Because in some way, every historical period and nation have had some form of deep state. Even in a direct democracy like Ancient Athens, legislation put forward for citizens to vote on was decided by the Boule behind the scenes. And historians have found that the boule – or council – was dominated by the aristocracy. During the Roman Empire, the Praetorian guard often became kingmakers behind the scenes. Emperor Pertinax was assassinated by the Praetorian Guard after just two months in power because he’d attempted to curtail their power. Behind countless King’s courts, powerful barons, nobles, elites quietly conspired to influence laws, dominate the court, or occasionally, overthrow monarchs entirely. Japanese Imperial Military Deep States in Manchuria, or within the army of the Ottoman Empire, global fruit corporations dominating entire banana republics, determining policy, and overthrowing democratically elected governments. FBI dossiers intended to blackmail democratically elected officials, British intelligence undermining leftist PM Harold Wilson, Russian oligarchs, globalist institutions, corporate backroom threats and deals – everywhere we look in history, a deep state stares back, asking a question: who is really pulling the strings?

NODES MAP – I want to lay out something not conspiratorial, but quite simple; if you have layers of democracy at the front – the ballot, legislative procedures, parliamentary debate, executive orders, judicial process, law, public opinion, polling, and so on – what’s going on in the deeper layers – what’s accountable and what’s unaccountable?

Because – and this is the crucial point – an influential 2014 study of over 1700 policy decisions found that the preferences of average citizens had “only a minuscule, near-zero, statistically non-significant impact upon public policy”. That doesn’t sound like democracy to me. 

Does the deep state theory explain why forever wars continue despite opposition, why banks are bailed out, but the economy still fails, why politicians say they’ll do one thing and end up doing another, why most of us work long hard days while others fly around the world in private jets? 

Does the Deep State Matter More than Ever?

Why is the term so more resonant now? For anyone who takes politics seriously, it’s easy to laugh at pop culture political terms like being red pilled or the deep state, but they’re resonant for a reason, and they’re useful windows, perspectives into reality, the often point to something important.

In the US, the resonance has built up over time as trust in government has decreased. Take the Gulf of Tonkin incident in 1964, in which Vietnamese ships fired on the USS Maddox in supposedly international waters. LBJ used it as an excuse to escalate the Vietnamese war. But it later turned out to be more likely a false flag – bad weather on radar – used as an excuse for the US Military-Industrial complex to ramp up the war effort. Watergate did little for public trust in an executive office that could have an off the books ‘plumbers’ unit that could wiretap the Democratic opposition. The false reports about Saddam Hussein’s WMDs added to the distrust, as did Edward Snowden’s 2013 whistleblowing that the state was engaged in mass surveillances of its own citizens.

In 2018, a Monmouth University Poll found widespread concern about government surveillance, reporting that ‘Few Americans (13%) are very familiar with the term “Deep State;” another 24% are somewhat familiar, while 63% say they are not familiar with this term. However, when the term is described as a group of unelected government and military officials who secretly manipulate or direct national policy, nearly 3-in-4 (74%) say they believe this type of apparatus exists in Washington’

But recently, the term has taken another twist courtesy of Donald Trump. Even before his first inauguration back in 2016, Breitbart published a lengthy and influential article entitled the Deep State vs Donald Trump. Trump called a whistle-blower a “deep state operative”. Stephen Miller blamed his impeachment on the Deep State. And Steve Bannon has talked about the ‘deconstruction of the administrative state.’ But the twist is that while they’re sometimes talking about the intelligence services, they’re really talking about something more banal: government bureaucracy.

But we need to go deeper than Trump. All of this of course aligns with the idea that since the 2008 financial crash and bank bailouts but increasing inequality, that what the people want and what politicians do and are two separate things. I’m going to keep referring back to this study – that the preferences of average citizens had “only a minuscule, near-zero, statistically non-significant impact upon public policy” in 2014, because it was that year – 2014 – that Mike Lofgren, a retired Republican congressional aid of 28 years, began publishing influential essays and books about a very real deep state – he can be credited with giving the term more seriousness. 

Lofgren put it like this: ‘There is the visible United States government, situated in imposing neoclassical buildings around the Mall in Washington, D.C., and there is another, more shadowy and indefinable government that is not explained in Civics 101 or observable to tourists at the White House or the Capitol. The former is the tip of an iceberg that is theoretically controllable via elections. The subsurface part of the iceberg operates on its own compass heading regardless of who is formally in power.’

Lofgren talks in nodes, with Washington at the core, Military and Industrial Contractors around it, Wall Street which ‘floods the town with cash and lawyers’, Silicon Valley which provides tech and surveillance, bureaucrats and lobbyists circling capitol hill, the CIA or FBI with their own contractors and networks; what’s fascinating about Lofgren’s analysis is the idea of proximity – all of the nodes jockeying to be as close to power as possible. And how it’s a model that be applied to any country.

Military Industrial Complex

Let’s start with one of the most obvious nodes of the deep state – the Military-Industrial Complex. It sits around many governments, but Washington in particular. A combination of the total warfare of WWII, the scope of the Manhattan Project to build the Nuclear Bomb, the rebuilding of Europe and the Marshall Plan, plus the start of the Cold War – all contributed to never bever seen networks of factories, scientific research, infrastructure, raw materials, energy, and all of the political and business relationships that tied them together. Much of this type of thing – on a smaller scaler – had usually been deconstructed in some way after previous wars – but the scope of the change after WWII led President Eisenhower to warn in his famous 1961 farewell speech that:

‘This conjunction of an immense military establishment and a large arms industry is new in the American experience. . . .Yet we must not fail to comprehend its grave implications. . . . In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.’

What Eisenhower saw and was warning against were the unwieldy and large incentives for vast numbers of people – politicians, industrialists, generals, scientists, even ordinary workers in munitions factories, say, to keep the wheels of the military-industrial complex turning – to sign new contracts, build new weapons, record new profits, and push for new wars. 

In 1961, the US defines budget was already $48b dollars, had 300 military bases in the US alone, and included millions of civilians in companies like Lockheed or Boeing plus all of the subsidiary companies serving them in providing machinery say, but also services as banal as food, cleaning, uniforms, transport, and so on.

Professor of Law Michael Glennon has called it it the ‘double government thesis’ – that in the US, national security is run by a “Trumanite network” of career military, security, and intelligence officials because theyre the ones who disclose to politicians the severity of a threat or the necessity of a new military vehicle, creating a vicious cycle.

Since Eisenhower’s warning, the Cold War, including the Korean War, the Vietnam War, the decline of the British Empire’s policing of the world, particularly by its navy, the shifting of that to America, and the forever wars on terror since 2003 have meant his warning has not only fallen on death ears but has become prophetic.

There are now almost 1,000,000 contractors with top-secret clearances, and in 2022, the defence sector spent over $100 million lobbying congress. There are around 600 American military bases in 40 countries, with US troops in 133 countries, drawing on a defence budget of almost $600 billion. From a deep state perspective, what’s notable is the vast number of contracts, local operators, relationships and networks this entails. 

Take just one example of a node far away: Camp Lemonnier in Djibouti. IT has $322 million worth of contracts including a 25-million-dollar fitness centre. So even that has a network of people with information, access, incentives, ways of working. Plus relationships with likely thousands of business contractors either locally or flown in.

But most contractors want to be as close to Washington as possible. AS recently as the 90s, defence contractors like Lockhead, Northrop Grumman, and General Dynamics moved their entire headquarters to Washington, which as Lofgren notes, has grown as the deep state has.

Lofgren writes ‘A visitor to the city might be surprised to find ads in the city’s Metro system selling a fighter plane, or spot the huge sign on a telecom building near the Southeast-Southwest Freeway extolling the virtues of an aerial tanker aircraft. A reader of National Journal or Congressional Quarterly or Politico will discover full-page ads for the littoral combat ship.’

This has created a revolving door between politicians, businesses, and military figures.

Bloomberg News reported in 2011 that “The top 10 U.S. defence contractors have 30 retired senior officers or former national security officials serving on their boards.”

Take army general and NSA director Keith Alexander. He left government, setup a consulting company called IronNet Cybersecurity, which advises Wall Street lobbying groups, just one contract of which is worth $600,000.

Thinking in terms of our democratic accountability vs unaccountable influence, the military-industrial complex adds billions of dollars and millions of people in deep layers which can be both impossible for elected officials to understand entirely, difficult to control, and often even operates entirely in secret.

Relying on so many contractors adds an extra layer of unaccountability. Take the private security firm Blackwater’s infamous stint in the Iraq War. IN 2007 they killed 17 Iraqi civilians in what was dubbed the Nisour Square Massacre. Investigators into the firm found “an environment full of liability and negligence.”

Or take Obama, who is the perfect example of how the military-industrial complex captures the outlook of incoming politicians. Obama went on a journey from hesitancy on escalating Afghanistan, and firm on closing Guantanamo Bay, to becoming drone commander in chief.

In his first term, the Pentagon leaked information about the dangers of Obama weakening the US mission in Afghanistan, which turned into a media story, and Obama soon committed 30,000 extra troops.

CIA director John Brennan, said Obama did “not have an appreciation” of how national security works when he entered office, but that now “he has gone to school and understands the complexities.”’ 

In other words, the military-industrial complex, despite as we now know entirely failing in Afghanistan, took Obama to school, and it can do this by presenting certain information, certain threats, having a strong military take, knowing the field better. As the whistleblower Thomas Drake said:   ‘“Obama—like any president—is literally a captive of the people who brief him on secret intelligence.”’

One Brookings Institute study has argued that “the real deep state is the contractor state,” consisting of “four intersecting networks”: giant defence corporations, state and local leaders lobbying for federal funds, big taxpayer-funded nonprofit institutions, and career members of Congress protecting spending – all feeding off federal budgets. This “contractor state” employs millions through government contracts and grants, far exceeding the number of civil servants on federal payroll.’

Silicon Valley CIA Complex

When you factor in all of those contractors, the size of people working directly or indirectly for the US government reaches over three million people. Each of those individuals make decisions based on their own small networks of information. How much do congress, for example, know about those three million people? There’s an interesting overlap, in the modern world, between information and data and intelligence. 

Take the CIA. It’s relatively small – around 20,000 employees – but the power of the intelligence it can collect is unparallel.

The drive for permanent intelligence services has a long history. In the aftermath of the French Revolution and the upsurge of radical movements in the 19th century threatening to overthrow monarchies, governments developed increasingly sophisticated network of police and spies to collect information on their own citizens for the first time. Policing is a relatively young phenomenon – historically speaking – starting at around the same time. 

During the wars of the 20th century, as technology improved, governments intensified their efforts in surveillance of enemies both foreign and domestic.  Networks of spy planes, satellites, wire taps, informants have only gotten more numerous and more sophisticated, and understanding their reach, and the effect this has on democracy, is difficult to quantify.

The US government, for example, classifies 50 million documents each year. If this isn’t a node of an unaccountable deep state, I don’t know what is.

If decision making is based on having information, and let’s remember the intelligence and information here are pretty much synonyms, then those with the best information, the most crucial information, those with the cards in their hands, can decide what to release or withhold, what to twist, what to leak, governing the course of action better than anyone further downstream of the information. Does this mean that the CIA or NSA are, logically speaking, decision makers more than any politician, let alone the public?

Lofgren writes ‘There is no more potent sign of the triumph of the Deep State than the fact that contractor personnel are empowered to vet the secrets our elected officials are allowed to see.’

There’s no better proof of how concerning this is than the history of governments the CIA has helped overthrow. Iranian PM Mossadegh overthrown in 1953 because he nationalised British oil. Arbenz in Guatemala in 1954 because of land reforms effecting US United Fruit Company. It’s happened in Hawaii, Chile, Nicaragua, the list goes on. In the UK, union leaders have spied on. France has a history of using intelligence influence in former colonies in Africa.

More recently and most notably, the extent of surveillance and it’s increasingly strong links with Silicon Valley was revealed by the whistleblower Edward Snowden in 2013.

CLIP

Snowden leaked 160,000 NSA records to journalists and analysis found that only 11% of the surveillance was on targeted individuals – with the rest being surveillance of over 10,000 ordinary civilians including their love and sex lives, mental health crises, their politics and religious views, and their finances.

But the documents also revealed Big Tech complicity in helping the NSA intercept internet traffic. The CIA has paid AT&T, for example, $10 million to provide information on overseas calls. And 70% of NSA budget is spent on outside contracts. More layers of deep state, fewer layers of democratic control.

Let’s return quickly to that initial frame – democratic accountability vs unaccountable layers Obviously, theoretically, on the one hand the military and intelligence in most countries are accountable to democratically elected officials or heads of state. But Snowden’s revelations, the secret plots to overthrow foreign governments, the WMD misinformation, and the very new scope, reach, and technological power of these organisations seriously problematises the idea that intelligence services are entirely accountable.

As Hans Born and Ian Leigh remind us in this paper ‘It should be underlined that democratic intelligence oversight systems have come into operation only comparatively recently (i.e. mostly since the mid-1970s and in many states only since the 1990s). This development represents a move away from a guardian state, in which important issues are left to the discretion of professionals, towards a democratic state in which important issues are subjected to normal democratic decision-making procedures.’ 

In other words, both democratic oversight of these institutions and the scope of the institutions themselves are very new historically speaking. We should remember that all across the modern era, all government institutions, and private ones, including what we’ll look at next – bureaucracies – have gotten bigger and bigger.

Bureaucratic Complex

In the 2024 primaries, Trump told supporters he would ‘shatter the deep state’. Vivek Ramaswamy said they’d be ‘shutting down the administrative state.’ For MAGA, and for so many across the Western right now, the federal bureaucracy and establishment politics is the swamp of the Deep State. But is this anything new?

Many of you will be groaning at me including government bureaucracy already, but thinking about the relationship between, for example, widespread suspicion that the CIA killed JFK and  the banality of everyday bureaucracy reveals something about modernity that is crucial – that the bigger institutions get the less individuals feel that they are in control. This is one of the most powerful ironies of the modern world: the promise of democracy is about self-determination, that the people are accountable for themselves. To do that, we’ve built enormous institutions that dwarf any single individual. Is modernity running away from us?

If we’re starting again with our framing of democratic accountability vs unaccountable actors, we have to look at what is the largest node – the US Federal Gov employs around 3 million people. Add in the 1.3m serving military and that’s around 1.5% of the entire population. The UK employs around half a million – 0.75% of the population – but add then NHS and that reaches 8.5%. India also employs around 1.4%, whereas the Chinese CCP employs around 56 million people which is around 4% of the population.

How are these bureaucracies’ part of a Deep State? Well millions of people is pretty deep, and all of those people have varying goals, incentives, values, and ideas that it’s impossible to always hold to account democratically. If we take Eisenhower’s Military-Industrial Complex as the model where there’s a nexus of incentives between politicians, the military, and industry – the same applies in some way to every department, every person, every relationship. A political-pharmaceutical complex? An environmental-protection complex? The duck-hunting-stamp-federal-complex? That is real by the way. My point is that any group who cares about what they do have incentives to do the thing better, to grow, to get more resources, to get more power.

Trying to curtail government bureaucracy is nothing new. Ever since the New Deal, conservatives like Buchanan, Nixon, and Reagan have, in different ways, wanted to fight what they see as a liberal bias in the state apparatus or dismantle institutions entirely.

But MAGA is new. Only with MAGA do we see the hyper sensational language of the deep state conspiracy wielded to the critique of bureaucracy. Is there any truth to the claim that the bureaucracy is a deep state? The issue with analysing these institutions is they’re so big, varied, and any interpretation is ideologically loaded. But we can poke around the edges.

Ok, a quick history here. Until the Pendleton Act in 1883, the federal roles were filled by what was called the patronage system – that elected politicians would fill all the government and civil services roles themselves. That’s right, all of them. They’d then all lose their jobs if they lost the next election. Of course, the government was smaller back then, but as it got bigger, filling every role as a party came into office became quite time consuming.  

Patronage was like currency. Offices would be exchanged for support in elections. You back me, you can run X. But with the industrial revolution and the growth of modernity, more factories, products, more globalisation, bigger and more advanced militaries, more to manage civil services everywhere became more complicated. The main issue was the growth of this labor force. Politicians were spending all of their time filling government roles.

To take one example of the scope of the patronage or spoils system, during President Cleveland’s administration at the end of the nineteenth century, 43,000 postmasters were removed to make room for new Democratic Party ones. In fact, such was the extent of the issue that in 1870, James Garfield remarked that politicians spend a third of their time managing the patronage system. Ironically Garfield was assassinated by someone who was annoyed he hadn’t given him a role.

But this wasn’t the only reason. Patronage bred corruption, scandals, fraud, and inefficiency. Politicians were incentivised to give out roles, so departments became bloated and too large.

NYT reported that ‘“At no point had the defects of the previous method of appointment [patronage] seemed more obvious. . . . The customs service at the Port of New York had been properly considered as the climax of inefficiency and corruption”’

The end of the Patronage system is one of the major and most underappreciated turning points of history. The Pendleton Act of 1883 enacted merit hiring for a small number of federal employees. It then expanded across the next century, until in 1980 patronage accounted for less than 1% of the number. Similar changes happened in Europe – like Britain’s Northcote-Trevelyan Report of 1854 – and in many countries patronage was replaced with a permanent civil service based on merit.

But this change was really the beginning of the deep state bureaucracy critique.

There are a number of criticisms historically that can be organised loosely into four buckets – inefficiency/incentives, unaccountability, policy drift, and departmental expansion.

The attempt to tackle inefficiency is nothing new. Take President Carter’s attempt to address it. His administration passed the Civil Service reform act in 1978, establishing merit pay for middle-managers based on performance. The aim was to provide incentives to innovate and improve. But as a result supervisors were just incentivised to rate their own department highly, metrics weren’t effective enough to work, and congress didn’t agree to big enough rewards for it to be effective. Carter’s reforms  failed.

As Johnson summarises it in this book ‘most authors have concluded that the 1978 law did little to institute pay-performance incentives.’

Or take another example: one of the best-known hypotheses about bureaucratic behavior is that of William Niskanen (1971), who argued that bureaucrats are primarily motivated to maximize their agency’s budget. The idea is that by expanding their budget, they can increase their influence, staff, and prestige—ultimately improving the standing and effectiveness of their department. This theory has become popular fodder for the right. Jordan Peterson, for instance, has recently referenced Niskanen’s model when discussing the tendency of institutions to grow for their own sake, often becoming bloated and inefficient over time.

However, while the theory has intuitive appeal bureaucracy, it hasn’t held up well under empirical scrutiny. Johnson reviewed the evidence and found little robust data to support the idea that bureaucrats systematically act to expand their budgets as a primary goal. In practice, bureaucratic behaviour appears to be shaped by a more complex mix of motivations—professional norms, political constraints, institutional cultures, and personal values—not just budget maximization.

Another critique is the slow speed of bureaucracies. In response to David Cameron complaining that the civil service slows every down, Jeremy Haywood, a top civil servant, told a committee that ‘Part of our role is to give advice, as to whether something will work, whether something is contrary to the law. Occasionally that will come across as trying to slow things down or stop things happening – that is part of our job.’’ 

Or take one more criticism: policy drift. We’ve looked at the deep state’s ability to shape politics subtly through their actions – by choosing what to work on, how to work on it, by withholding or revealing information, by convincing a president a little coup is in order. Policy on a national or international scale is hugely complicated, and is made in collaboration with lots of people – from politicians to experts to lawyers to bureaucrats and all the rest. All of them effect the end result, and the design of the policy can drift over time, depending on how the system works. In other words, the system by its sheer weight and influence, usually gets what it wants.

Since Nixon and Reagan in particular, the right has complained that the system – including the media – has a liberal bias. If you’re on the left, the system has a capitalist or money interest bias, which we’ll get to.

The right, through think tanks like the Heritage Foundation has tried to counter this with a return to patronage and accountability. 

Lofgren writes ‘Heritage has been very influential in formulating Republican policies, notwithstanding its nonprofit 501c(3) “charitable” tax status). In this document the authors stated the following: “The Office of Presidential Personnel (OPP) must make appointment decisions based on loyalty first and expertise second, and . . . the whole governmental apparatus must be managed from this perspective.” The Leninist principle in a nutshell!’

Despite knowing us all knowing them quite intimately, being on hold to them, dealing with how frustrating they are, we rarely well understand bureaucracy. 

The literature on bureaucracy is vast but complicated too. Maybe the most well-known is James Wilson’s book – Bureaucracy. In it he describes how government bureaucracy are not motivated by typical businesses they are often compared to, and so efficiency is not a good or only metric. There are often ambiguous and conflicting goals, unknown constraints, and an organisational culture that matters more than simple efficiency. Reform efforts, he argues, should focus on the political and structural constraints that shape bureaucratic action, rather than just blaming bureaucrats for inefficiencies.

And it’s worth remembering this when people talk about efficiency of governments. In the US, as the Brookings Institute reports ‘Eliminating the entire on-payroll federal workforce would reduce total federal spending by less than 5%.’

What’s more interesting from our perspective – accountable vs unaccountable – is the growth of that extra layer of contractors. John J. DiIulio at the Brookings Institute wrote that ‘The number of people who get paid from the U.S. Treasury but work for private businesses and nonprofits is now more than three times as large as the entire on-payroll federal civilian workforce.’

They argued that the real deep state isn’t inside government, but is rather ‘the contractor state. It consists of four intersecting networks: financially well-heeled and politically well-protected mega-corporations led by big defense contractors; state and local government leaders in both parties that bark and bloviate about federal bureaucracy and overspending but fight for their constituents’ shares of federal dollars; taxpayer-subsidized nonprofit organizations with multi-million-dollar annual budgets; and, last and most lethal to reform efforts, career congresspersons in both parties.’

