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Capitalism is one of those words we use constantly but rarely stop to define. We're told it shapes our economies, our societies, even the way we live and think. But what actually is capitalism? Where did it come from? And where might it be heading? Sven Beckert is the Laird Bell professor of History at Harvard University. His latest book is A Global History. Eckert argues that the roots of capitalism stretch much further back than most people assume into a pre modern world of global commerce in which Muslim merchants and others built vast trading networks linking Europe, Africa and Asia. And he challenges a central modern myth that capitalism emerged naturally separate from the state. In reality, he argues, capitalism and the state have always developed together a relationship that may tell us a great deal about the future of the global economy. I'm Thomas Small. This is my conflicted conversation with Sven Beckert.

Thomas Small (4:06)

Hello Professor Beckert, how are you sir? What a privilege it is to see you, to meet you. Thank you for coming on the show.

Sven Beckert (4:13)

Great to be here Thomas. Thanks for having me.

Thomas Small (4:15)

Well, as I say, it's my pleasure. I wrote to you and asked you if you'd be willing to come on the show because, well, back in the summer I came across a review of your recent book, A Global History. The subtitle alone, A Global History, intrigued me. And since this podcast, Conflicted is all about reframing history as best we can to take in a wider non western centric perspective, but which is still objective and ideology free, again as best we can, my first thought was A Global History sounds like maybe it could work for Conflicted. So I got the book, I began to read it, and then there was no doubt in my mind. I just had to talk to you because you tell this really big story, the story of capitalism, and you go back much further in history than I think most such stories would go. And there, smack bang at the start, you anchor the reader not in Europe, as one might expect, but in Yemen of all places. And then you spend the first 150 pages or so of this massive book painstakingly laying out the fact that our modern system of global commerce and finance, overseen by contract law, facilitated by ad hoc networks of entrepreneurial investors and producers. The foundation of that system is much more ancient than we think and involved Muslim merchants, bankers, lawyers, administrators, much more than we know. So it's a great book, really, really informative and illuminating and I cannot wait to discuss it with You.

Sven Beckert (5:53)

Thank you. The book emerged because I have spent much of my academic career thinking about parts of the story of global capitalism. I have written a book on New York City's economic elite in the 19th century. I have written on the global history of capital, cotton, mostly in the 19th and 20th centuries, and have written many other things, you know, ranging from labor to economic history to business history that are related to the history of capitalism. And it dawned on me eventually that what I should really be doing is to bring all of these things together and to try to write a new global history of capitalism, to write the entire thing, you know, throughout its entire history, and to write it from a global perspective. So this is kind of the scholarly logic out of which this project emerged. But beyond that, I also, you know, as I think everybody who lives on planet Earth today will undoubtedly have noticed that we live in a world that is deeply structured by the capitalist revolution. The biggest processes and structures we inhabit, from global trade to how we work to how we consume, are embedded within this capitalist revolution. But also some of the most intimate aspects of our lives are deeply related to this capitalist revolution. And so it's, to me, one of the main facts about our lives today. And, of course, many people think about capitalism. It's, you know, people have very strong opinions about capitalism. People debate either the entire thing or they debate parts of it. It informs our contemporary politics to a great degree. And thus it seemed to me that as a scholar who aims to also speak to audiences beyond academia, it seemed to me that I have some expertise here that might help people to think about the history of capitalism in you. And I found that to be of great urgency because I don't think we can really navigate the present without having a sense of how we got to where we are. And we cannot creatively, I think we cannot creatively think about the future if we don't have a sense of the patterns of change in the past. And again, capitalism is the most important process here that we could possibly tackle. And that's what I aim to do in the book.

Thomas Small (8:32)

Absolutely. Well, you really are in the right place. Conflicted is all about all of those things. Now, Sven, you are going to laugh at this, but if you would, at the very outset, please define capitalism for us. You are a world expert in the history of capitalism, so you may find it funny that people, even people who use the word regularly, often don't really know what it is, what we mean by capitalism. A part of me has always been somewhat wary of sweeping statements about capitalism, as if there really were such a coherent and all embracing system at work. Especially since, if I'm not mistaken, the term itself, capitalism, first emerges out of very ideologically charged, quite polemical writings from the early anarchist and socialist traditions of thought. I see in my research, whatever, that one of the earliest, if not the earliest usages of the word capitalism comes from a French socialist thinker, Louis Blanc, who defines it as the appropriation of capital by the few to the exclusion of the many. So a very ideologically, even morally charged definition there. So the word capitalism starts as a way of describing an ideological or political enemy. And you can't take a man's description of his enemy as wholly disinterested. So, Professor Beckert, what is capitalism? Especially as in your book, you draw a distinction between capitalism and. And capitalists, right?

