Section V: VThe Second Transition, 1648 to 1815

The second transition ran from Amsterdam to London, but we cannot ignore that France contested this transition twice and lost that battle twice (an interesting echo to the later twice-failed German attempts in the 20th century that we return to later).

Britain from 1707 was first the Dutch Republic’s rival at sea, then its ally and debtor, then its heir. Bourbon France was the territorial rival that tried to take the succession by land and bankrupted itself and the incumbent in the attempt. Revolutionary France was a new form of society that arrived early in one state, isolated on a sea of the old. The heir was the power that fought France inside the incumbent’s coalition and came out of it the victor by fusing with the incumbent’s trade, its colonies and its debt.

The Navigation Act of 1651 we mentioned earlier shut Dutch carriers out of English trade, and three Anglo-Dutch wars followed between 1652 and 1674. In 1672 the French King Louis XIV invaded the Netherlands overland while England attacked by sea, and Münster and Cologne came in from the east. The Republic survived the year by again opening its dikes. What it learned was that its wealth was vulnerable sitting beside the strongest army in Europe, which set its foreign policy for 40 years. In 1688 a Dutch stadtholder crossed the English Channel with an invasion fleet and took the English crown. The terms of the alliance that followed this “Glorious Revolution” by the Dutch carried the means of a hegemonic succession inside them. The combined fleet was fixed in 1689 at five English ships to every three Dutch, and the Republic put its money into an army that held the French at bay on land.

The year 1688 is also the date de Vries and van der Woude give for the emergence of the modern form of international lending, because the Dutch-backed overthrow of the English restoration monarchy in the Glorious Revolution made England creditworthy for Dutch money. The Bank of England of 1694, a private company that lent the state its war chest in exchange for the privilege of state note issue, gave Dutch money somewhere to go. Notably, the Dutch-English Glorious Revolution also sparked initial colonial rebellions in the American colonies, increased the power of Parliament itself in England, and ended the era of a semi-restored “Absolute Monarchy” in England. Such “Absolute Monarchies” would continue for centuries throughout the rest of continental Europe, especially Central and Eastern Europe, an important point to hold for our coming Third Transition.

The wars against the French King Louis XIV ran from 1688 to 1713 with one short peace, and the Republic won them and was finished by them. Its public finances were exhausted years before the peace, and in July 1709 the admiralty of Amsterdam told the grand pensionary that it would come to a standstill without cash. At Utrecht in 1713, Britain took Gibraltar, Minorca and the contract to carry slaves to Spanish America, and the Republic took a line of needed fortresses. After 1713, the regents gave up the pretensions of a great power to pay down their debts, the navy was let go, and when Britain called in 1744 for the 20 ships the treaties owed, the Republic could not send them. The incumbent had defended its security inside a coalition with its successor at the cost of economic stability, a pattern again repeated in the Third Transition between England and the United States.

In 1720, the South Sea Company converted British national debt into its own shares and lent buyers the money to buy them, and the same year John Law did the same in Paris with the Mississippi Company, and both schemes collapsed inside the year. Once Dutch trade itself had stopped growing sufficiently or providing the “necessary returns,” Amsterdam’s capital started the process of flowing into English paper.

“How much” is the most contested figure. On P. G. M. Dickson’s benchmark in The Financial Revolution in England (1967), “foreigners” held nearly 1/5th of the British national debt around 1750 and 4/5ths of those “foreigners” were Dutch. Dutch holdings of British stock peaked near 200 million guilders in the late 1760s, and by 1776 the estimates run to 3/7ths of the debt and 1/3rd of the British East India Company.¹¹ The Amsterdam crises of 1763 and 1772 broke the entrepôt: the Dutch stopped supplying new capital to Britain after 1780 and began to repatriate, and the Fourth Anglo-Dutch War of 1780 to 1784 is the moment the creditor was necessarily subordinated by the debtor it had financed.