We’ll return to this at the end, but it’s important to note that we think of the public and private sectors as separate when they’re not. As with every node we’ve looked at so far, and with the growth of contractors and the sheer size and power of the private sector, there’s another node that circles all of the rest – let’s look at the money complex

Money Complex

When taking on monopolies and trusts in the early nineteenth century, Supreme Court Justice Louis Brandeis said ‘We must make our choice. We may have democracy, or we may have wealth concentrated in the hands of a few, but we can’t have both.’

We’ve seen how big the state has become, plus the influence of contractors, but Brandeis points to something more fundamental – the unaccountable influence of money on all of this. Around all of the other nodes revolve lobbyists, the revolving doors between the public and private sectors, and the wider influence of big cash.

Money makes the world go around so it make sense to include this node at the edge – or maybe in-between – with money going outwards from the state -contracts, infrastructure investment, social security and money coming in and through, influencing the state – lobbying, taxes, the promise of high paying jobs, wealthy benefactors, plus the influence of banking, bond and stock markets.

All of this is difficult to quantify and can be approached in different ways. Corporate money can finance political parties exerting influence before they even get into government. There are also strong ties between central banks like the Fed or the Bank of England and the wider banking sector or Wall Street. In short, the influence of money is both direct and indirect.

Recently, short lived UK PM Lizz Truss’s position was made untenable when the Bank of England essentially told her policies would bankrupt the country. Clinton reportedly once said that “You mean to tell me that the success of the economic program and my re-election hinges on the Federal Reserve and a bunch of f*cking bond traders?”’

Much of politics revolves around the old adage that ultimately, it’s the economy, stupid. But is this unaccountable money power influencing – more than anything else-  the outcome of democracy? The obvious answer is yes, especially in reference to our initial study about ordinary votes having “only a minuscule, near-zero, statistically non-significant impact upon public policy”. But not in a simple way – political ideas and political elites have the ultimate power to change policy – but given their proximity to moneyed interests, the interests of the political elite and the economic elite have almost always aligned in some way. Disagreements between elites are more common than battles between elites and a pure democratic people.

History provides some big examples of how money influences of the Deep State straightforwardly. Many of the interventions and coups that America have engaged in over the years – from Panama to Hawaii to Haiti to Nicaragua have been found to have big money interests encouraging them behind the scenes.

In 1933 General Semdley Butler wrote ‘I spent 33 years and four months in active military service and during that period I spent most of my time as a high class muscle man for Big Business, for Wall Street and the bankers. In short, I was a racketeer, a gangster for capitalism. I helped make Mexico and especially Tampico safe for American oil interests in 1914. I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in.’

He continued ‘I helped purify Nicaragua for the International Banking House of Brown Brothers in 1902–1912. I brought light to the Dominican Republic for the American sugar interests in 1916. I helped make Honduras right for the American fruit companies in 1903.’

This is one dimension of the money nexus. Another, more recently, is how banks have usually gotten their way. 

In the wake of the 2008 financial crash, chair of the Fed Ben Bernanke put it bluntly, supposedly saying about granting the banks massive £700b bailout, “If we don’t do this tomorrow, we won’t have an economy on Monday.”

Bankers and the Fed said that is should be passed immediately with no amendments. 

Lofgren writes that ‘It was barely three pages long, and it was the greatest grant of power to the executive that I had ever seen: $700 billion—the largest single purpose request for money in history up to that time—would be handed to the Treasury Department with no strings attached to bail out the banks as Paulson saw fit (Paulson’s subordinate Neel Kashkari was to be the administrator of the money; he later told an economist friend of mine that the $700 billion figure was “a number plucked out of the air”).’

Democrats had been pushing that the plan should include provisions for keeping those losing their mortgages in their homes. But the banks got what they wanted, and despite crashing the global economy, came out broadly stronger. Growing their assets from 43% of the US economy to 56% in 2012. The popular narrative has been that the quick acting bailout was both necessary and saved the economy for ordinary people. Especially when compared to the drawnout depression in the 1930s. But is this really true? The rich have only gotten richer, inequality has grown, economies have been stagnant, need I go on. The $700b TARP program – Troubled Asset Relief Program – was unpopular with voters but supported by bankers.  This is not the place to explore that further – only to say that the bankers got what they wanted.

Bankers, economists, the fed, the bank of England, wall street, the bond market – all have a huge influence on policy not just by being thought-leaders, being technically knowledgeable, having command of scarce and valuable economic data and, of course, resources– but also by simply having relationships with people in the deep state network. A tapestry woven through with big money.

This happens even more directly through lobbying. The influence of money on politics here is both direct and often hidden. Conversations behind closed doors can never be legislated against. Take the infamous Koch brothers’ network.

In the 70s, business leaders including the Kochs and Joseph Coors responded to a memo from the lawyer Lewis Powell Jr arguing that business needed to step up its pressure countering the growing cultural and political power of the left.

A powerful network of pro-capitalist, anti-state, business pressure groups grew from there with money from chemical, oil, and munitions industries funneled into lobbyist and pressure groups like the Heritage Foundation and Cato  

Charles Lewis of Public Integrity writed that “The Kochs are on a whole different level. There’s no one else who has spent this much money. The sheer dimension of it is what sets them apart. They have a pattern of lawbreaking, political manipulation, and obfuscation. I’ve been in Washington since Watergate, and I’ve never seen anything like it. They are the Standard Oil of our times.”

The by now pretty uncontroversial open secret is that, as Republican Senator Vance McAllister said ‘Money controls Washington.’ 

In fact, one of the nodes we could insert between the Washington Capitol Hill buildings and outer nodes like Wall Street are the tax-exempt foundations set up to more efficiently direct the influence of money on those in power. There are more than a million in the US – about 5% of the economy – and about 1600 of them with HQs in the Greater Washington area. and they include military contractors that call themselves charitable and get tax free status despite paying their CEO’s millions of dollars. 

These are literally deep state satellites revolving around government, funnelling money and pedalling influence down the channels that matter to steer the direction of the state. They also provide a revolving door of job opportunities and big payouts for retiring politicians, incentivising them to keep on their good side at best and do as they say at worst.

Let’s just look at a few examples of how the revolving door works. In 2013, Jim DeMint resigned from congress despite having four years of his term left because, he said, he could exert more influence as the president of the Heritage Foundation than he could as a senator. Not to mention that he could become wealthier while doing it. 

Or take Robert Rubin of Goldman Sachs. He became Clinton’s treasury secretary, lobbied to repeal Glas-Steagall which separated commercial and investment backing, seen to be contributing factor to 2008 crash, became director Citigroup ion X, earned over $126 million, at the same time as Citigroup was being bailed out by the taxpayer.

Or take Clinton himself – he’s earned around $105 million from the business world since he’s left office. That’s quite a big incentive not to annoy them while in office. 

We could go on. The point is that not much of this democratically accountable. Billions are spent by just a handful of donors on elections each year, while 72% of Americans support imposing more limits. Does this happen? Democracy indeed.

Ideology & The Media Complex

In 2013, Amazon’s Jeff Bezos purchased the Washington Post for $250m, promising to respect it’s editorial independence. Bezos joined a long line of businessmen who has ventured into publishing, from LORD Northcliffe in Britain, Berlusconi in Italy, and Jay Gould and William Randolf Hearst in the US, whose own father was a mining tycoon and a senator.

This year, Bezos released a statement that said ‘I’m writing to let you know about a change coming to our opinion pages. We are going to be writing every day in support and defense of two pillars: personal liberties and free markets.’

Bezos owns Blue Origin, who, along with Musk (who of course owns media platform X) both have billions of dollars of government defence contracts. 

Ultimately, this deep state tapestry has another node – the cultural node, the media node, the PR node – that also sits somewhere around the periphery, and running through, both influencing and being influenced. 

Media nodes are in some ways the most important, as they’re how we get any insight into the deep state at all. There is no simple model that says that the media is all propaganda or entirely independent. The reality is of course much more complex. Sometimes, a story might have been pushed by a senator and a military contractor to further a specific idea that they have. Other times, the media publishes a story entirely independent of any sources within the state. And other stories might sit somewhere in between – coming from a begrudged civil servant or a Silicon Valley whistleblower. Some stories are shaped by the releasing of material, others by the withholding of details, or the selective presentation of intelligence from the CIA, for example.

What’s most fascinating, and a subject for continual analysis, is how this entire network shapes ideas. Take this comment from Obama:

‘Increasingly I found myself spending time with people of means —law firm partners and investment bankers, hedge fund managers and venture capitalists. . . . I found myself avoiding certain topics during conversations with them, papering over possible differences, anticipating their expectations.’

And in a way then, because we really have no consistent idea of which stories have been shaped and which are entirely bias-free and rational, the deep state exists in all of us, in here.

Take this comment  Elizabeth Warren made about Larry Summers in 2006. She said  he told her ‘I could be an insider or I could be an outsider. Outsiders can say whatever they want. But people on the inside don’t listen to them. Insiders, however, get lots of access and a chance to push their ideas. People—powerful people—listen to what they have to say. But insiders also understand one unbreakable rule: They don’t criticize other insiders.’

This is a great distillation of how the deep state functions. Either you get invited to all the dinner parties, get all of the latest information, be in the club that stays ahead of the game, get the funding, the contacts, the privileges, or you can say whatever you like, outside on your own, in the cold.

In many ways, the elite networks that undergird the deep state are transmitted in two ways – through cultures of institutions and through elite universities. In Britain, for example, since 1900, 71% of PM’s have attended Oxford or Cambridge, with many learning how to ‘think’ through the infamous Oxford PPE course – that’s Philosophy, Politics, and Economics – just the right sort of philosophy, politics, and economics. Similarly, in France the enarques are the elite figures that are educated by the grandes ecoles and go on to serve in elite positions in military, banking, or politics. They all join the same student clubs, the families know each other, and they can ring a newspaper editor or a investment banker over lunch.

What we’ve seen is that the Deep State functions  as a nexus, a meeting of relationships across different sectors, like an apex, with elites navigating and building coalitions within that network – the nexus both structures ideas – by having to convince and tow the line and stay on the good side of peers, plus has gaps, points of contention, some wiggle room.

Someone like Noam Chomsky would argue that something like the Deep State extends to the media, who manufacture consent by filtering out information that’s against the establishment’s interests. Group think, establishment dinner parties, the revolving door, the profit motive – they all filter what’s presented to the public.

Editors in the media are picked, Chomsky wrote, by ‘the selection of right thinking personnel and by the editors’ and working journalists’ internalization of priorities and definitions of newsworthiness that conform to the institution’s policy’. Ultimately, ‘The filters narrow the range of news that passes through the gates, and even more sharply limit what can become “big news”.’

The powerful subtly manage to filter the news environment, emphasising some things and deemphasising others. Most notably for us, one of the filters Chomsky and Edward Herman point to in Manufacturing Consent is PR. 

They write that the media ‘are dependent on a finite number of sources that are embedded in institutions like the White House or police departments or trade groups or embassies.’

The Pentagon, for example, spends billions on PR, the US Chamber of Commerce – a pro business lobby – spent $65 million in the year they were writing, and today that figure is over $200 million.’ – me

So that’s another node we could add – the network of Public Relations firms, spin doctors, branding and marketing experts that have built slowly up over the past century. All of which is very costly, is driven by profit, and have become firmly situated within party and government machinery. 

Chomsky and Herman wrote that ‘The press office is now the focus of the whole congressional operation in order to pump out a smokescreen of misleading propaganda claiming that Congressman X really cares about you.’

Many today criticise the propaganda model as being too monolithic, ignoring the good will, hard work, fractures, and points of freedom between actors within the media establishment Gore Vidal famously said that ‘it’s not a conspiracy, it’s that they all think alike.’ But is this fair? How can the millions of people that we’ve looked at all think in exactly the same way, all filter deep state propaganda in exactly the same way. 

In fact, thinking carefully about how and where disagreement and dissent happens within this monolith we’ve painted, is a perfect way to finish analysing how it works, and helps us all think about how we can improve and counter it.

Dynamics

At this point, the deep state is varied enough to invalidate the idea that it’s a single monolithic conspiracy directed from anywhere simply at the bottom or top. At the same time, all of these nodes tend to settle around a group ideology that is hegemonic. The nodes shift like a kaleidoscope, and there are disagreements between and within, maybe we should talk about deep states, rather a deep state.

Let’s look at some of the big issues that have kept coming up and think about some possible solutions.

The first and most obvious thing to say about our accountable vs unaccountable lens is get money out of politics. That’s a given, is both easy in some areas and difficult in others, and is the subject of another video. But if we’re talking about unaccountable influence over democracy, big money and lobbying is obviously number one.

The second thing, if we’re talking about accountability within all of this, is transparency. 

Transparency and oversight.

During and after the covid-19 pandemic, the UK health minister, Matt Hancock, came under fire when it was discovered that a £40m government contract for covid tests had been awarded to Hancock’s local pub landlord.

Hancock is known as a somewhat tragicomic figure here in the UK. The even more comical fact that a pub landlord was given a multimillion pound contract for delivering medical devices he had no experience of over a pint points to something often underappreciated about the deep state – it’s banality. Hannah Arendt famously talked about the banality of evil. What comes up again and again for us, is the banality of conspiracy.

One study found that a third of contacts awarded by the conservative government during the pandemic had red flags. The banality of it is, there is no conspiracy, there are rich people doing deals with their rich friends. Oversight and transparency then is key.

Harvard’s Stephen Walt has remarked that “there is no deep state” but that instead “it is hiding in plain sight”  – think-tanks, lobby groups, and civil institutions​. But I think hiding in plain sight is an exaggeration. For every deal like Hancock’s that gets reported on, there are thousands behind the closed doors of power that we never even hear about. What’s reported, disclosed, made public is inevitably decided by elites.

There are many examples we could point to for improving oversight and transparency.

To take just one – In South Korea, corruption was improved by implementing ‘Online Procedures Enhancement for Civil Applications’ – a portal to see permits, applications, complaints with transparency at its core. A survey found 68.7% of citizens believed corruption decreased after it was implemented. 

There are many other things we can talk about – freedom of information acts, when something is or isn’t classified, government databases being open to the public, making the revolving door between government and the private sector more difficult, and – and this is really important – making sure whistleblowers are legally protected. We should be encouraging whistleblowing not making it difficult. In fact, if we could add anti-nodes amongst our nodes – whistleblowers would be one of them.

Next, we should always be thinking about how to improve these systems. Some on the left ironically criticise Musk stripping back government but are often the same people who criticised USAID for being a vehicle for the promotion of US imperialism for decades. This is a good conversation on that, by the way. Obviously any discussion about improving the state will be ideologically loaded, and the right often used ‘efficiency’ as a front for deconstructing institutions entirely. But liberals and the left have not been particularly good on the ways we should be improving institutions. 

Just take a look at this list of drives to change how government works over the years from this book. 1905 – Roosevelt tried to make the state more efficient. Taft – 1912Commission on Economy and Efficiency, President Franklin Roosevelt’s Brownlow Committee in 1936, Pres- ident Truman’s Hoover Commission of 1949, a second Hoover Commission in 1953 under President Eisenhower, President Carter’s Reorganization Project of 1977, President Reagan’s Private Sector Survey on Cost Control in 1982. President Clinton’s National Performance review. In the UK Rothermere used the Daily Mirror to publicise his Anti-Waste League which sought to mobilise opinion against ‘excessive’ government spending. 1921- , the Lloyd – the Geddes committee to find cost-cutting measures.’ My point is, DOGE is old as the hills.

So how can we make sense of this? Let’s look at the evidence.  There are a few themes that keep coming up.

What we really want, in all of this, quite obviously, is decent, smart, innovative, hardworking people who are accountable ultimately to the electorate. Ideology aside, we need mechanisms for selecting talented people.

Efficiency, innovation, dynamism

But what do talented people do? Are they efficient, productive, accountable, innovative, upstanding? In their book looking at the civil service and the problems of bureaucracy, scholar Ronald Johnson says that performance is a problem because of the unusual protection civil servants have from firing and rehiring, and the rigid pay structure. Seniority is privileged over merit. 

Johnson concludes that the fear of a return to patronage as evil presents ‘an obstacle to meaningful reform.’ That there’s no returning to the patronage system, but we might have gone too far the other way. He writes ‘it became increasingly difficult for federal politicians to motivate or to manage the bureaucracy. As tenure provisions were strengthened and bureaucratic rules extended, the ability of politicians to dismiss employees was reduced, weakening their control over the bureaucracy.’

Continuing that ‘The fear of patronage is a convenient ploy to which federal employee unions can turn in responding to criticisms about the performance of the bureaucracy, For example, the National Federation of Federal Employees opposed provisions of the Civil Service Reform Act of 1978 granting supervisors authority to award merit pay. Union representative Sam Silverman claimed that the bill “allows for the ready politicization of the civil service.’

Just swap politicization in that last sentence for democratisation – words that are pretty much interchangeable – and you can see that there are two very different ways of looking at this.

The challenge is a difficult one though – as one of the benefits of a protected civil service is that employees can work in a neutral way across administrations. It’s a strange paradox – because as soon as this happens, it has the potential to become unaccountable, non-democratic. In some ways, effective administration requires a deep state that functions pragmatically and is somewhat immune to the back and forth of democracy. The question is always how much democracy, how much accountability – no one wants a public meeting and the village square every single day.

There are no easy answers here. In his review of the literature, Johnson says ‘no consensus on the role that bureaucrats play in policy formation and implementation’ Plus that ‘no satisfactory explanations for the persistence of the problems of bureaucracy have been offered.’

But the suggesting is that more patronage and more accountability might be a good thing. This is a theme that comes up often and is key to understanding the deep state. Who is ultimately accountable? It’s why whistleblower protection is key – it forces accountability between the gaps of the nodes. It’s why transparency is key, journalists, citizens, and employees all become more accountable for keeping an eye on what’s going on. 

Or take this book – Dan Davies argues that big institutions have incentives to build in accountability sinks, where accountability is kicked down to the next person and the next and the next.

Everyone knows that frustration with not knowing who’s accountable, and I do think tech can help modernise governments by bringing people closer to those that govern. Reading this book – Recoding America, by Jennifer Palkha, and talking to anyone about the systems the NHS relies on in the UK will make you think twice about criticising drives for government efficiency entirely. Governments are usually slow, outdated, stuck in the past. 

That is, except Estonia

They’ve entirely digitised the state, apparently saving over 3000 years of civil servants hours. You can do everything online – pay your taxes or incorporate a company in minutes. They have e-ID’s on decentralised blockchain to ensure security and transparency. You can vote, get your bus pass, driving licence, medical records, prescriptions – all online. 

X-road is a decentralised platform that both public and private sectors can plug into. The Estonian government claims it has added 2% to GDP, and since the 90s Estonia has seen impressive growth rates. The system South Korea implement to increase transparency in contracting procedures is another example of this kind of success.

The state and it’s parallel institutions have grown with the demands of modern life. Big institutions are, in many ways, necessary. But they can always – and always should be – the subject for radical revision and innovation. History moves. 

I think the kinds of protections against the things we’ve looked at happen between the gaps of the nodes – there are lots of policies that are quite easy to implement – open contracting procedures made public online, a better process for Freedom of Information laws, again available and streamlined in online databases, clear demarcations of accountability backed up by law, legal protections for whistleblowers, more independent media, Patreon supported Youtube media with different incesntives, not close to the state, and, again, money out of politics.

A deep state might be inevitable, but we can bring it out of the deep and into clearer waters

Sources

Mike Lofgren, The Deep State: The Fall of the Constitution and the Rise of the Shadow Government

Ian Fitzgerald, The Deep State: A History of Secret Agendas and Shadow Governments 

Dark Money, Jane Mayer

Ronald N. Johnson and Gary Libecap, Federal Civil Service and the Problem of Bureaucracy

Lorenzo Castellani, The Rise of Managerial Bureaucracy

Gilens and Page, Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens

Jennifer Pahlka, Recoding America

Manuel Castells, The Information Society is a useful background framework for thinking about this

Dan Davies, the Unaccountability Machine

James Q Wilson, Bureaucracy

https://www.cambridge.org/core/journals/perspectives-on-politics/article/testing-theories-of-american-politics-elites-interest-groups-and-average-citizens/62327F513959D0A304D4893B382B992B 

https://www.breitbart.com/politics/2016/12/12/virgil-the-deep-state-vs-donald-trump/ 

https://www.theguardian.com/us-news/2019/oct/03/trump-steve-bannon-deep-state-conspiracy-theory 

https://www.dcaf.ch/sites/default/files/publications/documents/PP19_Born_Leigh.pdf 

https://www.brookings.edu/articles/musk-and-ramaswamy-meet-the-real-deep-state/

https://www.govexec.com/feature/gov-exec-deconstructing-deep-state/ 

https://apolitical.co/solution-articles/en/big-sluggish-italy-is-trying-to-copy-estonia 

https://apolitical.co/solution-articles/en/data-exchange-platform-making-estonia-leader-digital-governance 

https://economy2030.resolutionfoundation.org/wp-content/uploads/2022/11/Estonias_radical_transformation.pdf?utm_source=chatgpt.com 

https://www.theguardian.com/politics/2021/dec/01/matt-hancock-says-labours-covid-contract-claims-rubbish 

https://www.theguardian.com/politics/article/2024/sep/09/tory-covid-contracts-worth-15bn-had-corruption-red-flags-study-finds 

https://www.monmouth.edu/polling-institute/reports/monmouthpoll_us_031918/ 

The post How the Deep State Really Works appeared first on Then & Now.

That puzzle is the question of how, why, where, and from who capitalism developed. Because capitalism isn’t like say communism, or fascism or even something like physics, where you can point neatly to a tradition of thinkers like Marx, Mussolini, or Newton. Capitalism kind of bubbled up, surrounded by other flotsam, from murky depths, and by historical standards, it did so very quickly.