Sven Beckert (10:04)

No, that's a great question. And I think that is a really, really important one because, you know, it would be hard to sustain an analysis of several centuries of the history of capitalism without having some understanding of what, you know, what it is we're talking about. And I think you're absolutely right that the word capitalism emerged relatively late in the history of capitalism. It emerged in the 1830s, largely, I think the first mention of the word capital, as you mentioned, are to be found in France. It actually doesn't come immediately from the left. There are some earlier mentions of this word, but then it does get used by early socialist thinkers. But by the late 19th century it goes into kind of common usage and people of all political preferences use the word capitalism. And that's of course a result of that. People understood that they're living in a completely new civilization, that the world had changed fundamentally. And so they thought we need to find a name for that, we need to call it something. And since capital and capitalists are very important in the history of capitalism, it was not particularly surprising that it was the word capitalism that came up to describe this new economic civilization. But to me, there are two things to say about defining capitalism. For one, I hold capitalism to be historical, and the book shows in great detail that, that capitalism changed drastically over time and also was very different in different parts of the world at any given moment in its history. And any way of thinking about capitalism needs to acknowledge that, because I think that is one of the first and most important facts about capitalism. This enormous flexibility and this enormous ability to change over time. That said, there's something that all these different forms of capitalism through time and through space had in common. And the core of the core of that is that capitalism Is a form of the organization of economic life in which privately owned capital is productively invested with the goal of producing more capital. So that is the fundamental logic of the capitalist way of economic life. And no matter if you look at 17th century Barbados or if you look at the 20th century United States, while many things change about capitalism in those years, but this basic logic is still at work in both of these places.

Thomas Small (12:57)

So you then could contrast capitalism with pre capitalist or non capitalist, because often non capitalist forms of economic arrangement persist while capitalist forms also are developing. So pre or non capitalist forms of economic arrangement that are extractive only is that the difference, Like a lord conquers some land, basically subjects the peasant to giving him a share of their production, their produce, but there is no sense that he should be actively trying to increase their ability to produce more. Nothing like that. Every year, year upon year, 30% of what they make goes to him, and every year it's the same amount. So that's like an extractive non capitalist system. Is that the difference?

Sven Beckert (13:46)

Yeah, I mean, that is one economic logic that was very common on earth before the advent of capitalism. And even in much of the history of capitalism, there are still parts of the world that are organized along this logic. And yes, they were rich people. So being rich is not a defining characteristic of the capitalist revolution. But the way how they became rich was very different. And you just mentioned that they became rich because they took wealth through coercion, violence, warfare, through systems of mutual dependence. That was very common. But then there's another logic of economic life that is perhaps even more common on earth, and that is subsistence logic. That most people in most of human history organize the economic lives with the goal of securing the subsistence for themselves, for their families, and maybe for some small community that they inhabit. Inhabited. So again, this is a logic of economic life that is fundamentally different from the capitalist logic. The capitalist logic, and this is one of the core arguments of the book, is really a radical departure from other logics of economic life that were common on planet earth. It's really a kind of revolution. And therefore, and this is also a core of the book, capitalism can only be understood from a historical perspective. It is historical. You can trace its emergence, you can trace its spread in space, you can trace how it shifted its shape quite drastically over the past couple of hundred years. So it's a radically different logic to other forms of economic life. And it is historical, it has a beginning and we can trace its history. And this is why I think historians are actually very good at thinking about capitalism. Because of course, historians have a historical perspective on everything, including on the history of capitalism. The book, as you might know, there are many scholars who have obsessed about coming up with ever greater and more precise and ever more abstract definitions of capitalism. This is not this kind of book. It does define capitalism. As I just mentioned, there is a common logic to its entire history. But in the end, the book is what I call is an analysis of capitalism in action, of really existing capitalism as how capitalism really unfolded historically, in time and in space.

Thomas Small (16:23)

Well, certainly what you show very clearly is that despite what common or popular narratives would have us think, which is that capitalism and modernity indeed emerge in more or less one single part of the world, northwestern Europe, but that in fact, capitalism is not rooted in one period or one region. It emerged more organically, let us say simultaneously, in a large number of nodes, cities, ports, families, even dynasties, which had always been networked through trade and, or law and, or religion. And so as one node developed, it rippled across the network and all the nodes developed and back and forth through this network. Almost like a more organic conception of the growth of capitalism than the sort of standard mechanized conception where one place, you know, take your pick, Renaissance Italy, maybe the Low Countries, obviously industrializing England, wherever one place is like the CPU of capitalism and everywhere else is simply an extension of it. But no, it was always a widespread network, and the development of capitalism was the organic development of that network. Have I understood you correctly there?

Sven Beckert (17:38)

Yeah, yeah, very, very, very much so. It' know, often thinking about capitalism is heavily systemic. It's kind of the logic of the system itself that explains its history. And of course, there is a logic to the system and it does explain something about its history. But in the end, my book is much more interested in kind of the nitty gritty of how this logic emerged and how it spread into ever more spheres of life and into ever more parts of the world. And it tells that history through the history of a particular set of actors, through, you know, and merchants come to play an increasingly important role in that story. So, and then, yes, you're absolutely right. And that's certainly a third reason of why I decided to embark upon writing this book. Because when it comes to the thinking of capitalism, thinking about capitalism, most people, even in this age in which Eurocentric accounts of history have become rather unfashionable, but when it comes to capitalism, Eurocentric accounts are really still quite dominant. And indeed, in many histories of capitalism, the world outside of Europe and maybe North America, but that word almost makes no appearance at All. I mean, much of humanity is totally marginalized in the history of capitalism. And typically stories, depending on the political preferences of the author, but typically stories about capitalism begin either with the merchant communities of Venice, Genoa and Florence, or they begin a little later with the merchant communities of Amsterdam. Or also, very commonly, they begin much later, namely in the 18th century, the late 18th century, and they start with the Industrial Revolution. So they start with a place like Manchester, and they tell the history of capitalism as exclusively an industrial civilization. And an industrial civilization that is based basically focused throughout much of its history on the European continent. I think this may have been a plausible story to tell in the 1950s, when the word was indeed still. I mean, when it came to economic life was still very much focused on the European continent. But it's totally untenable at a moment when clearly, when you think about contemporary capitalism, nobody in their right mind would say, okay, we can ignore everything outside the European continent and we will come to an understanding of global capitalism. We can't. We need to think about China, we need to think about. About India. We need to think about the Middle East. The Middle east, yeah. Many different parts of the world. Brazil, Nigeria. Many other parts of the world. And if that is the case. So if in order to understand capitalism today, we need to have a more global lens, then I think that is also the case for understanding capitalism at an earlier moment. And indeed, I think this book shows that capitalism was not only born global, it was global from the very beginning. It emerged as a world economy, but also in every moment of its history, even in its most Eurocentric moments, like, let's say, in the middle of the 19th century, it was still deeply connected to processes in almost all regions of the world. And in order to understand anything about capitalism, we need to have that global perspective. And the book does exactly that. It takes the readers to literally all corners of the world. It starts in Aden, as you mentioned, in Yemen, and it ends in Cambodia in the year 2023.

