The Pirate Organization: Lessons From the Fringes of Capitalism (3 page)

As these points develop, we will reveal the bigger picture: with the birth of modern capitalism, the pirate organization gained power as a transhistorical force. And as we develop our theory of the pirate organization, we will also hint at a theory of capitalism. And that is why Blackbeard, for example, has far more in common with a cyberpirate than with a Somalian peasant who uses a Kalashnikov to attack a fishing boat from a makeshift craft.

Chapter Three

THE PIRATE ORGANIZATION AND TERRITORIAL EXPANSION
or
Why Capitalists Shouldn’t Hate the State

The specifically legal concept of “territory” is a creation of modern times … Government officials have used new triangulation, topographical and mapping technologies to precisely determine the space covered by national jurisdiction. This process started coming into play in the 17th century
.

—Heller-Roazen,
The Enemy of All

To understand the pirate organization, we have to clarify exactly what kind of waters it operates in. That is, we must clarify what we mean by
capitalism
, given the persistent myth that likens it to a form of hyperindividualism. Capitalism must be set apart from the series of abstract principles used to lay the foundations of neoclassical economic theory, which studies the ultimate consequences of a state of the world in which the trading of any merchandise is carried out within a system entirely determined by the free fluctuation of price based on supply and demand. These free, pure, and perfect competitive conditions do not exist anywhere and have never existed: they describe an abstract framework that fuels the theoretical development of a scientific discipline.

Most critics of economics nevertheless continue to consider that the discipline can be reduced to
neoclassical
economics (which is wrong) or that economists are just a group of idealists who would truly want the real world to mirror their theory, which, with few exceptions, is also incorrect. Yet it is true that many economists hold their share of responsibility in the unfortunate association of capitalism with neoclassical theory that they have for some time helped disseminate.

Our view of history places the emergence of capitalism at the time when a twofold deterritorialization and normalization movement became effective. By
deterritorialization
, we mean the process whereby capital, workforce, or resources are ripped off of a given territory and become largely independent from it. And what we term
normalization
is the process by which norms, in the broad sense, are imposed upon a space and turn it into a territory. These two principles, which we will explicate further in the next few pages, are the distinctive features of capitalistic dynamics. Symbolically, the birth of modern capitalism began in 1492 with the discovery of America, and it ended in 1648 with the Treaty of Westphalia, which ratified the terms and conditions under which a modern sovereign state could operate.
¹

Sovereignty of State and Capitalism

In line with the spirit of this treaty, the key political event of the seventeenth century was the acquisition of sovereignty by the European states. The sovereignty of the state is the process by which all the land under royal influence becomes territory. As a direct property of the monarch, territory implies the normalization of land without feudal mediation: any individual living in the territory goes from being a subject of a vassal, who serves the king to the nth degree, to the direct subject of the sovereign. Clusters of fiefs then mold into one sovereign territory, emancipating from the church, from the nobility, and from merchant city-states.
²
Consequently, an expansion of territory is primarily an expansion of sovereignty—the homogeneous texture that facilitates the flow of merchandise, money, soldiers, taxes, and labor.

The economic development that took place in sixteenth- and seventeenth-century Europe is inseparable from the institutions that accompanied the birth of the modern sovereign state. The emergence of sovereign European states is the circumstance behind the upcoming upheavals in the organization of international trade. Modern economic changes could not have taken place without the institutional proliferation that secured property rights, such as those that oversaw the advent of the process of enclosure. This proliferation is orchestrated by the sovereign state, which has carte blanche to develop the legal, fiscal, and military tools required for its own reproduction and expansion.

Capitalism, therefore, as a sufficiently homogeneous social formation anchored in identified territories, allows for the circulation and combination of labor and capital. This combination did not take place during feudal times, because peasants were too land rooted. Capital stocks were almost nonexistent, and the local markets, divided up by local micropowers, were too rough and segmented. The serf is a product of the land that he cultivates, and the land is but a facade under which capital lurks. In a feudal society, labor and capital are simply appendages of the land.

Capitalism came into play when “land” became “territory,” when the link between labor and capital loosened, and when the sovereign states began to implement norms for economic circulation and exchange. If the Middle Ages were the age of land, capitalism is the age of territory. The sovereign state, by imposing a set of norms on its territory, enables the deterritorialization of labor and capital. By limiting the power of city-states, which had the habit of imposing taxes and the rules of local guilds on traveling merchants, the sovereign state increased the possibilities of circulation and sped up the flow of capital and labor—and this was going to change the course of history.

Capitalism and Deterritorialization

The concept of
capitalism
came into use during the second half of the nineteenth century, and, retrospectively, stood for the emergence of a social form that saw trade in a radically different way from what prevailed in feudal societies.
³
Capitalism, according to some, is a social order that allows organizational forms to combine flows (of labor and capital) and process them according to particular rules of exchange. Capitalism enables the exchange and combination of mobile resources across definite territories on which sovereigns, be they queens, parliaments, or courts, guarantee the enforcement of norms (e.g., rules and laws). Capitalism, therefore, fosters the gathering of productive resources without territories (“deterritorialized”) by capital owners who invest in their localized combination and future value. On new territories, too, capitalist entrepreneurs combine deterritorialized resources: for instance, labor that migrates to a novel settlement, raw materials transported to a production site where specially designed machines have been installed, and economic institutions like written contracts or business law that can be reproduced over time and space.

This deterritorialization of resources leads to the collapse of feudal codes: the peasant can no longer be attached to his parish; the serf can no longer depend on the local lordship. To integrate these resources into legitimate production, the state decrees standards for trade and the appropriation of any surplus. Thus, two dialectic movements are at the basis of the rise in power of capitalism: on the one hand, the deterritorialization of capital, resources, and labor, and their reterritorialization into the trade space; on the other hand, the normalization of this trade space through the definition and enforcement of norms that delineate legitimate exchanges.