So to unpack this mystery, we’ll be travelling across the world – from Spain to Italy to the Dutch Republic, from England to America. We’ll meet a diverse set of characters, and we’ll see how the story traverses many periods – from the Feudal estates of Europe to the Industrial Revolution to Southern slavery plantations to the Chicago meat district to Wall Street and financial crashes and even to the apocalyptic trenches of the first world war.

Capitalism famously booms and busts, it goes through phases and ages, it’s changed and morphed throughout its history, but one thing is undeniable – love or loath it – the speed and voracity with which it changed the world was astonishing. Here’s one first figure that I find incredible. In 1760 – before the Industrial Revolution – Britain was processing around 2.5 million pounds of raw cotton to make clothes. After just a generation or two, by 1840 it had grown to a staggering 366 million pounds. Just think about the scope of that change. Not doubled, or tripled, not 4% growth rates, or steady improvement – that’s an explosion by a factor of 160. And that’s just one example of similar figures in almost every sphere of life. But I want to avoid these abstract numbers as much as we reasonably can and think about lives, realities, flesh, emotions, possibilities, what we’ve inherited from this. I want to think about what having 160x more available clothes, building materials, tools, transport, food is like for people. Why it matters and what happens when a peasant is a little bit warmer, a little bit more satiated, watered, a bit healthier, a bit freer. What happens when you can suddenly travel on a train for the first time, buy a car for the first time, not worry about surviving winter for the first time. But what happens to the rest of the world, when one part gets immeasurably more powerful too, what happens when warships, tanks and guns can be rolled out like clockwork on an industrial scale.

This is a story of what some historians have called the conquering bourgeoises. The historian Eric Hobsbawm called it a ‘world revolution’. And another historian we’ll draw on, David Landes called it ‘Prometheus Unbound’. This image of fire, steel, oil, power, energy conquering the world is one we’ll return to a lot.

And finally, we have to keep in mind how historically and new this all is. The industrial revolution, for example, as a term, wasn’t used until the late 19th century. Capitalism as a term wasn’t really widespread until the twentieth. And it changes as it goes – small factories, handicrafts, slavery, cotton mills, very simple steam engines changed into corporations, multinationals, and global supply chains. Consumer culture, advertising, online shopping, all become parts of the picture much later. So analysing capitalism is like deconstructing a fast car while you’re speeding along in it. 

And that’s what we’ll have to. We’ll begin carefully unscrewing a few nuts and bolts, finding out where the rubbers from, peal back the paint, take out the oil, look at the shopping on the back seat, race this thing back to Ford’s factory floor, and then maybe I better drive this beaten to death metaphor off-road until the engine falls out. Let’s get started.

Contents:

• The Feudal Order
• New Worlds
• Protestantism
• First and False Starts
• The Industrial Revolution
• The Shape of the Capitalist Machine
• Why England?
• A Revolution in the Fields!
• Enclosure
• Patents
• The Age of Capital: England’s Supremacy
• The Iron Boot and the Dispossessed
• Globalisation
• Capitalism’s Empires
• The American Rise
• Titans
• The Corporation
• CRASH: Build up to the Apocalypse
• Apocalypse: WORLD WAR
• Conclusions
• Sources

The Feudal Order

Capitalism is the water we swim in. It feels so natural. As we’ll see, it’s actually very unusual. It just takes getting out of the water to see that. In fact, I think in a strange way feudalism would feel more natural. I want to try and really get us to feel how normal it would have been to be an ordinary average feudal person. I want to really try and situate us, to take us back, to the feudal world. To try and imagine the mental landscape of a feudal peasant, say. Only then I think can we understand the change in mentalities that took place. 

It’s really difficult to imagine being an average person in the Middle Ages. Because it was the big things that were written about – Wars, Kings, Religious issues. But the mundane – work, play, crops, business, the village – the very things we’re interested in retrospect when thinking about how capitalism developed – were thought of as unimportant. 

First, and most obviously, most of the world was rural. The world population in 1600 was around 500 million. Around 94% of people lived agricultural lives. And 80% of those were peasants. This figure – 80-94% – comes up again and again. It’s probably the most important figure we’ll think about; that it took 80% of the population to produce enough of the food for the rest. And that almost all of those were serfs, peasants, slaves, or in castes with roles or positions they were born into. 

Most practised polyculture, spent all their time on small patches, growing vegetables and tending to livestock, and fixing clothes. Market day was once a week, but would have been a long walk to the town, so many wouldn’t even do that. So you’d be directly producing the means of your subsistence, while likely having to give some of it to your lord. IN his book, Liberty or Death, historian Peter McPhee makes the point that the countryside would seem very crowded to us.

Appleby writes ‘Whether in ancient Egypt or Greece, Babylonia or Mongolia, it took the labor of upwards of 80 percent of the people to produce enough food to feed the whole population. And because farmers often didn’t even succeed in doing that, there were famines.’

What’s striking is how little change there was for the vast majority of human history. Even a skilled labourer in 16th century England, say, would be doing very similar work, for very similar pay, living a very similar life to their ancestor under the Romans 1500 years before. That’s a very cyclical, static, unchanging set of routines, ideas, practices, ways of living.—Of course, I’m generalising. The ways peasants lived, their obligations, the politics, their status differed enormously. Peasant being a kind of catch all term.

A serf, for example, was obliged to provide food for their lord. Many serfs in places like Russia were essentially slaves who could be bought and sold. Lords across Europe controlled huge estates. One in Poland was half the size of Ireland. One in Hungary 7 million acres. Catherine the Great once gave away forty thousand serfs, which speaks to how many were under her control. 

Europe was a patchwork of principalities, dukedoms, empires, free cities, kingdoms – all with different setups.

The historian William Doyle writes that even over much of Europe, ‘the reality of the ancien régime was intense confusion of powers and perpetual overlaps of unequal jurisdiction, in which the king, so far from imposing an unchallengeable authority, was constantly bargaining with his subjects at a number of different levels.’

In other words, it was complicated.

So I want to focus for a minute on absolutist France, because it’s the typical example of an absolutist feudal monarchy. It was defined by what were called privileges – a patchwork of them – different towns, provinces, people, estates, seignories, the church – had different types of privileges. Some were taxed less, some not at all, some had different laws, some different courts. Tithes – basically a tax of around 8-10% at harvest – were paid to the church by peasants. Dues were paid to seigniors at different times of the year. Peasants owned their lords between 15-40% of their produce. There were many languages, many units of measurement, many cultures.

Here’s a general example McPhee highlights. Gabian in southern France. It had a population of 800. It’s seignior was the Bishop of Beziers, who was hardly there. But there was a list of what was owed to him each year. 100seiters (85lt) of barley, 28 of wheat, 880 bottles of olive oil, 18 chickens, 4 pounds of beeswax, four partridges, and one rabbit. Peeper, nutmeg, cloves. Lords would usually own or control the mill or the village oven which might be shared. Peasants owed the lord some period of labour at harvest. This is all in return for being allowed to use the lords land and protection. On top of this, French seigniors didn’t have to pay any taxes – another privilege. 

These privileges were a maze of rights, dues, offices, tolls, etc, that were shared between state and church. To give some indication of the extent of the Church’s power, it owned a quarter of all property in Paris. Louis XVI sold 70,000 venal offices – that’s offices to raise royal revenue. There were 4200 nobles. And one in ten women were prostitutes.

So that’s just a snapshot of Europe. As we’ll get to, England differed somewhat, but Germany, Spain, Portugal, Eastern Europe and much of the rest of the World, including India, China, the Ottoman world all looked very similar.—-From our perspective, being a serf doesn’t sound like much fun. Think again about the 80% of the population working in farming number. That roughly means that 80% of humanity’s attention was spent working the fields, feeding animals, fixing homesteads, and so on. And even that wasn’t enough, because famine was an ever present threat.

To take one particularly bad period, in the 1690’s Seven ill years in Scotland, between 5-15% of the population died of hunger from famine. These were some the last bad European famines – and the reason why these were the last is a big part of this story. If we go further back, to the 14th century, as many as 10-25% of the population of Europe were wiped out in some of the worst famines the continent has seen. That’s before we’ve gotten to illness, plague, healthcare more broadly. The average lifespan in England as late as the 17th century was just 36.

But again, to really try and situate ourselves in these periods, how did an average person think about what seems like an almost hopeless existence?

For example, in 1833, a Manchester surgeon – Peter Gaskel – painted a rosy picture of England before industrialisation –  saying that the domestic manufacture most people practised was ‘infinitely superior to the manufacture of a later date’ – each worked at home, with family, with a plot to grow.

He says he doesn’t intend to paint an Arcadia, but that the average person ‘commonly lived to a good round age, worked when necessity demanded, ceased his labour when his wants were supplied, according to his character, and if disposed to spend time or money in drinking.

But this kind of rose-tinted view has been criticised by many historians as ideologically motivated or a good example of the ‘good old days’ genre. 

Christopher Bayly sums up ordinary lives like this: ‘peasants were not “boors” as some learned people of the time thought; nor, by contrast were they charming inhabitants of an unspoiled arcadia, as many indulgent literati had begun to asset by the end of the eighteenth century. ‘

Instead, he says most were quite ‘entrepreneurial’. They wanted more ‘land, money, and honor.’

But despite this, compared with today, the world – almost everywhere, for almost everyone – was very tied down. Tied to lords, tied in nets of privileges and obligations, and most importantly, tied to the soil – produce was overwhelmingly local, time was overwhelmingly determined by the seasons, by sunlight, laws fixed by god. 

The historian Eric Hobsbawm, for example, in his Age of Series, which I’ll refer to often, says ‘in the 1780s, and for the first time in human history, the shackles were taken off the productive power of human societies’

This idea of being tied, static, cyclical, shackled, can also be seen in the phrase the ‘great chain of being’. The idea that God, king, aristocrat, priests, gentry, peasant, European, African, dog, bug, grass, dirt – each had its place – like a place on a boardgame – except, you don’t move. That’s your lot for life

Here’s what another Mancunian – Richard Guest – wrote in 1823 about Lancashire before the industrial revolution: ‘The events of the neighbourhood flowed in a regular, unbroken train; politics were a field little entered into, and the histories of each other’s families, including cousins five times removed, with marriages, births, deaths, etc., formed the almost only subjects of their conversations.’

The lord was ‘was the dictator of opinion, the regulator of parish affairs, and the exclusive settler of all disputes.’

Again – Chained, tied, shackled, cyclical, expected, routine. And some might even say declining – towards the apocalypse, away from the garden of Eden. Instead, today, we often think instead things can improve, develop, progress, that we can climb the social ladder, maybe.

Compare this to Aristotle’s view of the world – one that Christianity borrowed from– He thought a rock falls to the ground because that’s it’s place in the universe – that’s where it belongs – that’s where god willed it to always move back to. Same with a king, same with a peasant.

This idea of belonging somewhere, being one thing and one thing only, doing things one way, seems such a powerful ideology to me. After all, everything has a home. The bees in the hive, the fish in the water, the rock on the ground, the person in their house. And some people are born into power, others into poverty. The sun belongs in the sky.  

I think reminding ourselves of this can help remind us how unnatural capitalism would seem to a 13th century French peasant. Why actually, feudalism would seem like the ‘natural’ way of doing things.

And on to this a couple more things – that wealth and credit were distrusted by Christianity. And that you’d be rewarded in the afterlife instead – that worldly things were bad, dirty, corrupting – and you get a situation which seems very difficult to see out of, to change, to imagine something new.

New Worlds

It’s hard to tell this story because it happens over such a long, slow period. Capitalism wasn’t planned. It emerged out of many different moments. Like the phrase ‘life can only be understood backwards but must be lived forwards’ we have to look in retrospect at what those moments were. This first class of moments don’t relate to capitalism specifically, but to the idea of something new emerging in general, out of those fixed shackles of feudalism. 

There was no bigger impetus to challenging the feudal order than the discovery of the new world. This was one of the first stages of modern globalisation, the age of discovery – not just of new lands but new foods, spices, animals, and materials too, not to mention new people, languages, and cultures. When Christopher Columbus landed in America in 1492, the culture of Europe changed in historical terms very quickly.

Many of the new spices, vegetables, and sugar were very desirable. And the idea that there was abundant new land was also very powerful. You have to really try and imagine the powerful, desirable effect this would have on the imagination.

This is a period in which the world was getting smaller. Ships were getting faster, communications easier, roads better. As the invention of the movable type printing press was spreading at around the same time, people could read more about these new and exciting novel things. 

So I’m trying to use the phrase new worlds here in the broadest way. I mean new worlds in here as much as out there. A broadening of the mental horizons, an expansion of the imagination. The renaissance was happening at the same time too – which meant more ways of doing art, architecture, and the rediscovery of lots of ancient Greek and roman books and ideas

It’s in this expansive context that we can start to piece together why some countries seemed to jump ahead of others, having first-mover advantages. And this idea of ‘first-movers’ is why this story will take us from Spain and Portugal, to Italy, to the Dutch Republic, to England, and then to America. In a very real way, we can see capitalism as character going on a journey and developing as it does.

Think about Portugal. It has a long coast along the Atlantic, good fishing waters, good fisher men, fishing and ship knowledge and technology. Still close enough to Europe’s core towns and cities but near enough to Africa to explore down that West coast of an unknown continent. You have the Canary Islands here, a good stopping off point for ships, a good slave trading base maybe, a good jumping off point to explore into the Atlantic. Spain of course shares these advantages. In this context, is it any surprise that these two countries had the first modern empires?

Of course, first-movers attract second and third and fourth movers. So we can already see something integral to capitalisms development; mimesis. Countries see what others are doing and say ‘we want a piece of that too’. This opening of the imaginative horizons was immediately contagious.

Appleby writes ‘The novelties from European trade in the East Indies and the New World promoted new commercial institutions, created a fresh group of entrepreneurs, and stimulated the imagination of contemporaries.’

Imagination here is absolutely key. It’s crucial because compared with the feudal chain of being as fixed, imagination throws us all  mentally into the future and the future’s possibilities. Most thought history was either cyclical or declining. I think people’s mentalities would have been completely different, thinking of the day, the week maybe, but not really the next month or year. Why would you? Now there was a new world, with new animals and plants, new materials. 

Once you have sugar, cinnamon, coffee, chocolate to impress guests, new silks maybe, new dyes and colours, the imagination is sparked. Imagine wearing heavy scratchy wool all your life then getting light bright cotton, say. Think about the social and cultural capital you get from having these things in your house, the look at me factor, the talk of the town factor.

One commentator wrote about trade later in 1690, declaring that “The Wants of the Mind are infinite, Man naturally Aspires, and as his mind is elevated, his senses grow more refined, and more capable of delight,”

Another wrote ‘man’s “wants increase with his wishes, which is for everything that is rare, can gratify his senses, adorn his body, and promise the ease, pleasure, and pomp of life.”’

Just imagine eating bland meals all your life without any salt or sugar. Imagine the power of being the only one walking down the street in a bright blue fabric cloak or wearing a powerful perfume. I think we really have no equivalent today. The discovery of the new world had the same effect as discovery aliens would today. 

So this is the first part of our equation – newness, desire, imagination, possibility, a sense of pluralism in the general sense – a plurality of new ways of doing things – a new mental frontier.

Protestantism

Again, these are very loose causes so far – the age of discovery, the renaissance, the printing press – but there’s one that some have seen as crucial – the Reformation. In fact, the sociologist Max Weber argued that Protestantism was the Spirit of Capitalism. What did he mean by this? 

Very loosely, The Reformation was a 16th century movement which saw many churches, countries, churches and theologians break off from the Catholic church because it was seen as being too greedy, corrupt, hierarchical, and so on.

Coincidently, it was many of the new independent protestant areas that industrialised first – the Dutch Republic, England, then Germany. In his book, the Unbound Prometheus, the historian David Landes points out how many Dissenters there were in the North and Midlands of England, where industrialisation first took off.

Weber’s argument was that Calvinism – a type of Protestantism – emphasised predestination, this idea that God – knowing everything – already knew who was going to heaven and who was going to hell, that couldn’t be changed. This in turn led to people looking for signs that they were going to heaven, motivating hard work, discipline, good deeds and so on. This is a debate that still rages on today, but many reject it. However, I think the idea of nonconformity is more interesting than looking for signs that you’re going to heaven.

The Reformation led – eventually at least – to more toleration for other religious views and so other ways of doing things.  When most universities, for example, had a strong religious component to teaching, toleration quite obviously enables doing things differently in other areas – science, economics, politics. Protestantism simply means a bit more freedom, a bit more slack from authority, a few more imaginative neural pathways to consider. Again, not a cause of capitalism specifically, but a cause contributing to the fertilising of the soil for something new to grow.

Finally, let’s add the scientific revolution. This is a big topic in itself but I think it’s more useful to think not about a revolution per se but scientific evolution or revolutions that spread across the modern period.

But the central moment here is Francis Bacon publishing his book The New Organon in 1620. In it, Bacon argued that new inventions like the compass, gunpowder, and the printing press had changed the world more than anything else, and because of this science and the experimental method in particular should be advanced. One result was the founding of the Royal Society in London in 1662 with a goal to further scientific advances. 

But this was just one tent pole moment in a wider culture of, again, the widening of horizons. Isaac Newton published his Principia on the laws of gravity and motion in 1687. There was then an intense interest in all things related to physics, gravity, forces – vacuums, gases, pumps, bell jars, air pressure experiments – these things, as we’ll get to, are absolutely crucial. 

In his book on the steam engine, William Rosen writes ‘A new enthusiasm for creating knowledge led to the public sharing of experimental methods and results; demand for those results built a network of communication channels among theoretical scientists; those channels eventually carried not just theoretical results but their real world applications, which spread into the coffeehouses and inns where artisans could purchase access to the new knowledge.’

So new worlds, the renaissance, the printing press, the reformation, and a scientific revolution are the broad, loose, somewhat ambiguous seeds sown in the stagnant feudal soil. They might have led to many different things, but they preceded the emergence of capitalism. Correlation or causation is difficult, as we’ll see, but it’s undeniable that after millennia of doing things a certain way, they effected the imaginations of thousands, maybe millions across Europe.

First and False Starts

In his book on the Industrial Revolution, William Rosen says there are more than 200 theories about its causes. If we’re thinking about how and why capitalism emerged, that’s a lot of theories to analyse and test. And causes are strange things. It would be strange to say that Columbus caused the industrial revolution, but when we look through a long lens, he at least contributed to it, in a very broad sense. Butterflies and wings and all that. Some causes are much more immediate – the steam engine say. But another way to understand capitalism, is to look at those factors that were present elsewhere but didn’t cause a take off in the same way that happened later in England.

Take Spain. A first mover. Lots of new stuff from the Americas. Lots of new land. Slaves. Ships. But the key problem with the conquistadors was that they were searching for gold. 

This might have brought wealth – but not capitalism, not new ways of producing, not new social systems. In fact, in brought inflation as lots of new gold came back and circulated around Spain, driving up prices. 

Today we call it a resource curse. It still happens. Notably with oil producing countries like Saudi Arabia, who focus all their attention on the oil fields, get rich, but then struggle to diversify.

And many aristocrats in Europe thought that commerce, merchant trading, work in general, was beneath them. So Spain didn’t open up its markets.  It was very oppressive, they had the inquisition, book banning. Rights and monopolies to trade or explore had to be granted by the authorities. It clung to the old, controlled, top-down way of doing things.

Another candidate was the Italian City-States – Florence, Venice, Pisa, etc. They were pretty free in comparison with a lot of Europe. They were focused on trade. Were very rich. The Renaissance happened there. 

The problem though, again, was the top-down control. There was a focus was on who traded, who were merchants, who benefited, who was skimming off the top, who was granted the right. The city-states might have been the gateway to the trade in silks, spices, luxuries from the East, but the political-economic system was based on privileges. 

What you’d have is something like a merchant with a monopoly on a specific good – cloves, say – granted by a specific political office who would be paid, prices would be regulated, it was all a closed system.

But the biggest contender to be first was the Dutch Republic. 

In the early 17th century, the Dutch suddenly became very rich, drawing the rest of Europe’s attention because it was such a small but increasingly wealthy country. This was a place that traded Herring. Many turned their pens to trying to explain this economic miracle. 

The Dutch were merchants, middlemen, much like the Italian and Iberian merchants. One major factor in this sudden success was their new independence from Spain who were catholic. After independence, the Dutch welcomed in dissenters from the rest of Europe. So we already have a culture of tolerance and a scepticism of orthodoxy. 

A big Jewish diaspora lived there, who had access to trading networks across Europe because of their shared language, culture, and connections. Ultimately, there was a freedom to innovate.

The Dutch’s most radical innovation was the joint stock company – in particular the Dutch East India Company which was formed in 1602. The joint stock company is probably the most immediate cause of the emergence of capitalism we’ve got to so far. The premise was simple but world changing. Backed up by law, the Dutch could buy stocks in a joint-stock company, pooling resources together, and sharing the risk of a larger venture. The added benefit of the joint stock company was that a nobleman could invest without having to work for the company itself- remember, work was still thought of as something for the lower classes. It also meant an investor wasn’t liable for any debts or losses if the risky business venture goes bankrupt.

Appleby writes ‘Nothing revolutionized industrial finance more than the legal form of incorporation that gave limited liability to the owners of enterprises.’ 

So there’s a bit of a mystery as why capitalism didn’t take of further in the Dutch Republic. Appleby hypothesises that this success in trading might have distracted them from trying to improve their factories. It was also very small. So unlike the British later, it could be difficult to control the seas, trading routes, and later still, a big empire..

All of these examples – Spain, Portugal, Italian city-states, and the Dutch Republic – might be thought of as proto-capitalist or as having proto-capitalist elements, but they did things in that top-down controlled way, and they were missing one very important factor that we see as crucial to capitalism – factories, industry, efficiency, improving the means of production.