Thomas Small (21:18)

Yes, you do start your narrative in Aden, and I would like to focus on that for a little while. Aden, a very important port in the south of Yemen. On conflicted. We talk about Aden all the time because of the role it still plays in Yemeni politics and geopolitics. And often Aden is associated with the British Empire since it was a key node in Britain's network of naval bases and trading stations connecting London to India especially. But in fact, Aden is a very ancient city and one of the early islands of capital, as you call them. So take us back to the 12th century, really, and explain the role that Aden and other islands of capital played in building a world knit together by global capital.

Sven Beckert (22:06)

Yes, yes, that's a really important question. And maybe I should say a few words about how I arrived at writing about Aden. I'm not a specialist in Islamic history, I'm not a specialist in the history of, of the Middle East. But basically I started from the observation that capitalism is historical. And anything that is historical must have a beginning. And thus we must be able to research and analyze how this radical logic of economic life, how that emerged into the world. And it struck me from my reading that that this logic that is capitalism can be traced very early on, can be found in merchant communities. So merchants are really the first people on planet earth who personify this logic, who live a life that is embedded within this peculiar economic logic. And these are not the kind of merchants, the bakers and butchers who go to the local market and sell their products, but these are merchants who engage in long distance trade. Obviously such merch have existed for a long time. But I observed that there is a kind of intensification of this kind of trade, and there's an intensification of these kinds of merchant communities in the early parts of the second millennium. And so I basically ask myself, when we look at the world, where do we find these merchant communities? And you find them in many, many different parts of the world. You find them in China, you find them in India, you find them in the Middle east, you find them, of course, also in Europe. You find them in East Africa. You find them Africa. And so I started the book with basically writing about these merchant communities in many different parts of the world. And in the process of doing so, it became clear that kind of the central node in this emerging world economy of the first half of the second millennium was in the Arab world. And one port that was particularly important at a particular moment in time was the port of Aden, because it was an important point in connecting three other islands of capital, three other nodes of capital, namely, it connected the Arab world to the east coast of Africa and traders on the east coast of Africa. But more importantly, it connected the Arab world to the western coast of South Asia, where there was an intense trap or in the 12th century, of spices, of textiles, of horses, and also of goods that were produced in China, such as tea and porcelain. And so Aden was. I'm not arguing that capitalism emerged in Aden. I think actually it is impossible to define one place where capitalism emerged.

Thomas Small (25:17)

Well, that's the point. It was a node in a network.

Sven Beckert (25:20)

Exactly, exactly. It was a node. It was a process. It connected. The very essence of its emergence is connecting different parts of the world to one another. But it was one of these islands of capital, and it was an important island of capital, and it's also one where we have unusually good documentation about this port. And so then one of the most striking things about this is. And that, I think, speaks to the larger argument about the emergence of capitalism. When you look at the activities of these merchants, if you look at the letters that these merchants wrote to one another, they are astoundingly modern. Even 800 years later, we understand right away what these people wanted. And they basically wanted to sell things as expensive as they could, and they would want to buy things as cheaply as they could.

Thomas Small (26:12)

You get a sense by reading these accounts, and it's remarkable, these fragmentary records are able to enable you to reconstruct the lives of really, like, hundreds of merchants. But as you read about. As you read these accounts, you realize, as you say, that you're encountering a spirit, actually, that is very recognizable and which back then, I guess, was, you know, limited to a small number of people in geographic. In demographic terms. Right. A small number of merchants. But it is that spirit that has spread and spread and spread, as you say, an attitude towards what's valuable in life, what we should be prioritizing in life.

Podcast Host (26:52)

Buying cheap, selling deer.

Thomas Small (26:54)

That sort of attitude is there already. And the people there, there are already fabulously rich, fabulously globalist. You know, there are Muslims, but Jews, Hindus, Christians, they have connections from China to Italy. Like, it's already. It's like a Dubai. It's already there.

