Capital has always been a factor of production. Primitive accumulation, or as Adam Smith called it, ‘previous accumulation’ concerns the origins of production; it is the process by which precapitalist modes of production are transformed into capitalist production.
This idea is central to Marx’s seminal thesis and is used by many to portray the Industrial Revolution as little more than unjust expropriation. The issue with this line of thought is that it presents a merely teleological perspective; seeking to understand the end purpose of capital rather than the conditions required for it to be created. This leads to the mistaken view that the Industrial Revolution was only made possible because of centuries of exploitation rather any significant innovation. If this ‘capital conspiracy’ were to be the case, why would the exploiters wait centuries to make use of the accumulated capital?
The idea bleeds into contemporary development economics. While capitalism is not tautologous with or sufficient for freedom, it is necessary. Although Marx added the pejorative ‘so-called’ to ‘primitive accumulation’ to emphasize the unjust history that formed the precondition of capitalist production, others accept that capitalist production is what is required for societies to develop. As a result, despite Bauer’s pioneering work on the topic, they continue to purport the misinformed ‘aid, not trade’ dogma.
The goal of most who confront issues of development is sustainability. This naturally requires the continuous accumulation of capital over time. However, large-scale aid initiatives may distort this goal; if the conditions for development arose, capital would be generated locally or become available from external sources such as investors abroad. If however, we assume conditions for capital accumulation are not present, then aid will consequently be less effective as the country would not be able to sustainably render this capital productive.
This then begs the question; what are the conditions for capital accumulation? The answer is (inconveniently for some) not aid but property rights. Economic sovereignty allows for human capital to correspond to and render capital effective to produce goods people want to buy. This is often followed by political sovereignty; if people are allowed the freedom to assemble and trade, democracy follows.
Ex ante expectations of aid are empirically (see southern Italy and most of Africa) and theoretically challenged, and ought to be so until such ideas are prevented from making peoples unnecessarily poorer.