The relentless revolution: a history of capitalism

ALSO BY JOYCE APPLEBY

A Restless Past:
History and the American Public

Thomas Jefferson

Inheriting the Revolution:
The First Generation of Americans

Telling the Truth about History
(
with Lynn Hunt and Margaret Jacob
)

Liberalism and Republicanism in the
Historical Imagination

Capitalism and a New Social Order:
The Republican Vision of the 1790s

Economic Thought and Ideology in
Seventeenth-Century England

The
R
ELENTLESS
R
EVOLUTION

A HISTORY OF
CAPITALISM

Joyce Appleby

W. W. NORTON
&
COMPANY
    New York • London

Copyright © 2010 by Joyce Appleby

All rights reserved

For information about permission to reproduce selections from this book, write to Permissions, W. W. Norton & Company, Inc.,
500 Fifth Avenue, New York, NY 10110

Library of Congress Cataloging-in-Publication Data

Appleby, Joyce Oldham.
The relentless revolution: a history of capitalism / Joyce Appleby.
—1st ed.
p. cm.
Includes bibliographical references.
ISBN-13: 978-0-393-07723-0
ISBN-10: 0-393-07723-3
1. Capitalism—History. 2. Economic history. I. Title.
HB501.A648 2010
330.12’209—dc22

2009035676

W. W. Norton & Company, Inc.
500 Fifth Avenue, New York, N.Y. 10110
www.wwnorton.com

W. W. Norton & Company Ltd.
Castle House, 75/76 Wells Street, London W1T 3QT

I dedicate this book to my son, Frank Appleby,

who has been an unfailing source of comfort, knowledge,

humor, and enthusiasm

CONTENTS

Acknowledgments

1. The Puzzle of Capitalism

2. Trading in New Directions

3. Crucial Developments in the Countryside

4. Commentary on Markets and Human Nature

5. The Two Faces of Eighteenth-Century Capitalism

6. The Ascent of Germany and the United States

7. The Industrial Leviathans and Their Opponents

8. Rulers as Capitalists

9. War and Depression

10. A New Level of Prosperity

11. Capitalism in New Settings

12. Into the Twenty-first Century

13. Of Crises and Critics

Notes

ACKNOWLEDGMENTS

W
RITING THIS BOOK
was actually fun, and even more pleasurable were the many conversations I had about capitalism with Flora Lansburgh, Jim Caylor, Linn Shapiro, Perry Anderson, Ruben Castellanos, Bruce Robbins, and Lesley Herrman. I had a band of readers to whom I am deeply, deeply indebted. Jack Pole brought to the reading of
The Relentless Revolution
a welcome and profound knowledge of history. David Levine, another fellow historian, was my toughest critic, but he generously praised the parts that he liked and always encouraged me to press on. Ware Myers gave me the kind of crisp advice you’d expect from an engineer with intellectual leanings. Susan Wiener, a poet and writer, read the book with sympathy and the sharpest eye for errors grammatical, syntactical, and orthographic that I have ever known. Carlton Appleby pushed for clarity and precision. My dear friend Ann Gordon brought her care for the English language to my prose. Several colleagues—Margaret Jacob, Robert Brenner, Peter Baldwin, Nikki Keddie, Fred Notehelfer, Stanley Wolpert, Jose Moya, Mary Yeager, and Naomi Lamoreaux—contributed valuable expert knowledge. My nephew, Rob Avery, saved me from making several errors about computers, as Seth Weingram did for the arcane world of finance. Karen Orren listened and read with her usual acuteness. I was fortunate in having Steve Forman as my editor at Norton, for he was a shrewd, yet sympathetic, reader of my text. My son, Frank, to whom I have dedicated this book, read each chapter with critical insight. What was even more helpful, he shared his expansive knowledge with me and never tired of talking about capitalism. Through the kindness of Peter Reill and the Center for Seventeenth-and Eighteenth-Century Studies, I found Vic Fusilero, the finest research assistant I have ever had. It’s rare that someone not only gives you an idea for a book but persists in convincing you to write it, but such is the case with Michael Phillips. After interviewing me for his radio show many years ago, he decided that I should write a book on capitalism, and so I have. I am grateful to all these friends. I may have to claim my mistakes, but I am certain that I would have had to claim a lot more without these superb readers.