What the Dutch money built in Britain was a state that could borrow funds for the state at 3% interest to field armies and navies for lengths of time and at sizes its rivals and the predecessor empire could not. This extended to its colonial holdings, exemplified by the sepoy army: Indians drilled in the Dutch and Prussian manner under British officers took Bengal at Plassey in 1757 with about 3,000 men against 50,000.¹² This mode of war the fiscal-military state produced was for sale to anyone who could pay for the drill process. The instrument was also a company that was itself a sort of state. The Dutch company of 1602 was chartered to make war and treaties, build forts and coin money. The English company that won at Plassey took the revenue of Bengal in 1765 and paid for the conquest of India with India’s own taxes and soldiers, a drain Dadabhai Naoroji measured in 1901.¹³ Notably, the Ottomans, Egypt, and after 1868 Japan would also begin a process of taking notes from the British. The Dutch Republic, meanwhile, like the Habsburgs before it, had built the apparatus that would consume it: the stadtholderate, and the Patriot revolt of the 1780s that tried to reform it, was put down by a Prussian army in 1787. The Dutch Republic’s advantages could not hold out indefinitely against the onslaught of the still-present absolute monarchies. Importantly, Britain was significantly more defensible as an island off the continent, and itself was still a monarchy, if not the same absolutist type.

The Dutch Patriot rebels came back to the Netherlands in January 1795 behind a French revolutionary army. The stadtholder fled to England, and that February he wrote to the governors of the Dutch colonies to admit British forces, which handed the successor hegemon more than half of the incumbent’s possessions in the East. The Republic had a land frontier with the strongest armies in Europe and Britain had the Channel, and ultimately that difference decided which merchant-state could carry a new societal form through a century of wars.

The second terminal cascade and crucible war was fought as dynasties against a thing called a “nation” and was settled as a concert of national-dynasties.

The French Absolute Monarchy, in its attempt to stymie British rivals in every theater, and in competition over influence in the Netherlands and Belgium, had overspent, become stratified, and essentially went bankrupt, causing economic chaos and even famine. The French Revolution that naturally followed this catastrophe abolished the monarchy in September 1792, killed the king in January 1793, and seven months after that put every loyal Frenchman into permanent requisition: from August 23, 1793, the young men went to battle, the married men went to forge arms, the women were to sew tents, the children were to shred linen, and the old were sent to preach hatred of monarchies.

This “levée en masse” was a new form of legitimation for the state’s demands on its people, grounded in the nation’s own sovereignty, and it created 750,000 men under arms within a year. The Jacobin movement that had initially led the revolution to the bewilderment of many ordinary French eventually destroyed itself through the clichéd internecine infighting of revolutionists, the old “revolution consuming itself,” giving way to a dictator in the Roman sense: Napoleon Bonaparte ironically became the levée’s own dynast, a “petty emperor of a nation,” a new type of King cemented by plebiscite spreading a new legal Code, conscription, and the administrative state. This itself spread throughout the continent at the point of a French bayonet through the creation of French client kingdoms from Warsaw to Naples. The reaction Napoleon provoked among Absolute Monarchies was total, with Napoleon crowning himself and Josephine almost worse than the regicide that preceded him. This created again an interesting side effect: one example being Fichte’s addresses in occupied Berlin and the creation of the masses of Prussian Landwehr of 1813, which was the French “nation in arms” turned against the French themselves.

By 1804, Napoleonic France with its “common Emperor of the French nation and people” was a bubble of a completely new way of organizing society on a vast sea of old dynasties and semi-feudal economies merely legitimated “by God“: the visible post-feudal/monarchical order represented seemingly by a single state, encircled by regimes that even in coalition could not match the levée and the furies the excesses of the French Absolute Monarchy had released in that nation, for several decades.

