Some Good News, For a Change

With the economies of the industrialized world on the verge of another collapse, the U.S. government increasingly resembling that of the late Weimar Republic, and the worst drought in decades afflicting Texas, central China, and eastern Africa, it's hard to imagine that there's any good news in the world. Late last year, however, fiction writer Charles Stross noted some cause for good cheer, which is worth recalling now:

1. During the first decade of the 21st century, sub-Saharan Africa averaged 5 percent economic growth every year. The continent still has serious problems, but the standard of living has steadily improved for the majority of its people.

2. Disease and famine are somewhat less serious problems in Africa today than they were ten years ago. Several nations, like Ethiopia, have become much more adept at feeding their populations since the 1980s, despite the aforementioned drought, and the advent of cheap anti-retroviral drugs has converted HIV from an automatic death sentence into a manageable chronic illness for most. Several West African nations (like Ghana) have meanwhile made major strides in eradicating polio and guinea worm.

3. India and China have experienced 10 percent annual economic growth since the turn of the century. The Indian middle class is now larger than the population of the United States, and China is en route to becoming the world's largest economy within a decade or so. Overall, the percentage of human beings living in abject poverty has fallen by 50 percent since 2000.

4. Sometime during the first decade of the twenty-first century, the world passed the threshold referred to by energy analysts as "peak oil" - but it was during that decade that the percentage of human beings worldwide who live in cities passed the 50 percent mark for the first time in history. Roughly speaking, the second development should help mitigate the second, since city-dwellers are less energy-dependent, per capita, than country-dwellers with the same standard of living.

5. And, while democracy may be on the ropes in the United States, it - or some reasonable facsimile, anyway - seems to be on the march in a place with which one usually does not associate it, namely the Middle East.

Also, there are still puppies.

Quote of the Month

"Nationalism is the illegitimate marriage of patriotism with a habitual inferiority complex." - John Lukacs, The Legacy of the Second World War (New Haven, 2010), p. 11. Take that, Benedict Anderson!

Dismal, but Free

Marronage, slaves' practice of running away from their masters and forming autonomous communities in remote areas, has received less attention from U.S. historians than it deserves. In part, this is because the largest and most famous runaway-slave communities in the hemisphere were in Caribbean and Latin American colonies, like Jamaica and Brazil, where planters lacked British North Americans' resources: a white majority population from whom officials could recruit slave patrols, and Native American neighbors willing to work as slave-catchers. Partly, this neglect is due to a lack of records; runaway slaves didn't leave many, and there were no large-scale military operations against maroon communities in the U.S., unless one includes the Seminole Wars.

Some of this neglect may now be ending. One of the largest harbors of maroons in North America, the Great Dismal Swamp, is the subject of an archaeological excavation by a team from American University. African slaves began running away to this immense wetland, situated in southeastern Virginia and northeastern North Carolina, around 1700. By mid-century there were a number of small maroon communities on the region's few patches of high ground, whose inhabitants subsisted off of "corn, hogs, and fowls," and probably also the wild cattle that white travelers sometimes spotted in the region. Initially, the runaways received protection from white "borderers," squatters who were themselves taking advantage of the region's disputed political status to avoid eviction, and who received in-kind payment from maroons in exchange for looking the other way. Later, reinforced with African-American slaves who'd run away during the Revolutionary War, the maroons began to protect themselves by intimidating travelers who came too close. By the early nineteenth century, some were even working as wage laborers for local resource companies, including the contractors who built the Dismal Swamp Canal and thereby brought the region's isolation to an end. (See Isaac Weld, Travels through the States of North America, [2 vols., London, 1807], 1:180; Charles Royster, Fabulous History of the Dismal Swamp Company [New York, 1999], 11-12, 250)

Archaeologist Dan Sayers and his assistants have located the remnants of several likely maroon dwellings in the Dismal Swamp, along with a small selection of material leavings and artifacts - "knife-cut bone," lead shot, and ceramics. Mainly these are very small remnants, suggesting that the locals threw very little away (and had little to throw away). Many of these artifacts show signs of re-use, and were probably originally Native American artifacts that runaways salvaged. Sayers and his team are therefore researching a group of people who lived lives of great privation, but were nonetheless free and able to hold off - or negotiate with - white Virginians and Carolinians who would otherwise have ended their "self-emancipation." (Marion Blackburn, "American Refugees," Archaeology, Sept./Oct. 2011, 49-58, quote p. 50.)

