The heart of modernity and capitalism
The inspiration for Permanent Revolution came from O. Arne Westad’s The Global Cold War, which describes that conflict as a struggle between different versions of “modernity.” This term connotes the immense transformation of the human condition over the last three hundred years, encompassing not only the extraordinary expansion of wealth, but revolutionary advances in health and education. With modernity also came immense moral progress such as the abolition of slavery. A French peasant born in 1600 might well have had more in common with an Egyptian peasant of the Old Kingdom than with a twentieth-century Parisian worker. Though most recognize the phenomenon, few agree on its causes and essentials. Why did history, starting in northwestern Europe in the seventeenth century, take such a dramatic turn? Which developments associated with modernity are causal and which are symptomatic? Did rapid urban growth drive the process, as people moved to new communities and lost touch with traditional ones, or was it a result, as economic change concentrated the work force geographically? As I wrestled with these questions, I became convinced that capitalism is central the phenomenon.
Capitalism is an economic system, not a religious, political, philosophical, or aesthetic one—the idea of a capitalist opera or religious service is ridiculous. Yet capitalism’s ongoing reorganization of economic life keeps society as a whole in constant flux.
If possible, the word “capitalism” conceals more disagreement than “modernity.” The level of discourse is often low, even among intellectuals. Capitalism is part of the fabric of life in Europe, North America, and much of East Asia, and analyzing something that we take for granted is difficult. Many socialists identify capitalism with greed and exploitation, as if these did not stain every page of human history, capitalist or otherwise. Economists and other academics often conflate it with free markets, though these existed in Ancient Rome and Classical China, societies no serious historian considers capitalist. Students of business discuss the distinctions between Japanese, German, and American capitalism in great detail, glossing over what qualifies these all as capitalist in the first place.
Capitalism begins with capitalists. Studies of the subject that minimize them—a distressingly large group—are like Hamlet without the Danish prince. Capitalists organize their affairs to secure the largest economic returns, and when conditions change, they rearrange their affairs to suit. Sometimes, they set changes into motion themselves if new arrangements offer profit. The object is material wealth, not spiritual enlightenment, political power, or social status. Historically, capitalists faced sharp restrictions on their activities that largely confined them to commerce. In Western Europe during the Early Modern Era, however, these barriers began to crumble. The Catholic Church’s ban on lending at interest, for instance, became a dead letter—merchants no longer had to devise means to evade this rule, and government’s became major consumers of credit. Slowly at first, and then with increasing speed, capitalists organized and reorganized economic life in search of ever-greater earnings, dismantling traditions and institutions that stood in the way. English landowners, for instance, used “enclosure” to abolish centuries-old patterns of agriculture, creating instead compact farms that adjusted output to market demand. This process of reorganization is ongoing, with capitalists abandoning their own creations whenever something new promises larger earnings. This constant drive for wealth regardless of other considerations created the modern world’s material cornucopia.
Capitalism also reshaped the social milieu. Capitalism is an economic system, not a religious, political, philosophical, or aesthetic one—the idea of a capitalist opera or religious service is ridiculous. Yet capitalism’s ongoing reorganization of economic life keeps society as a whole in constant flux. Long-established hierarchies crumble and the individual takes on a new importance—after all, individuals endure however much society changes around them. The results are profound. Abolition and feminism did not exist before the eighteenth century—heretofore, societies took both slavery and the subordination of women for granted. They reflected divinely- or naturally-ordained hierarchies. The position of slaves and subordination of women, however, look different if society is a collection of individuals. Capitalists did not set out to implement such changes, but by undermining traditional arrangements, they created an environment in which movements like abolition and feminism could flourish.
These conclusions came not in a sudden revelation but in the process of writing Permanent Revolution. I began not with an overarching design but with a conviction that capitalism was central to modernity as well as thirty years of experience reading, writing, and teaching about political economy. In some cases, such as the enclosure of estates in England, I found myself scrambling to close gaps in my knowledge. In others, esoteric information assumed new importance. The long and not-very-successful effort of the Hongkong Shanghai Bank (HSBC) to issue loans for the Chinese government in the late nineteenth century provided valuable insight into the latter’s attitude towards development. For me, writing is a dialectic, forcing discipline on valuable but nebulous impressions and insights. Such was certainly the case with Permanent Revolution. For instance, as I wrote the section on the business cycle—the ups and downs of capitalist economies—I began to realize that bankruptcy law is an important part of the system’s adjustment mechanism, allowing society to dispose of unsuccessful or superannuated ventures and move on. Only in attempting to explain how capitalism works could I solidify my own thinking about it.
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