Photo by Herve Gergaud/Millennium
A well-known story by Jorge Luis Borges, “On Rigor in Science”, recounts the tale of a guild of cartographers, who, in search of perfection, undertook to create a new map of their empire. This map ended up being to scale, matching point for point the terrain it described. The empire’s inhabitants, finding it impossible to navigate with this map, condemned it to “the inclemencies of sun and winters”. Now, only “animals and beggars” inhabit its “tattered ruins” in the “deserts of the West”.
Though a postmodern fable, Borges’ story evokes a grand failure to interpret a changing social reality. And a cursory glance at contemporary discourse does suggest something similar: that, as a society, we are struggling to make sense of present events. When, for instance, we talk about “the current conjuncture” or “the polycrisis”, these are descriptions of something we don’t understand, not analyses. At best, there is a general sense that we are living through a period of profound upheaval: a crisis of “democratic capitalism” (or of “neoliberal capitalism” or “globalisation”) unfolding against the backdrop of accelerating ecological breakdown.
These terms for crisis are attempts to encapsulate various corrosive trends that germinated in the era of neoliberal ascendancy between 1989 and 2008, and which came to the forefront after the Great Financial Crisis: from economic stagnation, rising national inequality and populist backlash, to the return of geoeconomic rivalry, mercantilism and a fracturing global economic order. We have some inkling that this state of affairs is radically novel and uncertain – but that’s about it. All of this poses with new force a set of questions about this thing we call capitalism: its origins, its relationship with “the global”, the new shape it is taking, and to what extent it is implicated in our general crisis.
Two new books take a stab at these questions. Both authors are eminent scholars. One has written a tremendously erudite, millennium-spanning tour de force of narrative history that ultimately falls short; the other, a deft contemporary political economy of the global economic order aided by empirical research and political theory. The former is a kaleidoscopic account of capitalism’s past, the latter a snapshot of its convulsing present. Read together, they provide some ideas of how to talk about the “system that runs the world” – and how not to.
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Where others drag their feet, Harvard historian Sven Beckert earns pride of place for lucidly defining his subject in the introduction of his voluminous Capitalism: A Global History. Widely respected for his study of the role of the cotton industry in shaping industrialism and the global economy, Beckert is not an economic historian but a scholar in the distinct field of global history whose subject is the history of capitalism. The methodological and theoretical emphases of this book reflect his membership of this particular academic tribe.
For Beckert, capitalism is not a “thing”. Rather, it is a “fact” about the world, one that is best understood as a process. Specifically, it is the open-ended and ongoing process of accumulation of private capital and commodification, in which the boundaries of different spheres of life are constantly being redrawn. It is tightly linked to non-economic factors and agents, principally the state, and it is inseparable from violence and coercion. So far, this is inoffensive and will not sit at odds with capitalism as construed in most historiographies.
But in Beckert’s history, the emphasis falls not on social relations between capital and labour but on the fundamentally global nature of the process. That is to say, capitalism is synonymous with (or, if you like, the emergent property of) the interconnections that comprise the global economy, the emergence of which in history is the “global condition of possibility” for the emergence of capitalism. With this process began a revolution in human affairs comparable only to that of the neolithic, when we ceased being hunter-gatherers. At first glance, Beckert might be accused of setting himself too easy a task by opting for a definition so expansive that it can subsume most of the key developments of a whole millennium. But tying the story of capitalism to the emergence of the global economy is precisely how it goes awry. What he ends up providing is less a history of capitalism and more a history of economic life since pre-capitalism.
Many aspects of the narrative are nonetheless compelling and informative. This is owed largely to the staggering wealth of archival material from centuries of economic life from China to West Africa to Argentina. But it is also aided by some apt conceptual choices. One is his separation of “capitalists” from “capitalism”. This allows for some way to distinguish early merchant capitalists from other tradespeople. And it also provides an outline of a pre-capitalist phase in which the social and institutional conditions for the emergence of capitalism proper didn’t yet exist, but in which the multiplying and deepening economic relationships were creating a world economy. As a result, Beckert departs from more conventional historical timelines, in which capitalism comes of age in the early modern period, drives the agricultural and industrial revolutions and conquers the world on the backs of empires.
Instead, Beckert starts his account in the mid-12th century in Yemen. Some of the most vivid and enjoyable chapters are those detailing the early “islands of capital” around Aden, which consisted of literal, fortified islands that formed the base for a dynamic and ethnically diverse merchant community. This community then slowly expands its commercial and cultural ties with similar communities in the Indian Ocean, West Africa, the Mediterranean, East Africa and China.