Capitalism Defined, Part VII: The Great-Souled Minority

When I was in college, twenty years ago, the most influential economist in the United States was probably Milton Friedman, the University of Chicago professor who founded monetarism and revived laissez-faire economics. When I was in graduate school, a little over ten years ago, that title had passed to "maestro" Alan Greenspan, the libertarian chairman of the Federal Reserve. Today, it has probably passed to Greenspan's mentor, Ayn Rand (1905-82), who though not a formal economist is probably the most well-known philosopher in the English language. Rand's magnum opus, the 1,100-plus-page brick Atlas Shrugged (1957), has sold an average of 150,000 copies every year since its publication and was cited in a Library of Congress poll as the second-most influential book in readers' lives - right after the Bible. Her earlier novel, The Fountainhead (1943), was only marginally less successful, and both books were later made into movies, something one could not imagine happening with Marx's Grundrisse or Weber's Protestant Ethic. In addition to her literary and financial success, Rand acquired a cult-like following during the 1950s and '60s, and her public lectures, which graced the campuses of numerous universities, were almost invariably packed. Not bad for an obscure Jewish pharmacist's daughter from Saint Petersburg, Russia.

Rand's contribution to the modern American perception, and idealization, of capitalism can be found in her novels and a few short polemical works. In Rand's view, free-market capitalism is the only truly moral economic system in human history. It takes its power from the creative energy of free individuals, who act (in a simile that Rand acquired from from her mentor Isabel Paterson) like dynamos in a vast electrical circuit, producing goods, trading with other creators, and using money to signal their desires objectively around the world. It depends not on idealism or charity, but on human reason, willpower, and selfishness - which Rand defined as "healthy egoism" - to function. According to Rand, capitalism did not require physical coercion, unlike feudalism or socialism, which ultimately needed armed thugs to redistribute property to the undeserving. (Quotes and citations in this and the preceding paragraph are from Anne Heller, Ayn Rand and the World She Made [New York, 2009], 135, 139-140, 221-222, 286-87.)

Rand's philosophy of capitalism represents a significant, in some cases a radical, break with her predecessors in this series. Where Marx and Polanyi saw free-market capitalism as socially destructive, Rand presented it as the infrastructure of a model and moral society. Where Marx and Schumpeter believed socialism was an inevitable and progressive socio-evolutionary phase, Rand argued that it was a barbaric regression that right-thinking people should abhor. Her views hewed closer to those of Adam Smith and Max Weber, but she lacked Smith's skepticism about the morality of capitalists and Weber's appreciation of their tendency toward sociopathy.

The popularity of Rand's views today is in some ways a function of the wealthy supporters she acquired during and after her life, who established research institutes and college endowments dedicated to advancing the study of her works. In other ways, it's due to the natural appeal of her libertarian ideals to young people; Rand was not only extremely intelligent but devoted to
philosophical consistency, which older and more cynical persons can respect but not easily emulate. (Young people are, I suspect, the bulk of Rand's readers today, and they are certainly the dynamic core of libertarian Ron Paul's political crusade.) Rand's vision of capitalism is probably also appealing to many people who feel alienated from the modern political-economic order in industrialized countries, intimidated (as most of us are) by multi-trillion-dollar public debts and too-big-to-fail banks, and who seek an alternative, however unrealistic.

For there are two big ways in which Rand's vision diverges from the economic reality in which most of us countries reside. One is her assumption that free markets are self- regulating and that self-interest will compel businessmen to be honest. Rand was herself a meticulously honest person, and she probably supposed all rational people - including successful businesspeople - would behave similarly. The idea that a group of coke-addled financial whiz-kids would develop junk-quality real-estate bonds, bundle them into CDOs, bribe ratings agencies into certifying them AAA, and sell them to unsuspecting institutional investors, thereby all but ensuring an eventual crash for the sake of short-term profits, would not have occurred to her. It certainly did not occur to Alan Greenspan, who as head of the Federal Reserve repeatedly refused to exercise regulatory authority over the CDO market, and then professed genuine shock that the market had not regulated itself. (Greenspan made this admission in testimony before a Congressional subcommittee in October 2008. Day late and a dollar short, maestro.) Markets are of course essential to a capitalist economy, but they depend heavily on the mutual trust of the actors therein, and where there are profits to be made from violating that trust, governments must intervene, either in the form of regulatory agencies or civil courts enforcing contracts and tort claims. (In Atlas Shrugged, Rand acknowledged a need for the latter institution, but she and her disciples were fundamentally opposed to the former.)

