Contradictions in early forms of capitalism: The case of the made-in-China Philippine cloaks in 17th century

Reading Silvio A. Zavala’s (1935) monumental work on Spanish Encomienda, La encomienda Indiana, I found a passage that captured particularly my attention. It dealt with the problem Spanish Crown officials faced when taxing the natives entrusted to Spanish grantees in the Philippines, the so called encomenderos at the beginning of the 17^th century. The questions the Spanish monarchy and its officials were asking at that time were: How do we tax Philippine natives? Do we tax them by collecting the fees in goods or by collecting actual money, that is, gold and silver?

This is the passage that intrigued me, as it reflected the many contradictions of early forms of capitalism:

The royal decree of 16 February of 1602 commanded the governor of the Philippines, Don Pedro de Acuña, to oversee if, as the prosecutor of the Audience informs, the tax of eight reales that the Indians pay now in goods by their own choice is inconvenient. The prosecutor held the view that before, by demanding to pay their taxes in goods, they produced them; now they buy the cloaks from the Chinese and do not weave them, and they do not mine gold. The King mandates that the most appropriate order be given to charge the fees. (Zavala, 1935, pp. 773-774)

These contradictions could be expressed nowadays by competing forms of economic development. On the one hand, we have economies that encourage the making of a fast buck, such as those of developing countries that encourage free trade, open up their domestic markets and engage in the retailing of products manufactured abroad, including China. The way to finance the consumption of foreign goods is by selling no manufacture-intensive commodities, that is, raw material. Because the economy is not labour intensive and the production processes are simple, the entrepreneurs and the workforce remain unsophisticated. On the other hand, we have economies that are not that radical in the defence of open markets, at least they are not keen on opening up their domestic markets, and prefer to manufacture goods locally. This kind of system requires massive amounts of capital and may create the true capitalist entrepreneur, the industrialist and the proletariat.

Salazar (2003) traces back this contradiction to the discovery and colonial periods, to the collision of different modes of production represented by the higher ideals set by traders, merchants and military captains that engaged in exploration and pillaging as a way to acquire gold, what he calls ‘the first conquest enterprise’ or ‘societas maris’, and the deviant and lower ideals set by the conquerors as they became settlers and sought autonomy from European powers, what he calls the ‘popular enterprise of production and exporting’ that created a proto colonial bourgeoisie (pp. 36-37). Eventually, the deviant idea was the seed of independence. The former mode of production is the one of the adelantados, explorers such as Cortés in Mexico and Pizarro in Peru. The latter mode of production is the one of Valdivia in Chile, an adelantado that did not find any treasures to pillage and therefore had no other choice than putting his soldiers to work in the settlements.

Yet there is still another contradiction in the aforementioned case of the Philippine Encomienda. If the Spaniards let the Indians engage in trading and retailing of commodities, taking advantage of the Philippines geographic position as a trading hub, as it stands near continental China and the Pacific islands that produced spices and manufactured goods, the master-serf relation that characterised the Encomienda would de facto come to an end. Ultimately, this meant that the natives would become entrepreneurs, businessmen and gain extraordinary levels of autonomy. They would move upward the social ladder severing the ties that locked them to their colonial masters. Thus, the Spaniards had many reasons to control Chinese trade in Manila and the Philippines in general and tax the Philippine natives in goods instead of cash. In that way they could have them working in the fields and mines, keeping them as serfs. However, these reasons betrayed the Spanish mercantilist fixation with rapidly acquiring gold and silver. The introduction of the market, ruled by the abstraction of exchange value and currency, was a way to end up the old feudal order.

Referencias

Zavala, Silvio (1935). La encomienda Indiana. Madrid: Editorial Porrúa.

Salazar, Gabriel (2003). Historia de la acumulación capitalista en Chile. Santiago: LOM Ediciones.