The answer came after a decade when Napoleon’s massive conscript armies could not be everywhere on the continent at once. In Spain from 1808 onward the guerrilla fighter got its name, tying down forces in attrition and hit-and-run warfare this new mass state formation could not spare, which Charles Esdaile’s Peninsular War (2002) documents in detail. In Russia in 1812 the French military campaign was won, on Dominic Lieven’s reading of the Russian archives tells us in Russia Against Napoleon (2009), by Russian logistics, army quality, and Alexander’s coalition-building. The Revolution had taught the monarchies its method, and the coalitions mastered using the levée against the levée.

In 1815, the sea of absolute monarchies eventually crushed the Napoleonic bubble, as a Prussian army had crushed the Dutch Patriots in 1787 and the English monarchy had crushed its Republic. Again like the English monarchy’s reaction after the English Civil War, the Concert of Europe absorbed the form while discarding the essence. Prussia after the Battle of Jena imported conscription, administrative rationalization, and the Stein-Hardenberg reforms as the price of fielding a modern army, and every dynasty that beat the revolution ran many of the revolution’s methods thereafter. What they discarded was the essence: any element of popular sovereignty or self-determination, and the Holy Alliance of the Absolute Monarchs of Prussia, Austria and Russia declared such discarding permanent, a return to natural dynastic order.

Plekhanov, writing for the revolution’s centenary, read the collapse the way this work reads every premature formation: the sans-culottes and Jacobins reached for a new order, which neither their own capacity nor the means of production of 1793 could carry, but the revolution’s social content survived them, such that the Restoration did not even try to undo it.¹⁴

Britain financed the coalitions that beat Napoleon, about 66 million pounds in subsidies and loans between 1793 and 1816 on John Sherwig’s count in Guineas and Gunpowder (1969), 8% of a military cost of 830 million pounds, the Peninsular allies alone drawing 19 million.

Regardless, Britain stood outside a newly forming Holy Alliance with its navy and its pound. The British successor joining the absolute monarchs to create the peace and declining to formally join the enforcement of it, which Paul Schroeder’s Transformation of European Politics (1994) reads as a new kind of order alongside a dynastic restoration.

The restoration ultimately didn’t matter. The productive base underlying the entire system had already transformed and moved. The French Restoration was reaction against an irreversible economic-political substrate, and it cracked by 1830, broke in the revolutions of 1848, and was steadily hollowed by the self-determinative national unification wars of the 1860s-1870s, and the birth of the French Third Republic. By 1945 the dynastic principle was finished as a way of organizing the vast majority of so-called “great powers,” including in the states that had won the World Wars. The French Revolutionary bubble of a new organizing method that itself became “corrupted” by a “people’s Emperor,” lost the war, and even so!: the sea of Absolute Monarchy took on the content, form-first, and despite their best efforts, essence later enveloped them anyways a century later.

The French Revolution and English Revolutions (one Republican, one Glorious, and one Industrial) spread a mode of production before it was codified. The French Revolution abolished the guilds and the internal customs barriers in 1791. It began the process of putting a free market in labor and goods where the corporations and the tolls had been. The growth of machines then began to let untrained hands do what seven-year apprenticeships had done, and the handicraft producer who had lived comfortably under privilege met factory prices he could not match.

Where this new embryonic method of organizing the economy and society spread, the countryside’s supplementary industries collapsed, the young moved to the cities for a wage, and the wage did not feed a family. By the 1830s the poverty of those who lived by selling their labor was visible enough to be named the primary social question, the solution to which was fought over by every political current, from the liberal progressives, to the conservative Bismarckian Prussian national-socialists and charity societies, to the “feudal socialists” who wanted the guild and artisan relations restored, to the Communist Manifesto’s authors who wanted the wage relation abolished and replaced from below.

Prussia’s trade-freedom edict of 1810 and the Zollverein of 1834 carried the French Revolution’s economic content into Absolute Monarchies that had beaten it, as the Landwehr had carried its conscript military content.

