August 2020. GrowthPolicy’s Devjani Roy interviewed Sven Beckert, Laird Bell Professor of History at Harvard University, on income inequality and the new Gilded Age, the jobs of the future, and the long historical arc of capitalism. | Click here for more interviews like this one.
Links: Professor Beckert’s faculty page | Personal Website | Empire of Cotton: A Global History | The Monied Metropolis: New York City and the Consolidation of the American Bourgeoisie, 1850–1896 | Program on the Study of Capitalism at Harvard
GrowthPolicy: You are an expert on the history of capitalism. The twenty-first century has demonstrated the dark underbelly of capitalism, as you note in a recent edited volume. Do you believe the current century will see a new economic paradigm emerge, or perhaps, a version of capitalism that has characteristics not seen in earlier centuries? What, in other words, is your prediction on the future of capitalism as we know it today?
Sven Beckert: I am a historian, so I don’t feel particularly qualified to predict the future. What I can offer is a historical perspective on our contemporary situation, and perhaps a recognition of certain patterns that have proven important in the long history of capitalism and thus might be important to its future as well. The most basic observation we can make, based on an understanding of the half-a-millennium long history of capitalism, is that capitalism has always been a state of permanent revolution.
Stability and capitalism are almost contradictions in terms. It is, hence, almost certain that the kind of capitalism that will evolve in the next eighty years will be quite different from the kind of capitalism that we inhabit today. The differences might be quite stark, making a newly emerging kind of capitalism almost unrecognizable from our present vantage point: Just think of such drastic changes in the past. Capitalism in the 1820s, based, as it was, on the exploitation of a miserable industrial working class in a small area of the world, the widespread enslavement of rural cultivators, and the dominance of merchant capital supported by relatively weak imperial states was quite different from the capitalism that had emerged by the 1890s, in which heavy industry had moved into the center, millions of people worked in industry for wages, rural cultivators were no longer enslaved, and powerful states were beginning to regulate almost all spheres of economic life. And compare that capitalism, again, to the capitalism of the 1960s. As you can see, things changed in ways that made them almost unrecognizable to one another. Most likely, the capitalism of the year 2080 will be quite as unrecognizable to us.
What will remain, however, is that capitalism’s history will continue to be not just the unfolding of a law of nature, but a set of deeply embedded social, political, and economic processes. Capitalism is not just an economic project but also a political one, not least because it is one of the most state-centric social orders that was ever created. The shape of a future capitalism will, thus, very much be determined by the emerging balances of social, economic, and political power.
Last, but not least, you are asking about a post-capitalist future. As a historian, I can say two things about that subject. For one, capitalism’s demise has been predicted frequently during the past 200 years; yet, as far as I can tell, capitalism remains, to this day, the most dynamic social order that has ever emerged on planet earth.
For the reasons mentioned earlier, capitalism is enormously adaptive. The imminent end of capitalism, thus, is something I do not see on the horizon. However, as a historian I also can observe that no form of the organization of economic life is “natural” and outside of history. Capitalism has a beginning—historians indeed have written hundreds of books trying to understand that origin. And, as we all know, things that have a beginning usually also have an end. Presumably that is the case for capitalism as well.
From my long historical perspective, I would say that the greatest challenges that the capitalist order faces are domestic and global inequality as well as the impact of economic growth—something that seems intrinsic to capitalism itself—on the natural environment and the survival of us as a species.
GrowthPolicy: Your landmark history of cotton, Empire of Cotton (2014), is both the history of a commodity and also a re-telling of the history of capitalism. In the book you introduce the concept of “war capitalism” as a precondition for the Industrial Revolution. Why is it important to challenge the traditional narrative around the origins of modern capitalism which often posits capitalism as a consequence of the Industrial Revolution, instead of including the role of state power, slavery, and Early Modern empire building?
Sven Beckert: The history of capitalism as it is widely told is still one of the most Eurocentric stories of them all. Usually, narratives of capitalism’s history begin in Florence or Venice, take a detour to the cotton mills of Manchester before ending up in New York’s financial sector. Of course this is a caricature, but you get the general point.
I believe, however, that this is a complete misreading of capitalism’s history. Capitalism’s history needs to be understood instead from a global perspective. When we look at early merchants, we need to broaden our vista beyond Florence and Amsterdam and look also at places in Asia, Africa, and elsewhere. When we look at early manufacturing, China and India are at least as important as the European continent. When we look at the capitalist transformation of the countryside, we need to not just look at the fields of England, but also the sugar plantations of Barbados. When we look at Manchester’s cotton mills, we need to also consider the Mississippi cotton plantations. When we look at the expansion of the world’s telegraphs in the 1880s and beyond, we also need look at the copper mines of Katanga. Capitalism from the very beginning is a global economic order, just as it produces new kinds of global connections. That is one of the roots of the radical nature of capitalism.
Once we take this global perspective, it becomes clear that it would be wrong to consider the Industrial Revolution the starting point of the history of capitalism. In some ways the Industrial Revolution came instead quite late. Capitalism has a long history before the Industrial Revolution, a history that took place in merchant communities, in the countryside, and in the proto-industrial sector.
