"Adam Smith, widely considered the
first major theorist of capitalism, abhorred the institution of slavery.
"Whatever work [a slave] does…can be squeezed out of him by violence
only, and not by any interest of his own," he wrote in 1776.
In an earlier lecture, Smith indicted laws that "strengthen the
authority of the masters and reduce the slaves to a more absolute
subjection." The plantation system at the core of this economy was not a
competitive market; planters had secured a state-sanctioned "monopoly
against all the rest of the world" and "indemnif[ied] themselves by the
exorbitancy of their profites for their expensive and thriftless method
of cultivation." Smith singled out the exceptional cruelty found in the
British colonies of "Jamaica and Barbadoes, where slaves are numerous
and objects of jealousy [and] punishments even for slight offences are
very shocking."
Yet in Capitalism: A Global History,
Sven Beckert calls colonial Barbados "an almost perfectly Smithian
economy, with utility-maximizing individuals creating a newly productive
division of labor"—indeed a model of market capitalism. A simple
contrast of those two characterizations is enough to raise the question
of whether Beckert bothered to consult what Smith actually wrote about
West Indian slavery.
In the 19th century,
slaveowners and abolitionists alike noted the tensions between the
emerging industrial economy and the plantation system. The former
depended on freedom of movement and on choice in career and industry.
The latter grafted elements of feudal hierarchy and coerced labor onto a
fixed model of agrarian mass production. Proslavery theorists such as
George Fitzhugh saw the two systems as irreconcilable. "Laissez faire,"
he argued, was "at war with all kinds of slavery, for they in fact
assert that individuals and peoples prosper most when governed least."
Such testimonies complicate Beckert's interpretation of slavery as a
fundamentally capitalistic institution.
Beckert's book, a sweeping 1,300-page
history, synthesizes bits and pieces of the academic literature to
recount the emergence of capitalism over the last millennium, tracing it
from the port cities of Yemen in the Middle Ages to the global economy
of today. But that literature is uneven and selectively curated.
Standard works on the "Great Enrichment"—the sustained worldwide
explosion in wealth and living standards over the last two
centuries—receive scant mention. Despite the centrality of slavery to
Beckert's narrative, he relegates the vast body of empirical analysis on
this question to a single footnoted reference to an unremarkable
synopsis by another author.
Instead, Beckert mixes a peculiar
amalgam of anticapitalist authors. Some are familiar. Beckert treats
Karl Marx's writings as an obvious diagnostic manual for how capitalism
operates, complaining only that their 19th century milieu and
Eurocentric focus precluded a more universal application. He has similar
affinities for Karl Polanyi, calling the socialist writer "one of the
twentieth century's most perceptive observers of capitalism" while
evincing little awareness of the withering empirical criticism that
Polanyi's 1944 manifesto, The Great Transformation,
has attracted. When Beckert draws from economists, they are almost
invariably from the fringes of the profession. He credulously repeats
the inequality theories of Thomas Piketty, for example, showing no
familiarity with the critiques of their shaky empirical footing or the
heavy contestation around Piketty's "laws" of capital stock
concentration.
The core of the book's
themes and general style comes from a more obscure source: the German
Historical School of Gustav von Schmoller and Werner Sombart. Beckert's
new study bears more than passing resemblance to Sombart's Der Moderne Kapitalismus,
a huge untranslated work published in successive volumes from 1902
through 1927. There are differences and updates. Whereas Sombart adopted
a Eurocentric framework, Beckert's approach emphasizes the role of
capitalism in the "Global South" of postcolonial studies. Yet both works
purport to trace capitalism through distinctive historical "stages" of
development. Here capitalism functions not so much as a system of
exchange but as a tumultuous, violent "process" that organizes all
economic life around the "ceaseless accumulation of privately controlled
capital." Beckert presents his product as a global extrapolation on the
Historical School's approach, but its message is ultimately a sustained
derogation of capitalism and the academic discipline that he sees as
doing the capitalists' bidding: mainstream economics.
The source of Beckert's grievance
goes back to the marginal revolution of 1871, when William S. Jevons and
Carl Menger developed near-simultaneous solutions to the longstanding
problem of value in economic theory. Earlier classical economists
theorized that the value of a good is instilled by the labor performed
to improve upon it. This simple intuition breaks down in practice, as
Smith noticed when looking at cases where the circumstance of a
transaction caused differences in how goods were priced. The
marginalists deduced that value is a function of individual subjective
preferences, as exercised at the moment of a transaction by the parties
to an exchange. This created a stumbling block for Marxist economics,
which relied on the labor theory of value to calculate the "surplus
value" that capital owners allegedly appropriate from their labor force
without fair compensation. It also sparked a methodological feud between
Menger and Schmoller, who attacked the marginalist approach as overly
abstract and deductive.
