Joseph Schumpeter famously summarized the achievement of capitalism in his 1942 book, Capitalism, Socialism and Democracy, with the following remark: “Queen Elizabeth owned silk stockings. The capitalist achievement does not typically consist in providing more silk stockings for queens but in bringing them within the reach of factory girls in return for a steadily decreasing amount of effort.”

On seeing Sven Beckert’s doorstep of a book — approximately a quarter of a million words longer than Schumpeter’s terse summary — an obvious question throws itself at the potential reader: What more does Professor Beckert have to explain?

The book’s subtitle gives an immediate answer. Whereas Schumpeter was offering a statement about the state that capitalism had reached in America and Europe by the time of World War II, Beckert offers a “global history” that starts a millennium ago in Yemen and ends in Cambodia.

His history consists of short, mostly descriptive essays covering incidents of capitalist activity and development since the beginnings of urban civilization. Loosely connected, the essays are grouped together in some eighteen extended chapters with sometimes cryptic titles, like “Enclosures” or “Insurgents.” These give vivid portraits of the personalities concerned and the business and political dramas in which they were involved.

Political Economy

The illustration of capitalism from all parts of the world is undoubtedly a strength of Beckert’s book. However, its critical weakness is that the personalities and dramas are not integrated with a clear political economy of capitalism.

In the absence of such a conceptual framework, Beckert’s book makes huge demands on its reader. Even the most ardent reader is unlikely to read these 1,100 pages in one sitting. His narratives span Europe, Asia, Africa, and the Americas, and jump back and forth between time periods.

For example, the chapter on capitalist culture in the late nineteenth century is followed by an account of slave revolts in the 1840s. On page 775, we are informed of the failure of London as a center for international financial settlements, while on the following page, we are plunged into the Great Depression of the 1930s. This approach makes it difficult to reenter at any point with a mental picture of the story so far.

On page 282, the author summarizes the picture: “Capital’s great revolutionary potential — emerging first on [trading] islands, pushing into the countryside and then intensifying industry — had only just begun to be visible.” Well into the book, on page 335, he gives the reader an outline methodology of the transition to industrialization, driven by innovations:

In the late eighteenth century, older forms of manufacturing continued and even intensified, with home-based proto-industrialization spreading in the United Kingdom and India, China and Prussia. In scattered places, however, this proto-industrialization became full-blown industrialization by harnessing the revolutionary energy of capital to the endless possibilities of technology.

Industrial capital gained tremendous strength in the process, its distinct interests shifting economic power throughout the world. At the global level, much sharper geographic hierarchies soon emerged, in what historians have called the Great Divergence: the moment at which a small part of humanity concentrated in Europe became wealthier than anyone else.

Beckert insists that the industrial revolution was the consequence of capitalism rather than its cause: “No prior form of organizing economic activity had ever birthed comparable ongoing innovations along with such productivity gains and economic growth.” This transformation “emerged from a globe-spanning network of processes that let a particular set of localized nodes break through to something fundamentally new.”

Keynesianism and Neoliberalism

John Maynard Keynes appears on pages 805–07 in the role he always wanted to perform: the savior of capitalism. But Beckert’s account of his ideas is very much couched in terms of conventional Keynesianism, stressing the importance of aggregate demand for output and employment and the emphasis of Keynes on fiscal policy.

This version of “Keynesianism” preceded Keynes himself. It was already well known among underconsumption theorists in the nineteenth century, and it had become conventional wisdom among economists and politicians by the 1930s, when Keynes sat down to write his General Theory.

Beckert follows the traditional route of Keynes’s partisans by presenting the mid-twentieth century as a “golden age” supplanted by a phase of neoliberalism, presented here as an alliance between business and Friedrich Hayek’s Mont Pelerin Society. At this point it all goes wrong, leading up to the 2008 financial crisis.

While this version of recent capitalism is conventional wisdom among heterodox economists, it flatters the anti-Keynesian Mont Pelerin Society. It was not Chicago professors who undermined the welfare state and the strong position of workers in mid-twentieth-century capitalism. Rather, it was the return of mass unemployment in the 1980s that unleashed popular dissatisfaction and weakened organized labor.

