Capitalist relations do not develop “naturally,” nor are the preconditions for capitalism assured by the rise of markets alone. This paper takes seventeenth–century Massachusetts as a case in point. Class relations there were noncapitalist. A brief exploration of these class relations as well as their economic, political, and cultural conditions of existence will show how complex interaction between classes produced the conditions necessary for capitalism.

Apprenticeship was, at one time, the foremost means of acquiring skill in North America and Europe. Today it is rare in North America for reasons that are not well understood. I draw on the population of apprentice contracts signed in Montreal over a 50-year period to pinpoint the start of the decline and explore its origins. I find that the decline began around 1815. During its first phase masters responded to greater difficulties in contract enforcement. A direct effect of the rise of larger establishments on the market for apprentices appears later, in the late 1820s and 1830s.

As in the Middle Ages in the West, so in Tokugawa Japan (1600–1868) men were fond of explaining the hierarchical society in which they lived by comparing it to an organism. Social classes, Confucian scholars said, were like parts of the body: each had a vital function to perform, but their functions were essentially different and unequal in value. In this scheme the peasants were second in importance only to the ruling military class. Just as the samurai officials were the brains that guided other organs, so the peasants were the feet that held the social body erect. They were the “basis of the country,” the valued producers whose labor sustained all else. But, as a class, they tended innately to backsliding and extravagance. Left alone they would consume more than their share of the social income, ape the manners and tastes of their betters, and even encroach upon the functions of other classes to the perilous neglect of their own. Only the lash of necessity and the sharp eye of the official could hold them to their disagreeable role. They had to be bound to the land; social distinctions had to be thrown up around them like so many physical barriers; and, to remove all temptation to indolence and luxury, they had to be left only enough of what they produced to let them continue producing.

Until the close of the Civil War, shipowning was one of the principal forms of capital investment along our northern seaboard. Gradually, investors found other outlets for their surplus wealth in government funds, in bank and insurance stocks; in railroads, and in factories. Although its relative importance had declined, shipowning reached its peak on the eve of the Civil War. After that, it declined sharply.

From the 1830s on Syria and Palestine exported monetary metal to pay for an import surplus. Nevertheless, there is evidence of a concomitant inflationary process. The apparent contradiction is resolved by a theoretical argument and by reference to the dual nature of the Ottoman monetary system. Government-induced inflation in terms of the domestic (token and paper) money reinforced the rising price of full-bodied coins, caused by the adverse balance of trade.