The Industrial Revolution

Looking at these false starts, we can see some causes that might be proximal factors – commerce, profit-seeking, joint-stock companies – they might be part of the picture, but they can’t be absolutely central causes. After all, profit was sought in the ancient world, commerce has always existed, risk has likely been shared in business ventures across history. What if instead we look at a much more positively correlated factor – the industrial revolution – then after, we’ll work backwards and ask instead what caused that.

The most obvious place to start is with the engine. 

Remember that Royal Society we looked at – setup to further scientific knowledge in 1662? In 1698 it advertised the demonstration of “a new Invention for Raiseing of Water and occasioning Motion to all Sorts of Mill Work by the Impellent Force of Fire which will be of great use and Advantage for Drayning Mines”’

This was Thomas Savery’s Fire Engine or Miner’s Friend – the first rudimentary steam engine. 

One common problem during this period was flooding in mines. It was dangerous for miners plus it limited how deep mines could go.

I don’t want to get into minutia, but Savery recognised that water heated into steam which was then cooled back to water created a vacuum in the chamber it cooled in. Connect this vacuum to a pipe down to the mine and the vacuum pulls the water up and out.

Savery’s device was one of many invented across Europe, but most of them were very simple and limited.

But seven years later, in 1705, inventor Thomas Newcomen improved on it by adding a piston and beam, radically improving the design. At a pace of twelve strokes per minute, each stroke lifted ten gallons of water out of a fifty meter mine, making it the first industrial device to be extraordinary useful across an entire industry.’

This has good claim on being the most significant and consequential moment or invention in history. It leads to factories, trains, cars, war machines, air travel, electricity, you could go on and on – it’s the foundation of modern industry.

To take one example of how big of a problem Newcomen and Savery solved, at one mine in England 500 horses were being used to hoist water out of it. Imagine how much upkeep and work and feed would be involved in this. To give just one example here, horses used at one mine could lift 67,000 gallons of water a day, while Newcomen’s engine could lift 250,000 gallons. 

Now, remember Thomas Newcomen. We’ll return to him in this story. Because if its so earth shattering, we want to know more about why – exactly why – he worked on this. What his motivations were, what the conditions and context were. But for now, let’s just look at how ground-breaking this was.

First, it made him rich.

After a few years, Newcomen’s atmospheric engine was being used in almost every big mine in the country. Plus new mines that couldn’t have been mined before. The advantage this gave England was astronomical.

By 1800 there were 1600 Newcomen engines in England but only 45 in France. England was producing 81% of Europe’s coal. Just consider how much more England is mining if they’re using 1600 engines and the next best competitor is using 45. It’s going to draw a lot of people’s attention.

One of those people was the Scottish inventor James Watt, who realised that engines like this would be useful for other things, like powering ships. Watt improved the efficiency of Newcomen’s design with a separate cylinder. He was a meticulous measurer of wasted fuel and heat, he experimented with different temperatures and volumes, essentially improving the efficiency by a factor of four. 

Landes says ‘By 1800 the United Kingdom was using perhaps 11 million tons of coal a year; by 1830, the amount had doubled; fifteen years later it had doubled again; and by 1870 it was crossing the 100 million-ton mark’

It’s this focus on efficiency – that even small improvements, because of the scale, improved function, saved money, time, manpower, opened new use cases – that had a revolutionary impact.

What happened next was a series of world-shattering knock-on effects. Because efficiency was key and metal work was key to tinkering with that efficiency, a corresponding revolution in metallurgy kicked off. John Wilkinson, for example, learned to bore cylinders more precisely. There were advances in lathes, drills, screws, and so on. People slowly started working with gauges to standardize sizes.

Appleby writes ‘Starting in the eighteenth century, a succession of ingenious men discovered how to make natural forces push, pump, lift, turn, twirl, smelt, and grind all manner of things.’ 

It all led to small incremental improvements in in generating warmth, in ability to cook easier, to manufacture the essentials more cheaply.

Hobsbawm wrote that ‘The gods and kings of the past were powerless before the businessmen and steam-engines of the present.’

But there was another distinct line of innovation happening too – in clothing. And these two separate lines would quickly converge. It’s in clothing that you can see the factor, cause, effect of that opening of the imagination and the new world more explicitly. 

First, you had lighter, different, more exotic materials coming from the new worlds.

The most commonly used material, sheep wool, was coarse and heavy.

Imagine for a second how uncomfortable old clothes would have been. I discard t-shirts today because they’ve become too uncomfortable. Let alone a pair of scratchy wool underpants washed once a week. So It’s no surprise then when people have a bit more money, clothes are the first things to improve. 

Think about fabric. It was to be picked, transported, cleaned, combed, spun into yarn, woven, sown, finished, dyed, bleached, etc. All of this could potentially be mechanised. 

Supplying weavers with better, stronger, cheaper yarn was the most obvious problem that could be solved. The biggest invention here was the English inventor Richard Arkwright’s 1775 water frame which was powered by water and used a complex system of wood, ropes, pulleys on a frame to spin raw cotton into stronger yarn by twisting it very tight. Arkwright setup maybe the first modern factory here in Derbyshire. One worker here could produce as much as seven or eight workers elsewhere.

If we think about the spread of these devices – different engines and water frames – over this period in the middle of the eighteen century, we can see how the midlands of England was like the Silicon Valley of its day.  One observer from the continent observed how an Englishman wore leather shoes instead of the more common clogs back home.

Within 40 years of Arkwright’s invention, steam was being used instead of water wheels. Plus stronger and cheaper plant cotton, grown and harvested cheaply by slaves, was beginning to be imported regularly from America.

Again, some of the growth numbers are staggering. Between 1750 and 1769, cotton trade exports in Britain increased by 10x. In 1760, Britain imported 2.5 million pounds of raw cotton. Just 27 years later, in 1787, that number was 22 million. 50 years later, it was 366 million pounds. The price of yarn was one twentieth of what it was. That’s like something going from 10$ to 0.50. Just think about that today – we don’t really see anything get cheaper by factors like that anymore.

One English politicians said at the time ‘It was not five per cent or ten per cent, but hundreds per cents and thousands percent that made the fortunes of Lancashire.’ These companies were the Apples, Googles, Microsofts of their day.

In 1780, Britain overtook France – a country with a bigger population – in trade. 70 years later, it doubled France’s output.

It’s important to remember that while these were the major inventions, they’re just the most notable examples of a whole culture of experimenting, tinkering, improvement, an interest in efficiency, all in lots of different areas.

The same happened in iron production, a knock on effect of mining and steam engines. Landes says ‘small anonymous gains were probably more important in the long run than the major inventions that have been remembered in the history books’

Also take something often underappreciated – chemicals. These were used for cleaning, dying, soaps, glass, fertilizer, to clean homes and shops and clothes. The chemical works in Glasgow had these towering 455 feet chimneys which dominated the skyline – the first modern skyscrapers. Businessmen, painters, writers flocked to both gaze over, be in awe of, and to criticise these factories that were beginning to dominate. Imagine seeing something like this – Turner’s Coalbrookdale by night – for the first time.

The next knock-on from the steam engine was the railways. They were first envisaged as short lines to transport raw materials using very small trains. 

Take a look, for example, at Richard Trevithick’s very first locomotive at ironworks in Wales in 1804. That’s quite a lot of small, precise, improvements to the basic steam engine concept over a hundred year period. By 1830, the first materials and passenger line opened between Liverpool and Manchester – it was 32 miles long. Everyone sat in little carts.

Once again, the numbers are huge. In 1830, there was less than 50 miles of track. In 1840, 4500 miles. By 1850 – 23,500.

But again, all of this had snowballing effects. Take iron. In 1750 Britain exported twice as much as produced. By 1814, exports were five times greater. By 1850, more than the rest of the world combined. From 1740-1850, iron output in Britain rose from 17,000 to 2,250,000 tonnes.

So we have this kind of interlocking system of invention, improvements of efficiency, snowballing, one affecting the other, clothes need raw materials need railway need engines needs iron needs coal – so many people were involved that opportunity to innovate was everywhere. England was exporting all of this – it was, quite literally, the workshop of the world.

There were clearly lots of geniuses. But what stands out for me is the culture. Rosen writes that ‘Thousands of innovations were necessary to create steam power, and thousands more were utterly dependent upon it’ We’ll return to this, but it’s the precision, the attention to minuteau, the valves, flues, condensers, experimenting with weights, dyes, volumes that stands out to me. The scientific gaze was a cultural phenomenon. Rosen continues that Most mill owners would be a ‘‘a fair arithmetician, knew something of geometry, levelling, and mensuration, and in some cases possessed a very competent knowledge of practical mathematics. He could calculate the velocities, strength, and power of machines: could draw in plan and section….’’

So we have a culture of science, a culture of imagination, a culture of industry, improving efficiency, of investing large sums of capital with the expectation of profits, more and more wage-labour coming from the countryside to the factories. In short, we have capitalism taking off at an exponential speed. But surely such dramatic shifts need dramatic causes? Was it really just a focus on science or the imagination that motivated this change? Or were there other factors?

The Shape of the Capitalist Machine

So far, to reiterate, we have a few ingredients: imagination, new worlds, new materials, new horizons, more tolerance maybe, plus science, empiricism, experimentation. But a lot of these things aren’t specifically capitalist. If someone asked for a definition of capitalism you wouldn’t say imagination. So what is capitalism? I think we should turn to laying this out so we can have a clear picture of how it emerged.

Capitalism starts, most obviously, with capital. Money, resources, assets – collected, inherited, earned, stashed, extracted, whatever it may be. But this isn’t enough. Kings and Emperors have long had wealth. So It’s a particular sort of reserve. It’s kept for a particular use. To invest.

In fact, all the industrial inventions we looked at so far took a lot of capital. Savery had investment from the British government and worked in British war workshops and factories. Newcomen worked with private investors. Arkwright was neither rich nor poor but had wealthy investors. Of course, railways, iron, slavery, spice, sugar, and the slave trades all required large sums of investment.

So we can start with capital plus investment.

There is a debate over where those initial large stocks of European capital came from.

Marx argued that the dispossession of land played a large role here. Many point to the slave trade and the influx of profits and cotton into England. And the numbers are unignorable. However, was this a primary factor, a necessary cause, or did it just help grease the wheels?

Appleby says that ‘a significant question for this history is how important was the Atlantic slave system to capitalism. At the very least it generated enormous wealth, most of which was repatriated to the countries of the European investors.’

Sugar and cotton – produced by 9 million slaves transported across the Atlantic – were the first widespread global capitalist commodities after all. So I think this has to be at least a large part of the picture. But necessary?

Appleby says ‘I don’t agree. As Europe’s cathedrals indicate, there was sufficient money to produce great buildings and many other structures like roads, canals, windmills, irrigation systems, and wharves.’

It also doesn’t explain why first colonisers like Spain and Portugal didn’t turn capitalist. Or the Romans or the Chinese. In other words, there’s been a lot of wealth and dispossession in history, but they didn’t lead to capitalism. Plus capitalism functions with slavery (for the most part, there’s a debate to be had here of course) today, so again, it’s not an essential, primary cause.

Nonetheless, capitalism requires capital reserved for investment. Investment requires the expectation of return. So profit enters the picture. Capital plus profit = accumulation.

But again, we find these factors in a lot of places. There was one thing that happened in England that we can add. A focus on improving production and efficiency. 

In her book on the origins of capitals Ellen Meiksins Wood points to four components:

• Accumulation
• Competition
• Profit-maximization
• And so the ‘constant systemic need to develop the productive forces’

Another defining feature is that under capitalism, compared to feudalism, the majority and mostly all of our goods come from the market, and are not produced directly in our gardens or at our spinning wheels. So we can safely add ‘markets’ to our list. Finally, all of this is pursued by private individuals and groups, rather than governments.

Finally, and some would disagree with this. Marxists and many leftists would argue wage-labour should be part of the definition. Unlike Feudalism say, where peasants produce their own food, clothes, materials, etc, under capitalism workers are propertyless, so have to work for a wage. Marxists would mostly argue further that the worker is the source of the capitalists’ profits. This is a contentious debate with no agreement, so I’m going to park it for now.

There are a ridiculous number of definitions of capitalism. I was going to include some, but I think what we have here sums it up already and paints an adequate picture of what we’re beginning to see emerge in England. The question is what caused this change. In the scholarship, this is referred to as the ‘transition debate’. This is another contentious, wide-ranging, sometimes furious debate with little agreement and many theories that is still on-going, still changing, and still really difficult to get a grip on.

Did the change come from within feudalism – a fight between peasants and lords? Or without – the growth of independent merchants and towns? Was it a natural consequence of Globalisation? Slavery? Was it ideas about freedom? Was it science?

There are so many causes that I think it’s better to simple lay them out, acknowledge that it’s overdetermined – in other words, it is determined by many things, in many ways; some causes may have been more important to say Newcomen and his engine and others to J.P. Morgan later on. The best we can do is paint a broad picture of what happened. Capitalism may be less like a single recipe and more like a style or cuisine – it has typically used ingredients, but they differ from dish to dish. But to give you a taste, before we get stuck into the main course, let’s look at one of the first people to think about this question – the Enlightenment economist and first theorist of capitalism, Adam Smith.

Smith said humans have a natural inclination to ‘truck, barter, and exchange’. That markets are natural. That profit-seeking is natural. That, if this is the case, feudalism, absolute monarchy, religious idea, whatever you throw into this hat, just need to removed, like chains, for the natural inclination of humans to flourish.

Smith maintained that the “principle which prompts to save is the desire of bettering our condition, a desire which though generally calm and dispassionate, comes with us from the womb, and never leaves us till we go into the grave.”

The British conservative politician Edmund Burke agreed with Smith. He wrote in a letter to him that “a theory like yours founded on the nature of man, which is always the same will last, when those that are founded on his opinions, which are always changing, will and must be forgotten.’

Continuing “The uniform, constant, and uninterrupted effort of every man to better his condition [is] the principle from which public and national, as well as private opulence is originally derived.” 

This is a great place to start with this debate because it’s so obviously wrong. Natural, comes from the womb, uniform, constant, the nature of man – if all of these are true, then why do we have humans doing all sorts of other things for hundreds of thousands of years, and then, very quickly, over the course of a couple of hundred years, develop a new novel way of doing things. Even if you argue that it was natural but was repressed, you still need a cause that released, liberated, unchained it. In other words, saying its natural doesn’t fit the historic record or answer anything. As Wood points out, if you can accept this, then there’s no need to explain capitalism at all. It’s always been there. Ready to go. So to answer the question of what really motivates capitalism, we need to look closely at its roots, the fertile soil out of which it grew, back in England.

Why England?

Ok, again, hundreds of theories of capitalism and industrial revolution, and whether they’re connected or separate. I think the cuisine metaphor is a good one here because you know some factors, causes, or ingredients are essential, some subsidiary, some extra. Imagination and science – can be a big part of cooking too – buy they’re really broad factors. 

Take another one often pointed to – the fourteenth century Black Death. It killed between 30% and 50% of all Europeans, it had a major effect on the Renaissance. But interestingly for us, it meant there was more money – more capital – for those who survived. Plus less labour – so workers could demand higher wages. 

Crucial? Well, no, because this wasn’t specific to England and plagues had happened before. A factor, a lubricant, likely, yes, to some people, in some places. So all of these broad factors existed in many places. We need to look at what was particular about England.

Another is that England had large coal deposits. Ironically, a shortage of forests led to an increase in coal mining and a demand for technology. Coal is very dense in carbon so has a lot of energy. But again, coal is pretty widespread, so it might have been a factor but not a primary cause.

One of things we’ve looked at is improving productive efficiency. Those very small gains in how a steam engine functioned, how far a mine could be dug, how strong and cheap yarn could be spun. Another efficiency property of England was that you could do certain things in quite a frictionless way compared with the rest of Europe.

In the sixteenth century, the Tudors had consolidated and strengthened a single, stable, cohesive set if institutions, courts, government official, an army, taxes, etc that didn’t really exist on the continent. There was pretty much one language, currency, measurements, a network of roads, and so on.

Compare this to France. It was a patchwork. The nobility basically lived off the peasants by charging them levies, tolls, taxes, tithes, privileges, dues – all varying from place to place and time to time. It didn’t have a unified market like England. If you sent goods from Bordeaux to Paris there might be taxes, bridge tolls, plus different languages to get them there. It’s just less likely to even be tried.

Germany – not yet unified – was even worse. Some 350 principalities with different weights, measures, tolls, regulations, currencies, and customs, etc.

Think about the knock-on effects. A network of roads, the same language, the same courts – news, cultural, books could disseminate easier – scientific knowledge, imaginative stories about new materials, animals, plants, peoples. So I think cohesion – or a lack of friction – is key to the transmission of goods, ideas, culture, and new possibilities.

One thing often emphasised with capitalism is individual rights, especially in America, as we’ll get to, or the rights of man of the French Revolution. Hobsbawm points to the French Revolution and the Industrial Revolution as the dual revolutions of modernity.

But the period we’ve looked at so far mostly precedes both the American and French Revolutions. If we take the first rudimentary engine of 1698 as one bookend, and Arkwright’s water frame powered cotton spinning mill of 1775 as the other, those big historical revolutions had not quite happened. However, the English Revolution of 1689 had.

The so-called Glorious Revolution, after the English Civil War, essentially codified a constitutional monarchy with a bill of rights that guaranteed property, trials, parliamentary independence, and limited the arbitrary power of the monarch.

This revolution didn’t go as far as the American or French one’s later – it effected ordinary people less, with no claims to being universal or of declaring the rights of all – but it did at least guarantee property, stability, and a certain confidence in a cohesive, stable system that was less likely elsewhere.

Another difference was with the English nobility. In places like France and Spain, a noble was a noble by blood. In England, only the first-born son inherited the title – a peerage or a lordship. The other children would be commoners like anyone else, with no access to the house or lords or political office. So they had to make their way elsewhere, and of course had the wealth to do so. This created stronger economic incentives over political ones or even military ones like in Rome, where the way to prove yourself was through conquest. A large proportion of the English upper classes had been demilitarised and depoliticised, so they were more likely to turn elsewhere.

There is some evidence this led to greater intermingling with commoners than somewhere like France. Take this quote from Lord Hervey in 1731. He said:

‘We used to sit down to dinner, a little snug party of about thirty odd, up to the chin in beef, venison, geese, turkeys, etc.; and generally over the chin in claret, strong beer and punch. We had Lords Spiritual and Temporal, besides commoners, parsons and freeholders innumerable.’ Lords, Spiritual and temporal – meaning political – commoners, freeholders – meaning people who owned their own plot of land – you can see a bit more tolerance, a bit more commerce, a bit more transmission of goods and ideas.

And I think here we can find ourselves right in the middle of our story – forget all of that industry, trains, engines – that’s in the future, and the new world, new materials, foods, cotton, new sciences, a bit more tolerance – that’s just happened or is happening. 

But right now – imagine you’re an English lord with acres of land, a few books on early science, and not much else to pursue. What do you do? You look right where you are. Beneath your feet – at the fields to farming and into the ground at mining. So maybe capitalism wasn’t born in factories and towns and commerce, but in the fields.

A Revolution in the Fields!

There’s an assumption that capitalism starts in cities and towns – Italy, Merchants, autonomous burghers, traders, shopkeepers – even industrial Manchester conjures images of urban factories and smog and slums.

But it should be a clue that before the industrial revolution, a lot of the industrial centres were small towns, villages even. I mean here in Cromford, where one of the first modern factories was born, it’s a village. In other words, capitalism didn’t start in London or Florence. 

Remember that significant figure we started with – that it took 80% of people to provide the food for everyone. 8 out of ten worked in agriculture. Growing, tending to, working on the sustenance, the core, the basis of life. And remember, in sixteenth century Europe that number hadn’t changed since the Roman Empire. As Appleby says ‘all economies begin with food production.’

I think we can safely assume that if 80% of people are involved in agriculture, 80% of people’s thoughts were agricultural. Imagine a poor harvest followed by a bad winter. You have some seed for planting in spring and a few animals for breeding. But things are getting desperate. Do you eat the animals? Do you take a risk that next year’s harvest will be better, so you’ll need less seed. Do you sell them? Eat them even? These were the sort of calculations people had to make.

Famine was a fact of life. Scarcity a fact of life. Time spent between fixing clothes or a fence, tending to animals and crops, just to secure just enough to survive, and often not even that. 

You’d usually eat what came out of ground, as it was picked, until around October. But you couldn’t really preserve much, if anything, for the winter. You could make some terrible bread or salt some bacon. But preserving, with no refrigeration, for an entire season? Difficult to say the least.

This is why the new world and sugar and new materials like plant cotton is so integral to people’s mentalities. Squashes, tobacco, cocoa, potatoes, corn, coffee, beans were all new. Corn could be grown in wetter places that wheat and you could get twice as much from a corn yield as wheat. Potatoes could be kept in the earth for longer and pulled out as needed. There are few parallels today – but I think just a few more options for people would have a radical effect. 

But it was sugar that really changed things in a kind of unexpected way. Yes, it was delicious and sweet and exciting, gave a burst of energy. But the revolutionary thing was that it could be used to preserve fruits and vegetables into the winter. 

In short, food glorious food is what us on everyone’s mind. Isnt it still? Let alone when you don’t have enough. And the smallest improvements would save fear of winters, would save time that could be spent doing other things, and save countless lives. I mean just in this period – seventeenth century England, relatively rich – one expert wrote that half the population needed some kind of assistance to get through each year.— So let that set our scene. Combine with this the factors we’ve looked at plus the fact that there was no serfdom in England. What you had were big landed estates, like this one, owned by our entrepreneurial upper classes, renting land out to tenants and in a few cases mining it.

