Rethinking the Transition to Capitalism in the Early American Northeast

Naomi R. Lamoreaux

When and how did the American economy acquire its capitalist character? During the late 1970s Michael Merrill, James A. Henretta, and Christopher Clark published influential articles challenging the notion "that Americans had been 'capitalists' since the first colonial settlements." Using evidence from farmers' account books as well as probate records and other sources documenting rural life, they argued that farmers' economic behavior in the late eighteenth and early nineteenth centuries was not compatible with conventional notions of capitalist exchange—that the transactions farmers recorded in their account books were not mediated by money, that the credits rural producers granted each other did not circulate as means of exchange, that farmers typically did not charge each other interest on debts, that they engaged in a wide variety of cooperative activities, that they made decisions that put family and community before profit, and that their goal was to achieve a competence, rather than to accumulate capital.1	1
In a study first published in the Journal of Economic History in 1981, Winifred B. Rothenberg mounted a powerful challenge to the claims of these "moral-economy historians." Using econometric techniques to analyze entries in account books, she argued that farmers in late-eighteenth-century Massachusetts behaved just like rational economic actors. They sought out the highest prices for their crops. They adjusted their product mix to market prices. They also made incremental but steady improvements to their farming practices that substantially raised agricultural productivity.2	2
Although Rothenberg's rejoinder touched off a heated debate that continued well into the 1990s, her work also provided the basis for the emergence of a new consensus.3 Because her research suggested that farmers were more market oriented in the late eighteenth century than they had earlier been, it was embraced by the moral-economy historians as evidence for the timing of the transition to capitalism, effectively ending the debate. Most historians now agree that there was such a transition in the American countryside during the late eighteenth and early nineteenth centuries and that it was associated with the social and political upheaval of the American Revolution.4	. . .