Capitalism is either eternal or it isn’t. There are people who defend the first view, or something close to it—the 2014 multivolume Cambridge History of Capitalism opens in Babylonia, circa 1000 BCE—but it is much more plausible that capitalism, like most other social phenomena, has its origins in specific historical developments. The trouble is that, once you’ve got everyone to agree that capitalism has a history, you have to define what capitalism is and then explain when, where, why, and how it emerged.
Of course, no one thinks you can date the transition the way you can specify when a battle took place or a patent was filed. But even after abandoning false precision, those who’ve grappled with the problem of defining and explaining capitalism’s emergence have been unable to agree even on which centuries and continents were involved. These questions are likely no closer to resolution today than they were when European radicals started using the word “capitalism” two hundred years ago.
For many, the whole question of origins is a pseudo-problem—you can write economic history without modes of production. But those who have dreamed of transcending capitalism find it harder to let go of the thorn. If the object can’t be defined, can it be dismantled? If there was no starting point, can there be an end? Marxist scholars have been central to the origins debate, but Marx himself said enough different things on the topic to inspire contending schools, each speaking in his name.
The so-called transition debate is often broken down into approaches that focus on the growth of trade and approaches that focus on the transformation of social relations of production. In the 1950s iteration, the Cambridge economist and Communist Party Historians Group member Maurice Dobb squared off against Paul Sweezy, who earned an economics PhD at Harvard before launching the independent socialist journal Monthly Review. Dobb outlined three common ways of understanding capitalism: as a rational-entrepreneurial mindset, as production for a distant market, and as a class relation between capitalists and wage-laborers. He found the first two “insufficiently restrictive,” since acquisitive investment and long-distance trade have clearly been present in societies since antiquity. Such ancient phenomena can neither explain nor serve as a definition for capitalism as a distinct economic system. For Dobb, the correct definition was found in class relations, which pointed toward a history of conflict between lords and peasants, rather than distant trade. Sweezy countered that late medieval commerce was a powerful disintegrating force capable of breaking apart feudalism and ushering in capitalism, including through the growth of towns.1 A generation later, the “Brenner debate” of the late-1970s took on the same question, with Robert Brenner defending the centrality of agrarian class structure to the transition against two sets of opponents: historians who emphasized a demographic explanation for the crisis of feudalism, and world-systems theorists who saw the creation of a continent-spanning world economy after 1492 as the fundamental transition to modern capitalist development.2
Jairus Banaji believes that Dobb and Brenner’s views have so far dominated the argument. Their critique of the conflation of commerce and capitalism has been so effective, in fact, that the phenomenon of merchant’s or commercial capital has been neglected in the literature. In his latest book, A Brief History of Commercial Capitalism, Banaji seeks to set things right. In a compact 138 pages, Banaji traverses the centuries from 829 to 1930 and ranges from Indochina to New Orleans, citing works in seven or eight languages. The book is not the overview that the title may suggest: it proceeds with some consideration to chronology but is mostly thematic and historically free-ranging, with events and characters appearing in sequential vignettes rather than a continuous narrative of development.
Banaji’s core intervention is that the venerable distinction separating production from exchange is badly posed. Historically, merchants have profited not just by arbitrage but also by dominating direct producers and thereby organizing production. Commercial capitalism, then, is not just a new name for an old thing (long-distance trade) but a specific formation in which “a wide range of industries worked for merchant’s capital.” Once this has been recognized, Banaji suggests, we can tell the history of capitalism on a broader canvas than the English pastoral painted by Dobb and Brenner. Another important part of the argument is that the dominance of merchants lasted beyond the early modern period, and even after the industrial revolution. It was only around the end of the nineteenth century, in Banaji’s view, that one can speak of “the subordination of commercial to industrial capital.”
Production and exchange cannot be cleanly separated because merchants have often dominated and organized production. In fifteenth century Florentine wool mills, in the prerevolutionary French silk industry, and in the cotton fields of the late-nineteenth-century, direct producers found themselves working under the same people who sold their products to markets around the world. At times, merchant capitalists gathered workers under one roof, but more common was some version of the putting-out system, in which merchants would advance raw materials (and sometimes payment) to families for household production. The Grande Fabrique of eighteenth-century Lyons was not, as one might translate the words today, a big factory, but rather a network of hundreds of merchants and thousands of homeworkers. These were capitalist class relations, but ones in which workers might be dominated not by the wage-system but by relationships of debt, credit, and the merchants’ monopoly over raw materials. The class relationship also included contracted managers, standing between merchant and the worker, who directly supervised the labor process.
The putting-out system is not a new discovery, but it has sometimes been treated as a “transitional form… incompatible with the overall development of capitalist production,” as Harry Braverman wrote in his classic Labor and Monopoly Capital. Against this, Banaji insists that merchant manufacturing was persistent and dynamic, worthy of a place at the center of the history of capitalism rather than just a preface to smokestack industry. Textiles were soon produced in factories, but “oriental” carpets were manufactured by cottage industry well into the twentieth century. Agricultural production, too, was commonly organized in this fashion, from the first Caribbean plantations to the various commodity booms of the mid-to-late nineteenth century. Banaji quotes a description by Samuel Smith, a contemporary English merchant, of the chain of relations governing the cotton boom in Western India in the 1860s. What Smith called “the machinery of the cotton trade” consisted of four levels between the cotton-grower and the customer: village-level dealers, regional dealers, the “wealthy native merchants of Bombay,” and finally the “shippers to England.” Credit was advanced from the top down, creating debt relationships tying the lower levels to the upper.
