The Relentless Revolution: A history of capitalism

Joyce Appleby (New York: W.W. Norton & Company)

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UCLA Professor of History Emeritus Joyce Appleby has written a history of capitalism that is broad in its coverage of the subject, novel in its interpretation of capitalism’s effects, and, because of a lack of constant documentation and reference to literature, a book that happily takes on the tone of a story. Indeed, in reading the book, there were times when I felt the book, like the King James translation of the Bible, was written to be read aloud. It is at once an almost deceptively gentle but certainly entertaining story.

The book’s 13 chapters carry the reader from a useful discussion of what the author terms the puzzle of capitalism, its origins, and definitions to the challenges of the 21st century and capitalism’s current critics. Along the way, the reader encounters rich discussion of the agriculture revolution that released labour from tilling to pursue other opportunities, the rise of cities, the American and European captains of industry, the US labour movement and war and depression.

Historian Appleby’s identification of the rise of capitalism focuses on 15th and 16th century England with the emergence of applied scientific thinking and the innovations that sprung from the age of reason. What she sees as a basis for capitalism’s breakthrough was, as she indicates, available across all of Europe, if not beyond, but it was England’s well positioned cultural planets that led to a political economy that generated legal institutions, population change, large scale manufacturing and ultimately dominant development of international markets. England, it seems, was also less constrained by a highly structured aristocracy and suffocating custom, tradition and religion that burdened other countries. The English were therefore better positioned to endure and later enjoy the fruits of the ordeal of change.

Appleby’s definition of capitalism relies heavily on the thoughts of Adam Smith, Karl Marx and Max Weber and helps one to understand how she might label England and not Florence or Babylon centuries earlier as the seat of the first capitalist order. She defines capitalism (p 25) as a “cultural system rooted in economic practices that rotate around the imperative of private investors to turn a profit.

Profit seeking usually promotes production efficiencies like the division of labour, economies of size, specialisation, the expansion of the market for one’s goods, and, above all, innovation”. It is worth emphasising that she sees capitalism as a cultural system, not just an economic system. Ayn Rand would be proud of the cultural approach but far from comfortable, indeed she would be made miserable by Appleby’s broad interpretation of how capitalism and government action often interacted in a positive symbiotic way.

Two of Appleby’s more interesting chapters examine 1) capitalism’s ability to produce wealth and resulting global competition to build military strength and then, 2) with public and private funds generated by capitalism, to provide the resources to colonise the non-capitalistic world, especially the African continent. Her examination of global rivalry set off by England’s extraordinary success focuses on 18th and 19th century Germany and the United States.

She points out that within 20 years of England’s 1851 Crystal Palace Exhibition, both Germany and the United States had exceeded England’s industrial progress, but by different means. Lacking a coherent national constitution and still dominated by a titled aristocracy, Germany drew on advantages in science, technology, education and a disciplined workforce while the United States went forward on the basis of having a constitutionally defined single nation that emphasised property rights protection, competition and commerce.

That two industrialising countries with dramatically different social make-ups could adapt capitalism so successfully demonstrated the power and flexibility of the profit motive in creating wealth. Appleby sees the power to produce wealth as the 19th century driver that enabled the capitalistic countries to colonise the non-capitalist world. In some cases, especially that of Belgium’s King Leopold’s acquisition of the Congo and the US conquest of the Philippines, the story of raw power is indeed ugly.

Appleby’s treatment of the Great Depression, its causes and effects, puts a spotlight on Keynesian logic for dealing with collapsed industrial economies and leaves the impression that capitalistic economies were inherently unstable, as proved by the depression itself. Her cautionary tale leaves the uneasy impression that government intervention is on balance beneficial and necessary.

While this will be bothersome to economists familiar with regulatory studies, the reader is rewarded with fascinating stories of capitalism’s overwhelming contributions to winning World War II. She gives details on how the US industrial machine accomplished incredible feats in producing war materiel and then in adjusting to peacetime production once the war had ended. Appleby is at her best in relating stories about entrepreneurs, burgeoning firms, innovation and management successes that form capitalism’s business history.

The book ends with a discussion of capitalism’s critics and accomplishments. Problems of global poverty and environmental harms are given vivid but somewhat balanced treatment. Along with these, Appleby refers to the credit market meltdown and how institutional flaws contributed significantly to both the bubble and its collapse. She ends with a reference to Schumpeter, one her favourites and a brief comment on his forecast that capitalism “was doomed because of its tendency to destroy institutions that protect it” (435). More optimistic than Schumpeter, Appleby emphasises adaptive human behaviour and learning that enables the culture of capitalism to continue a relentless revolution.

Readers who enjoy reading a broad interpretation of capitalism and stories about business history will enjoy Appleby’s book. They may even want to read it aloud to their children.

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Bruce Yandle

Bruce Yandle is Mercatus Center Distinguished Adjunct Professor of Economics at George Mason University, Dean Emeritus of Clemson University’s College of Business & Behavioral Science and Senior Fellow, Property & Environment Research Center (PERC) in Bozeman, MT. Author/editor of 16 books, including his most recent Yale Press Regulation by Litigation (coauthored with Andrew Morriss and Andrew Dorchak). Dr Yandle served in Washington on two occasions, first as a senior economist on the White House staff during the Ford and Carter Administrations and later as Executive Director of the Federal Trade Commission in the Reagan Administration. Dr Yandle, a frequent contributor to Regulation magazine and The Freeman, has served as a member and chairman of South Carolina’s State Board of Economic Advisors.

Bruce Yandle
Mercatus Center
George Mason University

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