The other serious flaw in Rand's vision is that she ignores the significant role that the commodification of labor plays in making most workers in a capitalist economy hate their jobs. Field hands, factory workers, clerks, telemarketers and middle managers aren't fountains of dynamic industrial energy, they are cogs in a productive machine that someone else designed. Most working and middle-class people, even if they do their jobs conscientiously, don't define themselves by their jobs; they define themselves by their leisure time, their worldly goods, and their relationships with other people, for which their jobs provide only financial support. That most jobs are unfulfilling is evidenced by the willingness of people like airline pilots and school teachers to take a lower rate of pay than other persons with comparable training in order to have a job that is meaningful or respectable. The income that the great majority of people earn has little to do with their rationality or their will (except for the willpower needed to get out of bed in the morning). It is the product of someone else's reason and will.

I've not found much evidence that Rand cared about this. She was primarily interested in the thinkers and entrepreneurs in society, and believed that the function of hoi polloi was to provide the social infrastructure for the few genuinely creative types - the trelliswork, to borrow a metaphor from her idol Friedrich Nietzsche, on which a few flowering plants could grow and blossom. She found utilitarianism, Mill's doctrine of "the greatest good for the greatest number," repellent, and probably would have thrown up if she had ever seen Spock's dying speech in Star Trek II (which came out just three months after her death). Here is another reason for Rand's appeal: she argues that only a minority of creators and builders matter, and that everyone else is conspiring to tear that great-souled minority down. The second half of this argument, at least, is untrue. The unwashed masses would rather wait patiently for the great ones' own hubris to bring them down, and then watch their self-destruction on the news or VH1.

A Gallinacious Indian Policy

At the NEH Seminar I attended earlier this summer, my colleagues and I spent part of one morning discussing the shift in U.S. Indian policy from "civilization" (that is, re-educating and assimilating Indian peoples as citizens) to Removal, and identifying the rise of scientific racism as one of the crucial intellectual preconditions for this shift. Those of us who were historians were interested in the origins of this conceptual change; one of our seminar leaders attributed it to the rise of linguistic nationalism in the early nineteenth century, and your humble narrator suggested that it first manifested itself in Americans' growing repulsion against the idea of intermarriage. Officials from Spain, France, and the United States had in the eighteenth century promoted Indian-white marriages as the surest way to assimilate Native peoples; in 1786 the Virginia legislature came close to passing a bill that would have paid bounties to interracial couples. By the early 1800s the tide was turning: in 1816 Secretary of War William Crawford felt free to propose Indian-white intermarriage as a federal policy, but just eight years later his political opponents used Crawford's pro-intermarriage speech to help derail his presidential bid. (On this subject see Mary Young, "Racism in Red and Black," Georgia Historical Quarterly 73 [Fall 1989].)

While intellectual change is always a moving target, I'm glad to report that I've found another data point that suggests a growing trend toward anti-Indian "scientific" racism in the early 1820s. In 1819 the U.S. Congress approved the Civilization Act, which provided $10,000 a year for schools for Native Americans. Three years later, in 1822, Thomas Metcalfe of Kentucky offered an amendment to an Indian trade bill that would have eliminated this subsidy. Metcalfe noted, quite reasonably by modern standards, that the recipients of this federal aid were Christian missionaries, and argued that Protestants shouldn't be paying taxes to support Catholic missions and vice-versa. He went on at greater length about the supposed futility of "civilizing" Indians. Drawing on a report by Jedidiah Morse on the United States' Native American peoples, he argued that the Indians who had enjoyed longest exposure to missionaries were also the most degenerate. The Saint Regis Mohawks, for instance, were supposedly "a lazy, dirty and degraded band of savages, unchristian, immoral, and vicious" despite nearly two centuries of Catholic missions. Those who did not enjoy the benefit of missions and schools, Metcalfe continued, said they wished to retain the freedom of their traditional lifeways, not be yoked to the plow. The Congressman closed his remarks with a significant comparison: he compared human beings to turkeys, and asserted that wild turkeys, even when raised alongside the domestic variety, always returned to the wild when they matured. Humans, he concluded, were similarly divided into such irreconcilable varieties, and it was fruitless to try to change them: "I do most sincerely believe that such is the barrier which nature interposes between the two people, together with the powerful force of habit operating upon them, that all our attempts to civilize those Indians who are dispersed and scattered in the wilderness will be fruitless and unavailing...We had much better mind our own business." (Proceedings of 4 May 1822, Annals of Congress, 17th Congress, 1st Session, pp. 1794, 1800.)

