This work begins with an ambitious claim: that the development of capitalism “constituted the most impactful revolution the world has ever seen” and that “no other event in human history has impacted societies – and the world – as deeply as the expansion of capitalism”.
A global perspective is essential to the evaluation of this theory. Any attempt to assess the spread of market economies through a personal or even national lens is inevitably incomplete. The connections created by the movement of human beings and capital across our planet are too dense and too wide.
A panoramic history of this scope requires extraordinary levels of scholarship, the ability to create links between local and global developments. It is a daunting ambition and one that Capitalism: A Global History magnificently achieves.
That success comes at a cost for the reader. At more than 1,000 pages, it requires sustained focus and stamina. However, this work should not languish unread on dusty shelves; it should provoke debate and inquiry regarding the history and future of our economies.
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At the heart of Beckert’s work lies a precise definition of capitalism: a form of economic life in which the owners of capital always need to produce more capital.
Economies must always be dynamic, never static. This is due to the imperative of the continual accumulation of capital. Momentum is always created by this demand.
This requires that inputs and outputs must be priced and traded on markets. Land, labour and raw materials must have a price; and goods or services must be sold.
A critical theme of this work is the fundamental role of the state in the structuring and operations of capitalism. The notion of private markets existing outside the realm of government is fiction. It ignores the power of regulation and that law creates property rights.
The opening section focuses on the period before the dawn of the Industrial Revolution. The global nature of this history is demonstrated by the early pages describing trade in Aden. In 1150 this city was one of the great trading outposts of the world, a flourishing port between India and Arabia.
The author quotes an Arab geographer describing Aden as a “source of good fortune to those who visit it, a source of prosperity to those who settle in it”.
At this nascent moment in the development of global commerce, the author identifies the role of the premodern state in enabling trade. It provided security, regulated trade and levied taxes.
Islands of capital were created, most often in cities, including trading hubs such as Genoa and Venice. Their story cannot be told without understanding the experience of Mogadishu, Cairo and Guangzhou.
The creation of trade networks by resilient and determined merchants “presaged the fundamental conditions necessary to the creation of capitalism”.
This led to the creation of a merchant class, who pioneered long-distance trade by the creation of new ways of doing business. For example, Italian merchants created guilds in Constantinople and south Asian traders built networks based on castes.
The author notes that the success of individual capitalists is not the same as the development of capitalism. There were few merchants and their activities were small in comparison to the scale of local trade.
This changed with the “Great Connecting” between 1450 and 1650. The catalyst was a coalition of ambitious capitalists and European states expanding their trade networks to Africa and to the Americas.
Beckert consistently identifies the role of the state in this growth. Property rights were “not a fact of nature but something that the state constantly defined and ... subject to shifting state interventions, deeply fungible, and deeply political”.
This growth in trade led to the transformation of forests, raw materials and land into commodities that could be traded. The author notes that “Capitalists emerged in cities, but capitalism was born in the countryside”.
This transformation was a brutal experience for many. A plantation economy was created in the Caribbean islands to meet the global demand for sugar. By 1760 European traders had transported 3.8 million enslaved Africans to the New World.
The reader is reminded that these decisive phases of economic growth were not the exclusive products of new institutions and virtuous innovation. A comprehensive analysis must encompass a recognition of slavery. This, again, demonstrates the power of a global perspective on development.
The global economy gradually industrialised. This phase was still located in rural regions throughout the world. The cause of growth was textile production: wool, linen and cotton.
The state continued to be active. Prohibitions and tariffs were used to protect local industries from competition and to increase tax revenues. States acted as customers, purchasing large amounts of wool for military uniforms.
The industrial revolution changed everything. Beginning in modest stone buildings in rural England and Scotland, cotton spinning was transformed. Sophisticated machinery was developed, first powered by water, then by steam. The nature of capitalism decisively changed from trade and agriculture to industry.
Many factors made a difference: institutions, climate and colonies. They were knitted together by the framework of capitalism. The rate of global economic growth accelerated, building the foundations of the modern economy.
Slavery again played a role in this growth. More than half a million enslaved people laboured in the Caribbean colony of Saint-Domingue alone. The successful revolt led by Toussaint Louverture created “winds of change”.
These consequences include the purchase of French Louisiana by the United States, the growth in the plantation economy in the Mississippi Delta and the rise of Brazil as the world’s leading coffee producer.
This arrangement of different strands of economic development is nearly orchestral in style and skill.
For example, the role of industrialists in their societies are examined in Lima, New York, Calcutta and Hamburg. The economic shocks, social revolutions and anticolonialism of the 19th century are deftly analysed with reference to events in Germany, Cuba and Bengal.
Beckert offers fresh perspectives on the economic performance of many countries after the second World War. He acknowledges that “By the 1970s, workers in the heartlands of industrial capitalism lived in ways that would have been unimaginable only one or two decades earlier”.
This is demonstrated by a detailed study of changes in the Swedish economy. The active role assumed by government during this period is again examined. As if playing with a reader already reeling with the breadth of this work, this chapter includes a study of changes in tourism and the growth of “fast food”.
This sets the stage for the next evolution of capitalism. The previous period was marked by heavy industrialisation in relatively few locations. This changed with the spread of industry into the Global South, particularly Asia.
Between 1973 and 2008, the value of global manufacturing increased fivefold, with China contributing 31.5 per cent of this growth at the end of this era. The relationship between capital and the state also changed as “the new capitalism still drew on the state but not necessarily on a particular one, as the link between (footloose) capital and nation weakened”.
The shape-shifting nature of capital was global in sweep.
The role of the state should still not be underestimated. Regulatory decisions required decisions by policymakers. The state’s role in economic life did not decline despite the efforts of some governments to roll back the parameters of government. Beckert concludes that “capitalism remained a most thoroughly statist economic order”.
The fluidity of capitalism is the cause of its durability. Despite this, the author speculates that a moment will come when capitalism ends. History is permeated with predictions of the demise of market-based economies. Could this time be different?
The future of market economies depends on the support they receive from the societies in which they operate. At the same time, capitalism has fundamentally influenced the societies within which it has evolved. A huge strength of this work is demonstrating the profound influence of political and social order on the shape of capitalism. It does not change in a vacuum.
How societies judge the influence of market economies on their progress is therefore very relevant to the progress of capitalism. This is a dimension that is less present in this work. Other works point to that progress, while acknowledging great costs and challenges.
For example, Angus Deaton is a leading historian, and his seminal work The Great Escape analyses more than 250 years of economic history. His book examines key issues of inequality but also argues that, “Life is better now than at almost any time in history. More people are richer and fewer people live in dire poverty.” Similarly, Carl Benedikt Frey in a recent economic history, How Progress Ends: Technology, Innovation, and the Fate of Nations, emphasises the necessity of innovation in driving growth.
A sense of progress and the positive impact of innovation are not central themes of this history. Human and economic costs rightly receive recognition, not relegation as is the case in too many other works. Capitalism has grown as it has received political support, and not just from elites. The reasons for this also deserve consideration.
Capitalism: A Global History is a demanding but magisterial achievement. Beckert closes by suggesting that future historians will look back at our civilisation and “will find it difficult to understand our ways of thinking, and our ways of being”.
If that proves true, this will be among the first books they open.
Paschal Donohoe is managing director and chief knowledge officer of the World Bank Group