Compare this to France with its vast patchwork feudal and royal system of dues and privileges and tithes and tolls. There, the best way to get ahead, was to secure political office, a certain privilege over peasants, certain dues, a certain right to a toll, a certain favour with a lord. In her book, Ellen Wood calls this ‘extra-economic’ or political. It might come from peasants working, owing you 300 bottles of olive oil each year, but its not from business per se, it sits above it – ‘extra-economic’ – it comes from your philosophical or theological or military right as a lord or a ruler.

This seems completely natural to me. If I’m a minor nobleman in this system, what are my goals? Messing around with dirt and seed and animals or getting closer to the king, to the pope, to god – looking up. 

But this route was more closed off in England. Instead, the route to improvement was getting more out of those fields, out of animals and seeds and mines.  What this led to, in Woods words, was a culture of improvement.

If you’d have looked out over your fields, you’d see two things different today – fewer hedges and much less farmed. Much of the farmland had to be left fallow to recover, so that you could only farm around a third of it at a time – and that’s the areas that were suitable. In the Netherlands, it was discovered that instead of leaving land empty you could rotate different crops, grains, turnips, and so on. The English copied this.

What happened next, during this vague agricultural revolution, a new approach to productivity. 

Loads of things were experimented with. Meadows were flooded to warm the soil and extend the growing the season. Different plants were found to enhance the soil. Parsnips were used as animal feed in the winter. Up and down husbandry swapped animals with plants which meant the animals fertilized the soil then the crop yields were better. 

By the early 1600s, ‘improver’ was becoming a common word in England. Landes writes that ‘Britain’s countryside was being kneaded like dough’

Now imagine if someone’s really good at this and another not so good and you’re an aristocrat renting out your land. You’re going to notice some paying on time, others not, some getting wealthier others not, some paying more rent, others not. In other words, land values correlating more with the success or failures of different techniques, competition having a greater effect on rent. More swapping and trading of both produce and ideas. It’s here we can see both the economic and the cultural roots of capitalism.

I think it’s important to think about how economics and culture interact here.

Ellen Wood points to economics, writing that by the 16th century, capitalist practices were becoming more common in England, saying quote ‘the maximization of exchange value by means of cost-cutting and improving productivity, through specialization, accumulation, reinvestment of surpluses, and innovation’

But think about our definition of capitalism:

• Accumulation
• Competition
• Profit-maximization
• The ‘constant systemic need to develop the productive forces’
• By private individuals or groups
• With markets

Some of these are economic, some cultural, some a mix of both.

The need to develop the productive forces strikes as both economic and cultural. Remember, we have that culture of science and experimentation from Francis Bacon and the Royal Society. The idea that things can change, new worlds, new horizons, renaissances and reformations. On top of this, agricultural reformers in England were publishing books and pamphlets of advice. Philosophers like John Locke began talking about improvement as the basis of property. 

Locke wrote ‘’the Grass my Horse has bit; the TurfS my Servant has cut; and the Ore I have digg’d in any place where I have a right to them in common with others, become my Property’

He thought that if you mixed your labour with the land and the plants and the animals you create your own property from it.

So you have this chicken and egg mix of economics and culture – material lives and ideas. Did one cause the other? It’s one of those questions that’s been debated forever with no convincing answer. I think it’s more interested to just explore how they interact dialectically, because what is unquestionable – is that this powerful new emphasis on productivity was about to change the world.

Enclosure

This emphasis on improving led to a long and contentious enclosure movement. Fields were divided and hedged. Peasants were kicked off communal land. 

Communal rights like collecting wood from forests or growing vegetables on a village plot removed. Traditional rights or practices like collecting wood from the forest became more difficult. This movement was hated by many. 

For wood, peasants may have only had ‘marginal plots’ and ‘impoverished dwellings’ but they were disposed of them nonetheless, and a new class of so-called ‘masterless men’ and vagabonds started roaming in search of work more.

But in his book, Landes argues that rather than creating an army of unemployed vagrants ‘the data indicate that the agricultural revolution associated with the enclosures increased the demand for farm labour, that indeed those rural areas that saw the most enclosure saw the largest increase in resident population. From 1750 to 1830, Britain’s agricultural counties doubled their inhabitants.’

The question of whether this was good or bad is notoriously difficult and furiously debated and something we’ll return to. Either way it was the beginning of that new class often seen as integral to capitalism – the working class, wage-labourers, the proletariat with nothing to bargain with but their labour. 

For Wood, wage labour – so central to Marxism as it’s where profit is extracted from – is a key component, but not the key component in the development of capitalism. She argues that those competitive pressures between tenants and landowners and the focus on productivity and improvement came first. Either way, adding wage-labour to our list means we have pretty much all of the ingredients for capitalism in place – with that emphasis on improving, efficiency, productivity in return for greater gains at the core. 

So let’s return to our 80/20 number. 80 people could support 100, and that extra twenty were politicians and clergy and aristocrats and military men and so on. This 80/20 was still the case in the early 16th century. Towards the end and into the middle of the seventeenth century, as the agricultural revolution grew, that number began to shift. And by 1800, it was only taking 36% to feed the entire population instead of 80%. By then, one farming family was providing on average for sixty others. Today, that number is down to 3%. Just imagine that amount of time, brainpower, energy, focus, attention and health that’s opened up to do other things. And as Landes points out, this meant England was pretty rich even before the industrial revolution, with average salaries a third higher over the course of fifty years between 1700-1750.

Patents

Ok, there’s one more thing we should look at. We’ve looked at quite general causes so far. But does this ignore that ‘great men’ theory of history? Are we forgetting that its individual people doing these things rather than broad abstract trends. In his book on the steam engine, William Rosen reminds us that the industrial revolution was ‘first and foremost, a revolution in invention.’

The agricultural revolution made England rich, but the industrial revolution made it superrich. And when you consider all those big inventors we looked at – Savery, Newcomen, Watts – they all had patents on their inventions, and this was quite a new idea in history.

Patents are actually quite strange things. They became more common during the Renaissance. Back in the fifteenth century, King Henry VI granted one for a novel technique to create stained glass. Another was granted in Florence for a boat designed to move stones. But initially they were mainly a way for a monarch to raise money. The Tudors granted them for all sorts of things – trade routes, salt, paper, and playing cards. 

One key thing to remember here is that a patent is a monopoly – that you will have the only right to trade or sell or do business for a certain period of time. It’s a level of control. At the beginning of the seventeenth century, James I then Elizabeth were both granting monopolies to presumably well-connected people to control trade and to raise money for themselves. 

Monopolies were the norm in the early seventeenth century. One said a typical Englishman lived “in a house built with monopoly bricks… heated by monopoly coal. His clothes are held up by monopoly belts, monopoly buttons, monopoly pins…. He ate monopoly butter, monopoly currants, monopoly red herrings, monopoly salmon, monopoly lobsters.”

Remember this is all going on at the same time. More demands for tolerance for different religious beliefs, more science, experimentation, more trade and commerce, more innovation in agricultural productivity. There’s the civil war in the middle of the century then the rights based revolution at the end. This period is a crucible of modernity while Kings and Queens were still trying to control things. The idea of innovation was in the air in England.

There was a famous landmark court case in 1602 over playing cards. Queen Elizabeth – Henry VIII’s daughter – had granted a monopoly for their sale. One person controlled the entire playing card market in England. 

This resulted in a huge court case led by one of England’s most famous lawyers of the period – Sir Edward Coke. Coke argued that monopolies were wrong – they restricted employment, too many were granted, and, most importantly, he argued that they should only be granted if the person had improved on the product, invention, or technique in some way.

Coke won, and later in 1624 the Statue on Monopolies established that patents should only be granted when something was invented or improved upon, shouldn’t be used to raise prices, and should only last fourteen years.

Now, think about the timeframe here. This is 1624. Two years after Bacon published his book advocating for a scientific method. Just as this culture of agricultural improvement is really taking off. Fast-forward around 75 years and all of those people involved in experimenting with and building steam engines have patents.

Remember Rosen’s words – ‘thousands of innovations were necessary to create steam power, and thousands more were utterly dependent upon it’

But lets return to one of them – Newcomen’s improving of Savery’s engine to successfully draw water from mines. Maybe the first really widespread industrial capitalist invention.

We can see all of this coming together in Newcomen. He was engaged with this wider scientific culture – he corresponded with scientists like Robert Hooke who was one of the most well-known in England. Popular guides to science – even children’s guides – were everywhere. Classes taught to artisans and blacksmiths by travelling lecturers. 

Newcomen was a master with his hands – at the anvil, lathe, with all sorts of tools. Rosen points to the Y-valve – a single part of the design – it had to be a perfectly precise shape and weight – all without modern tools. Rosen writes ‘The only way to “machine” such a valve was by hand, and the hands in question had to be as sensitive, and as precise, as those of a violinist’. Newcomen had ‘tactile intelligence’, Rosen writes.

This takes years of focus, decades of training, on the smallest of details. And I think this is key. Who is going to be doing this when there’s not enough food, for a start. You need a productive, efficient agricultural system. You also need to know about and understand a widespread problem – like mining and water in mines. And for those years of investment in time to pay off, you need to know you’ll be rewarded in some way. That the risk is worth the time. This is where Rosen makes the compelling case that the patent is crucial.

Newcomen could charge for licenses – £300 a year – one paid £200 but half his future profits. One hundred were in use within three years. Even then he wasn’t widely recognised nor was he wealthy. 

I don’t think it’s just the case that people do things to profit – although that is also true. Some people do it for the love of science or because it’s the right thing to do. But you at least need to survive while you’re doing something. The patent system also stops more powerful people or companies simply taking your innovation. 

Rosen points to a combination of ‘innovative culture’, ‘individuals looking out for their own interests’ and a ‘national interest in innovation.’ Savery worked in government war factories and workshops, for example. 

But there was a political culture that develop that said if you have an idea, a piece of land, some property – it is yours. 

So we now have all of the ingredients, factors, causes of capitalism in place. What’s astonishing is how quickly it was about to set the world on fire. Landes’ book title is evocative – Prometheus Unchained. As we’ll see, some of the numbers are staggering. People like to point to their favourite factors – everyone has a different theory. But as Appleby says ‘why not recognize how mutually enhancing all these elements were?’

We have a constellation of factors in England out of which a new world would emerge. A culture of imagination, change, possibility, improvement. Of reformation and toleration of others. Of rights in property and patents. A single market. Out of which the dynamics of maximising profit, accumulation, competition, and wage-labour would emerge.

How long would a Promethean England last?

The Age of Capital: England’s Supremacy

Prometheus stole the secret of fire from the Gods and was punished for it by having an eagle peck away at his liver for eternity.

 By the early nineteenth century, commentators were noticing the same bitter-sweet contradictions that this new economic system appeared to produce.

There was no doubt that Britain had uncovered some powerful new secret. But Romantic poets, reformers, and commentators were beginning to lament the effect this Promethean economy was having on the downtrodden, the vagrant, the environment, and increasingly, the colonised. Protests took different forms. In that early period, the levellers protested against enclosure by levelling the new hedgerows and fences. In the later, the Luddites protested against the machines taking their jobs by ‘breaking’ them.

After visiting Manchester in 1835, Alexis de Tocqueville wrote:

‘From this foul drain the greatest stream of human industry flows out to fertilize the whole world. From this filthy sewer pure gold flows. Here humanity attains its most complete development and its most brutish, here civilization works its miracles and civilized man is turned almost into a savage.’

But despite all of this, Britain’s new found wealth was unignorable. Not only did Britain look richer, it had around as many ships in her navy as every other navy put together.

Even by 1700, Britain was producing twice as much food as any other country. And across the 18th and into the 19th century the growth was exponential. In just a single 20 year period in the nineteenth century, steam and iron output quadrupled. And in just 50 years between 1800 and 1850, the British population doubled. By the end of the nineteenth century, Britain accounted for around half of the worlds trade in many major goods, including meat, sugar, wheat. Even today, the US only accounts for somewhere around 10%.

To take another short twenty year period, between 1850 and 1870, Britain’s trade almost tripled. Across just five years in the middle of the century, the number of railway passengers almost doubled. 

Others, of course, were taking note. There was a lot of industrial espionage and imitation. So much so that taking plans for a machine say to another country was illegal. France, Germany, and the United States were the three main imitators. By 1870 each was producing around 1-2 million tons of iron for their own machines and railways. However, Britain was producing around 6 million – half of the world’s total.

Many Englishmen, like the agricultural improver Arthur Young, travelled across Europe and were astonished at the comparative poverty.

The mimetic desire to imitate spread across both Europe and America. But the traffic in economics, culture and politics was multidirectional. Many looked to Britain’s industry plus France and America’s declarations that men – and it was mostly men – had universal rights. In fact, both industry and rights were to many two sides of one modern progressive coin. 

A new ideology – as yet unnamed – was emerging. Drawing on John Locke’s ideas about property and Adam Smith’s about trade and commerce, along with many others – the very loose idea of a ‘liberal’ was in the air. 

It was a period, in Hobsbawm’s words when ‘The few remaining obstacles in the way of the untrammelled development of private enterprise would be swept away.’ Some described it as the period of the ‘conquering bourgeoise’. 

The extent of change is demonstrated by the composition of the British parliament. Before 1895, aristocrats were always the majority. After 1895, they never would be again.

Hobsbawm’s book argues that the middle part of the nineteenth century was the Age of Capital, the age of ‘liberal triumph.’ But things were already beginning to change. The liberal order was at first based on the premise that the individual farmer, inventor, or businessman could be master of his domain, building business, inventing new machines, rational, free, in control. But already giant unwieldy national bureaucracies were growing, science was becoming too voluminous for one person to master, even in one field, corporations were developing that required huge amounts of raw materials, capital and investment, and the state grew with it all. 

Hobsbawm writes ‘combination advanced at the expense of market competition, business corporations at the expense of private firms, big business and large enterprise at the expense of smaller; and that this concentration implied a tendency towards oligopoly’.

Take Lloyds Bank, still one of Britain’s biggest. It bought out and merged with 164 smaller banks. National financial institutions were beginning to wipe out smaller communities banks, department stores began wiping out local shops, economies of scale were making local approaches uncompetitive. 

I’ll quote Hobsbawm quite a bit here, really because he’s so good on this. He wrote

‘In most people’s minds, and in reality, capitalism still meant the one-man, or rather one-family, owner-managed business. Yet this very fact raised two serious problems for the structure of enterprise. They concerned its supply of capital and its management.’

Investment and capital required much bigger institutions, but the same was true of the management of staff. Take the burgeoning trainlines. As we’ll get to, they became so big that they obviously needed a large bureaucratic management structure plus a close relationship with investment banks. Hobsbawm has a great turn of phrase here – Adam Smith’s invisible hand of the market became very visible. Her wrote:

‘The ‘visible hand’ of modern corporate organization and management now replaced the ‘invisible hand’ of Adam Smith’s anonymous market. The executives, engineers and accountants therefore began to take over from owner–managers. The ‘corporation’ replaced the individual.’

Take the London and Northwestern Railway Company. By 1890 it employed 65,000 workers, 7000 kilometres of tracks, and 800 stations.

As a good example of the economic composition. Take the Paris stock market in 1956. It listed 

‘33 railway and canal companies, 38 mining companies, 22 metallurgical companies, 11 port and shipping companies, 7 omnibus and road transport undertakings, 11 gas companies and 42 assorted industrial undertakings ranging from textiles to galvanised iron and rubber..

As much as these contradictions were starting to show, it was still that ideology of that conquering bourgeoise – the rational, in control liberal man – that was becoming  dominant almost everywhere in Europe and America. As well as Locke and Smith, it took from thinkers like Montesquieu the idea that the power of one could be mitigated with the division of political power, so that the executive, legislative, and judiciary could each check each other. It was this that was the response to that most contradictory of liberal questions – what if one person, one ruler, one businessman, one corporation becomes too powerful, too conquering? 

By the 1870s many were adding a ‘scientific’ string to this ideological bow; the survival of the fittest.

Hobsbawm wrote ‘In that ‘struggle for existence’ which provided the basic metaphor of the economic, political, social and biological thought of the bourgeois world, only the ‘fittest’ would survive, their fitness certified not only by their survival but by their domination’ 

Darwinism had provided the foundation for a ‘scientific’ liberalism in which people rose or fell – were inequal, or to go further, inferior, biologically. 

The idea that businesses, individuals, and races would inevitably compete, rise, or become extinct became the liberal ideology for many in the late nineteenth century. It created drives to catch-up and in Britain it led to anxieties that both America and Germany seemed to be snapping at their heels. It would eventually lead to eugenic policies which would aim to sterilise or in the extreme cases mass-murder those deemed to diluting the well of biological racial purity. 

In 1888 a bestselling science fiction novel called Looking Backward, set in the year 2000, recalled that for 1888 capitalists “selfishness was their only science”. Railroad magnate Andrew Carnegie, who will get to, said of the survival of the fittest that “while the law may be sometimes hard for the individual; it is best for the race, because it insures the survival of the fittest in every department.” One professor wrote in 1883 that ““millionaires are a product of natural selection.”

And for now, Britain was at the top of that hierarchy. There’s no better marker for its high point that the Great Exhibition in London in 1951.

Queen Victorian opened The Great Exhibition in the Crystal Palace – 14,000 companies exhibited endless new products – from new door locks to diamonds, pianos, ceramics, kitchens, foods, and clothes.

Anyone who as anyone was there. Dostoevsky visited, writing that 

‘You become aware of a colossal idea; you sense that here something has been achieved, that here there is victory and triumph. You even begin vaguely to fear something’

He continue ‘you feel that something final has taken place here, that something has come to an end. It is like a Biblical picture, something out of Babylon, a prophecy from the apocalypse coming to pass before your eyes.’

However, he noticed ‘a principle of individualism, a principle of isolation, of intense self-preservation, of personal gain, of self-determination, of the I, of opposing this I to a l nature and the rest of mankind as an independent autonomous principle entirely equal and equivalent to a l that exists outside itself.’

The mid-century was like a hall of mirrors. Dostoevsky could look at the exhibits with awe, as the middle class of Europe did, but he urged his fellow Russians not to copy so enthusiastically. The Crystal Palace was a modern wonder, but he took to the streets of London too, noticing much of the city ‘‘half-naked, savage, and hungry’’. Many from Charles Dickens to Jack London later on noticed the same. 

IT was becoming an age of extreme differences – Britain looked futuristic while most of Europe still looked as it had five hundred years before. Even in the more advanced European countries – like Spain and Portugal – there were less than one hundred miles of railway. And many liberal bourgeois, despite living lives never before imaginable, were also living with a sense of fear. Nowhere could everyone vote, nowhere was there true democracy, but uprising, revolutions, protests, marches, demands – were all ubiquitous across Europe. The Conquering Bourgeoisie had conquered. But they ruled in fear.

The Iron Boot and the Dispossessed

There’s a debate, that we’ll get to, over whether the initial wealth undeniably produced by capitalists was widely or even marginally shared. Whether the emerging working classes, those vagrants and vagabonds released from or disposed of agricultural work were actually better off. The debate is a fascinating one. Some argue that there were wage increases, others say that only for a minority and they were offset by harsh working conditions, cramped diseased urban slum housing, industrial accidents, and so on. One study looked at the records of people’s heights from prison records and found that people got shorter, suggesting less calories.

The perception at the time by most was a negative one.

Landes says that ‘Many Britons would have stopped it in its course, or even turned it back. For good reasons or bad, they were distressed, inconvenienced, or outraged by its consequences. They mourned a merrie England that never was; deplored the soot and ugliness of the new factory towns; bemoaned the growing political power of crass parvenus; cried out against the precarious poverty of a rootless proletariat.’

Take Arnold Toynbee, the nineteenth century historian who coined the term industrial revolution.

He wrote ‘We now approach a darker period – a period as disastrous and as terrible as any through which a nation ever passed; disastrous and terrible because side by side with a great increase of wealth was seen an enormous increase of pauperism [and] the degradation of a large body of producers . . . The steam- engine, the spinning- jenny, the power- loom had torn up the population by the roots’

Or take E. P. Thompson’s more recent work on the English working class. He wrote ‘It is neither poverty nor disease but work itself which cast the blackest shadow over the years of the Industrial Revolution . . . long hours of unsatisfying labour under severe discipline for alien purposes’

IT was the period when Blake had already written of the Dark Satanic Mills, when the Dickensian idea of chimney sweeps and child labour in Victorian London developed. Hobsbawm despised this period. He said that ‘the condition of the labouring poor was appalling between 1815 and 1848 was not denied by any reasonable observer.’ In that period, the slums in the north of England, the periods of unemployment, the crises, the hours, the dangers, the insecurity, were all bigger and longer than at any time before or since.

Take some of these descriptions of crashes, slumps, and unemployment. Textile industry slumps in Bolton and Roubaix in the 1840s put two thirds out of work. This was common.

In 1830, a member of the Royal Society, Frederick Baker wrote ‘About one-third of our working population . . . consists of weavers and labourers, whose average earnings do not amount to a sum sufficient to bring up and maintain their families without parochial assistance. It is this portion of the community, for the most part decent and respectable in their lives, which is suffering most from the depression of wages, and the hardships of the times.’

One person described a women’s march in Manchester in 1842. 2000 were ‘dreadfully hungry—a loaf is devoured with greediness indescribable and if the bread is nearly covered with mud it is eagerly devoured.’

Illustrating the sense of fear of the bourgeoise, A German scientist wrote in 1847 that ‘Pauperism and proletariat are the suppurating ulcers which have sprung from the organism of the modem states. Can they be healed? The communist doctors propose the complete destruction and annihilation of the existing organism. . . . One thing is certain, if these men gain the power to act, there will be not a political but a social revolution, a war against all property, a complete anarchy’. 