Sven Beckert (27:12)

Yeah. I mean, the quantities involved, of course, much smaller than the quantities involved in global trade today. And it was also. The process of trading was quite slow because it took a long time to send a boat across the oceans. But yes, the basic logic is exactly, exactly what is so familiar to us today. And I don't say it's not just an attitude, but it's also a practice. It's not just having a certain new idea about how one can accumulate wealth and become rich, which was so different from the logic that tributary rulers embraced, but it's also a practice these merchants develop. Global trade is difficult. It's very risky, very hard to organize. And so they develop mechanisms in which they can practice this trade, they develop institutions in which they can develop this trade. And all of that is, like, strikingly modern. So the word, as you say, the word of 1150 Aden is, broadly speaking, quite recognizable to us, but importantly, it is in 1150, quite marginal to economic life on Earth, because most people wouldn't really embrace that logic and wouldn't live with in that logic, and they might even be opposed to that logic and be quite violently opposed to that logic. And the history of capitalism now, and this is the story that the book tells, the history of capitalism is how do we get from a world in which these capitalists existed, in which these islands of capitalism existed, but are marginal to economic life on Earth, how do we get to a world today in which this logic determines almost everything about life on Earth?

Thomas Small (29:01)

Earth. So having started in Aden as one example of these islands of capital that were spread across the world, and especially across the Indian Ocean, littoral, but also the Mediterranean, the East African coast, Southeast Asia, as you said, but also an overland routes, overland across Greater Iran and Central Asia, cities like Samarkand and Bukhara. So having started in Aden, you make it clear that in the 13th, 14th, 15th, 16th centuries, despite the rise and fall of dynasties and empires, the arrival of the Mongols, the expansion of the Ottomans, of the Moguls in India, of the Yuan dynasty, in China, despite all this political change, these capital networks survived, expanded, developed again, all the way from China to Western Europe. And as you make clear, this is only because legal tools and institutions that we associate now with capital capitalism were already in place. Things like contract enforcement, private property rights, a stable global currency, or at least currencies that were widely accepted as legal tender, a sophisticated infrastructure of customs duties, tariffs, taxation. So as the world moved into early modernity, all of these things which we think of as products of modernity were already in place.

Sven Beckert (30:23)

Yes. And as you say, they turn out to be extremely important in the long history of capitalism. I mean, there is, yes, the logic that we discussed that is embodied within these merchant communities that persisted through all of the political upheavals and the rise and fall of empires, the rise and fall of various rulers. But of course, also some merchant communities rose to greater prominence at particular moments in time and then became much more marginal again because of political changes or economic changes. So there is kind of an ebb and flow to that. And in some ways it's a story when it comes to these merchant communities. I think it's a story of relatively slow change. There is sometimes communities, merchant communities expand, sometimes they become less important. Some trade routes, new trade routes emerge and other trade routes collapse for a whole variety of reasons, which I think shows that the logic, the capitalist logic is quite marginal to economic life on earth. It's also so radical that it faces such kinds of oppositions that it doesn't really break through for a very long time. It is really only then in the 16th century that it breaks through in a more significant way. But look, the Muslim world, the Arab world, is really quite central to that history. And it's central to that history partly for the reason that you just mentioned, namely that because it's such a node of global trade, the merchants in the Arab world are basically forced to develop the tools that allows them to organize that kind of international trade. And these tools, such as letters of credit, transfer of debt, the pooling of capital for voyages, many of these do prominently emerge in the Arab world. And then also, the Arab world is unusually urbanized, more so than other parts of the world at this point. And this is something I think is also really important to keep in mind when we think about these traditionally very Eurocentric narratives about the history of capitalism. So, for example, the city of Samarkand, which is an important note in the trade between the Arab world and China in 1390, it has about 150,000 inhabitants. So it's a very, very significant city. In the 14th century, the city of Cairo has allegedly 600,000 inhabitants, making it perhaps the largest city in the world. So you see that very significant islands of capital emerge in this particular region of the world, and they are absolutely crucial to our understanding of the global history of capitalism. And as you know better than I do, often they are totally marginalized or even ignored in narratives about the story of global capital.

Thomas Small (33:38)

Mean that when, like, Italian city states are sending out merchants who then set up their own trading ports or their little trading stations within some of these large Levantine, Egyptian, Black Sea, Central Asian cities, and they're sending, you know, merchant missions all the way across the Silk Road. As Italians are doing this, interacting with Muslim traders, like, literally trading with them. Will the Italians, through, through whom I understand the famous Flemish and Dutch merchants, developed their institutions of capitalism, et cetera, the Italians would have had to adopt and adapt some of these institutions, contractual arrangements, et cetera, from their dealings with the Islamic world. I mean, in order to do business with them, they had to kind of play along with their rules. And through that route, those rules become embedded and adapted in Europe.

Sven Beckert (34:37)

Yeah, no, this is a global learning process. These merchants, of course, this is what they do. They encounter one another, they trade with one another. In order to be able to trade with one another, they have to develop a kind of common language in which they can embed their commercial relationships. And since the Arab world, the Muslim world, is really quite advanced in regards to the development of these kinds of institutions, the Italian merchants do learn from these Arab traders. And this is not just the case for European merchants. That is also the case. We know that this is the case in Southeast Asia and South Asia. So some of these ideas spread out of the Muslim world into other regions of the world. Of course, they get also then change in the process, and there are new innovations that come out of these different regions of the world. But this is not traditionally, that story has been told as a story about the genius of Italian merchants who develop all the crucial tools of global capital capitalism, and then it fuels the capitalist revolution 200 years later in the Netherlands and in England. That is not the case. This in itself is a global process. And look, if you think about the European merchant communities, if you think about the merchants of Florence, if you think about the merchants of Venice, and if you think about the merchants of Genoa, what do they really do? I mean, one of their core activities is to reach out into the. The Arab world. They are making much of their wealth trading into the Islamic world and then through the Muslim world to India and China. Because they don't directly trade with Indian merchants or with Chinese merchants. They are totally dependent on middlemen in the Middle East. And so you can, you know, the European merchants, they gravitated towards the center of the world economy where there were things to be had that they really wanted. And the things they really wanted were things that were produced in China, India and the Arab world. And again, this shows that you cannot even begin to understand the history of the earliest European nodes of capital without seeing them in connection to developments in the Middle east and in east and south and Southeast Asia.

