of these tendencies working with iron necessity towards inevitable results. The country that is more developed industrially only shows, to the less developed, the image of its own future"[citations needed]
David Harvey expands the concept of "primitive accumulation" to create a new concept, "accumulation by dispossession", in his 2003 book, The New Imperialism. Like Mandel, Harvey claims that the word "primitive" leads to a misunderstanding in the history of capitalism: that the original, "primitive" phase of capitalism is somehow a transitory phase that need not be repeated once commenced. Instead, Harvey maintains that primitive accumulation ("accumulation by dispossession") is a continuing process within the process of capital accumulation on a world scale. Because the central Marxian notion of crisis via "over-accumulation" is assumed to be a constant factor in the process of capital accumulation, the process of "accumulation by dispossession" acts as a possible safety valve that may temporarily ease the crisis. This is achieved by simply lowering the prices of consumer commodities (thus pushing up the propensity for general consumption), which in turn is made possible by the considerable reduction in the price of production inputs. Should the magnitude of the reduction in the price of inputs outweigh the reduction in the price of consumer goods, it can be said that the rate of profit will, for the time being, increase. Thus:
Access to cheaper inputs is, therefore, just as important as access to widening markets in keeping profitable opportunities open. The implication is that non-capitalist territories should be forced open not only to trade (which could be helpful) but also to permit capital to invest in profitable ventures using cheaper labour power, raw materials, low-cost land, and the like. The general thrust of any capitalist logic of power is not that territories should be held back from capitalist development, but that they should be continuously opened up.— David Harvey, The New Imperialism, p. 139.
Harvey's theoretical extension encompasses more recent economic dimensions such as intellectual property rights, privatization, and predation and exploitation of nature and folk lore.
Privatization of public services puts enormous profit into capitalists' hands. If it belonged to the public sector, that profit would not have existed. In that sense, the profit is created by dispossession of peoples or nations. Destructive industrial use of the environment is similar because the environment "naturally" belongs to everyone, or to no one: factually, it "belongs" to whoever lives there.
Multinational pharmaceutical companies collect information about how herb or other natural medicine is used among natives in less-developed country, do some R&D to find the material that make those natural medicines effective, and patent the findings. By doing so, multinational pharmaceutical companies can now sell the medicine to the natives who are the original source of the knowledge that made production of medicine possible. That is, dispossession of folklore (knowledge, wisdom, practice) through intellectual property rights.
David Harvey also argues that accumulation by dispossession is a temporal or partial solution to over-accumulation. Because accumulation by dispossession makes raw materials cheaper, the profit rate can at least temporarily go up.
Harvey's interpretation has been criticized by Brass, who disputes the view that what is described as present-day primitive accumulation, or accumulation by dispossession, entails proletarianization. Because the latter is equated by Harvey with the separation of the direct producer (mostly smallholders) from the means of production (land), Harvey assumes this results in the formation of a workforce that is free. By contrast, Brass points out that in many instances the process of depeasantization leads to workers who are unfree, because they are unable personally to commodify or recommodify their labour-power, by selling it to the highest bidder.
The economist Joseph Schumpeter disagreed with the Marxist explanation of the origin of capital, because Schumpeter did not believe in exploitation. In liberal economic theory, the market returns to each person the exact value she added into it; capitalists are just people who are very adept at saving and whose contributions are especially magnificent, and they do not take anything away from other people or the environment. Liberals believe that capitalism has no internal flaws or contradictions; only outside threats. To liberals, the idea of the necessity of violent primitive accumulation to capital is particularly incendiary. Schumpeter wrote rather testily:
[The problem of Original Accumulation] presented itself first to those authors, chiefly to Marx and the Marxists, who held an exploitation theory of interest and had, therefore, to face the question of how exploiters secured control of an initial stock of 'capital' (however defined) with which to exploit – a question which that theory per se is incapable of answering, and which may obviously be answered in a manner highly uncongenial to the idea of exploitation.— Joseph Schumpeter, Business Cycles, Vol. 1, New York; McGraw-Hill, 1939, p. 229.
Schumpeter argued that imperialism was not a necessary jump-start for capitalism, nor is it needed to bolster capitalism, because imperialism pre-existed capitalism. Schumpeter believed that, whatever the empirical evidence, capitalist world trade could in principle just expand peacefully. If imperialism occurred, Schumpeter asserted, it has nothing to do with the intrinsic nature of capitalism itself, or with capitalist market expansion. The distinction between Schumpeter and Marx here is subtle. Marx claimed that capitalism requires violence and imperialism—first, to kick-start capitalism with a pile of booty and to dispossess a population to induce them to enter into capitalist relations as workers, and then to surmount the otherwise-fatal contradictions generated within capitalist relations over time. Schumpeter's view was that imperialism is an atavistic impulse pursued by a state independent of the interests of the economic ruling class.
Imperialism is the object-less disposition of a state to expansion by force without assigned limits... Modern Imperialism is one of the heirlooms of the absolute monarchical state. The "inner logic" of capitalism would have never evolved it. Its sources come from the policy of the princes and the customs of a pre-capitalist milieu. But even export monopoly is not imperialism and it would never have developed to imperialism in the hands of the pacific bourgeoisie. This happened only because the war machine, its social atmosphere, and the martial will were inherited and because a martially oriented class (i.e., the nobility) maintained itself in a ruling position with which of all the varied interests of the bourgeoisie the martial ones could ally themselves. This alliance keeps alive fighting instincts and ideas of domination. It led to social relations which perhaps ultimately are to be explained by relations of production but not by the productive relations of capitalism alone.— Joseph A. Schumpeter, The Sociology of Imperialism (1918).
... the accumulation of stock must, in the nature of things, be previous to the division of labour...