Sven Beckert, a Harvard professor, has written a very long history of capitalism. As its subtitle suggests, ‘Capitalism: A Global History’ covers all of the inhabited world and spans a millennium, starting with 12th-century merchants trading through the port city of Aden.
The enterprise is of more than purely historical interest. As Beckert points out, capitalism is contentious. Some believe it is responsible for an extraordinary improvement in human welfare since the 18th century. Others believe it is a source of ‘…exploitation, violence, and unfathomable misery … an insatiable demon on a planet-threatening trajectory with staggering social costs’ (p. 6). Beckert’s aim is to contribute to the debate, not by taking sides, but by supplying the historical facts on which one might properly base an assessment of capitalism.
Alas, the endeavour is doomed to failure by a surprising mistake Beckert makes at the beginning of the book.
As Beckert acknowledges, ‘[b]efore we embark upon a journey into capitalism’s history, we should clarify what we are talking about when we talk about capitalism’ (p. 34). Three pages later, Beckert has arrived at his definition:
Ultimately capitalism is best defined as a global process in which economic life is fundamentally driven by the ceaseless accumulation of privately controlled capital, is structured by the state, and propels the ever expanding commodification of inputs and outputs, including labor, creating constantly shifting boundaries between its outside and inside (p. 37).
This is like defining a man as a creature between one and 10 feet tall, with facial hair, who wears shoes and uses violence to dominate women. Beckert has confused a definition with a description. Nothing on his list is necessary for capitalism, in the way that being human, adult and male are each necessary for being a man (and jointly sufficient).
Perhaps understanding that he has failed to define capitalism, Beckert explains why it doesn’t really matter. ‘This book will … trace capitalism’s history – not with the goal of offering another impossibly fine-tuned definition of capitalism’s essence but with the intent of tracing what I call “capitalism in action”. The book aims to look at capitalism not as what it should or could have been but as what it was and is’ (p. 37).
The problem with this approach is that if you can’t define capitalism, you can’t tell whether you are observing ‘capitalism in action’ or something else in action.
Consider Beckert’s discussion of how things have changed in Cambodia since it shifted from communism to capitalism in the mid-1990s. Having acknowledged the rapid economic growth that has ensued, Beckert draws the reader’s attention to less welcome outcomes. ‘Other families sell their daughters into marriage: Chinese men pay up to $10,000 for a Cambodian wife, much of it to an agency, with just $500 typically going to her family’ (p. 1,054).
Selling daughters into marriage is a consequence not of capitalism but of poverty. And the poverty of the families involved is not a consequence of capitalism, either. It results from the communism that preceded it, and the prior feudal agrarianism that persisted through French colonisation.
Forcing daughters into marriages that are financially or otherwise advantageous for the parents has been common throughout history and around the world. But it is extremely unusual in countries that have been capitalist for more than a century. This fact should have given Beckert pause.
Beckert’s difficulty in defining capitalism is peculiar. For it has had a stable meaning since Karl Marx published ‘Capital’ in 1867. An economy is capitalist insofar as the ‘means of production’ – tractors, electronic looms, printing presses, cargo ships, data centres and so on – are privately owned, and not necessarily by the people who work with them. These private owners then have a claim on any profits arising from their use and suffer any losses. Another way of expressing Marx’s definition, then, is to say that capitalism exists when there are profits and losses: that is, when there are returns to ownership and not only to working.
Private ownership alone, however, isn’t enough to explain the explosion of innovation and economic growth that began in the Netherlands and England, in the late 18th century. A private owner whose profits are guaranteed by legal barriers to competition has no reason to innovate. As scholars such as Deirdre McCloskey (‘Bourgeois Equality’, 2016) and Stephen Davies (‘The Wealth Explosion’, 2019) have argued, it was the newfound freedom to innovate and compete with incumbent interests – the freedom to ‘have a go’, as McCloskey puts it – that explains the extraordinary progress of the last 250 years.
Free markets are what advocates of capitalism – the likes of Adam Smith, Friedrich Hayek and Milton Freedman – are especially keen on; it is part of what they mean by capitalism. Governmental interference in markets, even when aimed at benefitting certain capitalists (crony capitalism), attenuates capitalism pure and simple.
With this definition in mind – private ownership and free markets – we can avoid the confusions that riddle Beckert’s book. We can tell which parts of the mixed economies that have prevailed over the last three centuries have been the capitalist parts and which the non-capitalist parts. And we can tell whether we are observing ‘capitalism in action’.
On the standard view of the 2008 financial crisis, for example, it was a consequence of ‘neoliberalism’ as applied to banking. Beckert agrees: ‘the crisis undermined the idea that the [free market] system was stable and self-monitoring…’ (p. 1,077).