But, as I said, there are opposing camps in this debate, some showing that wages rose, regulation slowly came in, housing and plumbing and water and food all gradually rose. Famines were, in England at least, a thing of the past.

In one quite new book, historian Emma Griffin argues that it’s hard to square the pessimism of dark satanic mills with the autobiographies of working people in the period. She says that there are many examples of people writing critically of factories, of course, but there are also many counterexamples. The older rhythms of agricultural work were not exactly a walk in the park. It was backbreaking and could be just as irregular. 

One working man in Essex said his farmer boss was ‘‘somewhat tyrannical, ordering me up at four o’clock in the morning, and requiring other things which I considered an infringement of my rights. I told him plainly I would not submit, and took it upon myself at once to become my own master.’

There are sources that suggest people were thankful for factory or mining work. One said he ‘was never as happy as I was at that time’

Even Hobsbawm acknowledges that along with the insecurity, slums, poverty, and pauperism of the early nineteenth century, the situation improved by at least the 1860s, when the economic boom provided employment ‘on a quite unprecedented scale.’ 

Although he cautions that ‘Yet, unlike the middle class, the worker was rarely more than a hair’s breadth removed from the pauper.’

In Prussia, for example, the end of serfdom gave peasants land and freedom from having to labour for their lord and pay them dues at harvest. But at the same time they could no longer get assistance from the lord who lived locally and often took interest in the affairs and problems of their estates, if there was a bad harvest say; they lost the right to collect fire wood – the main fuel – from the lord’s forest. Lost pasture land. The Lord often was also obligated to help with repairing houses or infrastructure. So, I’m not becoming an advocate for a return to feudalism here, only to point that there was a different loose inadequate set of practices for welfare and a kind of familiarity and set of expectations that existed in that shackled, pinned down, very local world. With capitalism, as Marx pointed out, all that is solid melted into air.

On the other hand, take Rosen, who it’s worth quoting at length here:

‘If you examined the years since 1800 in twenty-year increments, and charted every way that human welfare can be expressed in numbers—not just annual per capita GDP, which climbed to more than $6,000 by 2000, but mortality at birth (in fact, mortality at any age); calories consumed; prevalence of infectious disease; average height of adults; percentage of lifetime spent disabled; percentage of population living in poverty; number of rooms per person; percentage of population enrolled in primary, secondary, and postsecondary education; illiteracy; and annual hours of leisure time—the chart will show every measure better at the end of the period than it was at the beginning.’

But I think this is a problem with this debate. Everyone wants to generalise or get a clearcut answer. While life may have slowly improved, it did so by fits and starts and extremes. Many did well, but clearly many did not. One yeoman might have done well in agriculture and had an awful experience in a factory. For another that might be reversed. What’s undeniable, as Hobsbawm points out, is that there were a significant, large, and increasingly influential or noticeable group that were a hair’s breadth from the breadline, lived in slums, had children working in factories, worked long pollution ridden hours, and so on. And it was this new group – the dispossessed, the alienated, the working class, the proletariat, that began to organise.

So the scene is set for a Mexican stand off. Yes there were the newly powerful bourgeois capitalists – new money – and yes there were the slowly organising proletarian, but it’s easy to forget that especially across Europe, the old aristocracy were still firmly in power, trying to balance between modernising and holding back the forces of liberalism and democracy that they feared.

The stand off was the result of several contradictions. First, even the old aristocrats and nobility across Europe wanted to modernise and catch-up, but they feared that universal suffrage – the democratic expansion of liberal rights- would mean the end of property. Why, they feared, would the working classes not vote to take it all from them? Here the bourgeoise sided with them – they wanted rights for themselves but not for their lessers, for those who supposedly had not bought into society, who had no propertied stake in it, and so would only vote to destroy it.

A wave of revolutions spread across Europe throughout the century, with 1848 being their apogee. They often followed a common pattern. The liberals demanded rights – free speech, constitutional monarchies, elections, property rights – but then feared the revolution was going too far towards taking their property for the poor, and so would halt the revolution by siding the aristocracy. Unionisation was still mostly banned and almost all of these revolutions failed, while their demands would eventually be met.

To take just one country, there were almost 500 peasant revolts in Russia between 1826-1861 when serfdom was abolished.

Austria’s Prince Metternich, writing to the Tsar of Russia, wrote:

‘The governments, having lost their balance, are frightened, intimidated and thrown into confusion by the cries of the intermediary class of society.’

He would build a vast secret police network to supress revolt. Alexis de Tocqueville warned  ‘’We are sleeping on a volcano . . . Do you not see that the earth trembles anew? A wind of revolution blows, the storm is on the horizon.’’

Conservatives clung onto power by slowly granting rights and widening the franchise, as the Reform Acts did in Britain, and almost everywhere this seemed to work. But to give an example of how restrictive democracy was, in Britain only 1 in 30 could vote, while the second reform act in 1867 increased this to 8% of the population. Obviously to many, this was nowhere near good enough. Socialism was quietly growing.

Trade unions were slowly legalised and grew. A few began turning to cooperative, socialist, and anarchist ideas and groups. But disappointingly for Marx, who kept believing the revolution was around the corner, slumps and recessions came and went, capitalism continued to recover.

Not only did it recover, but the Promethean fire was spreading irrepressibly across the globe.

Globalisation

I think Globalisation is a complex concept to get your head around. Definitions point to connectedness – interconnectedness – across the entire globe that hasn’t happened in history before. But is that true? As we’ve seen, there’s always been vast trade networks, silk and spice roads, slave trades, and if not globalisation, continentalisation has existed for thousands of years.  

So if we think about globalisation as a mentality – as how people experience it – as connections, possibilities, business ideas, costs, logistics, exchanges of ideas or cultures of profits – that can find the price of coal in China then compare with the cultural ideas of pollution in the Congo and shipping across the Atlantic – has this mentality not, in some way, always existed? Even if it was on a smaller scale? Across Europe, say? My point is, what is the difference conceptually, ideationally?

I think the primary differences are these. Those old connections were, at least in a large part, quite homogenised and stable. They might be Christian or Buddhist, or in specialised goods from one region to another, fish for coal, wood for iron.

This new burst of capitalist globalisation is of such a different scale that it becomes a new kind. 

First, through the printing press, the railway, steam engines, ships, better roads and postal systems, that drive towards speed and efficiency, more raw materials and their properties (quality, changes in price, logistical information) could spread, be used, and acted on much quicker, and at much greater volumes. And second, as the globe was thrown together so quickly – what the historian Felipe Fernandez Armesto calls the great convergence – that there was quite a sudden range of inequalities – of ideas, cultures, languages, economies, navies, potentialities – of power. Hobsbawm has a good line. He says ‘History from now on became world history.’

This was a period when vast quantities of coal, iron, grains, cottons, sugar, coffee, tea and an ever-expanding catalogue of other goods crossed continents by rail and oceans by ships for the first time. The figures, again, increase astronomically. They doubled, tripped, quadrupled in matters of years. British exports to Australia, for example, increase from 1.5 million pounds in 1848 to 20 million in 1875. Canals were dug, roads were laid, the world shrank. Austria added 30,000 miles of road in 20 years between 1830 and 1850. The USA expanded from 21,000 in 1800 to 170,000 in 1850.

The invention of the telegraph probably quietly changed the world more than any other – as events, prices, quantities, opportunities, troop movements – were transmit in a matter of hours and minutes instead of days, weeks, and months. In 1849, there were 2000 miles of telegraph wires, by 1869 there were over 100,000. A transatlantic cable was laid in 1865. Hobsbawm writes ‘There followed a burst of international cable-laying which, within five or six years, virtually girdled the globe’

By 1870s, London could reach India in five minutes. 

Imagine how unimaginable this would be just decades early, and how, like the small improvements in engines, with small improvements in communications you already have almost inherent in them the modernity of the internet. Think about all of those telegraph operators translating the electrical dots and dashes of morse code laboriously into letters. By just 1860, Charles Wheatstone invented a machine that did that automatically. That was just twenty or so years after this rudimentary telegraph was invented.

Hobsbawm says ‘the world was about to enter the era of electric light and power, of steel and high-speed steel alloys, of telephone and phonograph, of turbines and the internal combustion engine.’

And listen to what US president Ulysses S. Grant wrote in 1873: ‘As commerce, education, and the rapid transition of thought and matter, by telegraph and steam have changed everything, I rather believe that the great Maker is preparing the world to become one nation, speaking one language, a consummation which will render armies and navies no longer necessary.’

As well as communications and materials, this was a period of the greatest movement in people the world had ever seen. Vast numbers moved into ever-growing sized cities. London grew from a million to seven million across the nineteenth century. By 1900 1 million people were entering America each year. Many of them spread our West.

Think about the vast wide Mississippi being bridged in 1855. A symbolic victory of humanity, science, engineering, and of big capital spreading across the globe, the victory of man over nature, quite literally. Capital was unstoppable. In the last few decades before the first world war in the 1890s, international trade tripled in size.

How much globalisation was a result of capitalism can be seen from a brochure Hobsbawm points to teach English to Polish immigrants in America. It read:

‘I hear the five-minute whistle. It is time to go into the shop. I take my check from the gateboard and hang it on the department board. I change my clothes and get ready to work. The starting whistle blows. I eat my lunch. It is forbidden to eat until then. The whistle blows at five minutes of starting time. I get ready to go to work. ·I work until the whistle blows to quit. I leave my place nice and clean. I must go home’

Now all of this seems quite triumphant – modernity, inventions, trains, work, bridges, messages – what some would call civilization – spreading across the globe. As if the Promethean only built and didn’t burn. It’s said, likely apocryphally, that when Gandhi was asked what we though of Western civilization at the beginning of the twentieth century we responded, ‘I think it would be a good idea.’

Capitalism’s Empires

The search for new markets, raw materials, investment in navies to protect ports, trade routes, and colonies, all incentivised a global burst of imperial acquisitions. IT’s undeniable that capitalism built infrastructure, modernised communications & transport, spread wealth to some across the globe, and in some cases even educated, but everywhere it did so it did on the bones of natives, traditions, cultures, and protestors.

In a small period between 1876 and 1915 around six countries grew to control a quarter of the globe. As Hobsbawm says ‘Britain increased its territories by some 4 million square miles, France by some 3·5 millions, Germany acquired more than 1 million, Belgium and Italy just under 1 million each. The USA acquired some 100,000, mainly from Spain, Japan something like the same amount from China, Russia and Korea. Portugal’s ancient African colonies expanded by about 300,000 square miles’ 

Native Americans would be slaughtered and squeezed as modernity marched west. One American general, William Sherman, said that “the railroad which used to follow in the rear now goes forward with the picket-line in the great battle of civilization with barbarism.”

Capitalism spread as it looked for land to grow, materials to mine, spices to trade, and so the rest of the world was introduced to this thing called capitalism at their ports, import/export markets, or, sometimes through imperial educational institutions. The British set up schools in India to train a small number of Raj administrator. Egypt was sucked into the British sphere of influence by its cotton and wheat, then by the Suez Canal. China through the opium trade.

Most would eventually try to emulate the West but in this period, where there was resistance, it was futile. The Chinese were forced to open their markets at the barrel end of British gunboats during the Opium Wars in the middle of the nineteenth century, the final cry of the Mughal Empire was silenced after a brief revolt in 1857, the native way of life was pushed further west in America and slowly extinguished, while something similar happened as the Zulu and other groups was they were forced further into the interior from South Africa. The rest of Africa was carved up by European powers over a dinner table in Berlin in 1884.

As one common saying put it: ‘whatever happens, we have got the Maxim Gun, and they have not’

While British dominance of the sea led to a general ostensible Pax Britannica, it hid increasing rivalry between states everywhere, and increasing pressure from revolutionaries and nationalists under the yoke of empires, both of which sometimes flared into short bursts of protest or war, premonitions of what might come.

As the sociologist Max Weber put it in 1894: ‘the unavoidable efforts at trade expansion by all civilized bourgeois-controlled nations, after a transitional period of seemingly peaceful competition, are clearly approaching the point where power alone will decide each nation’s share in the economic control of the earth, and hence its people’s sphere of activity, and especially its workers’ earning potential’. 

India is a prime example of what happened in this period.

The first voyage of the British East India Company in 1601 retuned profits of 200%. It and other similar European voyages attracted the intention of more and more investors in joint-stock companies.

The vast subcontinent was rich in things like pepper, nutmeg, cloves, indigo, textiles and cotton and produced a quarter of the planet’s total manufacturing. England controlled just 3%. It was ruled by the wealthy and powerful Mughal Empire. One emperor said that ‘‘the English were a company of base, quarrelling people and foul dealers.’ 

The Mughals were defeated by the East India Company at the Battle of Plassey in 1757. IT’s governor – Robert Clive – was by then one of the wealthiest self-made men in Europe at just 33.

By the early 19th century, to take cotton as an example, the value of India’s trade fell from £1-3 million to less than £100,000. While the value of British trade grew by a factor of 16.

One Indian complained after that the English ‘forcibly take away the goods and commodities of the merchants for a fourth part of their value; and by way of violence and oppression they oblige the farmers to give five rupees for goods that are worth but one.’

British governance also overruled traditional community practices leading to a worsening of famines. In the late nineteenth century, the famines were unimaginable. There were several in the 1860s and 70s. In Rajputana, a third died. In Madras, 20%. Millions perished across India while Esat India Company business went on as usual.  The historian William Dalrymple says that In that worst famine year, £100 million worth of goods in today’s money was transferred from India to London.

And The historian Mike Davis puts the blame for the extent of the crises squarely on capitalism. HE writes ‘the newly constructed railroads, lauded as institutional safeguards against famine, were instead used by merchants to ship grain inventories from outlying drought stricken districts to central depots for hoarding…In Madras city, overwhelmed by 100,000 drought refugees, famished peasants dropped dead in front of the troops guarding pyramids of imported rice.’

Something similar happened in Ireland between 1846-48 in a famine which was in part caused by food being transported out of Ireland while people were starving. Laws prohibited the eating food from the fields of absentee landlords.

In the past, lords in Ireland or local rulers and communities in India may have responded to the extreme conditions on their land, with their serfs, by providing local relief. For capitalists, joint-stock holders, and government officials, the bottom-line became more important, the crises more distant.

The British in India was likely the most extreme example of capitalist experimentation seen in history. It was, for a period, an entire country ran as a business.

Dalrymple writes ‘It wasn’t the British government, or the British people, that conquered India, but an unregulated private corporation, with profit as their sole motive.’

Even many British were critical. One Gentleman’s Magazine article wrote ‘Down the that rump of unconstitutional power, the East India Company, the imperious company of East India merchants!’

And IN 1830, parliamentarian James Buckingham declared that ‘the idea of consigning over to a joint stock association the political administration of an Empire people with 100 million souls were so preposterous that if it were now for the first time proposed it would be deemed not merely an absurdity, but an insult to the meanest understanding of the realm.’

Dalrymple calls it ‘the supreme act of corporate violence in world history.’

None of this is to claim there was a systematic bourgeois Darwinian profiteering ideology that led the charge into every corner of the globe. But the combination of militarism, nationalism, social Darwinism, profit, the hunt for raw materials led to what Lenin to an imperialism that Lenin called the ‘highest stage of capitalism.’

The American Rise

America – the new world – had everything the conquering bourgeoise needed; abundant land, resources, a system that imitated the English one, taking it even further. While we remember the British Empire as the biggest the world had so far seen – an Empire on which the sun never set – what’s striking, in retrospect, was how brief British ascendency was. No quicker than it had unleashed engines, iron, and industry on the world, two counties in particular were snapping at it’s heels; America and Germany.

That exhibition in 1851 marked the high point. Everywhere sought to copy. Switzerland, for example, had 34 engines in 1850 and 1000 twenty years later. Austria went from around 700 to over 9000. The Krupp Steelworks in Germany increased its workforce from 72 in 1848 to 12,000 twenty years later.

The extent of America’s growth though can be demonstrated with one figure. In 1800 the population was around five million. In 1900 it was seventy-six million. 

Americans spread west, improving on farming, manufacturing, and industry in the same ways their cousins across the Atlantic had shown them to. Only Americans were going further.

In the 1840s, 80% of American iron came from the ironworks in the midlands of Britain. Just a decade later, most of it was coming from American companies. In 1850, steam power output surpassed Britain. By 1886, steel had to.

25 years after the Crystal Palace exhibition, Philadelphia held their own; the 1876 Centennial Exposition. In every way it seemed to surpass the British.

In his book on the history of American Capitalism, historian Jonathan Levy writes that the Philadelphia exhibition had the biggest steam engine in the world, plus ‘steam locomotives, steam fire engines, steam farm engines, steam road rollers, and engines for steamships. There were also steam pumps, steam air compressors, steam pile drivers, gargantuan steam forging hammers, and even larger steam blast-furnace-blowers.’— Like the British fair twenty five years before, tourists, politicians, and industrial spies from across the world gawked at American innovation. Industrial espionage was common. Skilled factory workers in Britain were actually prohibited from emigrating. Machines couldn’t be exported. Some were smuggled out. Other spies drew machines from memory.

Brand after brand began in the late 19th century – Campbells, Coca-Cola, Kellogg’s. Hobsbawm sums up the innovation like this: ‘The rewards of invention and enterprise were ample: and the inventors of the steamship (1807), the humble tack (1807), the screw-cutting machine (1809), the artificial denture (1822), insulated wire (1827-31), the revolver (1835), the idea of the typewriter and sewing machine (1843-6) the rotary printing press (1846) and a host of pieces of farm machinery pursued them. No economy expanded more rapidly in this period than the American, even though its really headlong rush was only to occur after 1860.’

But lets once again take that place where all economies begin: farming. Here Americans had the biggest advantage. Between 1840 and 1880 square footage of farmed land tripled. In 1849-51, 191 patents were taken out relating to agriculture. Twenty years later, in a three year period, over 3000 were. Take just one, the most famous – barbed wire. It revolutionised farming by keeping livestock in place and increasing the number that could be looked after at once. The Range and Ranch Cattle Business of the United States (1885) noted, “The average cost per head of the management of large herds is much less than that of small herds.” I read somewhere that it meant animals were now a form of big capital.

One author wrote “The world has never seen anything comparable” to the surge in agricultural production,” and that “what European miners had done over the span of several centuries, the Americans accomplished in little more than in a single generation.”

There was a book called Where to go to get Rich. If you could get $150 deposit for a mortgage of $1000 – which would be paid off in just 6 years, you could go and buy a 160 acre plot on the great plains.

Now take some of the knock on effects comparable to the knock on effects of the invention of the steam engine.  America is obviously vast. The problem was getting all of this meat to the people who needed it, which was much harder than we imagine today. If you butcher it out West, it goes bad by the time it gets East – no refrigeration remember. If you don’t, you have to literally post herds of livestock on cattle cars across the country to be butchered where it’s needed, and that’s exactly what happened in somewhere like Chicago.

Chicago was a great and growing capitalist choke point. It connected the agriculture of the West to slaughter houses in the city and then on to the East Coast by the ever expanding train lines. In 1800 it was a tiny town. IT’s population from a few hundred to 300,000 in 1870 to over 1.1 million in 1980. By 1900 14 million animals went through the city.

The city became a great capitalist melting pot of slums and riches. The English American poet Rudyard Kipling visited Chicago and said its air was dirt, it had no beauty, its ‘canals were black as ink’ and it had ‘untold abominations’. But on the other hand, one English farmer in 1886 wrote “I have calculated that the produce of five acres of wheat can be brought from Chicago to Liverpool at less than the cost of manuring one acre for wheat in England,” I find that quote fascinating. That because of the forces unleashed by an English agricultural revolution, it became cheaper to get food from half way around the world, and that in this period, the British were increasingly looking over to America with an unease.

Titans

No figure more aptly symbolises both the momentum and contradictions of growing American dominance in this period than the Titans of Industry – the Robber Barons.

In 1835, the French writer Alexis de Tocqueville visited America and noted a unique American spirit. He wrote ‘The European navigator ventures on the seas only with prudence; he departs only when the weather invites him to; if an unforeseen accident comes upon him, he enters into port at night, he furls a part of his sails, and when he sees the ocean whiten at the approach of land, he slows his course and examines the sun. The American neglects these precautions and braves these dangers.’

Between de Tocqueville’s visit and the turn of the twentieth century, several American businessmen became still recognisable names – Andrew Carnegie in railways and steel, John D. Rockefeller in oil, J.P. Morgan in banking.

Similar to Big Tech social networks today, this was a period when single entrepreneurs could build businesses on a national, standardised, even global scale for the first time. They became the richest people in the history of the world, and not without controversy.

Take one of the most famous – Andrew Carnegie’s Carnegie Steel. In 1875 it produced around 20,000 tonnes of steel, fourteen years later it was producing over half a million tonnes, more than halving the cost per tonne in the process. The quality improved too – the weight track could take rising from 8 tonnes to 70. 

The Robber Barons are still debated by historians. They were clearly men of intense drive, passion, and in some cases charity too. But the success was bought at the cost of driving down wages, monopolising and price fixing, manipulating the young and naïve stock market, and getting cosy with lawmakers. Jay Gould even bought the New York World with the intention of controlling business information and manipulating financial markets.

Even a business magazine – Financier – was critical of railroad magnate Jay Gould, calling him “the most accomplished of all modern criminals.” Pulitzer said he was “one of the most sinister figures that have ever flitted bat-like across the vision of the American people.”’

And here’s a great quote from a US diplomat that really emphasises the conquering bourgeoise ethic of this period. He wrote of the first influential Robber Baron railroad magnate Cornelius Vanderbilt that: ‘[He] has combined the natural power of the individual with the factitious power of the corporation. The famous “L’etat, c’est moi” of Louis XIV represents Vanderbilt’s position in regard to his railroads. Unconsciously he has introduced Caesarism into corporate life. He has, however, but pointed out the way which others will tread….Vanderbilt is but the precursor of a class of men who will wield within the state a power created by the State, but too great for its control.’

