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The Natural Economy Revisited

Permeating the writings of an extraordinarily wide range of authors is the notion of historical economic systems, described as "primitive" or "natural," which are in some sense opposed to the technologically dynamic, expansive, modern economy. Best known are the arguments of Rosa Luxemburg, for whom the natural economy was the antithesis of capitalist economy; its destruction was both a precondition of the emergence of capitalism and a condition of the expansion of capital. "Capitalism," she announced, "must always and everywhere fight a battle against every historical form of natural economy it encounters."' 1 Nevertheless, all those who have written on the subject have defined natural economy in terms of its opposition to some fundamental feature of modern economy. It has been described as an economy in which, variously, money, commodities, or the market-each crucial to the modern economy-has been absent. It is the negative of modern capitalist economy. Indeed, by one recent definition, it is all those characteristics of all precapitalist modes of production that are inconsistent with capitalist relations of production.2 This article reconsiders the concept of natural economy. It does so in terms of a general equilibrium theory, which facilitates analysis of the structural conditions that make the so-called natural or primitive systems antithetical to modern capitalist economy. Though this involves a discussion of the characteristics of natural economy that covers old ground, it leads to a new explanation of the dynamic features common to a disparate group of historical systems. More particularly, I seek to explain why technological or institutional change should be so prescribed in this type of system.