Thomas Small (36:58)

And I think we can see why then global commerce, at the very least, global capitalism, for so long has been associated with certain minority diaspora communities who more easily lived across these imperial continental zones. I mean, in the west, often historically, we think of Jews as facilitating a lot of trade. But, you know, Armenians played that role. Arab Christians played that role in places like India. Parsis played that role. Throughout Southeast Asia, Chinese played that role. So it makes sense. Why? Why, if for so many centuries there is this global network of transactional proto capitalism going on, that you would have communities who were more able to move from place to place with, you know, maybe they had cousins in one city and second cousins in another city, or they had, you know, there were synagogues or churches or whatever that they could kind of network with that facilitated that merchant activity. It makes sense. Sense, why as capitalism develops, so does the sort of role that these minority middlemen people play. And I'm saying that because I know obviously everyone's hackles get up. I don't mean by any stretch of the imagination to suggest anything sinister here. It's just what happened.

Sven Beckert (38:19)

I think one of the big problems of global trade in the medieval or early modern world is that it was a very risky business. Would send out a boat from the port of Aden to the west coast of South Asia and the boat might sink, the captain might take off, the locals on the other side might just take the goods and burn the boat, or the goods might be controlled by somebody who has interests that are totally counter to the interests of the person who sent out the ship. So trade is extremely. And so traders in all corners of the world try to find ways to make that trade more secure. And one way to make that trade more secure is to embed that trade within non market networks, Networks that are not primarily constituted by the market, but networks that are constituted by networks of trust. People, they try to find people whom they could trust to ship the goods and to sell them abroad and all of that. And these networks of trust could be based on family. I mean, often they were based on family. Sometimes they were based on people having the same religious beliefs. Sometimes they were based on the fact that people came from the same town or the same cities. So there was, for example, a very extensive network of Genoese merchants in the Middle east, in the Black Sea, all over the place. So this is very common. So I don't even would, I wouldn't give religion in that particularly prominent position. I think this goes much further and much deeper, namely an effort by merchant communities to create networks of trust in which they can embed their extremely risky business enterprises. And this is the case all the way, perhaps even all the way to the present, that these kinds of non market networks of Chinese trust continue to play a very important role in capitalism's history.

Thomas Small (40:34)

Absolutely. So moving into the modern period, 16th, 17th century, I wonder if you could address something else that your book very much illustrates, which is that the growth of capitalism and the growth of the state go hand in hand throughout this whole period. I mean, everyone, every man, I think in his early 20s is a Marxist and in his late 20s is a Libertarian. And I had that same trajectory. So in my late twenties I just read all the libertarian stuff, right? And in that kind of framing of what capitalism is, the state is almost like an enemy of Capitalism, the market is this natural phenomenon totally disconnected from politics and the state. Ideally, and originally in this framing, well, you show that that's just total nonsense and that what we call capitalism and all those institutions that underlie it, they've been inextricably connected to the state. Could you tell us that story?

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Sven Beckert (42:15)

Yes to to write a history of capitalism in which capitalism is kind of the opposite of the state is utter nonsense. Nonsense. It's an ideologically powerful trope. Many believe in it. A lot of politics is being made by mustering these kinds of arguments. But as a historian, I have to tell you that this is not the history of capitalism. This is not how capitalism emerged and expanded. I indeed argue in the book that capitalism is really a co production of capital owners, entrepreneurs and the state. You cannot even begin to think about capitalism without also thinking about the state. It does so on multiple levels. If you think about infrastructures, if you think about some of the economic institutions that we have already discussed, if you think about military power, if you think about the structuring of global trade through tariffs and all kinds of mercantilist policies of the early modern period, and then again of the 19th century and then again of the present. The state is everywhere. The state is. The story of capitalism is also very much a story about the expanding scale and scope of the state. And therefore my history of capitalism is fundamentally a political economy. And it does put great emphasis on in every moment in capitalism's history and in every place in capitalism's history. To also investigate the role of the state in these places and at these particular moments in time, can you maybe

Thomas Small (44:00)

just tell us one of those stories, like an illustrative account of how capitalist or market development and state development went hand in hand?

