It would be inappropriate to leave our analysis at the micro-level (that of the family farm) because in the same manner that the peasant society is a part-society (interrelated to a larger social structure), so the peasant economy is a part-economy. The Russian Mir itself - that which formed the basis of Chayanov's analysis - is suggested by Weber, among others, to be "not a primitive institution but a product of the taxation system and of serfdom" (Weber, 1927). For Weber, the ideal peasant village was in Germany, and in Russia by contrast, serfdom was "unusually harsh". The peasant was subject to torture; bound not only to the soil but also to the village. As Chayanov suggests, land was distributed according to family size, but Weber argues that such decisions were only nominally democratic and more often "capitalistically determined". The peasant simultaneously owed obligations to the lord and church in labor and kind, taxes to the village and was under the domination of 'lulaks' through money lending.

The feudal economy is often described in terms of bilaterality-there are two interlocking economies: the landlord economy (principally the demesne as the predominant agricultural enterprise); and the peasant household economy discussed above. The differentiation of wealth which lies at the base of feudalism is attributed by Weber to be of different sources, among which are chieftmanship, the internal differentiation through the appearance of a professional military class, and the conquest and subjugation of some enemy people. Tradition maintained the status of the lord and protected the peasant from excessive exploitation. The peasant did not produce any more than was necessary to maintain his own subsistence and meet the obligations imposed. The lord had no interest in increasing the size of those obligations as long as he did not produce for a market. Following the demise of the Roman Empire, markets in Europe were at best sporadic and limited-- the feudal system remained relatively stable for hundreds of years. This stability was reinforced for some time in the self-interests of the nobles, as well. The nobility of Europe were usually exempt from taxation, that burden being passed on to the peasant. It was in the interest of the nobility therefore to maintain peasant landholdings to ensure this exemption.

The character of the feudal economy was not essentially different from the peasant household, however. The similarity was not due so much to the absense of a freely exchangeable currency, requiring payments in kind,, as to the fact that forced labor-power on the demesne had no price-- '...the feudal economy merely transposed into its own logic the patriarchal small I peasant conception of 'value'...."(Benaji, 1976). Further, when the feudal estate did convert into exchange-value the use-values produced, it did so not on the basis of some concept of Sprofit' for accumulation, but solely to consume that for which it traded. The production of commodities remains "a mediation of socially-determined levels of consumption"(Ibid); i.e. it remains subordinated to social habits of generosity, conspicuous display and a culturally determined standard of living. Direct consumption remained the sole growth determinate for the economy.

The manorial accounting system reflects this absorption of 'consumption value'. Items of consumption and production were entered into a single ledger. By the eighteenth century, the 'maximization of sales' became a central slogan in Russian estates and the primary motivation was to maximize profits and expand feudal-incomes. We still do not find a concept of competition between estates, however, and the goal of maximization was subordinated to a certain "proportionality between income and consumption" not the rapid expansion of incomes from one year to the next (the rate of profit) as occurs within the modern enterprise concerned solely with production. Because the costs of the feudal estate were its own consumption, 'profit' signified for it only.the maximization of.sales, not the minimization of costs.

The process of maximizing sales brought the peasant more closely under the domination of the lord. To increase production in the demesne meant expansion of the surface in production which required that more peasant-labor had to be extracted from the household economy. In the prior instance, the household was left with substantial autonomy as to economic decisions, in the latter form the peasant households were directed toward simple reproduction on mere subsistence plots which "effectively eliminated the peasant household as a seperate economic enterprise"(Ibid)

As the landlords "attempted to extend compulsory services to which slaves alone were subject" (Weber) they also placed the peasantry on a fixed money rental (obrok) in preference to fluctuating payments in kind. "The growth of the money economy resulted in throwing the peasants heavily into debt. Only a single crop failure was necessary for this result, and the freedom of the movement of the peasant was lost .... The peasant had not more rights than a Roman slave"(Ibid). The exploitation was extensive, also, to the extent that the overlords furnished almost nothing in the production process-- the land was tilled with the capital and horses of the peasants themselves. The forced savings on the part of the peasantry-- in the form of rents and taxation-- was not re-invested in capital accumulation, but was squandered in the culturally determined consumption patterns of the lords.