Were I an intellectual historian, I would stop and let Mr. Metcalfe's remarks stand on their own. Since I lean more toward political history, I will add that as soon as Metcalfe finished his speech, the House rejected his proposed amendments out of hand, thereby choosing to continue funding the civilization program. (This despite the wave of retrenchment that had been passing through Washington for a year, producing deep cuts in military and Indian-department spending.) Other House members might have agreed with Metcalfe's sentiments, but for the moment they decided to let public money do their talking for them.

What I Wrote to My Congresscritter

Once in a while, your humble narrator rouses himself from his apolitical torpor and sends a check to an advocacy group, or writes a letter (these days, an email) to his elected representatives. Concerning the danger of a politically-motivated default on the United States' debts, which at the moment appears entirely possible, I wrote my Congressmen the following:

"Dear Congressman Bucshon:

I am writing to express my dismay at your co-sponsorship of the 'Cap, Cut, and Balance' resolution which passed the House of Representatives last week. As a former employee of the Concord Coalition, I share your concern with the United States' budget deficit and your belief that Congress must address this critical problem. However, I also believe that in the short term, our government must pay its debts and meet its other commitments. Since we are currently in a recession and fighting two wars, the federal government must - as George W. Bush observed under similar circumstances ten years ago - run a short-term deficit to pay its bills. By voting to link an increase in the federal debt ceiling to a Constitutional balanced-budget amendment, an amendment which would take months if not years to pass, you effectively declared that you no longer believed it was a priority for the United States to pay its creditors. Should the United States default on its debts, even for a brief period, the results would be catastrophic: bank failures throughout the developed world, a collapse in the value of the dollar, a return to recession in the United States, and a chain reaction of credit downgrades not just for the U.S. government, but for state and local governments as well (including Indiana). I urge you to reconsider your position and vote to approve an increase in the federal debt ceiling prior to the default deadline on August 2nd.

Sincerely Yours,
David Nichols
Terre Haute, Indiana "
(July 24, 2011)

I hope this soon becomes an artifact of an obscure early-21st-century political spat, but given the ideological extremism of the current House Republicans, I fear my mildly-hysterical tone may prove justified. It's always unsettling when one has to invoke George II as an example of moderate statesmanship.

Gallant Trousers, or the Lack Thereof

In her recent article on the Chickasaw-Creek war of the 1790s ("How the Chickasaws Saved the Cumberland Settlement," Tennessee Historical Quarterly 68 [2009]: 2-20) , Wendy St. Jean noted the close military alliance that grew up between that nation and their white neighbors in the Cumberland settlements (Nashville and environs), which extended to Nashvillians' sending militia and artillery to help defend Chickasaw towns from Creek attack. The alliance had an emotional component, as well: at a July 4th dinner in Nashville, one of the toasts was to "our gallant sans-culotte allies of the Chickasaw and Choctaw nations" (p. 13). The toast was a nice play on words: it referred to the breech cloths and leggings that Chickasaw warriors wore in lieu of knee-breeches (or trousers), and also to western white settlers' sympathies for the more radical and ill-clad elements of the French Revolutionary movement, sympathies which some frontiersmen (in Kentucky and western Pennsylvania) expressed by forming Democratic-Republican societies to support the French Republic. One tends to think of the French Revolution as an Atlantic phenomenon, so I was pleasantly surprised to see pro-Revolutionary sentiments expressed in such remote settlements - and used to refer to people who (in the case of the Chickasaws) were fairly staunch opponents of France for most of the eighteenth century.