Sven Beckert (44:10)

I mean, there's a potentially unending number of examples, but we could think, for example, I mean, a crucial moment in the history of capitalism. And I think every one of your listeners is going to agree with that. A crucial moment is the Industrial Revolution. This is the moment when modern factory production emerges, and this is also when modern economic growth emerges. This is the moment when technical progress and productivity gains become the norm instead of the exception as they were prior to the Industrial Revolution. So the Industrial Revolution is of course, most at the beginning, it focuses on the production of cotton textiles. And in this industry, the history of this industry is deeply embedded within the state. So European governments, including the English government, England, thus in the 18th century, when there are significant imports of South Asian textiles, the best, cheapest textiles produced in the world, in the 18th century, many European governments pass either high import tariffs or they even prohibit the importation of Indian textiles because they want to protect their domestic industry, first their woollen industry. And then once Europeans began to develop the ability, ability to produce cotton textiles themselves, they want to protect their emerging cotton textile industry. So high import barriers is certainly an important measure that states take in order to channel certain forms of economic development, including the development of the cotton textile industry. Then the very knowledge about cotton textiles, and much of the knowledge about how to produce cotton textiles, of course, comes from South Asia. And here the East India Company plays an important role in enabling the importation of cotton taxes from India. And again, the East India Company is a state chartered company with a state enforced monopoly. So in that history, the state plays a crucial role as well. And then last but not least, if it comes to the import of cotton that is essential to the production of cotton textiles that comes out of the Americas, by and large, and is a direct result of the kind of imperial expansions of European powers into the Americas. And by the 19th century, it comes largely from the southern parts of the United States. About three quarters of our cotton imported into Europe comes from the United states by the mid 19th century. And of course, the expansion of cotton agriculture into the American south is also very much a state driven project by the US State that also, for example, acquires the territories where that cotton growing would eventually take place in the 19th

Thomas Small (47:16)

century and enforces the slave laws, enforces a situation where the enslaved black Americans were not free to do what they wished.

Sven Beckert (47:24)

Yes, so this is just one of countless examples, but it's an important one because it's so important to the history of capitalism. And this is a story that is certainly about entrepreneurs who invest their capital in new ways and to help the development of new kinds of technologies that increase the productivity in cotton spinning dress. But that story is Also embedded within the story of the state.

Thomas Small (47:51)

I also think, more maybe than people realize, that the Industrial Revolution itself, which, growing up, I was told that for some freakish reason in the late 18th century, some genius tinkers in the Midlands of England just suddenly had brilliant ideas in terms of mass production. And yet, from what I now understand, the reality is much more complicated and started earlier and very much at the heart of the state in Britain or in England, especially in the Royal Navy, that apparently, like 80 years before the Industrial Revolution, as we understand it, took off. The Royal Navy, in order to prosecute England's ambition to totally dominate the waves of the world, had investigated and invented new modes of mass production and organization and administration just to keep the engine of the navy running and growing. Now this is happening within the belly of the state. This is totally not a free market situation whatsoever. A king, as it were, has said to another man, conquer the world for me using a navy. And this man has used his genius to develop processes where he could achieve that.

Sven Beckert (49:04)

Yeah. No, there are no free markets. Free markets do not exist. The markets are always politically constituted. And you can see that most easily. Perhaps if you think about some of the most primitive markets that we know about, like the kinds of markets that are already visible in medieval Europe, where farmers meet several times a week around the church to sell the apples and potatoes and whatever they had to offer to local customers. That seems like a perfectly Smithian market. There are many producers, there are many consumers. But even that market is embedded within a certain kind of politics, because it's either the local church or it's the local rulers who tell everybody when they can start trading, when they need to stop trad trading. They give certain permits to certain people to trade on the market and not others. If there are conflicts about some trade, the state comes in to somehow adjudicate that conflict.

Thomas Small (50:00)

There are soldiers there at the barriers making sure that brigands don't come in. There's a man making sure the weights and measures are all up to standard. And if you take that back further back to the Muslim world, where this story began, I mean, the way in which contract law and trade law is embedded within Sharia law, which is in itself an expression of state power, understood sacrally as organized beneath a sultan who acts in God's name and makes sure that the ulama, the clerics, are drawing kind of freely, but also within a tradition from the. I mean, this is all state activity as well.

Sven Beckert (50:35)

Yes, yes, yes. So it's actually, you know, once you try to come to Terms with the long history of capitalism, I find it totally, totally puzzling how anybody could want to think about capitalism without thinking about the state. I mean, this is purely ideological that there's nothing in the history of capitalism that suggests that there's any validity to that kind of argument.

Thomas Small (51:01)

I also wonder if we can imagine the growth of the state alongside the growth of capitalism in this sense that as trade, production, commerce, finance is growing, let's say in the price private sphere, more and more people are getting involved more and more in this kind of transaction, you know, these kinds of transactions, then more and more possibilities of conflict, interpretation whatsoever, whatever arise. And so then you, more and more people are going to the state in order to adjudicate these differences. So the state is in real time creating new laws, new institutions, new offices, new officers to regulate all of this, to adjudicate in these decisions, disputes. And it just goes on step by step together. Not to mention when you bring in the question of currency minting, which becomes a state prerogative, central banking, all of these things. So this is how I'm trying to imagine these two things working in tandem.

Sven Beckert (51:55)

No, no, absolutely no. And just think about the expansion of capitalism and the expansion of the scale and scope of the state. If you look at this in quantitative terms, then these are over the past 500 years. I think both the expansion of capitalism and the expansion of the scale and scope of the state are almost parallel. I think you could graft that. And when today the state even, I think in the United States, about 35% of GDP is being spent by the state. This is obviously radically more than it was in 1500, but it's a snip

Thomas Small (52:30)

compared to some other countries.

Sven Beckert (52:31)

Yeah, no, it's like in other countries it's like 50% or 60%. So there is, I'm not saying that variation is possible and we can observe variation, but the macro trend, if you look at the whole thing about them over the past 500 years, I think the macro trend is that the expansion of capitalism goes hand in hand with an expansion of the scale and scope of the state.

