Three great theories have traditionally dominated scholarship on early capitalism: capitalism as trade (Braudel, Wallerstein), capitalism as agriculture (Brenner) and capitalism as proto-industry (Mendels, Kriedte, Medick, Schlumbohm). In the past decade, a new approach to capitalism has emerged that takes the perspective of economic growth. The two-volume Cambridge history of capitalism, edited by the economic historians Larry Neal and Jeffrey Williamson, demonstrates the consolidation of this approach: ‘Modern economic growth’ are the first three words on the very first page of the first volume, and this three-word string occurs another seven times on the first page alone. It is bested only by ‘capitalism’ itself, but the reader is left in no doubt of the territory we are about to enter.
Capitalism is defined and discussed by the editors as an economic system. This is worth noting, because it would be equally legitimate to think of capitalism in terms of, say, social conflict. Michael Huberman’s chapter in volume 2 excepted, the working class is mostly conspicuous by its absence. However, the Cambridge history of capitalism adds a dimension that was absent in some of the most influential earlier works: globalization. It does so in two distinct ways. Whereas volume 1 basically treats various regions separately, and discusses to what extent these regions were interconnected by long-distance trade, volume 2 takes globalization as a given, and employs a thematic approach. There are obvious advantages in this division of labour, but it also raises questions that are best discussed for each volume separately.
The idea behind volume 1, which is the longer of the two, is that capitalism was not a uniquely modern, or indeed European, phenomenon. The ‘revolution of the early modernists’ (Jan de Vries) has effectively broken down the watershed between the pre-modern and industrial economies. Capitalism is now presumed to have been a potential attribute not just of Ancient Babylonia, Greece, and the Roman empire, but also of sub-Saharan Africa and among North American Indians. All these chapters point to the existence of internal markets and long-distance trade in their respective areas. To facilitate these activities, there was some sort of private ownership, contracts could be enforced, and governments were at least willing to tolerate merchants. So hey presto, capitalism – at least, by the definition of this book (p. 2).
The editors’ ecumenical definition of capitalism has allowed them to serve up a smorgasbord of delightful and at times brilliant essays, written by some of the best economic historians currently active. In reading them, one cannot but be impressed by the amount of new research done over the past fifteen years that has now found its way into these essays. For students and specialists alike, these are very helpful introductions to a literature which has become too vast to handle. Most of the essays in the first volume rely heavily on work that has been published since 2000. And that work has in all kinds of ways enhanced our views of pre-modern economies. Still, reading the chapters in quick succession left this reviewer wondering if it is really the case that all pre-modern societies were potentially capitalist, as implied in Neal’s introductory essay.
The first volume suggests three analytical strategies to deal with this problem. The first is to concentrate on the factors that prevented economies from developing their markets and long-distance trade into fully-fledged capitalism. Şevket Pamuk points out how, in the Middle East, merchants had little political influence. The Chinese state, says Bin Wong, simply had no need for capitalism because it managed to do what it aimed to do: namely, to take care of its inhabitants. Tirthankar Roy argues that the Indian economies were quite successful and that it is European exceptionalism that we need to explain. The second strategy is to think beyond product markets and to bring in the markets for land, labour, and capital. Oscar Gelderblom and Joost Jonker, in their essay on the Low Countries, and, to a lesser extent, Luciano Pezzolo on medieval Italy, employ this approach. They show how capitalism was striking deep roots in these economies, and how increasing numbers of people became completely dependent on the market. This then brings us to the third strategy, which is to concentrate on the frontrunners: Renaissance Italy, followed by the Low Countries, and ultimately England. This strategy is explored by Patrick O’Brien, who contributes one of the few explicitly comparative essays in the first volume. In his passionately argued chapter, O’Brien claims that what set the frontrunners apart was their aggressive governments and capacity to execute expansive economic policies. Inspired by mercantilist arguments, successive governments in seventeenth-century England created a permanent navy, reformed their tax system to pay for it, and set out to conquer the world. The Dutch had already shown the way and, on a smaller scale, the Italian city-states had done the same in the Mediterranean. O’Brien seems to imply that modern capitalism was created within the British empire, inspired by smaller-scale experiments in Italy and the Low Countries.
Volume 2 marks a shift in gear. Now capitalism and globalization have both entered the world and the authors of this volume seek to gauge their various dimensions. Historically speaking this is a problem because it leaves the initial question unanswered: how were the barriers against the rise of capitalism finally removed? The assumption seems to be that there was no alternative once capitalism had emerged: adapt or die were the only options. From that assumption, there follows the organizing principle of the second volume: the spread of capitalism. The implication is very much that the West was doing the spreading, while the ‘rest’ were on the receiving end. This, as Gareth Austin’s chapter brings out most clearly, inevitably contradicts the claim of the first volume that capitalism was potentially an attribute of many regions around the globe long before the Industrial Revolution. It is no coincidence, then, that Austin is also one of the few authors in this volume highlighting the role of indigenous forces promoting capitalist practices outside the capitalist core.
Austin’s chapter discusses colonialism and imperialism, two of the most powerful tools in the spread of capitalism. Bob Allen underlines how the incentives resulting from factor prices, combined with government policies, shaped the ways in which the new manufacturing technologies were taken over outside the European world and its offshoots. Kristine Bruland and David Mowery highlight the role of education in the reception or rejection of industrial technologies. Labour unions made their own contribution when they discovered that lower transport costs triggered mass migrations which put an end to ‘national’ labour markets (Huberman). Capitalism was thus helped along by various non-capitalist allies.
Perhaps it is no surprise that some of the most interesting chapters in the second volume qualify and question the whole idea of a triumphant capitalism ‘spreading’ across the globe. Thus, Giovanni Federico reminds us that extraordinary progress has been made in the agricultural sector, both in terms of productivity and total output, all the while remaining immune to capitalism to a large extent; family farms were, and still are, the norm. Randall Morck and Bernard Yeung point out that powerful business groups, with the help of aggressive governments, proved to be effective instruments for achieving Big Push industrialization. In the same vein, Huberman underlines how modern capitalism was most successful precisely during the decades when, and in the regions where, organized labour was most powerful as its main opponent. Likewise, Peter Lindert argues that industrialization, capitalism, and economic growth produced an unprecedented expansion of public services, collectively known as the welfare state, as an unintended but not unrelated consequence. If we broaden the definition of outcomes from GDP growth to ‘human welfare’, as Leandro Prados de la Escosura does, these ‘non-capitalist’ and non-market aspects stand out: improvements in health and education were together much more important than the increase of income.
The sobering message of this history of capitalism must therefore be that, although capitalism was a significant cause, it was by no means the only cause behind the progress made by human societies in recent centuries. Or, as the editors Neal and Williamson note in their brave attempt to draw lessons from history for the future, capitalism will continue to produce its beneficial effects only by ‘introducing policies to ameliorate the human condition’ (p. 544).
To sum up: the more than one thousand pages bound into the two volumes of the Cambridge history of capitalism provide first-rate reference material, as well as food for thought. Given not only the high quality of the chapters but also the conceptual problems created by the framing of the topic, the book provides excellent teaching material for introductory graduate courses in economic history. But its use is undermined by the prohibitive price of the hardcover set. It is hoped that the publisher will allow students to benefit from this work by bringing out a paperback edition soon.