Beckert presents the 2008 crisis in a similarly conventional way as a subprime mortgage crisis, because that was how it was reported in the news media. In fact, the problems of collateralized debt obligations were merely a symptom of the illiquidity in capital markets — a problem that was quickly remedied when the US government stepped in to buy long-term securities under the Troubled Asset Relief Program.

Uneven Development

Beckert’s summaries of his argument are really too brief and too general to afford a framework to support the book. At this level of abstraction, the shifts in the focus of the narrative around different parts of the world give an impression of undifferentiated progress. The more interesting questions arise, as Karl Marx and Rosa Luxemburg pointed out, from the uneven character of capitalist development and the structures of production and distribution that bring about this unevenness.

A good example, overlooked in this book, is the case of Spain, where industrial capitalism singularly failed to develop until the late nineteenth century even though the country had been a leading force for well over three centuries in the international integration of markets, through its monarchy’s conquests in the Americas. The resulting flow of gold and silver back to Spain arrested the development of capitalism in the country at the stage of mercantile capitalism, precisely because Spaniards could afford to buy anything that was produced in the rest of Europe, in particular by the manufacturing centers of the Netherlands, Germany, and Italy.

By the eighteenth century, Spain had become the paradigmatic example for political economists of industrial and agricultural backwardness brought on by the import of precious metals. Traveling through Spain before the French Revolution, Henri de Saint-Simon was shocked at the lack of interest in the country in production and agricultural improvement.

In Beckert’s book, Saint-Simon and his followers appear all too briefly as utopian socialists. But there was far more to the unconventional French aristocrat, and to those he influenced, than the rational approach to dress and community life that some of those disciples embraced.

Saint-Simon realized that the future lay with science and engineering and that the fundamental obstacle to realizing the benefits of innovation was the lack of finance for investment. Among his followers were the bankers Barthélemy-Prosper Enfantin and the brothers Émile and Isaac Pereire, who developed the Crédit Mobilier system, a kind of development banking that spread through France, Germany, Italy, and even to Japan (after the Meiji Restoration of the late nineteenth century).

Capitalism and the State

A second region whose economies and societies have failed to conform to the general pattern of trade, leading up to mercantile capitalism and eventually industrial capitalism, is the Middle East. This is a region where mercantile capitalism had been established going back millennia, with ebbs and flows depending on where the confrontations of great civilizations — Greeks against Persians, Romans against Greeks, Europeans against Ottomans — cut across established trade routes.

The paradox here is the failure of that well-established mercantile tradition to generate much in the way of industrial capitalism. Limited water availability may have restricted the expansion of manufacturing. In the twentieth century, the abundant energy resources of the region seem to have played the same part as Spanish gold and silver imports in an earlier period by arresting the development of capitalism. But the Middle East also suffered from weak states, with the decline of the Ottoman Empire and the subsequent attempt of foreign powers to carve out colonies and control of oil and natural gas resources.

In this regard, the picture presented in this book of the capitalist state, one where its role in the formation of capitalism is limited to backing up capital with compulsion and violence, is partial at best. The state also had to organize the necessary infrastructure and finance. Somewhere in Beckert’s Harvard should be lurking the ghost of Alexander Gerschenkron, who pointed out that state capitalism in Russia predated the October Revolution by decades precisely because Russian commercial capitalism was unable to make the transition from mercantile to industrial capitalism. The tsarist government’s great economic achievement, overlooked because of that government’s political incompetence, was the Trans-Siberian Railway.

The state as the midwife of industrial capitalism appears in Beckert’s vivid descriptions of Japanese development following the Meiji Restoration of 1868 and the subsequent industrialization of East Asia. This is intriguing because the rise of industrial capitalism of that region also does not conform to the standard pattern where it emerges out of merchant capitalism.

The financial and development economist Charles Kindleberger found Japan in particular to be puzzling. The Meiji Restoration and subsequent industrialization came after nearly two and a half centuries during which foreign trade was suppressed. In China during recent decades, capitalist industry emerged out of the state communist system. East Asia thus confounds the standard pattern of capitalist development.