Thomas Small (52:52)

So what about that European divergence then? We started in Aden as one node in one, many, one island of capital amongst many. Eventually industrial capitalism does take hold in Europe. And so if early commercial sophistication, early capitalism, if you like, was global, what made Europe's pathway different? What happened?

Sven Beckert (53:18)

Yeah, that is of course one of the most important questions we can ask because the book is critical of a Eurocentric perspective on the history of capitalism. But on the other hand, the book also acknowledges that for a long period, for about 200 years, Europe is clearly at the very center of global capitalism. And we need to explain this. How did this happen? And in some ways, as you just said, it's puzzling because we see more dynamic, maybe more sophisticated, maybe also wealthier merchant communities in other parts of the world. And certainly when it comes to global manufacturing, before the Industrial Revolution, the center of global manufacturing is in China and India, and not on the European continent. So how come that Europe, which is so marginal both to the commercial revolution for a long time, but then it's also marginal to the manufacturing that takes place increasingly in many parts of the world, how come that Europe suddenly becomes so central? And I think here, My key argument here is about the state. And that is that in Europe a peculiar kind of coalition emerges between capital owners, between these merchants that we discussed, and the state. And once they combine their forces, they propel state power, European state power, but also they propel the European islands of capital into remote parts of the world. They propel them first to islands off the coast of West Africa, to Cabo Verde and to Sao Tome and the Canary Islands and others. And then they propel them after 1492, they propel these islands of capital into the Caribbean and into the Americas. And this is no other merchant commercial community does that to the same extent. And that now enables for the first time capital to leave in significant ways the world of trade and push the logic of capital, the logic of capitalism also in a massive way into production itself and for especially agrarian production. So then the question is, why is that coalition emerging in Europe and not elsewhere?

Thomas Small (55:38)

Well, can I suggest something? You can shoot it down. This is what I've always walked around in my head thinking. And sort of two things happen. On the one hand, I understand that when the Ottoman Empire rose to predominance in the eastern Mediterranean, it made it harder for Western capitalists to access those age old markets across the Islamic world into China. It made it harder for them incentivizing the development of the new routes around Africa to the east, which incentivized the development of naval in order to achieve that, and at the same time, for a huge host of reasons. But I think this is linked to this idea of merchants in the state coming together was the endless internecine warfare within Europe. They were a very warlike people. And in order for one baron or lord or duke or king to, you know, beat the shit out of his neighbor, king, baron or lord, more and more he relied on finding financiers, industrialists, makers of cannons, makers of guns, et cetera. So that kind of confraternity of state and merchant and industrial power comes together in order to wage war. So those two things, one internal to Europe, one external to Europe. That's how I've always imagined it.

Sven Beckert (56:55)

Yeah. No, absolutely. I completely agree with you. And Christopher Columbus is a good example for this dynamic at work because it's the Spanish crown that needs access to capital in order to fight all of those wars involved in on the European continent. And it draws on the capital available in places such as northern Italy or southern Germany, the Fuggers or Florentine or Genoese capital. And of course, Christopher Columbus is a Genoese merchant. And here you see, in this crucial moment, you see this coalition between European state power and European capital emerge and propel these nodes of capital into new regions of the world. Exactly. In a way, they were propelled into that coalition exactly because of their relative weakness in comparison to capital and states elsewhere. So the Chinese state, for example, was not so dependent on merchant communities because they had a relatively unified political framework

Thomas Small (58:01)

and a monopoly of power across a

Podcast Host (58:03)

huge amount of land.

Sven Beckert (58:05)

Yes. They raised sufficient resources from taxes on the land, on agrarian production, that they were not dependent on the resources of merchant communities. That was totally different in Europe. So the relative weakness of European states, which also, as you mentioned, was rooted in the fact that there were very many of them and that they fought constant wars that became ever more expensive. And also the relative weakness of European capital owners, of European merchants who increasingly had a hard time getting to where they really wanted to get to, namely to India and China to exchange things with Chinese and Indian merchants, because the Ottomans in the middle bec, you know, kind of reluctant or difficult to deal with from a European perspective. And so that propelled them into the Atlantic world. Because why did they go into the Atlantic world?

Thomas Small (58:53)

That's another thing. It's just pure serendipity that it happened to be this Italian dude who crashed up against two continents that no one knew even existed, with a much materially weaker population that very quickly died from disease and conquest. And then you have this huge, more or less virgin territory to exploit to your heart's content, you know, that really opened up vistas for both early modern European state building and market building.

Sven Beckert (59:22)

Yeah. And I tell that story. I have a chapter which focuses very much on the island of Barbados in the 17th century as it is turned into, like, one vast sugar plantation. And there you see the combined power of European capital and European states At work in creating a society that is now fully organized along the capitalist logic. All inputs are commodified. All inputs are acquired on markets. Everything that's being produced on this island is shipped into global markets. The labor power is commodified in that enslaved workers are being purchased on the coast of Africa. So you see one of the first fully developed capitalist societies. And this exactly. This is partly possible because the kinds of resistances that merchants would encounter in the European countryside are much less powerful in the Americas for exactly the reasons

Podcast Host (60:17)

peasant revolts or even the old landowners,

Thomas Small (60:20)

all those knights and barons.

Sven Beckert (60:23)

Yeah, feudal lords. Feudal lords, religious authorities, who were very opposed to that kind of logic infusing economic life. You don't have that to the same extent in the Americas. And I think that explains kind of the success of the capitalist revolution at this particular moment in time.