Arno Mayer’s Persistence of the Old Regime (1981) names this survival of absolute monarchy and semi-feudal relations in continental Europe as a result of the restoration, even in the face of growing industrial development. The true beneficiary was London, whose capital had financed the coalitions, had embraced industrialization, inherited Dutch and Spanish colonial possessions and control of the seas and trade, and now financed the world. Mayer himself argues that restoration of absolute monarchies in continental Europe held for a full century: landowner, crown, and church governing Europe in 1914 much as they had in 1815, until the growing underlying transformation of the economic base’s evolution via industrialism and urbanization finally produced a terminal cascade and new crucible war that ended the monarchies.

The class of wage laborers that the new wage relation, mechanization and industrialization made was a minority for a long time after it was named: as late as the 1870s the proletariat existed as a mass only in urban Britain, Belgium, the Rhineland and Saxony, the north of France, and the mill towns of the American northeast. The rest of Europe and America was still largely peasant, artisan, and clerk. This itself explains why the “old regime” could persist and why revolutions in societal organization came where and when they did. It also explains that “developed capitalism” only solidified its control of continental Europe in the 20th century, rather than the 19th as is commonly assumed through a false generalization of the British case.

Importantly, the durable carrier of the new mode of societal organization in Britain was never the “revolutionary bubble,” or was only it for a brief time: it was the first hollowed monarchy that had been forced to abandon absolutism through its own failed revolutions and civil wars, and whose restoration still led and financed the coalitions against the visible Revolution itself.

Britain was where social-property relations were parliamentarian and capitalist before any formal political settlement made them officially so, and represented an agrarian capitalism under improving landlords, tenant farmers and wage labor, the crown reigning while the parliaments and propertied classes ruled. The first industrial society still wearing the clothing of monarchy.

The Lords and an established state church opposed to Catholic universalism existed as residue over a capitalist essence that subordinated such residue over the following century: the franchise widened, the Corn Laws repealed in 1846 against landed interests, the crown and church reduced toward an empty ceremony.

This is precisely a fusion we must hold for the Chinese case: a new mode of production and society carried inside an old form, controlling trade and production. Interestingly, revolutionary breaches, the vehicles which “publicly” crystallize a new form first, seemingly have never historically been the actual vehicle that ends up consolidating such new forms globally even if they are required to begin and spread this process. The settlement of 1688 kept the crown and put the propertied behind it, so that what a state was could not be read off its form, which is the rule this work applies to the fourth successor, and why its class content is left to the tests.

As the historian E.H. Carr notes himself in From Napoleon to Stalin (1980), in this view, Napoleon stands to the revolution of 1789 as Stalin stands to 1917, a “post-revolutionary stabilization” that deforms some initial egalitarian content of the revolution while it preserves and spreads a new mode of societal organization into the old system. This old system “persists” when the initial vehicle is contained and destroyed by a coalition of the “old order” in 1815, and arguably again in 1991.

France therefore held in one transition the two seats that Germany and the Soviet Union would divide in the next: the same-form rival that fights the succession and loses it, and the early emergence of a “pure version” of a new form that is both destroyed and copied. In both transitions, the heir was a third party: the incumbent’s ally and its debtor turned creditor. Britain after 1689 and America after 1917.

In this “Second Transition” Western centrality expanded from chokepoint system to the world market, Bengal after Plassey, the Atlantic slave system expanded with the companies and the need of a constantly expanding market that, in the Manifesto’s sentence, chased the bourgeoisie over the whole surface of the globe. The capital relation expanded in its own kind for the first time: the expropriation of the English agricultural population that Marx traced from the enclosures to the factory, made the “free laborer,” the person with nothing to sell but their labor-power.

US hegemony’s embryonic form was born in this transition as another revolution, a debtor and a frontier. Marx read the frontier as the thing that kept the wage relation from fully binding there: conquered and exploited land in the colonies letting the laborer become a proprietor, and forcing US capital to import indentured laborers by the shipload. The US therefore ran pseudo-capitalism for a century before becoming the hegemon, without itself having a majority population of the proletarian class capitalism is made of.

The Dutch lent to its great rival of Britain, and Marx noted in 1867 that the same thing was going on between England and the United States. ¹⁵