The End of the Holocene

Last month the Economist ran a cover story, "Welcome to the Anthropocene," discussing the startling idea that humans had so altered the Earth's surface, oceans, and atmosphere that they had actually inaugurated a new geological epoch. We are all familiar with the anthropogenic increase in atmospheric carbon dioxide, but humans have introduced less well-known but no less profound changes to their physical environment: a 20 percent decrease in the amount of sediment discharged by the world's rivers, for example (thanks to 50,000 or so hydroelectric and flood-control dams), and a 150 percent increase in the amount of nitrogen transferred from the atmosphere to the soil (thanks to synthetic nitrates). Most of these changes are problematic, but they are all the consequence of creating a world economy and technosphere capable of supporting seven billion human beings. Turning back the clock to a "lower-impact" state - one should perhaps say "to the Holocene" - would require massive depopulation, which only a few idealists publicly favor.

As a historian, I have two questions about the "Anthropocene." First, when did this new geological epoch, if we may call it that, begin? One of the commentators on the Economist's website, "Callisthenes," argues that it may be difficult to identify a starting-point using geological rules, but the list of technologies the article provides allows us to identify some significant dates. The Haber-Bosch process of nitrate synthesis was demonstrated in 1909, the construction of large concrete dams began about 1880, and the takeoff in human CO2 production occurred in the latter half of the nineteenth  century. 1900 would seem a good ballpark estimate, but it's fair to say that no-one living at the turn of the twentieth century realized they were bringing the Holocene to a close, just as a fair percentage of humans today would prefer to believe that nothing has changed since the world's creation (in 4004 BC, of course).

My second question is the standard historical significance question: so what? On the time scales most historians work with (a few decades, usually), the inception of a new geological epoch wouldn't seem to leave much of an impact. Taking the past ten thousand years of human history and prehistory as a whole, however, the Economist article suggests an answer to the question "Which was more significant, the Neolithic Revolution [the introduction of human agriculture] or the Industrial Revolution?" Insofar as the Industrial Revolution has reshaped the surface and atmospheric chemistry of the Earth and stamped its geological record, an Earth scientist who accepts the concept of an Anthropocene would argue it was more significant, and that the Neolithic Revolution was primarily important as the precondition for industrialization. Whether historians will be inclined to discuss the matter with their colleagues in the Geology department remains to be seen.

(Above image via oilempire.us.)

An Empire, If You Can Define It

My friend Sydney Freedberg and I recently had an exchange on his website about the definition of the word "empire," and whether it properly applied to the United States. (This was apropos of an interview Sydney did with a Romanian news site on the NATO campaign in Libya.) Sydney defines an empire as a state with a "politically dominant, culturally distinct group" living in a core territory, and at least one ethnically distinct peripheral group with limited political rights. By this definition, the U.S. was an actual empire from 1898 to 1946, during its period of formal rule over the Philippines and establishment of protectorates over several Caribbean and Central American republics.

I think it's useful to have a limited definition of empire, if only because the term has become so widely and pejoratively used in the early twenty-first century as to lose its meaning. I would only add two caveats here. The first is that "empire" wasn't always pejorative; during the eighteenth century, for instance, it could merely mean "a large territorial state." As Peter Onuf points out in Jefferson's Empire (U. of Virginia Press, 2001, pp. 53-79) the first leaders of the American national republic frequently referred to the United States as an "empire." Indeed, Federalists discovered it was more politically useful to call the U.S. an "empire" than a "nation," since the latter implied that they wanted to create a consolidated national government (as their Anti-Federalist critics claimed).

The second caveat is that under Sydney's definition, the interstellar Empire in the original STAR WARS movies wasn't an empire, unless you count the Stormtroopers as the "core" ethnic group. Pretty much everyone else was an oppressed peripheral group. (In the prequel films, there was only one consistently oppressed subject race: the audience.)

The Best-Kept Secret in Chadron, Nebraska

During the past ten years I've visited three first-rate museums: the National Civil Rights Museum in Memphis, the Science Fiction Museum and Hall of Fame in Seattle, and the Museum of the Fur Trade in Chadron, Nebraska. The latter is a compact but richly-endowed and ably-interpreted archive of materials from the North American Indian trade: animal pelts, Indian handicrafts, European trade goods, models of pirogues and trade canoes, and a restored nineteenth-century trading post. I had thought myself an expert, of sorts, on this subject, but I quickly learned that the museum's designers curators had much to teach me. Here are some of my more intriguing findings:

1) Deerskins, which I thought Europeans used primarily for breeches and gloves, could also be used as water-resistant coverings for bags and trunks.