The more common story figures merchants giving way to industrialists. Banaji does not completely reject this idea, but he locates the transition at the end of the nineteenth century rather than the first industrial revolution. Banaji places the death of the commercial capitalist era sometime between 1880 and 1914, when “trade began seriously to be driven by industry.” The crucial developments were new forms of heavy industry (oil, steel, chemicals), the formation of industrial cartels and other concentrations, and the division of the non-European world through the New Imperialism. This was not just “an entirely new form of capitalism” but “a completely new world.” The new players were nation-states and their empires, not the independent merchants and diasporic communities that gave commercial capitalism its cosmopolitanism. (Banaji is aware of the danger of romanticizing this earlier state of affairs, writing that cosmopolitanism and racism often proved compatible, but the warmth in his descriptions of various trading communities is unmistakable.)
In some ways, A Brief History of Commercial Capitalism is an appropriate counterpart to the late Ellen Meiksins Wood’s The Origin of Capitalism. That book, similarly brief, offered a powerful and stylish exposition of the Brennerite argument that capitalism was born in the English countryside. In just under 200 pages, Wood rejects vast historiographical literatures for the sin of conflating commerce and capitalism (in later work, Wood even charged Brenner himself with having too loose a concept of capitalism). Many readers, myself included, have found Wood’s polemical style bracing and clarifying. Her insistence that the historically specific core of capitalism is market dependence (people cannot access the means of their subsistence without going through the market) has helped people think about contemporary capitalism as well as its history. Many others—sometimes the same readers who learned so much from her—have been frustrated by Wood’s single-minded focus on England and free wage labor and, relatedly, her lack of interest in race.3
The two books demonstrate two opposed ways of thinking about commerce, and Banaji’s short book is good follow-up reading for fans of Wood. Each illuminates the insights and lacunae that accompany their dueling forms of thought. Banaji offers a trade-centered international history of capitalism that, because it keeps social relations of production in focus, cannot be easily dispatched by Wood’s critique of the commercialization model. He draws on a far wider body of sources and points the way toward reintegrating these into a comprehensive story. On the other hand, Wood’s finely-honed specificity means that she provides an answer to the basic question about the origins of capitalism—and the political importance of a definition—in a straightforward way that Banaji ultimately does not.
In an incisive review of Banaji’s earlier book Theory as History, the sociologist Henry Bernstein questioned Banaji’s “deafening silence on Brenner’s work; the lack of any indication of where industrial capitalism (and its origin) fits in his framework.” Bernstein, an Africanist whose 1977 “Notes on Capital and Peasantry” Banaji credits as one of his core inspirations, can hardly be accused of special pleading on behalf of English exceptionalism. The questions he raised about Theory as History are not fully answered in Banaji’s new book either. Slyly (and perhaps diplomatically), Brenner is only cited in connection with his study Merchants and Revolution, which Banaji finds to be partly consistent with his own framework. The transformation of agriculture, prerequisite for moving masses of workers off the land and into factories without running out of food, does not feature in the book. The industrial revolution appears, so far as I can tell, once, in an aside that “the industrial towns in the north of England acted as magnets for commercial firms from all over the world.” Steam power does not appear except in the form of trans-oceanic steam-ships; coal is mentioned as something traded but not as a source of energy. The point that we should not let a stylized image of Manchester stand in for all of capitalism is well taken and, at this point, accepted. But the dark satanic mills still must find a place, and a relatively important one, in any history of capitalism.
Related to the question of industrial revolution is the question of productivity growth. Part of what makes capitalism distinctive is its record of sustained economic growth, driven by continuous increases in labor productivity. Historical estimates of per capita world output are crude, but no one can deny the major discontinuity signaled when the graph shoots up around 1800. For Marx and other observers, this was the heart of the system’s dynamism and its crises, as well as the enabling condition for one day escaping economic necessity altogether. When thinkers like Harry Braverman dismissed the putting-out system as a “transitional form,” they argued that the lack of industrial concentration obstructed the centralized control and infinitesimal division of the labor process that was the key to increasing productivity. Banaji shows effectively that workers manufactured things for merchants at a large scale, but there is no full answer to Braverman’s argument about that system’s limits. There are many striking and well-chosen examples of the trade in agricultural commodities expanding, but not much about whether this was the extension of production into new lands or the transformation of production. A fascinating section on “Velocities of Circulation” focuses on the specific way merchants increased profits, not by labor-saving innovations but by increasing the rate at which their capital could turn over. These included improvements to transportation (some of which, like steam ships, clearly come out of industrial capitalism) as well as more purely commercial innovations such as credit instruments allowing the more rapid advance of capital from one investment to another.