Capitalist Futures

But there is perhaps an even more important reason why political economy is essential to the understanding of capitalism. Political economy is capitalism talking to itself: about its aspirations and the obstacles to reaching those lofty aims; about its failings and the causes of those defects. In particular, with the primacy of the processes of investment and finance in capital accumulation, it is about the future of capitalism.

In any history of capitalism, political economy is therefore necessary to understand what the direction was at each stage of capitalist development and why it turned out as its did. Without political economy, our understanding of capitalism is at the mercy of any idiosyncratic interpretation of what constitutes capitalism and its history, or the vagaries of the reader’s own passing interests.

A good example here concerns the role of slavery in capitalism. Beckert comes back to it repeatedly in his book, declaring that it constitutes “a central pillar of old regime capitalism,” one that is “central to capital accumulation” and serves as “the foundation of the system of wage labour.” Chapters on labor revolts against capital turn out to be mostly about the slave revolts that punctuated production in the plantation economies almost from the earliest time of planter economies.

This approach may work well in case of the United States, whose history of slavery stands in flagrant reproach to the foundation myth of the country as an Enlightenment project. But it hardly does justice to the first struggles of workers to organize for better pay and conditions of work which, in Beckert’s account, only appear in the later part of the nineteenth century. At the same time, the emphasis on slavery makes it difficult to explain the book’s neglect of the American Civil War, one of the bloodiest wars of modern times and one that shook capitalist economies and ended in the victory of industrial capitalism over the planter economy.

The relationship between slavery and capitalism was (and remains) more complex than Beckert allows. Perhaps the replacement of struggles over wages and working hours by slave revolts in the narrative is part of the author’s promise to “decenter” the European perspective, “highlighting agency, resistance, innovation and ruthless coercion around the world.”

Imperialism and Dependency

Where political economy is allowed to enter the author’s discussion, it is incidental and frequently wrong. He cites Adam Smith as arguing that utility maximization drives capitalism. But Smith was not a utilitarian in the mold of Jeremy Bentham and James Mill, who Beckert does not mention, and capitalism in Smith’s understanding was driven by competition rather than utility.

Beckert also refers to a couple of obscure nineteenth-century political economists who favored slavery. But these were unrepresentative figures: the most widely read political economists of the nineteenth century were overwhelmingly against slavery, whether for religious reasons (Henry Thornton, David Ricardo) or because they recognized that the zero marginal cost of labor under slavery removes much, if not all, of the incentive to mechanize production.

Integrating the rest of the world with the industrial countries of Europe of course took the form of imperialism, whose link to capitalism was explored not only by Marx and Luxemburg but also by the British liberal J. A. Hobson, so admired by Vladimir Lenin, as well as Rudolf Hilferding and Schumpeter. Sadly, this literature is more notable by its absence in Beckert’s account, perhaps because the very notion of imperialism is itself “centered” in Europe and the United States.

What little there is about imperialism consists of a few pages, wedged between a section on Japan’s progress after the Meiji Restoration and a rather jejune account of the marginalist revolution in economics. Beckert presents imperialism as consisting of annexation and exploitation, which it unquestionably did. But he avoids the intellectual challenge of how imperialism came about and how it integrated its colonies into the global economy — in other words, its political economy.

In a brief discussion of the developmental state in postcolonial societies, political economy resurfaces, only to be dismissed in favor of dependency theorists (Samir Amin, Walter Rodney, and Raúl Prebisch). Despite its importance for the field of development economics, the main deficiency of dependency theory is precisely its inability to comprehend the functioning of capitalism in what were the industrialized economies and are now the “financially advanced” countries where capitalism keeps its money.

Beckert’s book provides a rich and extensive, albeit unstructured, account of the social conflicts that accompanied the development of capitalism. The reader who already has the works of Marx, Luxemburg, Hilferding, Hobson, Lenin, Schumpeter, Gerschenkron, Thorstein Veblen, Charles Kindleberger, and Eric Hobsbawm on her shelf will readily recognize the incidents it describes. Those without prior access to those works should read them in order to appreciate fully the significance of Beckert’s fascinating narratives.