Nothing in these chapters is necessarily new. But Beckert marshals so much evidence from so many different sources in support of his narrative, that any doubts about the non-European origins of merchant trade and early capitalism are thoroughly put to bed. The growth and intensification of the connections between these communities of capital-rich merchants are what dominate the narrative of the years till around 1640, concluding the so-called “long 16th century”. In as much as there is a central thesis, it’s that this “great connecting” drove a qualitative shift from an economy of merchant capitalists to capitalism. Specifically, it is not regional development, but the intensification of long-distance trade that spawns new uses of capital during the middle ages. Thus, capitalism is “born global”.
This is neat but not entirely plausible. It precludes the centrality of what the medieval historian Chris Wickham has called the “internal logic of the feudal economy”. The preponderance of historical evidence highlights the relevance of local social relations of production, namely the distributive conflict between the peasantry and the feudal nobility: over rents, dues and taxes. And the dynamism in medieval economic life prior to the rise of agrarian capitalism can be attributed to the significant extent of (regionally concentrated) commercial activity under the feudal mode of production. Where it differs from the capitalist mode is in the manner of coercion. The lord or the monarchic state, unlike capitalists, played an extractive role and was not structurally involved in the labour process or in production
By no mean is this strictly at odds with Beckert’s view. For one, it prefigures how new sources of demand from globally emergent capitalism which he narrates – in tandem with the fiscal-military conflict between European states formally described by Charles Tilly – would prove transformative. And neither Wickham nor Beckert would refute what historians such Jairus Banaji have emphasised about the pre-capitalist period, namely that the “peasant mode of production” co-existed with more direct and archaic forms of surplus extractions including tribute, dispossession and semi-enslavement.
Where Beckert differs is in his emphasis. But his case for the relative importance of long-distance trade is not wholly convincing. For one, even until the 19th century, the boundaries of the global economy were effectively defined by merchant sailing fleets and pack animals, ending a few dozen kilometres inland. And feudalism too was a “global system” of loosely connected “islands” of regional economic activity, in the sense that it encompassed the Eurasian landmass where Beckert’s analysis of the first few centuries (prior to the integration of the new world economies) dwells.
The apparent reason for emphasising the global character of trade integration is laudable. Most narratives about the emergence of the global economy and capitalist modernity are overwhelmingly “Eurocentric”. Beckert’s isn’t the first attempt to redress this. But like other efforts, his is shaped by an overcommitment to a familiar set of progressive tropes: a rejection of “the West and the rest” narratives; a dismissal or deflation of the role of geography; the centring of colonial violence; a focus on the ecological dimension of historical change; and so on. It is hard to escape the impression of a scholar trying to cover all his bases.
This surely informs Beckert’s expansive definition of his subject. In the introduction, he claims to not simply provide an “impossibly finely-tuned definition of capitalism’s essence”. Yet this is arguably what he ends up doing – much to the detriment of his goal to describe “capitalism in action”. After all, any analysis of “the economy” presupposes the ability to abstract from it. But it is precisely the expansiveness of his framework that undermines this ability. Readers braving these 1100 pages should mentally prepare to end up without a clear idea of what capitalism is; they can find comfort in the fact that the author doesn’t have one either. One is reminded of Fernand Braudel, the celebrated chronicler of capitalist civilisation in the early modern period. Braudel’s accounts brim with erudition and style but leave us unclear about what actually drives historical developments. They are too broad, or, as Charles Tilly quipped: “broad, broader… Braudel”. This defect is on voluminous display in Beckert’s tome. A pastiche of Braudel, it features the same debilitating “broadness” but without the redeeming stylistic flourishes.
As we progress through the book, contradictions begin to accumulate. Beckert’s account of the period of the agrarian revolutions between 1550-1750 (the “transformation of the countryside” that drove the consolidations of agricultural production, generated the first industrial labour force and swelled urban populaces) is masterfully expansive and replete with fascinating detail. Above all, he manages to impress upon the reader how exceptionally violent this period was: the sprawling military and political upheavals across Eurasia and the extermination, enslavement and exploitation that characterised European colonial expansion have no obvious historical precedent.
But much of the violence credited to the global expansion of capitalism manifested in ways incompatible with even a rudimentary idea of capitalism, indeed any notion of a market society. Beckert holds up the Caribbean plantation island of Barbados in the 17th century as an “almost perfectly Smithian economy, with utility-maximizing individuals creating a newly productive division of labor”. But what markets (let alone capitalist markets) can be spoken of when labour was enslaved, land was stolen and centrally distributed by feudal authority, and trade with rival powers (e.g. the Dutch and the Spanish in the Caribbean) was frequently limited by royal fiat?
