Merchant Capital and Underdevelopment

  • Geoffrey Kay


Merchant capital discovered what subsequently became the underdeveloped world more than two and a half centuries before the first triumph of industrial capitalism in Britain at the end of the eighteenth century. The vast commercial empires set up first by the Spanish and Portuguese and later by the British, French and Dutch, established the basis of the modern economy. They concentrated vast accumulations of wealth in the form of capital, while overthrowing and pillaging whole civilisations. The creation of the world market, ‘the starting point of the modern history of capital’, was also a process of destruction. On the one hand it drew the world together into a new global division of labour that opened the possibility of previously undreamt-of increases in men’s productive powers; on the other it split it apart, turning this division of labour into a grotesque structure of exploitation and oppression. The foundations of modern development and underdevelopment were laid at the same time by the same process.


Free Trade Develop World Productive Capital Cost Price Underdeveloped Country 
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  1. 3.
    See G. B. Kay, The Political Economy of Colonialism in Ghana (London: Cambridge University Press, 1972).Google Scholar
  2. 6.
    ‘There has been a great deal of confusion about the so-called problem of the “transformation of values into prices”, but, once it is freed from its metaphysical associations, it turns out to be merely an analytical puzzle which, like all puzzles, ceases to be of interest once it has been solved’ (Joan Robinson and John Eatwell, An Introduction to Modern Economics, p. 30). For a concise statement of the problem see Paul M. Sweezy, The Theory of Capitalist Development, Monthly Review, Modern Reader Paperback Edition (New York and London, 1968), chap. VII.Google Scholar

Copyright information

© Geoffrey Kay 1975

Authors and Affiliations

  • Geoffrey Kay
    • 1
  1. 1.The City UniversityLondonUK

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