2) When Indians bought tobacco from traders, they purchased it in highly-processed units: large spun ropes of "twist" tobacco and pressed bricks of "plug" tobacco, both commonly flavored with spices and molasses.

3) Point blankets, the large, water-resistant woolen blankets sold by the Hudson's Bay Company, whose vertical stripes (or "points") indicated their cost in beaver skins, were commonly sold in pairs. I had no idea why this was so until I actually saw a display of point blankets: each "pair" was actually a single double-sized blanket that storekeepers subsequently cut in half. British weavers supposedly made the blankets this way to minimize export duties on individual items.

4) Indians sometimes wore padlocks as pieces of jewelry, rather than using them as actual locks - a point one might remember when trying to view padlocks as evidence that Indians had abandoned the concept of communal property.

5) By the nineteenth century, the American fur trade had become not only an extension of the Atlantic economy, but the global economy. Plains Indians bought cowrie shells from the Indian and South Pacific Oceans, to decorate their clothing, and Northwest Indians sometimes bought Chinese camphor-wood boxes or coins ("cash") from European traders. This is a subject that I suspect (or at least hope) will generate a growing amount of research over the next couple of decades.

The Jamestown Conundrum

Daniel Richter's new book, Before the Revolution: America's Ancient Pasts (Harvard UP, 2011), is in some ways a sequel to his last monograph, Facing East from Indian Country. In that 2001 volume, Richter shifted the spatial alignment of American historiography, replacing westward-facing accounts of European territorial expansion with an eastward-facing narrative of Native American contact and survival. In his new work, the author tries to change the temporal orientation of American history, arguing that since most of that history occurred before 1776, we can quite usefully view the American Revolution as a culminating, rather than inaugural, episode. American history, as Richter presents it, grew like a series of geological or archaeological strata, each laid down by a particular group of Indians or colonists, each providing at least a partial foundation for its successors.

I've not had the chance to read and digest Professor Richter's book in its entirety, but I can attest to the success of its methodology regarding at least one perplexing colonial episode: the unlikely survival of the English colony of Jamestown. The behavior of Jamestown's early settlers was a puzzle to historians when I was in college: instead of planting corn and tending to their own livelihoods, the English colonists spent their time refusing to work and bowling on the village green. Following the lead of Edmund Morgan and Francis Jennings, Richter explains this lassitude was a consequence of the settlers' historically-determined expectations: they had come to Virginia not to work but to enrich themselves by exploiting indigenous labor, and justified this exploitation by spreading (in a nominal way) their brand of Christianity, like medieval Crusaders or Spanish conquistadors.

Richter goes on to attribute the colonists' actual survival to the "medieval," or more precisely Mississippian, mindset of the region's paramount Indian chief, Powhatan. Like other great chiefs, Powhatan derived much of his power from his control of trade routes and access to exotic goods, which the English clearly possessed in quantity. Thus, in return for gifts of copper kettles, swords, and other prestige-conveying merchandise, Powhatan proclaimed the English not "strangers...but Powhatans" (p. 125) - simultaneously extending his authority over them - and allowed them to reside on his confederacy's land and trade for food. The seemingly-useless metal smiths who accompanied the early Jamestown voyages became the colony's most important workers, making copper and iron tools to trade to the Powhatans for food. Periodically, during the Anglo-Powhatan wars of 1609-1614 and 1622-32, the English would conduct "harvesting raids" (as Frederick Fausz has termed them) against Powhatan villages for supplies, but otherwise the colony, like its contemporaries at Plymouth and Quebec, survived chiefly through Indian trade until the 1620s. Richter concluded that this was less the consequence of design and more the result of an unconscious compromise between English desires to exploit Indian labor and Powhatan desires to acquire rare English goods at the lowest cost.

Whether the English ever invited the Powhatan Indians to play bowls with them, I know not. Perhaps.

Capitalism Defined, Part VI: Schumpeter and the Origins of Socialism

While Joseph A. Schumpeter (1883-1950) was best known for the term "creative destruction," which he identified as one of the positive features of capitalist economies, that term (which he did not coin) only hints at the subtlety and power of his analysis of capitalism. I have defined capitalism so far in this series as an economic system in which investors commodify economic inputs and mobilize them through markets to generate a financial return on capital investments. Schumpeter's definition of capitalism was much more dynamic: he identified it as "a form or method of economic change" (82), driven by entrepreneurs who in their pursuit of profits invariably and radically transformed farm organization, transportation, materials technology, and living standards.