Ultimately, the manorial system did not survive. The accounting system of themanor had only two columns: receipts and expenditures. Expenditure, as we have seen, contained both expenses for consumption and production(of which the latter was negligible), the receipt column included both receipts from sale and from the excessive borrowing required to maintain consumption standards. Hence, the financial position of was often misstated. The end result was that the manor was extremely uneconomic. Its disintegration fell in the hands of the nobility, which destroyed the rural organization through a process called 'enclosures' and turned the system into an exchange economy: rents and wages would now be expressed monetarily and entered into the production functions as factor costs.

The peasant farm was incorporated into the new economic system which emerged. Chayanov describes the 'trading machine' which begins at the traditional bazaar and constructs "a certain national economic whole .... with its hundreds of thousands of branches (which extends) to the full depths of the peasant farms and leaving them free as regards production, entirely dominates them economically". Through the process of financing, transportation, and mortgage credit, "capitalism penetrates agriculture ... (and) converts the farmers into a labor force working with other people's means of production" (Chayanov)

While Chayanov and his related group of Populist economists sought to describe a path of development which would enable the peasant economy to integrate outside of capitalistic domination through vertical cooperation, Lenin argued that peasant production was already capitalist. For Lenin, the distinction begins with the social division of labor which arises intrinsically in commodity production (as opposed to subsistence production). "Capitalism is a social relation of production, commodity production based on wage labor. The capitalist system of production subordinates other forms of possession and other labor processes by integrating them into its process of exchange, and, through circulation, imposes on them the logic of its process of production" (Ennew, et al, 1977). Marx fully extracted this quality in specifying a freal' capitalist mode of production:" real he meant mature, crystallized, and the basic sign of this maturity was the formal subsumption of labor into capital, in other words, a process of labor determined by capital itself" (Benaji, 1976). Or put differently, "capital is not a thing but a social relation between persons, established by the instrumentality of things" (Marx, 1930).

This "instrumentality of things" encompassed the peasantry by the introduction of what Polanyi defines as 'fictive commodities'. These are land, labor and money. Polanyi dates this introduction with the birth of elaborate machines.

Since elaborate machines are expensive, they do not pay unless large amounts of goods are produced. They can be worked without a loss only if the vent of the goods is reasonably assured and if production need not be interrupted for want of the primary goods necessary to feed the machines. For the merchant this means that all factors involved must be on sale... (Polanyi, 1944)

The introduction of such 'fictive commodities' now allows us to fully exploit the 'formalist' models defined previously. The factors of production and the price of the product attain certain discrete values the price. The price conveys information which is understood at all places and at all times. Now factors of production and the product it self will move about freely. Capital will seek low wage areas, labor will seek industrial centers, currency and commodities will be arbitraged. Each will seek to maximize its return. Hence, the process of colonialisation by capital centers, urban expansion and the development of a world market in the capitalist sense. Domination by a landed elite now gave way to domination by capital and the operation of 'formal' economic principles, each of which may exist thousands of miles distant. The crucial point, however, is that the peasantry remain. The peasant community may be articulated into capitalist production without themselves becoming capitalist. In the case of the Amatenango:

Amatenango presents the paradox of a community whose market economy makes it aware of economic calculation and relative Costs'and benefits, but a social structure and value system which channels economic choice toward economic stability and social continuity. Communities like Amatenango develop in the face of great economic pressure from the superordinate society, or via the extension of economic links with persons and social systems in which the rules of choice and values, and organizations are congruent with sustained ability to seize or make economic opportunity. (Nash in Dalton, 1967)

This demands that we extend our analysis to include what may be the distinguishing feature of peasant economies: those institutions in which the economy is "embedded and enmeshed".