Thomas Small (60:38)

That is fascinating. And you know, reading that chapter as you describe Barbados, you know, I must say it does return me a little bit to that early 20s Marxist kind of thing, because you do feel the whole thing is pretty satanic. Just the degree to which all of reality is reduced to quantity and money making. It's really depressing. So listen, just briefly now, this has been a fascinating conversation. I thank you again for coming on the show. It's been great. But briefly now we're told we are sort of in the midst of possibly even leaving a phase of globalization, so called moving into multiple multipolarity, so called new geopolitical rivalries. Where do you feel we're headed based on your deep historical research into the past and the development of capitalism as a historical phenomenon? Where is it going, do you think?

Sven Beckert (61:32)

Yeah, I mean, the future is unpredictable, but I think having studied the past gives us some ways to think about the future and ask certain questions about the future that might help us come to a better understanding of what might come next. And I think a couple of insights from the study of the capitalism's past are relevant for the contemporary moment. Certainly one of them is that capitalism is an enormously dynamic way of organizing economic life. By far the most dynamic way of organizing economic life that has ever made an appearance on planet Earth. And presumably that dynamism of capitalism will continue into the future. Then. Second, the economic logic of capitalism is astoundingly undogmatic. Capitalism is astoundingly undogmatic. It has changed quite drastically over time and in quite fundamental ways. And presumably that undogmatic nature of capitalism is partly explaining. It's very dynamic. And it's also partly explaining its great Staying power, why it has been around for such a long time, and presumably that will continue into the future as well. Third, maybe the capitalist revolution has drawn very much on what has been called free inputs, especially free inputs from nature. And as we know, nature is, as such, limited. And the core impetus of the capitalist logic is, at its core, unlimited and accelerating. And so we can see pretty clearly that there is an emerging conflict between the logic of nature, which is limited, and the logic of capitalism, which is unlimited. And last but not least, capitalism is an economic symbol in which change is constant. Every year we produce more. Every year, more people are working in factories. Productivity is increasing year after year. So this is a continuous process of change. But then, for the reasons that we discussed earlier, capitalism is also an institutional order, and it's a particular kind of political economy. And there the change is not continuous, but this institutional order, this political economy, can remain relatively stable for extended periods of time and then shift suddenly. And one of these shifts is still maybe in the living memory of some of your listeners, namely, the end of the kind of golden age, the Keynesian age of the 1950s and 1960s, and the emergence of what later has been called the neoliberal order beginning in the 1970s. So change was continuous in the sense of ever more things were produced throughout that time period. But there was a pretty substantial change in the institutional order in which capitalism was embed. Now, the world we live in today, I think, is a world in which the old institutional order, namely the institutional order of neoliberalism as it had emerged

Thomas Small (64:46)

in the 1970s, working through institutions like the WTO and other institutions.

Sven Beckert (64:50)

Yeah. Is increasingly under attack. And this attack is partly the result that it produced some real economic crises. Just think of the 2008 economic crisis, but perhaps more so it is also under political attack. And it's under political attack from the. Just think of Occupy Wall street and the anti WTO movements, but it's in particular under attack from the populist right. And my sense, if you would really push me, my sense is that we are now at a moment in which this institutional order of capitalism is beginning to shift. A new institutional order is beginning to emerge that is quite different from the neoliberal order. And what new order is going to look like exactly, I think is unpredictable at this moment. And I think also a variety of different institutional orders is still possible. I mean, the future is not set in stone. I mean, if anything, the history of capitalism tells you that there's a lot of contingency, and there are sometimes the Most surprising things happen in this history of capitalism. For example, slavery was done away with even though it was for a very long time very central to the history of capitalism. So I think we should think about this moment as a moment of significant institutional and political economy changes in capitalism. And that should also encourage us to think about what kind of world do we want to live in? How do we want to structure that word of the future?

Thomas Small (66:24)

Well, as you say, even in the early years of global capitalism, way back in the 12th, 13th, 14th centuries, not everyone felt that they had buy in to this kind of world. And there was pushback from peasants, from lords, you know, other, other sort of actors. Maybe that's what we're seeing both on the left and on the populist right. These are the sort of peasants of the 21st century and they're saying we're sick of it. Maybe there are some feudal lords involved who have got very fat off some rentier kind of monopolistic arrangements. They're pushing back against it. Who knows? But it's all very fun. It's. It goes to show that when you look at history from the widest view, the more things change, the more things stay the same. So that's the fascinating thing, certainly about your book, Sven Beckert, Capitalism A Global History. It's well worth buying and reading. Dear listeners, I promise you, you will learn a huge amount and you will no longer be able to rest content with those simplistic, ideologically charged ideas of what capitalism is and where it comes from. Sven, thank you so much for coming on Conflicted.

Sven Beckert (67:30)

Thank you, Thomas, for this great conversation.

Podcast Host (67:34)

That was Sven Beckert, Laird Bell professor of History at Harvard University. His excellent new book, A Global History is available from all good booksellers. Remember, for deeper dives into the ideas we explore on this show, including extended conversations and Q&As with my CO host Eamon Dean. Check the show notes for details on how to join the conflicted community. I'm Thomas Small. Conflicted is a message Heard Production Our executive producers are Jake Warren and Max Warren. This episode was produced and edited by Thomas Small.

Sven Beckert (68:26)

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