Schumpeter's initial economic research focused on the origins of business cycles, to which several previous economists had assigned regular periods of various lengths. He was particularly interested in the "long cycles" described by Russian economist Nikolai Kondratiev, who identified three sequential 55-year-long waves of economic boom and bust that began in 1790 and continued into the twentieth century. Kondratiev didn't specify the causes of these cycles, but Schumpeter argued they were the products of discrete industrial revolutions, caused by entrepreneurs' adoption of new technologies (like spinning jennies) or production of new goods and services (like rail transport). These revolutions produced not only profits for entrepreneurs but "avalanche[s] of consumer goods," which generally increased the purchasing power and improved the living standards of ordinary workers (67-68). Once the new methods of production had spread throughout the economy, however, markets became saturated with new goods and services, and firms which had borrowed heavily to expand or to adopt new technologies went bust. The result was growing unemployment and economic depression, which ended only when a new industrial revolution began and started the next cycle.

While the heroes of Schumpeter's economic narrative were individual entrepreneurs, he observed that it did not take long for the firms these innovators built to turn into monopolistic corporations. Nor did Schumpeter think this was a bad thing. Large corporations tended to be more efficient than small ones, because of their ability to employ economies of scale, and while critics of monopolies argued that they tended to stifle innovation, Schumpeter didn’t believe this was true. In the long term, he admitted, a monopolistic corporation might benefit by inhibiting technological change, thereby conserving its sunk costs in plant and equipment, but most corporations preferred the short-term profits that came from adopting new technologies and productive techniques – as evidenced by the investments most twentieth-century corporations made in research and development (96-97). Competition between firms thus might diminish over time, but competition between old and new productive methods remained constant.

Like Marx, Schumpeter believed that capitalism contained the seeds of its own destruction, though his explanation of how this occurred was subtler and more sociologically informed than Marx’s. Marx and Engels argued that capitalism would fall when an immiserated global proletariat discovered it had “nothing to lose but their chains.” Schumpeter countered that capitalism would fall when the bourgeoisie discovered they had nothing to fight for. He explained that the chief motives of capitalists were the drive to innovate – either to invent or to adopt others’ inventions – and the desire to accumulate capital. As capitalist economies became more dominated by large, “heavily bureaucratized” firms, however, entrepreneurs would encounter increasing constraints on their ability to innovate (134). Those who prospered would instead be those who could serve as cogs in a corporate machine or, at best, members of a corporate research team. Moreover, ownership of capital property would become less materially satisfying as the means of production came to be dominated by joint-stock companies, whose owners – shareholders – held their property in a highly “dematerialized and defunctionalized” way (142). Anyone who has worked for a large corporation or cast a proxy ballot in a shareholders’ election will recognize the truth of both of these observations. Essentially, Schumpeter concluded, the emergence of monopoly capitalism tended to prepare most people for life in a collectivist state, which offered the same amount of bureaucracy and greater economic security into the bargain.

Schumpeter added that the industrial-era bourgeoisie was a class singularly ill-suited to governance. They viewed the state as an impediment to their goals, and lacked the sense of responsibility that the European aristocracy had developed by the early modern era. At the same time, the bourgeoisie could not function without certain utilities, like roads and military protection, that the state provided, nor could it thrive without the existence of cities, which required considerable organization and political management to thrive. Capitalism, or rather capitalists, thus needed a "classe dirigiste" (136) to manage affairs of state. A.J.P. Taylor, in a quote I mentioned earlier in this blog, would confirm this statement with his observation on the post-Revolutionary French middle class. Schumpeter, who was more interested in the twentieth than the nineteenth century, merely concluded that this was another reason capitalists would eventually give political ground to labor union leaders, urban reformers, democratic politicians, and (to use James Burnham's adjective) "managerial" types. This is largely what did happen in most of the world's industrial countries in the mid-twentieth century, at least until the Reagan-Thatcher revolution in the 1980s.

(Citations above are from Schumpeter's Capitalism, Socialism, and Democracy [New York, 1942].)