THE
RELENTLESS
REVOLUTION

THE PUZZLE OF CAPITALISM

L
IKE A GOOD
detective story, the history of capitalism begins with a puzzle. For millennia trade had flourished within traditional societies, strictly confined in its economic and moral reach. Yet in the sixteenth century, commerce moved in bold new directions. More effective ways to raise food slowly started to release workers and money for other economic pursuits, such as processing the sugar, tobacco, cotton, tea, and silks that came to Europe from the East and West Indies and beyond. These improvements raised the standard of living for Western Europeans, but it took something more dramatic to break through the restraints of habit and authority of the old economic order. That world-reshaping force came when a group of natural philosophers gained an understanding of physical laws. With this knowledge, inventors with a more practical bent found stunning ways to generate energy from natural forces. Production took a quantum leap forward. Capitalism—a system based on individual investments in the production of marketable goods—slowly replaced the traditional ways of meeting the material needs of a society. From early industrialization to the present global economy, a sequence of revolutions relentlessly changed the habits and habitats of human beings. The puzzle is why it took so long for these developments to materialize.

Most of the marvelous machines that transformed human effort began with simple applications of steam and electricity. How many people had watched steam lift the top off a pan of boiling water before someone figured out how to make steam run an engine? Couldn’t someone earlier have begun experimenting with lightning? The dramatic success of eighteenth-and nineteenth-century innovations compels us to wonder why human societies remained fixed for millennia in a primitive agrarian order. How can it be that brilliant minds penetrated some of the secrets of the cosmos but couldn’t imagine how to combat hunger? The answer that the times were economically backward is of course semantic and doesn’t really help us pierce the conundrum of great civilized accomplishments in the face of limited economic productivity.

Starting with these questions, I am going to explore the benchmarks in capitalism’s ascent, looking at how this system transformed politics while churning up practices, thoughts, values, and ideals that had long prevailed within the cocoon of custom. This is not a general study of capitalism in the world, but rather a narrative that follows the shaping of the economic system that we live with today. Nor does it cover how various countries became capitalistic, but rather concentrates on those specific developments in particular places that gave form to capitalism. My focus is on economic practices, of course, but it can’t be stressed too much that capitalism is as much a cultural as an economic system. A new way of establishing political order emerged. People reversed how they looked at the past and the future. They reconceived human nature. At a very personal level, men and women began making plans for themselves that would once have appeared ludicrous in their ambitious reach. Tucked into this account will be an examination of how different societies have responded to the constant challenges ushered into their lives during the past four centuries.

If we were to visit ancient Florence, Aleppo, and Canton, we would be astonished by the rich array of foods and goods for sale in their vast bazaars, souks, and markets. We would marvel at the beauty of their churches, temples, and mosques, as well as the merchants’ elegant city houses and the country homes of the nobility. We would discover a population of talented artisans, knowledgeable statesmen, shrewd traders, skilled mariners, and energetic people everywhere. Yet they all were in thrall to an economic system so limited in size and scope that it could barely feed them. They accepted as normal that they would regularly suffer from drastic shortages of all kinds of goods because it had always been so.

Scarcity in Traditional Society

Traditional societies around the globe were built on the bedrock of scarcity, above all the scarcity of food. Whether in ancient Egypt or Greece, Babylonia or Mongolia, it took the labor of upwards of 80 percent of the people to produce enough food to feed the whole population. And because farmers often didn’t even succeed in doing that, there were famines. All but the very wealthy tightened their belts every year in the months before crops came in. The fear of famine was omnipresent. Hungry subjects tended to be unruly ones, a fact that linked economic and political concerns. The worry about famines, which most adults shared, justified the authoritarian rule that prevailed everywhere. Few doubted that those vulnerable to food shortages needed to be protected from the self-interested decisions that farmers and traders might make about what to do with the harvest if they were left to themselves.

To prevent social unrest, rulers monitored the growing, selling, and exporting of grain crops. Where there were legislatures, they passed restrictive laws. Hemmed in by regulations, people had few opportunities to make trouble—or undertake new enterprises. Most manufacturing went on in the household, where family members turned fibers into fabric and made foodstuffs edible. Custom, not incentives, prompted action and dictated the flow of work throughout the year. People did not assign themselves parts in this social order; tasks were allocated through the inherited statuses of landlord, tenant, father, husband, son, laborer, wife, mother, daughter, and servant.

Despite the great diversity of communities around the world, they conformed in one way: Their population grew and retrenched like an accordion through alternating periods of abundance and scarcity—the seven fat and seven lean years of the Bible. You can see this “feast or famine” oscillation in the construction record of European cathedrals. Most of these magnificent structures took centuries to complete, with a spate of years of active building followed by long periods of neglect. When there was a bit of surplus, work could resume, only to be succeeded by stoppages during times of acute scarcity.

If we could go back in time, we would probably be most surprised by the widely shared resistance, not to say hostility, to change. Novelty has been so endemic to life in the modern West that it is hard for us to fathom how much people once feared it. The effects of economic vulnerability radiated throughout old societies, encouraging suspicions and superstitions as well as justifying the conspicuous authority of monarchs, priests, landlords, and fathers. Maintaining order, never a matter of indifference to those in charge of society, was paramount when the lives of so many people were at risk.