Podcast: Why a historian of capitalism believes the neoliberal order is dying

There is nothing natural about capitalism: it has been “a radical departure and discontinuity in human affairs.” The free market, so beloved by neoliberal economists, is “nothing more than a figment of scholars’ and ideologues’ imaginations.” Like communism, capitalism is an “extraordinarily statist form of economic life,” one that could not survive without the deep and active involvement of governments.

These perspectives might surprise and shock some readers. They are all found in Capitalism: A Global History, a new work by the Harvard historian Sven Beckert. For over a thousand pages, Beckert tells a world-spanning story with some very revisionist takes, amassing data and written sources to paint a detailed, comprehensive portrait of the economic system which has birthed the modern world.

In this episode of Past Imperfect, Beckert distills in less than an hour some of most important themes from his book.

Beckert, who previously authored Empire of Cotton (2015), champions a historical approach for understanding capitalism. He is sharply critical of the modern discipline of economics, dominated by quantitative methods and beholden to “its alleged scientific method.” Only history, he argues, can demonstrate the profoundly revolutionary nature of the capitalist system. History throws up a picture of capitalism in all its complexity and contradictions: private enterprise which depends on state power, free markets relying upon coerced labour.

Above all, as Beckert emphasises in this episode, any account of capitalism has to be fundamentally global. The West has overshadowed the rest of the world in many previous works of global economic history. In Capitalism, Beckert demonstrates how the “peripheries” of the global economy have been anything but peripheral. “Capitalism was born global – it was always a world economy,” he states.

In examining the beginnings of capitalism, he looks to cities like Aden and Surat in addition to Florence and Amsterdam. His account of the Industrial Revolution goes well beyond the landscape of textile mills in Lancashire and Glasgow, embracing proto-industrial workshops in Gujarat and plantations in the West Indies. As a result, Beckert presents us with a surprising geography of where the first truly capitalist societies emerged: not in the metropolises of Western Europe but rather in places like Barbados and the Andean city of Potosí.

These societies present us with quite a stark picture of what capitalism looked like. Yes, they yielded fantastic riches. But production of West Indian sugar and Andean silver was only possible through slavery or, at best, highly coerced labor. Beckert is unequivocal in his belief that capitalism rested upon the vast system of slavery in the Americas. Following earlier scholars like Eric Williams, he points to ways in which slavery sustained the Industrial Revolution.

And slavery, in turn, helps reveal the critical importance of the state. Governments facilitated colonial exploits, underwrote corporations involved in the slave trade, and were made up of public men who had grown wealthy from their distant plantations.

Abolition in the 19th century shook things up, but only to an extent. Beckert is particularly sensitive to how the state constantly sought out new roles and functions. The French, British, and Spanish governments actively worked to replace slave labour with indentured labor. Elsewhere, the government of Meiji-era Japan recast the island of Hokkaido, importing new labor, marginalising the indigenous Ainu, and, through American expertise, turning a once-peripheral northern outpost into a vital commodity frontier.

Beckert offers a unique chronology of capitalism. He draws our attention to the 1870s, when an earlier form of mercantile capitalism crumbled under the dynamic force of industrial capitalism. The collapse of Western and Japanese empires after the Second World War was another hinge moment. “No single twentieth-century development recast global capitalism in more consequential ways than decolonisation,” Beckert tells us. His account of decolonisation takes into account economic behemoths such as India and Indonesia but also surveys transformations in places like Senegal and Burkina Faso.

The current moment, Beckert believes, is another critical turning point. The neoliberal order is dying. Yet, we are in what the early 20th-century Italian thinker Antonio Gramsci would classify as an interregnum: “The old is dead, but the new has not yet been born.” As Beckert says in this episode, the state of global politics today can make one wonder if it is more likely that things will go wrong rather than right. Yet history provides us with numerous examples of successful management of capitalism’s inevitable crises: the construction of the welfare state in Sweden beginning in the 1930s, for example, or China’s careful economic reforms after 1979.

As Beckert makes clear, the history of capitalism, like all history, is an imperfect mechanism of prediction, but it nevertheless provides a general idea of possible future outcomes. The question remains whether today’s global leaders are willing and able to examine this history.

Dinyar Patel is an associate professor of history at the SP Jain Institute of Management and Research in Mumbai. His award-winning biography of Dadabhai Naoroji, Naoroji: Pioneer of Indian Nationalism, was published by Harvard University Press in May 2020.

Past Imperfect is sponsored and produced by the Centre for Wisdom and Leadership at the SP Jain Institute of Management and Research.