Beckert unintentionally reveals that
he does not grasp the logic of marginalism. He interprets subjective
value theory as a crude attempt to "quantify the pleasure that goods
provided for consumers," which he deems "ahistorical" and blames for
"shift[ing] the primary question of economics" from labor-centric
production "to the problem of how scarce resources should be allocated."
In a few ambiguous steps, Beckert migrates to the 1960s writings of the
post-Keynesian economist Piero Sraffa, who attempted to construct a
theory of value from labor and commodity inputs that claimed to
resuscitate this older approach, sans marginalism. Few mainstream
economists cared, finding Sraffa's approach tendentious and empirically
irrelevant. Beckert nonetheless proceeds as if the marginal revolution
failed at its objectives, or at least warrants discarding today on the
grounds that it allegedly ignores "history, power, culture, and even
ethics" in favor of claimed universal laws of economic rationality.
For all his complaints, it is Beckert
who whiffs on the historical context of this debate. Ignoring price
theory, or perhaps not understanding its complexity, he scoffs that the
heirs of marginalism "were all utopian thinkers with an almost religious
belief in markets." His attempted history of economic thought omits the
fact that an observed breakdown in the labor theory of value (David
Ricardo, for example, noticed that wine pricing defied an aggregation of
its labor components) precipitated this new approach. He glosses past
marginalist critiques of the German Historical School's lack of
evidentiary rigor. And as his treatment of slavery shows, Beckert
appears unaware of mainstream economic scholarship on the very topics he
claims as a historical specialization.
Ultimately, Beckert's grievance comes
down to politics. He believes that marginalism's triumph imposed an
"intellectual enclosure" that "divorced economics from other social
science disciplines." Conveniently, those other disciplines tend to
display greater normative alignment with Beckert's own beliefs about
inequality, labor, and class conflict.
These methodological complaints
culminate in a lengthy treatment of "neoliberalism," the supposed
pinnacle of this "intellectual enclosure" from the mid–20th century to
the present. Here Beckert adopts the ideologically loaded frameworks of
scholars who view "neoliberalism" as a cohesive project to wall off the
capitalist economy from "democratic" will, by which they invariably mean
a socialist model of economic redistribution.
Beckert's account repeats many common
errors of this genre. He depicts 20th century trade liberalization as
the quintessential neoliberal project, ignoring that its main
institutional faces, the General Agreement on Tariffs and Trade and
later the World Trade Organization, grew out of the New Deal. While
characterizing the "neoliberal" postwar economy as an institutional
veneer for coercive economic violence, he almost entirely neglects its
historical context amid a geopolitical struggle with the Soviet Union's
coercive applications of Marxist doctrine. And in a final twist, Beckert
cannot resist impugning capitalism with another form of violence.
"Fascism never broke with a fundamentally capitalist organization of
economic life," he contends, citing its alleged entrancement with the
"commodification of inputs, outputs, and labor" and, above all, private
property.
These features transmitted into
"neoliberalism" after the war, he argues, because of the "absolute
primacy of securing the workings of the price mechanism" in its
doctrines. This produces a high "neoliberal" tolerance for
authoritarianism, even "admiration for fascism"—a point he attempts to
sustain with an out-of-context quotation by Ludwig von Mises in 1927
that credited interwar fascist governments for halting Marxist political
violence.
Compare that with Beckert's
assessments of Sombart, whom he praises as "incisive" and visionary.
Beckert omits the final turn in Sombart's career. In 1934, this student
of Schmoller, former correspondent of Friedrich Engels, and prophet of
capitalism's evolutionary procession would forever discredit the
reputation of the German Historical School by linking it to the Third
Reich. Sombart's Deutscher Sozialismus
demarcated this moment as an "age of late capitalism, which at the same
time is early Socialism" and prophesied the rise of a new socialist
economic order rooted in a Germanic "Volksgeist."
It is not in the myth of a Smithian
Barbados where we find the historical value of capitalism. It is the
terrifying alternatives that emerge when voluntary exchange is
supplanted by an illiberal convergence between the socialist left and
nationalist right."