Capitalism Defined, Part V: Polanyi and the Fictions of Free-Market Societies

While Max Weber founded what one might call the sociological study of capitalism, the Hungarian economist Karl Polanyi was among the first scholars to identify capitalism as a fit subject for anthropological study. Following the lead of Jacob Malinowski (whose study of Trobriand Islanders in the 1920s became a classic) and sociologist Ferdinand Tonnies (who developed the gemeinschaft/gesellschaft dichotomy), Polanyi argued that Adam Smith’s economic man, who pursued only profits and personal comforts, was a myth. The primary function of most human economies, Polanyi observed, was to improve participants’ social status and augment their “social assets,” not their store of worldly goods. In pre-state societies like the Trobriand Islanders’, people’s primary economic goals were reciprocity – the symmetrical exchange of goods as gifts, usually in a social context attended by ritual (7-9) – and redistribution, whereby chiefs accumulated goods for the purpose of giving them to followers. The former ethic promoted social cohesion, while the latter produced political hierarchies by tying clients to their chiefly patrons. Neither ethic, though, was typical of capitalist societies; indeed, one later ethnohistorian, Daniel Richter, called redistribution a “kind of upside-down capitalism” because it involved negative accumulation (Ordeal of the Longhouse [Chapel Hill, 1992], p. 22).

More sophisticated state societies, like ancient Greece, medieval Europe, or eighteenth-century Dahomey, had more complicated economies, but they still weren’t capitalistic. Most produced for household or local consumption, and the trade in which they engaged – which, granted, might be very valuable (like the spice and slave trades) – usually consisted of luxury goods bought and sold by social outsiders or state employees. These societies did employ various kinds of money, like cowry shells or gold coins, in trade, but Polanyi argued that they used money as a “semantic system” to represent and discharge particular social obligations, like bride price or fines (190-194). Production, consumption, and trade thus remained thoroughly “embedded” (82) in political or social relationships, and philosophers from these societies, like Aristotle, defined the "good life" as a communal one, where people took pleasure not in material accumulation and consumption but in festivals, theater, political debate, and even battle.

The primary innovation of capitalism, Polanyi argued, was to yank economic inputs out of these social contexts by commodifying them (30-32). The merchants, industrialists, and liberal economists of the 18th and 19th century developed and codified a new set of economic "fiction[s]" (32), like wage labor and free trade, which subordinated previous social relationships to the new imperatives of commodity exchange. They then used the power of the state, first in Britain, later in other countries, to remove all impediments to the commodification and exchange of inputs. They passed enclosure laws, built poorhouses, removed tariffs, and instituted a global gold standard. They thereby created a so-called "self-regulating market," which capitalists and liberal economists believed was natural but was in fact highly artificial and socially destructive. Capitalism, Polanyi argued, created a global wave of ghastliness, knocking down laws, customs, and institutions that might have mitigated its ill effects. Nineteenth-century India saw the destruction of its textile industry and the spread of famine due to rising grain prices; Native North Americans lost their land and went into a steep demographic and cultural decline; and twentieth-century African migrant laborers escaped starvation only by losing their homes, families, and culture.

One might argue (as I would) that Polanyi's conclusions are a bit shrill, since he observed in his earlier work that the British developed mechanisms for defending their society against capitalism's evils: trade unions, a protectionist movement, and the creation of a welfare state after 1906. Presumably, other societies injured by capitalism's "self-regulating market" were able to develop their own countermeasures, like the legal defense associations that Plains Indians established to recover some of their lost lands. One might also argue that Polanyi was merely adding another layer of sophistication to Marx's early analysis of the cultural bankruptcy of capitalism. This is in some ways, however, beside the point. Polanyi's real strength lies in his analysis of pre-capitalist economies and his careful differentiation of societies with some of the features of capitalism (like trade and currency) from those that are genuinely capitalistic. In defining a thing, it is helpful to understand what that thing is not; in the case of capitalism, it is very helpful to know that the great majority of human societies have not organized their economies according to its rules.

Quotes from George Dalton, ed., Primitive, Archaic, and Modern Economies: Essays of Karl Polanyi (Boston, 1968). See also Karl Polanyi, The Great Transformation (Boston, 1944); idem, "Traders and Trade," in Jeremy Sabloff and C.C. Lamberg-Karlovsky, eds., Ancient Civilization and Trade (Albuquerque, 1975), 133-154.