To return to the original question, when did capitalism begin? In another essay, Banaji has written that “a form of ‘war capitalism’ may well be the best way of characterizing even Rome’s expansion and domination.” We are almost at a transhistorical notion of capitalism, which may after all be correct. But a few pages later we find: “The Roman fine ware industry was organized on a capitalist basis, but it doesn’t follow that Rome’s economy was driven by capitalism in the sense in which one would normally understand this.” At stake here are theoretical questions about social forms and modes of production, which are treated at length in Banaji’s Theory as History. The Brief History is written far more accessibly, but it leaves unanswered the definition of “capitalism in the sense in which one would normally understand this.” The new book starts with Venetians in Byzantium around the year 1000. It’s clear that their story can be brought forward until it merges with something we all recognize as capitalism, but it’s not clear if they themselves are already merchant capitalists, or, more concretely, whether and how they took control of and reordered production processes. Banaji does make clear, near the end, that not all complex commercial societies are capitalist. He cites (and seems to endorse) Roy Bin Wong’s argument that the late imperial Chinese state fostered a market economy that was distinct from commercial capitalism. What made China different from Venice and Genoa in the later middle ages was that the latter had states subordinated to the merchant class. Here, in an aside on another author’s claims, in an easy to miss paragraph in the final pages, we get an actual origin story: commercial capitalism was born in the class struggles through which Italian capitalists conquered state power.
A number of voices have suggested that the contemporary world economy has seen the return of merchant capitalism. One of the first was labor historian Nelson Lichtenstein, who spent much of his life studying the archetypal smokestack industry, automobile manufacturing. As he tried to understand the world that had come after Fordism, Lichtenstein noticed striking similarities between Walmart and the powerful merchant houses of the eighteenth century. What did Walmart do if not buy cheap, ship across oceans, and resell at a profit? At such a scale, buying and selling generates immense power, including over production. Lichtenstein describes one struggling Arkansas apparel factory which was saved by a huge order from Walmart. The corporation procured bulk flannel in Taiwan, shipped it to American workers (mostly African-American women) to work up, then bought back every shirt they made. There was pressure to hold down labor costs, not least because Walmart itself continued to manufacture similar shirts in lower-wage plants abroad. Since Sam Walton “wouldn’t buy union goods,” the workers were barred from the collective bargaining rights supposedly secured by federal law. In the same Mississippi Delta where cotton brokers had once told planters what to grow, merchant capital was still organizing exploitation through the putting-out system into the 21st century.4
“We live in the period of transition from capitalism to socialism,” wrote Paul Sweezy in 1950, “and this fact lends particular interest to studies of earlier transitions from one social system to another.” In the 1970s, Immanuel Wallerstein addressed his theory to “those who are seeking to understand the world-systemic transition from capitalism to socialism in which we are living, and thereby to contribute to it.” Today, capitalism remains prone to crisis. But what systemic alternative waits in the wings? Could the world-bestriding powers of latter-day merchant capital be commandeered by democratic economic planning? This is the hope of those who imagine a “People’s Republic of Walmart” or Amazon as “Gosplan 2.0.”
Others fear regression toward the direct power relations that preceded the impersonal rule of the world market, with writers across the political spectrum warning of “neofeudalism.” In his classic contribution to the transition debate, Robert Brenner sharply contrasted feudalism—with its limited productivity and strictly “political” methods of extraction—from capitalism, with its reliance on “economic compulsion” and historical takeoff into “self-sustaining growth.” But in recent analyses, Brenner speaks of “worsening economic decline met by intensifying political predation,” suggesting a world-historical boomerang back to lordly domination. Whatever comes next will not be a simple return, if only because of the radical transformations to which capital and the environment will subject each other in the coming century.5 As we wonder what comes next, we are all transition theorists now.
The basic texts are Maurice Dobb, Studies in the Development Of Capitalism (1946) and The Transition from Feudalism to Capitalism, edited by Rodney Hilton (1976), which collects responses to Dobb including Sweezy’s. ↩
Brenner’s challenges to demographic arguments are collected, with replies, in The Brenner Debate: Agrarian Class Structure and Economic Development in Pre-industrial Europe, edited by Trevor Astin and C.H.E. Philpin (1985). For the debate with world-systems theorists, see Brenner, “The Origins of Capitalist Development: A Critique of Neo-Smithian Marxism” (New Left Review July-August, 1977); Giovanni Arrighi, “Capitalism and the Modern World-System: Rethinking the Nondebates of the 1970's” (Review: Fernand Braudel Center, 1998). ↩
Even Adolph Reed, who has called anti-racism “a neoliberal alternative to the left,” objected to Wood’s insistence that “capitalism is conceivable without racial divisions.” See: Adolph Reed, Jr., “Unraveling the Relation of Race and Class in American Politics,” Political Power and Social Theory 15 (2002): 265- 274; Ellen Meiksins Wood, “Class, Race and Capitalism,” Political Power and Social Theory 15 (2002): 275-284; Reed, “Rejoinder,” Political Power and Social Theory 15 (2002). ↩
Jason W. Moore, whose work recasts world systems theory as environmental history, is strikingly absent from Banaji's bibliography. ↩