When it comes to the defining events and developments conveyed in Beckert’s account of the last millennium, one is left a bit in the lurch when it comes to relating them to one another causally. Are they monocausally linked to the long and inexorable march of capitalism? Or, perhaps, there are a myriad of factors but they are either incidental to the grand revolutionary process (in which case the process can hardly be so grand or revolutionary) or simply various forms of “resistance” to capitalism. It would be uncharitable to accuse Beckert of denying the multiplicity of causal factors at work, but the narrative heavily implies that the fundamental changes over time were produced by these factors being subsumed into the global capitalist process as defined by him. This simply begs the question what drove those underlying factors to begin with. These contradictions are not sufficiently addressed let alone resolved, and one suspects that the author is not fully aware of his framework’s shortcomings.
Much of this book is marred by these contradictions. But the defects of Beckert’s framework begin to fade the closer we get to the current moment. Strangely, they do so in a manner compatible with his view of capitalism as an all-encompassing, ever-expanding and ever-intensifying process. It may not be true that capitalism is to blame for, say, my high-school girlfriend breaking up with me. It is undeniably true, however, that there are fewer and fewer aspects of contemporary life into which the “logic of capitalism” – expressed in the tendency to commodify, assetise or commercialise every sphere of social, political and natural life – hasn’t extended. Now, both broad and minute causal claims invoking fundamental aspects of capitalist civilisation begin to have merit. But to recall Borges’ map problem: if it explains everything it explains nothing. The whole point of a theory is that it can exclude certain outcomes. In Beckert’s case, it becomes more useless the moment it becomes more accurate.
It is to his credit that Beckert avoids the excess of theory that bedevils other histories of capitalism. But he left too little meat on a very large bone: we are left with a collection of facts and anecdotes without the means to causally relate them to one another. Doing so requires a plausible theory of social change, which we don’t get. We are assured, for instance, that the contingent nature of capitalism’s emergence implies that other systems can emerge from within it – from other “islands” and through another “great connecting”. In other words: if capitalism has a clear origin story, then it can have an ending. Yet we are left with scant theoretical resources to even recognise such an ending if it were to occur. This imposes real limits on our ability to think about alternative forms of social organisation.
By contrast, Branko Milanovic’s The Great Global Transformation is more likely to invigorate the reader’s political imagination. An economist by training, Milanovic is noted as one of the progenitors of the field of global inequality, which deals with national wealth and income data in comparative perspective. His writing is that of an empirically minded social scientist with great theoretical nous, expertly marrying political theory, political economy and economic history. In what is perhaps the most famous chart on the global economy in recent years, the “elephant curve chart”, Milanovic demonstrated (along with Christopher Lakner) that income growth between 1988 and the early 2010s, disproportionally favoured the global upper income decile (particularly the 1 per cent) and the middle classes in emerging economies at the expense of the middle classes in the advanced economies, while the global poor saw meagre gains.
What this chart describes is the most fundamental redistribution of global economic power since the industrial revolution. It has taken place in the last half century, accelerated since 2008 and ground to a halt during the Covid pandemic. Milanovic devises a simple yet powerful three-part analytical framework for understanding this economic shift: the country-level geopolitical consequences, the individual or household-level reshuffling of incomes, and the domestic rise in inequality and attendant political conflict. These are the three deeply interrelated “great transformations” that have shaped the current moment and which offer a plausible guide to understanding the near future of capitalism.
In this account, the most important economic fact by far is the rise of East Asia, above all China, and simultaneously the relegation of the West, particularly Europe. The “centre of global production and trade” has shifted to the Pacific, bringing “the most populous part of the world to play a role that is broadly equivalent to its importance in the world population”. In terms of their share of global GDP, this restores the pre-19th century balance of power. The notable difference is that now much of the global middle class is composed of non-Westerners.
This is consistent with Beckert’s historical account that de-centres Europe’s role in the emergence of global trade and capitalism and firmly locates the most dynamic commercial centres in South and East Asia up until the 17th century. While his account of the reconstructions of capital and labour between 1870 and 1920 is impressive, Beckert does not offer a satisfying account of the postwar globalisation that explains the divergent trends we see now. But Milanovic too stumbles conceptually; this becomes apparent when looking at his framing of the role of neoliberalism in producing the three transformations.