The flight of the Huguenots, the brain drain, and the gold rush are famous examples of deterritorialization. A contemporary example of reterritorialization is the relocation of Native Americans to protected reserves and to tax-free areas where they can develop gambling-based businesses. The legitimization of any form of economic exchange (bartering, below-cost pricing, credit purchasing), of trade (sale of alcohol, slaves, or firearms), or of competition (monopoly, regulated oligopoly, free trade) constitutes a normalization process orchestrated by the state, which, for several centuries, has been carving out the possible trajectories of capitalism. From this perspective, free trade is no more “natural” than monopoly. It is the visible hand of the state that contributes to shaping the early competitive structure of most industries in any capitalist society.

The deterritorialization of men, resources, and goods was facilitated by a series of events that occurred simultaneously on both land and sea. In the sixteenth century, the rise in enclosure gave birth in Great Britain to modern farms, which were managed by large landowners, who focused on productivity and profit gains. Subsistence farming was being gradually replaced by intensive agriculture, which allowed landowners to accumulate wealth while forcing thousands of impoverished peasants to seek labor in city factories, whose emergence was made possible by the growing availability of investment capital. At the same time, improved navigation techniques created a potential for deterritorialization toward new continents. European sovereigns thus had new areas to exploit precious metals and labor power, which began to spread worldwide. The emergence of an international banking system, the widespread use of substitutes for coinage (bill of exchange, currency), and the normalization of risk by insurance companies has sped up this worldwide movement of deterritorialization. This set the stage for a redefinition of statehood.

Normalization of Exchanges

The notion of sovereignty has taken different meanings over time. In primitive societies, the sovereign was the one who claimed control over the forces of nature. Kings and shamans could equally refer to the sun as the source of their legitimate power. Throughout the Middle Ages, in despotic societies, the supreme leader found his legitimacy in the size of his land possessions—and sovereignty, literally, was rooted in the land controlled by lords and emperors.

In the modern age, it is capital (or money) that fills this function. Each and every thing can be converted to a value that is scaled against a currency that ensures perfect comparability across the many forms that capital can take on. Not anchored anymore in land possessions, cut and split up multiple times, deterritorialized resources can flow and be combined more freely under the ruling and protection of sovereign states, which enforce a homogeneous set of rules in a given territory. These rules determine once and again how to trade and exchange novel productions. Their deployment and subsequent enforcement form the core of the normalization process, which is essential for capitalism’s expansion. Sovereign states had to take important measures to remove the preexisting binds that tied capital to land, such as imposing a single unit of measure for weighing goods or enforcing the use of a single language across merchant cities (e.g., when the meter was first defined in eighteenth-century France, more than seven hundred different units of measure were in use).

To prosper, societies require order. Before the modern age, order was often controlled by a lone despot, whose desire for power was mediated by the social machinery of the city, the empire, or the fief. With the advent of the modern state, the normative apparatus or “code” deployed by sovereigns has considerably expanded, and it now trickles downward to citizens. This code superimposes itself upon society. Norms affect many aspects of life—social, economic, political, and religious. Some people denounce sovereigns, mainly for their capacity to “overcode” the lives of their citizens. We speak of “overcoding” to make it clear that sovereigns always superimpose their norms over a code that was already there and in use before they came to power. Sovereignty does not emerge spontaneously and typically has to wipe out previously existing social rules to achieve dominance. The nonconformists who disagree—the philosophers, artists, entrepreneurs, activists, or bankers—either alone or en masse, decode, make explicit, and rewrite the principles that give meaning to social and productive activities. In return, the sovereign has to justify his own code, prohibit new norms, and fight against those who try to reveal the downsides of overcoding, its totalitarianism and its fundamental, soul-sucking nature. The state is blinded by its own norms and its fear of losing control over the outcomes of economic exchanges.

Capitalists succeed by constantly reshaping the conditions of the pursuit of their own goals. A capitalistic crisis is nothing but a burst of energy that destroys old norms and gives birth to a new way of working: the tulip crisis (or tulip bubble) in the 1630s was a warning against the first exotic-speculative instruments of the Amsterdam Stock Market. The stock market crash of 1929 brought attention to the risk posed by the general authorization of credit share purchasing. The financial crises of 2008 and 2011 showed the limits of the securitization of private and public debts. If there is one thing that will not kill capitalism, it is a capitalistic crisis, which systematically outsmarts all the talking heads predicting its demise and all analysts who infer from their research the death of the system. Since the very beginning, it has been part of capitalism’s nature to keep redefining its own rules, each time pushing its limits further. Through the burst of crises, new codes emerge that are reintegrated into the capitalist logic.

The seventeenth century was a time of such normalization on the seas. European sovereigns established new trade territories in which the deterritorialized flows of labor and capital could circulate, opening capitalism up to new ways of exchanging, thinking, working, and resisting. The period saw the normalizing of codes of acceptable practices in the new territory: defining which legal entities are allowed to trade within legitimate territories, establishing which measures must be used to account for and record economic activity, and determining the conditions under which products and goods can be sold. The United Provinces, for instance, simultaneously saw the appearance in the seventeenth century of the East India Company, which produced, shipped, and traded spices and luxury goods; of the letter of marque and reprisal, which controlled the activity of merchants in Southeast Asia; and of the spice market of Amsterdam, which structured the consumption of goods at home by making their relative price known to consumers. All of these are institutional innovations promoted by the state to enforce new norms that would define the contours of capitalism for the next couple of centuries.