Economic Growth and the Historicity of Capitalism

NewYork1One of the central characteristics of the new history of capitalism has been its tendency to defer the question of just what “capitalism” is. The project’s enquiry starts with the question, not with a predetermined answer. But in order to know where to look, historians have to start with some idea about what makes a place and a time capitalist. As Tim Shenk points out in a recent article in The New Republic, the clue around which they converge is economic growth.

In a distinctly critical tone, Shenk accuses the historians under his microscope of “the routine conflation of economic growth with capitalism. Though far from the only subject addressed by these historians,” he goes on, “economic growth serves a crucial purpose in their accounts, in which capitalism’s ability to satisfy the yearning for more becomes its trump card.” For Shenk, apparently, identifying capitalism by its historically unique generation of compound growth is to unknowingly step into the shoes of the very economists historians “love to complain about.” The importance of growth in these historical accounts is tantamount, according to Shenk, to “the idea that economic growth is a necessary feature of collective life.” Historians are just as much “apostles of growth” as their economist siblings.

Of course, compound economic growth may not keep going forever; it might not even be desirable. Shenk seems to assume that this undercuts the “conflation of economic growth with capitalism,” exposing a flaw in the historical project. “The invention of modern economic growth—capitalism, if you like—reshaped the world,” he writes. “But it was part of an ensemble of larger transformations that we are still grappling to understand, and control.” Whatever those larger transformations were, I think he’s saying, those were the ones that really mattered, and they’re not the ones addressed by the historians of capitalism.

Shenk’s argument, if I’m reading it right, aligns with Naomi Lamoreaux’s critique of the new history of capitalism in the Journal of American History‘s recent “Interchange.” If we’re looking for a “radical shift in human experience,” she argues, we won’t find it in capitalism; and if we want to understand the end of the Malthusian trap and the beginning of “modern economic growth” we should be telling a “different story from what most historians of capitalism would tell.” The view Lamoreaux was opposing was succinctly put by Louis Hyman: “capitalism is what made that growth possible” (see pp.518-19, 526-27).

For Lamoreaux, the whole concept of the “history of capitalism” is worrying because it “takes for granted something that should be a question by assuming that economic behavior is fundamentally different in so-called capitalist societies” (p.509). In other words, Lamoreaux rejects the central premise of the enterprise: that capitalism is contingent, historical, and therefore unique. The counterpoised vision of a human economic behaviour that is “fundamentally” the same in all times and places is precisely the assumption that the history of capitalism seeks to puncture, one that has played a key role in the intellectual history of economics and the ideology of western liberalism.

Emphasizing capitalism’s historicity raises questions about where, when, and how it began—but also about its ending. If as Shenk remarks, most historians have used compound growth as the best rule of thumb for identifying where capitalism is present, we should take seriously the question he poses: “what if growth stalls?” To do so would mean comprehending the possibility that without growth, capitalism will not work at all. Like everything else in history, it might not in fact go on forever.

8 comments on “Economic Growth and the Historicity of Capitalism

  1. Even if “compound growth” (presumably net of depreciation) did stop, you would still have a massive stock of capital per worker that would be fundamentally different from preindustrial societies which were intensive in labour and land but not so much in capital.

    • Tom Cutterham says:

      Yes, is definitely not a question of going “back” to “preindustrial” conditions. The point is to see capitalism as a transformative historical process with a beginning — and an end.

  2. Michael Meranze says:

    Tom–i’m not sure that i can see how Shenk’s critique is the same as Lamoreaux’s. Lamoreaux wants to challeng the idea that there is any historicity to capitalism–instead we should challenge the notion that there is any period that can be considered capitalist as such. And if there was no before there can be no after.

    Shenk on the other hand is arguing against the new historians refusal to provide a conceptual core isn’t he? I doubt he would argue the same way about Arrighi or say Brenner. Moreover, defining capitalism as economic growth is problematic as James Vernon has pointed out in his recent *Distant Strangers* where he offers a much different accounting of the breakthrough from the Malthusian trap than either the new historians or Lamoreaux would.

  3. Tom Cutterham says:

    Michael, thanks: I think you may have grasped Shenk’s aim better than I did, regarding this problem of conceptual content. What struck me in the article though was the way he seemed to assume that, if you use growth as a marker of capitalism, then you must be an advocate of both and a believer in their perpetuity. My worry is that if you don’t understand capitalism as the factor that generated modern growth, and all the transformations attendant on that (as apparently Hyman does, for example), then what explanatory capacity does your concept of capitalism hold on to? That’s where I think his position meets Lamoreaux’s: if capitalism isn’t bounded by the historical period of modern economic growth (or, to put it another way, if when we try to understand capitalism, growth is not the thing we’re trying to understand), then doesn’t it fade away into something much less important?

    • Michael Meranze says:

      Tom–i’m not sure why that follows. What if you take capitalism as a system of production and exploitation? Would that make understanding it any less important? What if modern growth has less to do with capitalism than say changes in family formation that enabled moving beyond thr malthusian trap. I think that the tendency to equate it with growth is to meet it at its strongest tendency. But that is not the only way to conceive of its importance i don’t think.

  4. […] as far as Shenk is concerned, now no better than those evil reductionists the economists. (See the Junto blog for its reaction to […]

  5. […] volume on Slavery’s Capitalism, ought to read what Clegg has to say. In earlier posts at The Junto, I’ve pointed out the way new historians of capitalism have made a feature out of […]

  6. […] volume on Slavery’s Capitalism, ought to read what Clegg has to say. In earlier posts at The Junto, I’ve pointed out the way new historians of capitalism have made a feature out of […]

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