Again, the dominance, the speed of growth, even the falling prices of consumer goods, came at the same cost – in many cases worse than in England – unsafe and unsanitary work conditions and slums, downward pressures on wages, booms and busts and long periods of unemployment, and an American working class that began to organise and strike. It led to violent stand offs between not just Americans and natives and industry and agriculture expanded west, but violent standoffs between the classes.

Hobsbawm writes that ‘In 1865 and 1866 every railroad, colliery, iron-furnace and rolling mill in Pennsylvania was granted statutory authority to employ as many armed policemen as it wished to act as they thought fit’.

The most well-known of these bourgeois security outfits were the Pinkertons, and the most well-known of these standoffs was a strike at Carnegies Homestead Steelworks in 1892. Hundreds of Carnegie guards hired faced off against thousands of workers, ending in a shootout in which the Pinkerton’s were defeated.  Eight died. The national guard were sent in, ending the strike. 

It’s incredible how often these violent stand offs happened. In 1892 alone, state militia’s were used to end strikes twenty-three times.

During the Great Railroad Strike of 1877 Chicago descended into chaos and violence. A thousand went to jail and a hundred were killed. Levy writes that ‘Make no mistake, by any possible criterion, in the Age of Capital the United States had 20 the most contentious and violent labor relations of any country in the world’.

The Corporation

In the US then, unionisation followed a similar pattern to elsewhere – securing some concessions, wage increases, regulations, and along with muckrakers like Ida Tarbell and Upton Sinclaire managed to focus attention on the practices of the ever growing corporate giants. In the US, this battle reached its peak with the Sherman Antitrust in 1890, which ultimately broke up Rockefeller’s Standard Oil into several smaller companies. 

The factors that led to the passing of the act were price-fixing  on the monopolistic railways, giving preferential treatment to big corporations over smaller farmers, using industry dominance to put up barriers to entry, manipulating the stock market, giving ‘rebates’ to favoured customers to weaken others, buying politicians, and needing to regulate interstate commerce,  and wider public outcry. It was an era of populist and farmer revolt against the corporations. The Promethean corporations though were Goliaths, and the act was only acted upon on rare occasions, and less so through most of the twentieth century.

The much more noteworthy trend was the continuation of what Hobsbawm recognised as the invisible hand of the market becoming visible, family-run business becoming rare, and giant bureaucratic corporations becoming the feature of American life.

The driving force though wasn’t necessarily individual greed. It was economies of scale in natural monopolies. In the end, it was cheaper to manufacture mass-produced goods at scale and more efficient to do so under one super-connected system like a railway or a network of oil refineries and dispensaries. Or take steel production:

Levy writes that ‘The productive capital wielded by, and organizational scale of, U.S. Steel were extraordinary. The Corporation controlled 213 separate factories, 41 mines, and over one thousand miles of railroad, spread out across the entire northeastern-midwestern manufacturing belt. It employed 162,000 individuals.’

McClure’s Magazine said of U.S. Steel, “It receives and expends more money every year than any but the very greatest of the world’s national governments; its debt is larger than that of many of the lesser nations of Europe; it absolutely controls the destines of a population nearly as large as that of Maryland or Nebraska, and indirectly influences twice that number.”

Who could compete with that?

Landes put it like this. ‘that smaller firms in traditional lines were pressed hard by bigger and more efficient competitors; many collapsed in spite of all the resistance, ingenuity, and sacrifice that old-style family enterprises are capable of.’

The modern managerial approach to business was invented in this period – bureaucratic hierarchies of accounting and management and micromanagement. The Penn Railroad being the first ever national business bureaucracy. At this level it became about buyouts, financing, and ever-increasing extinction of the smaller family businesses – just take a look at the long list of recognisable brands owned by corporations like Procter and Gamble or Unilever or Coca-Cola – all of this started in this era. It culminated in what became known as the Great Merger Movement at the end of the century. Between 1895 and 1904, for example, a total of 1800 firms in American were consolidated with the help of bankers like J.P. Morgan into just 157 corporations.

In his book on monopolies, historian Charles Geisst writes that ‘The entire period of American capitalism since the Industrial Revolution has been an unrelenting trend toward consolidation.’

It’s hard to know when to move on from the American picture in this story. This is all obviously very familiar to us – we could keep drawing it out to this day. It’s interesting how much more recognisable this is becoming to our world than just fifty, a hundred, a hundred and fifty years before, when we had single inventors or farmers improving their methods. But I think a natural pinnacle here is what Levy calls it ‘the greatest achievement in the annals of the industrial revolution’ – the Ford manufacturing line.

Again, one statistic says enough. In 1910, 20,000 Model Ts were manufactured by Henry Ford. In 1916, almost 600,000 were, and they were done so at half the price.

If we bring together everything we’ve looked at so far – engines, oil, national infrastructure, efficiency and productivity, Ford’s cars became the peak, the combination of all of it. 

It’s hard not to be impressed with the outcome. Remind yourself of what Rosen said about Newcomen’s focus and tactile ability being like playing the violin. How what seems very simple but precise – the very careful improving of a tiny valve or thread – required so much political, cultural, economic, technological infrastructure and knowledge behind it – otherwise we’d have been doing it from the first day we evolved. Now compare Newcomen’s engine to Ford’s factory two hundred years later. It took a while, but the blink of an eye considering we’ve been around as a species for at least 200,000 years.

Ford wrote the 1926 Encyclopaedia Britannica entry for ‘Mass Production’. IT declared that mass production “is the focusing upon a manufacturing project of the principles of power, accuracy, economy, system, continuity, and speed.”

He essentially took Newcomen and Watts attention to the details of the engine and writ it large imagining that the entire factory is an engine in the same way. Everything was standardised. Specific machines were built to bore individual holes, whereas others were still using standard drills. He was the first to use electric assembly lines. Ford’s Magazine told its readers that ‘Time is the Most Valuable Thing in the World.’

Everything was organised on the principle of efficiency. This was the period of Taylorism and the scientific management of employees. Fredrick Taylor, an engineer, studied the wasteful movements of workers, worked out the best place for tools and machines for the quickest most efficient access times; he employed ‘time keepers’ and using stop watches.

Ford reduced the production time for a Model T from 12.5 hours to 1.5.

This was America’s Crystal Palace moment.

His factory – the Rouge – attracted hundreds of thousands of tourists a year. Vanity Fair described it as “an American altar of the God-objective of Mass Production.”

One magazine article wrote ““We think of 200,000 automobiles,” Colvin gasped. “We lose all sense of proportion.” It meant “a million lamps; eight hundred thousand wheels and tires; ninety thousand tons of steel…2 million square feet of glass.”

One visitor noted that now “the machine dominates American life.”

CRASH: Build up to the Apocalypse

But the great American boom was heading to a great global bust. While financial crises, depressions, recessions have long been a feature of economic life, the speed and scope of investment under capitalism made them inevitably much deeper and longer lasting. We’ve all heard of the Great Depression of 1929 but there were also several warm-ups.

In 1873 there was a ‘panic’ that was the result of railway overinvestment. Bonds had been sold to finance their construction, which was happening at great speed, but construction cost more than anticipated, hundreds of railroads went into bankruptcy along with thousands of businesses with them. Banks failed, railroad stocks lost almost two thirds of their value, half of railroad companies closed their doors, 21,000 miles of railroad were lost. It was felt as far as Vienna where the stock market crashed. German shares were hit by as much as 60% and half of the world’s blast furnaces shut down.

The severity of it for ordinary people is debated by historians, although it’s agreed that it was not as bad as what was to come. The crash of 1893 shows how truly global the economy had become – involving investments in farming on Argentina and a bad harvest there, overinvestment in property in Australia, runs on banks out of fear in Europe and America, slowing economies across the world, more overinvestment in railways, debates about mining too much silver, and the closing of hundreds of banks across America. 1893 was even called the Great Depression/ But the even Greater Depression was to come.

There were other panics in 1896 and 1907 – some even call the last couple of decades of the 19th century the Long Depression – but 1929 was to eclipse them all. The causes of 1929 and all of these crashes, depressions, recessions, and gluts are debated and nuanced and complex – interest rates, gold standard, fiat money, federal intervention, silver mining, global markets, etc – but we’ll just think about an overarching one, one that makes the most sense to start to understand the others – that idea of optimism and confidence.

Take one statistic: that during the 1920s, the number of people in the US holding stock rose by a factor of sixteen. It was becoming much easier to buy them, they were becoming more common, there were more companies issuing them – some big, some profitable, some questionable. IN fact, buying stock had become something of a fashionable craze.

Levy puts it like this: ‘By 1929, some 2 million Americans had bought stock in some 770 different investment trusts; 3.5 million had opened a brokerage account. As Keynes would write, “When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.”’

But confidence in the casino was soaring. Take Ford’s General Motors, one of the biggest companies in the world. It’s profits doubled in just two years between 1925-1927. The big capitalist infrastructure corporations like US Steel and Rockerfeller’s Standard Oils – broken up into smaller companies – were all booming. Think about this period – the roaring twenties – combine this with how quickly radios and flashy magazines and fridges and cars were suddenly everywhere. This was the period of the birth of true consumerism, consumer culture, the Sears Catalogue was born, you could flick through new consumer goods, electricity was everywhere, skyscrapers. Wouldn’t you be confident?

Levy writes ‘stock speculation does seem to have become a highly energized activity, in which the desires of speculators slipped on and off one liquid security after another. Stockbrokers advertised nationally over the radio, to which an estimated 30 million Americans listened every evening in 1929.’

However, increases in profits were running ahead of increases of wages, inequality was increasing, stocks were driving higher and higher and then suddenly, in 1929, poor profits were reported, people panicked, and in one day – Black Tuesday – $14b of wealth was wiped out – 10% of US total. Over 2000 banks failed in America in just 1931 alone. World trade decreased 65%. About a quarter of Americans had no money to live on. Unemployment in some places reached 50%. In short, it was bad.

The British banker Montagu Norman wrote to the head of the Banque de France, “Unless drastic measures are taken to save it, the capitalist system throughout the civilized world will be wrecked within a year.”

Another banker looked back and said the American people ‘just sat there and took it….In retrospect, it’s amazing, just amazing. Either they were in shock, or they thought something would happen to turn it around….My wife has often discussed this with me. She thinks it’s astonishing, the lack of violent protest, especially in 1932 and 1933.’

And Levy sums it up like this: ‘The Great Bull Market of the 1920s was a product of mass communications and mass psychology, and was nothing short of a mass cultural spectacle.’

Apocalypse: WORLD WAR

Eagled eyed viewers might have noticed something. I’ve just jumped ahead to the crash of 1929 and am now jumping back to the rise of Germany and then forward to the outbreak of the first total, global, modern, industrial – maybe capitalist – war in 1914. There’s good reason for playing with time in this way. The build up to the GREAT Depression and the build up to the GREAT war seem to have something in common. Both had smaller premonitions – smaller crises, smaller isolated wars – before them, like sparks before an explosion. The timings might be slightly out of joint, but the logic – the building towards greater investments, greater mergers, greater machines, greater weapons, greater empires – seem to suggest that rather than being distinct GREAT cataclysms, they are connected. That they may have had the same factors, causes, part of that same recipe – was capitalism to blame for both?

It was that literal metaphor of the Titanic sinking in 1912 is so evocative. The greatest industrial capitalist machine ever built – steel, engines, aristocrats and businessmen, transatlantic luxury, all the mod cons, speed, and hubris – all of it heading confidently to a very modern disaster. 

What makes that metaphor even more evocative is that those shipbuilders in Britain – White Star and Cunard, the most technologically advanced companies of their day – were looking nervously across to Germany, whose passenger ships and navy were in their wake.

After unification in 1871, Germany had become the dominant force on the continent. 

In the space of three decades, German exports grew from half the size of Britain to becoming larger than Britain, second only to America. Their giant corporations transformed the country in the same way they had in the US; Thyssen in steel, Siemens in telegraphy, wiring, then electronics, Haber in fertilizers – these were huge companies.

But German ascendency proved how malleable capitalism was a system. Unlike the decentralised, individualistic approach in America, Germany – under Bismarck first, took a much more monarchical authoritarian approach, having a Kaiser with significant executive power – Bismarck’s ‘blood and iron’. Governments planned railways and operated mines, but liberalised the majority of the economy. Germany’s length of railways had surpassed Britain’s by 1875, once again showing how short Britain’s ascendancy really was.

Appleby writes ‘Once unification was achieved, Germany became the industrial giant of Europe. Bismarck had triumphed with his policy of “iron and blood” against what he rather dismissively called the “speeches and majority decisions” of his liberal opponents.’

Both Germany and America introduced protectionist measures and tariffs to protect their own young industries from British dominance. Max Weber said they created a “closed national state which afforded to capitalism its chance for development.”

So by the beginning of the twentieth century, it was no longer British dominance – it was a multipolar world of interconnected but competing corporations and empires. Germany had colonies in Africa, France and Britain all across the world, and even America had expanded into Hawaii, Puerto Rico, Guam, the Philippines, looking more and more like an uneasy Empire.

Japan had modernised too, imitating the Western model, building trains and infrastructure, winning a surprise military victory against Russia in 1904, and beginning to expand into the Pacific island and China.

It was a unique period. On the one hand – great powers of relatively equal wealth and might spread across the world suggesting coming competition – on the other hand, unlike say world war two or the Cold War – they all had reasonably similar capitalist, imperial systems – could they not co-exist? The period was like a room of balloons inflating until their edges pressed together, the expansion of each threating them all to pop.

In one literature review article I was reading, the historian Mark Harrison begins with an arresting line: ‘The nineteenth century saw the triumph of capitalism; the twentieth century saw the bloodiest wars in history. Is there a connection?’

We’ve seen how improvements in one capitalist industry – engines, say – led to innovation and growth in others – oil, metal, rubber, hundreds more – but what about tanks? Precision engineering of gun barrels, explosives? What about the forty million or so people killed around the world between 1914 and 1918? Was that struggle between the Great European powers – Germany, Austro-Hungary, the Ottomans on one side, Britain, France, Russia, the US on the other – not, even in part, the result of capitalism? Expansionism? Colonialism? The profit motive?

Writing during the first world war, Vladimir Lenin interpreted the catastrophe as capitalist powers fighting over global markets. Later President Eisenhour warned of the growing ‘military industrial complex’. Hobsbawm, for his part, thinks the link is obvious.

Imagine you’re a German military planner in 1910. All countries had them. Imagine thinking about how to invade France and Russia at the same time. This question is, more than any other time in history, one that involves understanding and controlling global supply chains, ordering and transporting raw materials, negotiating thousands of business relationships, getting the markets in oil, rubber, steel right, thinking about the train lines and shipping lanes used to transport them and troops, controlling telegraphy and messing and wider communications. In other words, war has become a global capitalist business. And war is the survival of the greatest, the wealthiest, the most powerful.

Hobsbawm, who argues capitalism is a central factor, points out that in all countries there were certain groups pushing for expansion, looking for new raw materials and new markets to sell to. 

He writes ‘it was the very process of global capitalist expansion which multiplied tensions within the overseas world, the ambitions of the industrial world, and the direct and indirect conflicts arising out of it.’

Continuing that ‘The rivalries between the capitalist powers which led to this division also engendered the First World War’ and that ‘much of the [capitalism didn’t cause the war] literature amounts to denying facts which were obvious enough at the time and still are.’

Germany resented Britain and France’s global empires. America’s reach, interests, and troops were spreading further across the Pacific, as were Japan’s. And – I think this is central – we often think of Empire as domination and the extraction of materials like rubber from the Congo or tea from India, but 60% of British cotton was exported to India and the East. Capitalist empires were about the control of markets – protecting your business interests, imposing tariffs, shrinking the competitors pie. Business was so global that everyone was thinking about what their investment return would be from half-way around the world and this is inevitably going to increasingly dominate the thoughts of policy makers, leaders, and, of course, imperialists and the military. To take one figure, more than half of all British savings were invested abroad in 1900.

One British Prime Minister in 1897 told the French ambassador that ‘If you were not such persistent protectionists, you would not find us so keen to annex territories.’

Or think about this quote.

‘I understood by a world policy merely the support and advancement of the tasks that have grown out of the expansion of our industry, our trade, the labour power, activity and intelligence of our people. We had no intention of conducting an aggressive policy of expansion. We wanted only to protect the vital interests that we had acquired, in the natural course of events, throughout the world.’ 

Who said that? The German chancellor, Bernhard von Bülow, in 1900. How can the eventual military clash not be thought of as part of this bigger capitalist story?

Hobsbawm put it like this: ‘Businessmen, always inclined to fill the blank spaces on the map of world trade with vast numbers of potential customers, would naturally look for such unexploited areas: China was one which haunted the imagination of salesmen – what if every one of those 300 millions bought only one box of tin-tacks? – and Africa, the unknown continent, was another’

This is where causes get interesting. Hobsbawm makes a compelling and influential case. Capitalism runs through everything from the nineteenth century on. So how can it not be a cause? But as we’ve learned, causes are almost always overdetermined – there are many of them – and their relevance or their explanatory power or their importance – can vary between moments, people, countries. And many are critical of just pointing to capitalism.

Some point to the relative peace before and after the wars comparative to other periods. The nineteenth century was quite peaceful when it came to devastating global conflicts. The post-war period to today has been described as the long peace. And this were both, of course, extremely capitalist periods of history. Others say, yes the two world wars were the worst in history, but that’s only because there were more people alive than any period before to fight and die them. Others that better technology a product of modernity but not necessarily capitalism. On top of this, stock prices on average fall during crises – why would capitalists want war? Some businesses might get richer from war, but there’s little evidence businesses actually explicitly push for it. Some industries might do very well from war, but many others don’t. The problem I think is that capitalism becomes so dominant that as an explanation it explains everything and in doing so explains nothing. And there are two other movements that I think also take some of the broader blame off the capitalist system.

The first was the growth of nationalism – the idea of a people, national pride, a national struggle, competition between groups, or at the extreme, xenophobia and racism. War based on these things preceded capitalism but only became more concentrated as national identity grew especially through modern media, the printing press and the spread of national stories, culture, language. 

Gavrilo Princip assassinated the Arch Duke of the Austro-Hungarian Empire, Franz Ferdinand, not because of capitalism but because of nationalism – he believed in a greater Serbia that Austria was occupying part of. These kinds of beliefs dominated the minds of many groups across Europe.

Second, related, Social Darwinism. As we’ve seen, it was used by many to justify capitalism, but it didn’t come from capitalism. The idea that peoples were locked in a biological, evolutionary, universal struggle, the survival of the fittest, was something a lot of people believed to be justified by science.

One German general even wrote a book just before the war that wrote that Social Darwinism ‘indeed ensured, by the conquest of inferior races and people or war against rival states.’ Again, this was a reiteration of a belief the preceded capitalism but was concentrated by a culture of social Darwinism. Another general believed in the ‘“biological necessity of war.” As we’ve seen, many business leaders like Carnegie and politicians believed this too. 

By the Armistace and the Great Crash, if we accept them to be events of a kind, hundreds of billions of dollars of destruction had been wrought across the world. Only to followed by a German nation on its knees, hyperinflation, the end of the gold standard, new ideological forces of fascism and communism, and ultimately a capitalism system that by the next round of war, looked like it wasn’t going to survive. But despite that, it came out in the postwar period stronger than ever. Like a heavyweight boxer on the ropes, bruised and beaten, it emerged victorious. But that’s a story for another day – because for now – capitalism had conquered the globe. 

Conclusions

This is the most difficult conclusion I’ve had to write. It’s such a totemic unfolding of events that can’t really be reduced to a single narrative. And it hasn’t finished. The most obvious question – has capitalism been a force for good or bad – is not a good one. For one, it depends on who you are, who you were, where you are, where you were. But if you’re thinking about the odds of being dropped into a life before capitalism or now, and talking about material well-being, you’d be a fool I think not to pick today. That comes with some obvious caveats, and it certainly doesn’t mean we live in the best of all possible worlds. If anything, history shows that things not only can but will change.

It’s also a problem generalising because, as the historian Will Durant once observed, historians like to talk about the big things while people’s ordinary lives continue unnoticed. We’ve talked about vast infrastructure projects and shipping, train lines and war, scientific institutions and imperial conquest, but not the grocery shop on the corner of the street, not the average businessman, not women’s liberation from the domestic sphere, not the impact of unions on the lunch break, or the mental health or literal health of an ordinary worker..

But when you’re talking about a general topic like this, without getting into the weeds, we can only really summarise on general terms. And I think there are two general concepts we can think about that play a big part in this story – and these are two concepts that I think encapsulate as many of those ordinary lives as possible –  freedom and change. If we think about these two things we can clarify the good things we value from this long historical shift, then from that we can see why the criticisms hold weight too.

The idea of freedom – in particular of individual rights freedom – as we’ve seen, has been one of the most common justifications for capitalism. Freedom from being fixed in a feudal great chain of being, economic freedom, in Smith’s phrase ‘to truck, trade and barter’, legal freedom from the monarch arbitrarily your property, freedom to live a life in a way not dictated by authority.

Even Hobsbawm was salutary: ‘‘The crucial achievement of the two revolutions was thus that they opened careers to talent, or at any rate to energy, shrewdness, hard work and greed. Not all careers, and not to the top rungs of the ladder, except perhaps in the USA. And yet, how extraordinary were the opportunities, how remote from the nineteenth century the static hierarchical ideal of the past!’.