Despite its popularity, this is an implausible idea. Although banks in the US, UK and Europe were privately owned, the banking market was far from a free market. The ‘Basel II’ regulations that dictated how much capital banks must hold to avoid insolvency had come into force in 2007, and all the banks that failed complied with them. Interest rates were manipulated by central banks, as they still are. And bank deposits were protected by government guarantees, which removes the normal market discipline on risk-taking by banks. Given that a free market in banking didn’t exist, it can’t have caused the financial crisis.
This failure to separate the various elements of mixed economies and to analyse cause-and-effect is repeated throughout the book: for example, when considering the transatlantic slave trade and Nazi forced labour (Chapters 3 and 14), state bestowed ‘monopolies, privileges and subsidies’ for cotton manufacturers (p. 363) and state-imposed import tariffs (pp. 604–5). By mushing everything into what he calls capitalism, Beckert renders his history of no more intellectual value than the brute facts it compiles. And, even here, the reader must beware. Beckert’s taste for hyperbole and indignation incline him to peddle falsehoods.
‘How did we get from a world in which the logic of capital was restricted to just a few spaces to one in which it determines almost everything?’ Beckert asks in the preface (p. xii). Here is a list of things that are not determined by the ‘logic of capital’ – that is, traded in markets – in contemporary Britain and in most other Western countries:
After all of that, there isn’t much of significance in our lives left to be subject to the ‘logic of capital’: only employment and housing, and they too are subject to extensive governmental regulation. Contrary to Beckert’s claim that, by definition, capitalism is forever expanding ‘commodification’, by which he means things being traded for money, in the West the ‘logic of capital’ has been in retreat since WWI.
Sometimes Beckert’s errors result from his reluctance to think like an economist. He claims, for example, that ‘[d]espite unbelievable increases in global wealth over the last five centuries, almost everyone in the world starts life without inheriting any resources transferred from the previous generation – indeed, starting from nothing – with about half of humanity living a life of barest subsistence’ (p. 1,074).
Given that five centuries ago 95% of humanity led lives of barest subsistence, this is a peculiar complaint. But the serious economic misunderstanding lies in Beckert’s claim that almost everyone inherits nothing from the previous generation. He can think this only by failing to recognise that knowledge is a valuable resource. Each generation inherits the knowledge acquired by the previous generation. And even those who do not themselves have the new knowledge benefit from it. Someone born into a penniless household in 2025 can expect to consume far more over the course of his life than could someone born into a penniless household in 1525, even if he remains an ignoramus.
Then there are simple factual errors. For example, when discussing neoliberalism, Beckert has this to say:
In a show of staggering hypocrisy, neoliberals … endowed the family with new ideological and economic importance, holding it out as a kind of welfare state in miniature that was to cushion market blows. As Margaret Thatcher had argued at the very beginning of these shifts, “there is no such thing [as society] … there are individual men and women and there are families”. As often as not these women and men now worked double-shifts to pay their day-care bills (p. 1,034).
It is strange that Beckert takes issue with the obviously true claim that families are a kind of welfare state in miniature. But more problematic for a scholar is Beckert’s claim that in more than half of families with children, the parents worked double shifts because of neoliberal policies. Beckert supports the claim with no data or citation, and it takes only a few minutes online to learn that reliable data about the percentage of UK citizens working double shifts is unavailable.
But let’s not be pedantic. We know what Beckert means. He means that because of neoliberal reforms of labour markets, Brits needed to work longer hours to get by. But even this is false. In 1980, the average hours worked by a UK citizen was 1,654 per year. In 1990, when Thatcher resigned as prime minister, the figure had fallen to 1,610. Beckert seems to have simply made up the fact that Thatcher’s labour market policies forced people to work double shifts, even when the claim is interpreted charitably.
As this passage reveals, ‘Capitalism: A Global History’ is not really an evaluatively neutral, purely empirical account of capitalism. Scholars engaged in such an enterprise do not use expressions such as ‘staggering hypocrisy’. Nor do they indulge in the Marxist academic’s habit of speaking about capitalism as if this economic arrangement were some kind of person, as Beckert does: ‘Unlike many of its most vocal apologists and critics, capitalism is not dogmatic’ (p. 14) … ‘How did we ever give such superpowers to something created by but also external to us’ (p. xii) … ‘Capitalism draws its energy not just by widening in space but by drilling ever deeper into our bodies, our minds, our most intimate social relations – our very humanity’ (p. 1,060).
This kind of silliness passes for intellectual depth in certain academic circles: post-modernist human geography, critical theory and the like. Those who are serious about understanding the effects of capitalism on humanity can only find it bewildering and infuriating. They should skip Beckert and read one of the serious histories that have been published in the last 10 years.
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