The process of globalisation that created these shifts also sowed the seeds of conflict, reverberating from the individual and the household, through the domestic political and to the global geopolitical levels. The formation of new “monied elites” in concert with the defenestration of middle-class prospects across much of the developed world led to domestic political conflict, which in turned into backlash against the global economic order. Nowhere is this picture clearer than in the US, whose particularly rapacious elites mishandled the impact of various shocks of global trade integration. The populist frame that won out blames both domestic “liberal elites” and China.
Here, Milanovic relates both of these shifts – the developmental miracle of China and the corrosion of economic prospects in the US and elsewhere in the West – to the “success” of “global neoliberalism”. “The rise of China,” he writes early on in the book, “that was made possible thanks to global neoliberalism made the end of global neoliberalism inevitable.” This is neatly dialectical but patently untrue. The distinction between neoliberalism at the global and national levels is sound. But it relies on the conflation of “neoliberalism” with “globalisation”. The truth is that the great reduction in global inequality, responsible for much of the first big shift of production to Asia, was driven by countries whose relationship with the global trading system rejected neoliberal strictures. The key feature of neoliberal trade is the unfettered mobility of short-term capital flows. Yet China’s success (and to a lesser extent India’s) was predicated on avoiding such destabilising portfolio flows by regulating its capital account.
Instead, China’s growth was significantly dependent not on portfolio flows but on foreign direct investment (FDI) through special economic zones. Hong Kong has acted as the primary springboard, accounting for about 64 per cent of inward flows and around 65 per cent of outward FDI between 2010 and 2018, whereas portfolio flows through the Qualified Foreign Institutional Investor (QFII) scheme and other initiatives remained negligible during this period. Perhaps one could argue that the volume of these capital flows depended on the growth of debt-fuelled consumer demand in the US and that this in turn was downstream from full integration into global trade and finance along neoliberal lines. Even if this were plausible, it is likely that China would simply have grown more slowly.
The confusion likely results from being too caught up in the framework of complete neoliberal hegemony after 1989. Indeed, Milanovic opens the book by describing how at the end of the Cold War he bore witness to the “total domination of neoliberal economics across the world” and frequent collapse of state socialist systems (such as the one in which he grew up, Serbia) into “extreme versions of the neoliberal creed”. But the fact is that global trade was not an ideologically uniform phenomenon and that certain countries were able to contest their relationship with it.
The failure to realise this complicates the argument that the demise of the neoliberal consensus around trade is leaving in its wake a genuinely new form of neoliberalism-sans-internationalism, which Milanovic terms “national market liberalism”. The premise that neoliberal financial capitalism ate globalisation through rising inequality and oligarchic aggrandisement holds up. But it did not, in the process, turn itself into an empty shirt domestically, dominated by a new political logic that revolves around the need to “check or break the new globalized elite”.
Milanovic makes this case for China, the US and Russia. This case is a bit tenuous. In the US for one it seems that it is simply a different section of the elite that has joined the rest in enriching itself more brazenly and at a grander scale than ever. And while there is a pushback against the system of allowing capitalist interlopers in the Communist Party elite (which originated under Jiang Zemin), the crackdown has more to do with internal need to rebalance in the midst of an epic real estate crash. And in the rest of the developed world, which Milanovic largely ignores in this context, one need only pick up a newspaper to see that not much has changed: renewed calls for austerity, deregulation, welfare cuts, structural reforms, and all the rest. If anything, the convulsions of the post-2008 and post-“triple shock” more deeply entrenched domestic neoliberalism.
It is a basic failure of intellectual hygiene to equate capitalism, in whatever ideological variant, with “the global economy”. Both Milanovic and Beckert are guilty of this to some extent. But it also implies the possibility to contest the nature of the new global economic order as it is taking new shape. It is worth remembering that capitalism is the wholly owned subsidiary of economic life which in turn is governed by political and social choices made within material constraints in a particular historical context.
When it comes to whose book provides a better understanding of capitalism and its current state, it would have to be Milanovic’s. Like John Maynard Keynes, he has a gift of illuminating the world in both the grand context and empirical detail. By contrast, Beckert’s meanderings offer little guidance. Though kaleidoscopic and beautiful, simply narrating capitalism within economic life is useless as a guide to navigating its crisis-ridden empire. He is most likely to join Braudel, whose works currently serve as an elaborate stand for my computer screen. To quote Tilly again, he is not a “mapper” but one of the great “musers”. If Beckert’s book at all aspires to be a map it ends up like the one Borges’ fable: the tattered ruins in which only animals and beggars dwell.
[Further reading: How the left misread Gramsci]
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