However, capitalism has a Janus face too. If it’s freedom that we care about, it’s also what motivated the colonised to resist capitalist expansion, to be free from foreign interference, it’s what motivated the antitrust movement – to fight to be free from corporate power. And unions to be free from domination. What’s interesting, I think, is that the value that people point to as being a merit of capitalism is the very value used to critique capitalism too.

Marx was maybe the first to notice that even capitalists weren’t as free as first appeared – they were forced, by competition, into a spiral of competitive pressures to compete, grow, innovate, and reduce wages.

Ellen Wood puts it like this: ‘capitalist ‘laws of motion’: the imperatives of competition and profit-maximization, a compulsion to reinvest surpluses, and a systematic and relentless need improve labour-productivity and develop the forces of production.’

If capitalists aren’t free, then what does that say about workers. On the other hand, it depends how we define freedom. No-one, of course, is entirely free. We all have responsibilities, exist in a context that determines what we can do, have to do things for reasons beyond our own individual will. By freedom in this story, surely we have to mean freedom to choose between more options than a different period in history. If that’s how we think about freedom, then free time, availability of consumer goods, time and resources to choose one’s owns life goals and hobbies all become the factors by which we assess any political or economic system as being good or bad. To my mind, the more expansive this set of ingredients the better.

Which leads to the second point – change.

The history of capitalism shows that capitalism isn’t some natural human state. It can be shaped, moulded, changed, it can exist and it can not exist, it has different ages, different cultures, different laws, unions, technologies, different manifestations – from laissez-faire to corporatism, colonialism to financialism. 

Often those changes have been motivated by people who have felt the effects of a catastrophe, crises, slavery, colonisation, poor working conditions – who have felt their freedom to be diminished by the forces of capitalism, and have fought to change it. In that sense, the flows of capital have been redirected by laws as if they were seawalls and dams. National independence movements kick out or nationalises foreign business, workers fight for minimum wages, stock markets are regulated. 

One good example of this in Levy’s book is how the so-called ‘profit-motive’ needs further inducements to be effective. Why? Because the profit motive has always existed and not always led to capitalism. Those inducements are many, cultural, social, and political. Levy points to the Homestead Act, Federal Land Grants and bond loans for railways. There’s the granting of federal land for railways, military contracts, public investment, education, different tax breaks. Capitalism doesn’t sit still. It doesn’t exist as a natural thing outside of the culture. The recipe is a human creation and ingredients can be added or taken away.

Its why culture, the availability of economic, social, and cultural capital, their dispersal matters so much. Lone-geniuses and individualism I think less so. As we’ve seen, what there really was were thousands of people, with the tools, new physics, new ideas, engaging in the scientific method of trial and error to improve the minutia of processes, machines, approaches.The telegraph, for example, not invented by one buy by many pretty much simultaneously. The steam engine went through the hands of quite literally thousands of individuals making many tiny improvements to metalwork, ideas of pressure, needs for mining and so on.

It’s been a relationship between institutions and people that have set the tone for these cultural, social and political recipes. Whether that was the Royal Society and science, rights-based governments, patents, regulation about child-labour or antitrust. What’s clear is that this relationship is almost infinitely malleable – change is always not only possible, but a requirement of history.

So why end the story here? Some might say we should continue: the New Deal, the post-war boom, neoliberalism, multinationals, to the 90s and the fall of the Soviet Union? And that’s true. But I think it’s a story for another day because it’s a story that naturally falls into two parts. 

This first period was dominated by reasonably simple Newtonian physics, machines based on that physics, single person inventors, mechanical factories, family businesses growing into national ones, England being a ‘nation of shopkeepers’. But by the end of this period, all of that has changed. Single-person inventors are replaced by institutional science, a complex Atomic age. Family businesses are replaced with corporations. Imperialism with multinationals. When we talk of the issues with capitalism today, the frame has changed so much – that’s one of the reasons understanding this story is so important. We need the right concepts, the right language, the right analysis to guide us through the changes.

What’s incredible, as Hobsbawm points to, is that the age of laissez-faire was actually very brief. It was over before they knew it. The invisible hand morphed into the visible hand. Bureaucracy, finance, corporate consolidation, big government regulation, vast databases and balance sheets and accountants and analysis, stock markets and global impersonal networks of systems, seemingly out of the control of any single individual. I think the next chapter, when I get to it, will have to be an account of this change. What that means. Maybe the next chapter will be How Corporatism Conquered the World. I’ll get there soon.

Sources

Eric Hobsbawm, The Age of Revolution, The Age of Capital and The Age of Empire

Ellen Meiksins Wood, The Origin of Capitalism: A Longer View

David Landes, The Unbound Prometheus

Joyce Appleby, The Relentless Revolution

Christopher Bayly, The Birth of the Modern World

Peter McPhee, Liberty or Death

Emma Griffin, Liberties Dawn: A People’s History of the Industrial Revolution

William Rosen, The Most Powerful Idea in the World

William Dalrymple, The Anarchy

Mike Davis, Victorian Holocausts

Andres Palacios Lleras, Constitutional Traditions and Competition Law Regimes: A Primer 

Mark Harrison, Capitalism at War

The post How Capitalism Conquered the World appeared first on Then & Now.

Even when focusing on the simplest building blocks of its very beginnings, we can see how more than anything, subtle emphases – differences between well-intentioned observers – matters.

Because of this, I’ve carefully selected three main sources, and drawn on others. The first, and one I recommend the most, is a very readable textbook called Arabs and Israelis: Conflict and Peacemaking in the Middle East. It’s by three scholars: Abdel Monem Said Ally, Shai Feldman, and Khalil Shikaki, and it pays careful attention to different historical narratives before analysing them as even-handedly as possible.

Then, Palestinian-American historian Rashid Khalidi’s, The Hundred Years’ War on Palestine is from a Palestinian perspective, while Israeli writer Ari Shavit’s My Promised Land is from an Israeli one.

Of course, even referring to a perspective as ‘Israeli’ or ‘Palestinian’ is an enormous oversimplification, ignoring the vast differences there always are within and between groups. I’ve also drawn on a few historians who’ve been labelled Israeli ‘new historians’ – this loose group have challenged a traditional historical narrative in Israel, something we’ll come to. The literature on this is vast, intellectual humility is required, and so I will focus only on the origins. I’ll also return to a note on how and why I’ve approached this in the way I have at the end.

Towards the end of the 19th century, outbreaks of violence against Jews called pogroms increased across Eastern Europe.

In most countries, Jews were second class citizens. They couldn’t own land, vote, had different and varying legal rights, and were marginalised, lived in ghettos, and often randomly blamed for problems and were targeted and murdered.

This was coming to a head in the last two decades of the 19th century.

In 1881, in the Russian Empire, Jewish communities were attacked after Tsar Alexander II was assassinated and one of the conspirators had incidentally had Jewish ancestry. A wave of pogroms resulted. But this was just one of many instances. In modern day Moldova in 1903, 49 were killed, and many more injured, raped, and homes were attacked.

It’s important to remember that this is relatively borderless period. Palestine had been administered by the decaying Ottoman Empire for centuries. It was home to a small number of Jews already who lived peacefully with a majority of Arabs, mainly Muslims, with a few Christians.

This was a period very different from today. Empires were the norm, borders were always changing, but the idea of ‘nation-states’, that peoples had the right to self-determine, to govern themselves, was on the rise. In 1800 the population of Palestine was 2% Jewish – some 6700 Jews. By 1890, 42,000 Jews had moved there, while the Arab population was around 500,000. By 1922, the Jewish population had doubled to 83,000.

Towards the end of the 19th century, Jewish settlers started buying land from absent urban Arab landlords, leading to the displacement of the Arab peasants who had worked the land. 500 Arabs signed a letter of complaint to the Ottomans about this in 1891.

In My Promised Land, Ari Shavit describes the complex and sometimes contradictory motivations of the young Zionist movement at the end of the 19th century. For some, fleeing violence, it was a matter of life and death, for others, like his own British great-grandfather, it was a complex choice, one comprised of solidarity with those fleeing persecution, a romantic idea of the Holy Land, and a modern idea of it too – that a new thriving modern future could be built in a land that was widely and falsely seen as empty.

Judaic Studies professor David Novak has written: ‘The modern Zionism that emerged in the late nineteenth century was clearly a secular nationalist movement’. However it had deep religious and historical roots to draw on as well – that Palestine was the Jewish ancestral homeland, the Exodus from Egypt to the promised land, and later exiles from the region, and returns. But Zionism was never unified – many, many disagreed, religious and secular alike, and those who agreed or became Zionists did so for many reasons. Shavit points out that travellers from places like Britain didn’t see Palestine for what it was. They saw empty desert. They saw a few Bedouin tribes. They saw possibility. They didn’t see the Palestinian villages and towns, or maybe, he says, they chose to ignore them?

They also saw poverty – dirt huts and tiny villages. They believed, or said they believed – as many colonists also claim, it’s important to note – that the indigenous population would benefit from Jewish capital, education, technology, and ideas, and it’s true that many did.

Drawing on his grandfather’s diaries, Shavit asks why his grandfather ‘did not see’. After all, he was served by Arab stevedores, Arab staff at hotels, Arab villagers carried his carriages, was led by Arab guides and horseman, was shown Arab cities.

He uses a word: blindness. They were too focused on a romantic ideal of the area and the tragic oppression they were fleeing from. Shavit writes: ‘Between memory and dream there is no here and now.’

Not everyone was blind, though. At the beginning of the 20th century one Zionist author, Israel Zangwill, gave a speech in New York that reported that Palestine was not empty. That they would have to ‘drive out by sword the tribes in possession, as our forefathers did.’

This was heresy. No one wanted to hear it. He was ignored.

So between 1890 and 1913, around 80,000 Zionists emigrated. In the short period between WWI and WWII the same number again. But this snowballed with the rise of Nazism in the 1930s. Between 1933-1940, 250,000 fled Germany. In 1935 alone, 60,000 moved to Palestine. More than the entire Jewish population in 1917.

With this came millions in capital and investment, and successful settlements, villages, and towns began growing.

This huge demographic movement coincided with the most important shift of power in the region. The defeat of the Ottoman Empire during WWI and the subsequent British takeover of control.

During WWI, Zionists in Palestine provided valuable information to Britain, formed spy networks, and volunteered to fight.

At the same time, a coalition of Arabs supported Britain by rising up against the Ottomans in the Great Arab Revolt. In return they were promised an independent Arab state by the British.

But Britain made several contradictory promises in quick succession.

In 1917, the Balfour Declaration – a memo between Foreign Secretary Lord Balfour and Lord Rothschild – committed the British Government to a home for the Jewish people in Palestine.

The Balfour declaration neglected to mention the word Arab, who comprised 94% of the population. It read: ‘His Majesty’s government view with favour the establishment in Palestine of a national home for the Jewish people, and will use their best endeavours to facilitate the achievement of this object, it being clearly understood that nothing shall be done which may prejudice the civil and religious rights of existing non-Jewish communities in Palestine, or the rights and political status enjoyed by Jews in any other country.’

Here lies the root of the conflict; the contradictory promise: ‘when the promised land became twice promised’, in the words of historian Avi Shlaim.

Reporting this news in Palestine was banned by the British.

Instead, after the defeat of the Ottomans, the British and French divided the area into spheres of influence under the Sykes-Picot Agreement in 1916, leaving Palestine as a British mandate under British control. This was the famous ‘line in the sand’, made by people who had little knowledge of the area.

In a private 1919 memo only published 30 years later, Lord Balfour admitted: ‘In Palestine we do not propose even to go through the form of consulting the wishes of the present inhabitants of the country… The four Great Powers are committed to Zionism. And Zionism, be it right or wrong, good or bad, is rooted in age-long traditions, in present needs, in future hopes, of far profounder import than the desires and prejudices of the 700,000 Arabs who now inhabit that ancient land.’

The British Mandate gave the Jewish Agency in Palestine status as a public body to help run the country. Jewish communities and leaders formed institutions for self-defence and governance, which the British slowly recognised, essentially becoming a government in waiting.

As a result, outbreaks of violence began to increase in the 1920s, getting progressively worse. In 1929, hundreds of Jews and Arabs were killed and hundreds more wounded at the Western Wall in Jerusalem. Tensions rose, resulting in a series of massacres of Jews by Arabs, one of which in Hebron resulted in the death of almost 70 Jews and the injuring of many more. In response to the violence, the British declared a state of emergency. They proposed a legislative council that would be comprised of six nominated British and four nominated Jewish members, and twelve elected members, including two Christians, two Jews, and eight Muslims.

Seeing themselves as outnumbered on a governing panel in a country in which they were the clear majority, Palestinians rejected the proposal. Another was proposed that was slightly fairer to the Palestinians, but this time it was rejected by the Zionists and British parliament.

During the largest wave of immigration as the Nazis came to power, Palestinians called for a general strike demanding an end to Jewish migration and the sale of land to Zionists by absentee urban landlords, which continued to dispossess peasants working the land.

In 1936, an Arab revolt started when gunmen shot three Jews, setting off a series of attacks and counterattacks, leading to the deaths of around 415 Jews and 101 British. The British response was swift and brutal. 5000 Arabs were killed by the British, violence continued into 1937, and many were imprisoned and exiled. 10% of the Arab population were killed, injured, exiled, or imprisoned.

Kahlidi puts the figure higher, writing: ‘The bloody war waged against the country’s majority, which left 14 to 17 percent of the adult male Arab population killed, wounded, imprisoned, or exiled.’

Said Ally, Feldman, and Shikaki write that it was ‘disastrous for the Palestinians.’

In one instance an 81-year-old rebel leader was executed after being found with a single bullet. The British tied Palestinian prisoners to the front of their cars to prevent ambushes. Homes were destroyed. Many were tortured and beaten, including at least one woman.

However as a result of the unrest, in 1937 a British government report recommends two states for the first time. The Arab state, though, would not be Palestinian. It was to be merged with Transjordan.

In 1939, British government policy, put forward in a white paper, decided to call for a single jointly administered Palestine, and limited Jewish immigration and land sales.

The Holocaust changed all this. And even more disastrous for the Palestinians was the leadership’s decisions to side with Hitler in 1941, as he had told them that the Nazis had no plans to occupy Arab lands.

As the true extent of the Holocaust became clearer, the plight of European Jews became more urgent in the eyes of European and US policymakers. It’s crucial to remember the extent of the horror – six million Jews industrially murdered. After the war, there were 250,000 Jews living in refugee camps in Germany alone. Britain was bankrupt and was pulling out of many of its former colonies. Syria, Lebanon, Jordan, and Egypt gained their independence, and they formed the Arab League.

More plans were proposed, including the Morrison-Grady Plan in 1946 calling for two separate autonomous Arab and Israeli regions under British defence, which was again rejected by both Zionists and Palestinians.

A UN plan in 1947 proposed 43% of the area going to Palestinians, despite them comprising two thirds of the population. It was rejected by the Arab Higher Committee who called for a three-day general strike.

The newly independent (or quasi-independent, at least) surrounding Arab states were becoming increasingly hostile to Zionism and the plight of the Palestinians. But they also saw potential to either increase their own territory or to gain power in the region. Egypt saw itself as a new Ottoman Empire. King Abdullah of Transjordan saw Palestine as part of Transjordan. He thought that victory in the war against Israel would be secured in ‘no more than ten days.’

The USSR, seeing the potential of a state of Israel as a socialist ally, provided weapons to the Zionists. Seeing themselves as decisively outnumbered and outgunned, with no tanks, navy, or aircraft (the Arab countries, to varying degrees, did have this equipment), Ben-Gurion secured a deal with Czechoslovakia for $28m worth of weapons and ammunition, increasing their supply by 25% and ammunition by 1000%. In 1968, Ben-Gurion remembered, ‘the Czech weapons truly saved the state of Israel. Without these weapons we would not have remained alive’.

By now the Palestinians and Zionists were in a state of civil war, with continued attacks and counterattacks.

In early 1948, knowing the British would leave, Arab countries were preparing to invade and Jewish state institutions-in-waiting prepared a plan of defence. And there were already Jewish settlements outside of the proposed UN partition boundaries, and of course, many Palestinian areas within.

Zionist leadership prepared what was referred to as Plan D, which included, ‘self-defense against invasion by regular or semi-regular forces’, and ‘freedom of military and economic activity within the borders of the [Hebrew] state and in Jewish settlements outside its borders’.

All of this was made worse by British bankruptcy and a hard-line Zionist militant group called Irgun, who bombed the British Mandate headquarters, killing 92 people, and were involved in skirmishes with Palestinians. In one attack in April of 1948, Irgun killed 115-250 men, women, and children in a village near Jerusalem, despite a non-aggression pact.

So on 15 May 1948, the British left. The day before, David Ben-Gurion declared the establishment of the new state of Israel. The day after, a coalition of Arab forces from Egypt, Jordan, Syria, Lebanon, and Iraq invaded.

For the most part, Israel captured and defended the areas allotted to them by the 1947 UN plan, as well as areas outside of it.

Hundreds of thousands of Palestinians were forced to flee their homes. Palestinians call it the Nakba – the Catastrophe.

The result of the war was the Gaza strip coming under Egypt’s control, the West Bank contested but under the control of Jordan’s forces, to be annexed in 1950, and anywhere between 400,000 and a million Palestinians displaced.

There is complexity, and this is only a small fraction of this story, but it’s impossible to ignore that the Nakba was a catastrophe – power differentials, foreign influence, empire, failures to compromise, perpetration of atrocities, the loss of homes and land that would never be returned to. The Palestinians were divided, outnumbered, and kept weak by Britain, Zionists, the US, the USSR and their surrounding Arab neighbours.

Journalist Arthur Koestler famously said that, ‘One nation solemnly promised to a second nation the country of a third’.

While British Prime Minister Neville Chamberlain had tried to limit immigration to Palestine, he was replaced by Winston Churchill, one of the biggest supporters of Zionism in British public life. In 1937 Churchill said of Palestine that: ‘I do not agree that the dog in a manger has the final right to the manger even though he may have lain there for a very long time. I do not admit that right. I do not admit for instance, that a great wrong has been done to the Red Indians of America or the black people of Australia. I do not admit that a wrong has been done to these people by the fact that a stronger race, a higher-grade race, a more worldly wise race to put it that way, has come in and taken their place’.

In response to the UN planning to partition Palestine in 1947, several Arab countries warned, or even threatened, violence against Jews in their own countries and expulsion. In 1950 and 51 Iraq withdrew Jews of their Iraqi nationality and property rights. Antisemitism in Yemen led to the migration of 50,000 Jews between 1949-1950. There were attacks on Jews in Tripoli before the war in 1945. Whether punitive policies and attitudes began before the war or as a result of it is a matter of debate.

What becomes clear, though, is that moral questions depend on the minutiae of often unanswerable questions; ones that historians are still, often acrimoniously, debating.

Who, which groups and subgroups, were most responsible for violence in ‘47? Were 19th century Zionists ‘blind’, ‘altruistic’, in existential danger? Are they colonisers in the usual sense? Or victims fleeing from violence in Europe?

Shavit writes that, ‘these pilgrims do not represent Europe. On the contrary. They are Europe’s victims. And they are here on behalf of Europe’s ultimate victims.’

Anyone who tells you that answers are easy to come by are wrong. Antisemitism was at its height in the 1940s. The Holocaust had just happened. Jewish immigrants had purchased land and settled in Palestine peacefully for decades. But amongst these difficulties, there are some indisputable facts. The UN partition plan offered Palestinians 43% of the land despite them comprising 68% of the population. And around 700,000 Palestinians became refugees.

Shavit cites a letter written from an Israeli he knew who fought the 1947-48 war. He wrote about the time: ‘when I think of the thefts, the looting, the robberies and recklessness, I realize that these are not merely separate incidents. Together they add up to a period of corruption. The question is earnest and deep, really of historic dimensions. We will all be held accountable for this era. We shall face judgment. And I fear that justice will not be on our side’.

And this is one report from an Israeli military governor, reporting a conversation with Palestinian dignitaries when Palestinians were forced from the small city of Lydda in 1948:

DIGNITARIES: What will become of the prisoners detained in the mosque?

GOVERNOR: We shall do to the prisoners what you would do had you imprisoned us.

DIGNITARIES: No, no, please don’t do that.

GOVERNOR: Why, what did I say? All I said is that we will do to you what you would do to us.

DIGNITARIES: Please no, master. We beg you not to do such a thing.

GOVERNOR: No, we shall not do that. Ten minutes from now the prisoners will be free to leave the mosque and leave their homes and leave Lydda along with all of you and the entire population of Lydda.

DIGNITARIES: Thank you, master. God bless you.

And in many cases, people left before the war broke out. In one case, the Israeli mayor even begged the Palestinians to stay. Although this was the only case.

For many years, the ‘Israeli’ narrative – although to call it that is far too simplistic, ignoring the disagreements, differences, and dissent within the conversation – was that the surrounding Arab states called upon the Arabs in Palestine to leave so that they could invade.

School books in Israel taught that Israelis wanted peace, but they were surrounded by enemies who wanted their destruction; that the Arabs fled to safety as a natural process of war.

This was challenged in the 1980s as official archives were opened, and a generation of ‘new’ Israeli historians looked differently at the period.

Benny Morris, one of those new historians, argued that there was no master plan of expulsion. However, it was understood that it was in the leadership’s interests to establish a Jewish state with as small of a minority of Palestinian Arabs as possible.

Most say the order came from Ben-Gurion himself. Those saying this include the later Prime Minister Yitzhak Rabin, who reported in his autobiography that Ben-Gurion had given him the order to expel the Palestinian Arabs in Lydda. When Rabin tried to publish this in 1979 it was censored.

What’s clear is that there was an overwhelming atmosphere – of fear, of exodus, of violence and beatings, of many massacres, of war in general – that led to 700,000 Palestinians leaving their homes, never to return.

Sources:

Understanding Israel and Palestine: A Reading List

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