We can observe how capitalist social relations slowly spread, how land, raw materials, and labor was commodified, how merchant capital pushed into both agricultural and industrial production, and how capital owners and statesmen jointly created new economic spaces that enabled the flourishing of the capitalist order. State power was so instrumental in creating and maintain this project that I think of capitalism as a co-production of capitalists and the state. And in that early history of capitalism, empires played a crucial role in forging new economic connections and new areas for commodity production, just as much as slavery was one prominent form that the commodification of labor took in that expanding empire of capital.
What we can also see from such a global perspective is that capitalism shows great variety from one place to the next. Instead of thinking of capitalism as a social order that unfolds along a certain preordained trajectory, I prefer to think of is as a connected diversity. And I believe that the very dynamic of capitalism is best explained by putting this connected diversity at the center of the analysis. Capitalism, unlike many of its analysts, was and remains rather undogmatic.
GrowthPolicy: Your book, The Monied Metropolis (2001) is a ground-breaking study of New York City’s mercantile elite between 1850 and 1896. You note that due partly to the depression of 1877, “universalist antebellum traditions of stewardship and free labor slowly gave way to notions of the unfettered rights of property and the social or even racial superiority of the holders of wealth” (p. 211). This cultural phenomenon, one we might call “Social Darwinism,” continues to pervade America: In 2019, for instance, income inequality was at its highest level since the Census Bureau began tracking this metric fifty years back. In what ways, if any, are we returning to the socioeconomic disparities of Gilded Age America? Or, do you believe we have made progress towards a more economically egalitarian society?
Sven Beckert: The Gilded Age, as we all know, was characterized by sharpening social inequalities. It was also characterized, as you mention, by the emergence of new ways of legitimizing these new inequalities. These inequalities became visible both in terms of wealth, but also, and decisively, in terms of social position: After the 1870s, the number of Americans who started their working lives as wage workers and ended it as such was increasing rapidly.
This was not just an economic challenge, but very much a political challenge as well, because the United States had started out with the idea that it constituted a republic of independent producers; economic independence was thought of as the very precondition for the political life of a citizen of the Republic. By the Gilded Age, this was clearly not the case any longer and Social Darwinism emerged as one important ideology to explain and justify this new social order. It also adapted well to the prevailing racist assumptions, and that had been sharpening in the wake of Reconstruction. American inequality always has been connected to racialized ways of thinking, and governing.
The depth of inequality was one of the factors that brought the world to the brink in the 1930s. It was followed by a long period of declining inequality in the North Atlantic world, including the United States. Inequality was declining to such an extent that American social theorists came to think of the United States as a “middle class” society, and they began to interpret the history of capitalism as a history that diminished inequalities over time.
It turns out that these thinkers were wrong. In recent decades we have seen a severe sharpening of inequality, especially in the United States. This new inequality partly builds upon long ingrained inequalities—for example, the systematic discrimination of African Americans in U.S. labor, housing, education, and marriage markets. But we also see a “new” inequality, in which ever-smaller segments of the U.S. population have captured ever-larger shares of the nation’s wealth.
To answer your question: Yes, there was a moment when we made progress, when we significantly reduced inequality. That success is important to remember since it shows that inequality can be reduced, that it is not a fact of nature. But as we have slid back in recent decades, we also learned that progress can be undone. The degree of inequality that American society now features is a threat to the social and economic well-being of all too many Americans, and undermines the American political regime as well. It is not sustainable. And it is not necessary. There are many known mechanisms through which we can address these inequalities; taxation is one important one. Radical inequality of the kind we see today undermines the social fabric of the nation; it threatens the very reproduction of the society that we live in.
GrowthPolicy: Where will the jobs of the future come from?
Sven Beckert: Again, I am a historian, and I have no particular expertise in predicting where future jobs will come from. From a long historical perspective, we can see that there were many moments in which certain categories of jobs diminished or disappeared. However, new ones always emerged. No one would have predicted in 1950 that large numbers of Americans would make a living developing applications for computers, but now they do.
Even though some politically influential people in the United States seem to think that our best possible future is returning to our (mythical) past, it is unlikely that job growth will come from coal mining and steel work. That is a good thing; placing explosives in mining shafts or standing near a steel furnace are dangerous and difficult things to do. If the past is any guide, then we will probably see jobs emerging that we can’t even think of now.
But we should also consider something different: The long history of capitalism testifies to an enormous reservoir of human creativity, and our collective ability to vastly increase the productivity of human labor. We can see this as a threat—we are running out of work, and people will be unable to find employment—or we can see this as an opportunity—future generations will need to work many fewer hours and we will still be able to maintain our wealth as a society.
That perspective opens up amazing opportunities—we can spend our time doing other things, learn, engage with our communities, volunteer, do politics, spend time with our friends and families or do whatever is important to us. We have reached a level of technical development and generated a level of wealth that makes all of these things distinctly possible. We would only need a politics that would allow for the remaining work to be so distributed that everyone has access (and is able to draw on the necessary educational training) and to decouple, in some ways, incomes from labor.
I sometimes have the sense that American society is almost immobilized by a fear of the future, and, therefore, all-too-many people see returning to the past as the best possible perspective. Let me tell you as a historian: the past wasn’t such a great place for many people. And I don’t think we need to allow ourselves to be immobilized by our fears: We should, instead, creatively rethink the way we want to live—and the diminished need for labor time provides us with exactly such an opportunity. But, as I said earlier, such a forward-looking, and optimistic vision of the future depends on a different kind of politics and also on a commitment to reduce the grotesque inequalities of the contemporary moment.