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CAPITALISM AND ITS CRITICS

A HISTORY: FROM THE INDUSTRIAL REVOLUTION TO AI

JOHN CASSIDY

CAPITALISM AND ITS CRITICS

A History: From the Industrial Revolution to Al

John Cassidy

Farrar, Straus and Giroux New York

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Table of Contents

A Note About the Author

Copyright Page

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To Lucinda, Beatrice, and Cornelia

Introduction

All history books are products of their own time, this one included. The original idea for it came to me in 2016, during the insurgent presidential campaign of Senator Bernie Sanders, and I made the final edits to the text shortly after Donald Trump was elected to a second term. Sanders, you may recall, claimed that the US economy was “rigged” and promised to make it work for “working families and not just for the billionaire class.”1 Trump was a billionaire himself, of course, but that didn’t prevent him from positioning himself as the tribune of a forgotten working class and parlaying the grievances and discontents of many non-rich Americans all the way to the White House, twice.

The rising disaffection with American capitalism that Sanders (and, indeed, Trump) drew upon in 2016 proved to be a lasting phenomenon. In 2018 the polling firm Gallup found that fewer than half of Americans ages eighteen to twenty-nine had a positive view of capitalism, compared to slightly more than half who had a positive view of socialism.2 Rising antipathy toward capitalism wasn’t confined to the United States. In 2017 the British polling firm Populus asked people to list the traits that they associated with socialism, capitalism, and various other “isms.” For capitalism, the most commonly chosen phrases were “innovative,” “greedy,” and “selfish.” For socialism, the three most popular choices were “fair,” “for the greater good,” and “delivers most for most people.” The survey was commissioned by the pro–free market Legatum Institute. “I believe that free enterprise policies are a key driver of prosperity,” Matthew Elliott, a senior fellow at the institute, said when the poll was released.

“Sadly though, it appears that a large proportion of British voters do not share this view.”3

Originally, I conceived of the book as a shortish history of contemporary capitalism and the economic debates it has engendered, from the collapse of the Soviet Union to the present. However, I was quickly forced to confront the fact that many of the criticisms of modern capitalism —from complaints about rapacious platform monopolies and self-dealing bankers to laments about the impact of technology on working conditions and inequality—have roots in economic developments and debates that took place during the rise of industrial capitalism in Britain and even before that. Writing in the late eighteenth century, Adam Smith, no enemy of the profit motive, railed against colonial monopolies like the East India Company, whose privileged position and egregious self-dealing marked them out as preindustrial analogues of the too-big-to-fail banks that taxpayers bailed out during the Global Financial Crisis of 2007–2009. (Like the banks, the East India Company, which effectively ruled great swaths of the subcontinent, received a massive government bailout.)

As factory capitalism developed in northern England, some preindustrial craft workers broke into textile mills and smashed new machinery that was threatening their livelihoods. For a long time, the Luddites, as they came to be known, were dismissed as antediluvian enemies of modernity. In a world where artificial intelligence is now threatening to eliminate countless jobs, their concerns about new technology look more reasonable. Criticisms of the growing gap between rich and poor were another feature of early industrial capitalism. In 1829 the Romantic poet Robert Southey wrote: “Great capitalists become like pikes in a fishpond, who devour the weaker fish; and it is but too certain that the poverty of one part of the people seems to increase in the same ratio as the riches of another.”4

Eventually I decided to expand the project into a broader history of capitalism and its critics. To be sure, I couldn’t hope to cover everything, or nearly everything. Back in the 1950s, the English historian G. D. H. Cole wrote a history of socialist thought that took up seven volumes. The first volume alone, which was devoted to “The Forerunners,” contained fifty principal characters.5 In whittling things down, I was greatly helped by the fact that, over the centuries, the central indictment of capitalism has remained remarkably consistent: that it is soulless, exploitative, inequitable, unstable, and destructive, yet also all-conquering and overwhelming. “Our true monarch is not Victoria but Victor Mammon,” John Ruskin, the English art critic and philosopher, wrote in 1866.6 A hundred and fifty-five years later the NPR journalist and podcaster Rund Abdelfatah commented: “Capitalism is an economic system, but it’s also so much more than that. It’s become a sort of ideology, this all-encompassing force that rules over our lives and our minds.”7

In tracing efforts to critique capitalism and resist its onward march, I have tried to explain the various iterations that the system has gone through, from the rise of factory production, to the switch from sole proprietors, to large corporations as the dominant form of capitalist enterprise, all the way up to the digital revolution and its latest offshoot, the commercialization of artificial intelligence. But this is not a standard economic history. Although it contains discussions of GDP figures and wage trends and technological developments, as well as some political history, it concentrates mainly on the lives and works of individual writers and critics. By engaging with the theories and commentaries of my subjects, I have sought to illuminate how the world appeared to them in their time and their environment. If there is a conceit to the book, it lies in trying to tell the history of capitalism through the eyes of its critics.

Many of my subjects are economists, but not all. Two of them are groups: the Luddites, and the dependency theorists of the 1950s and ’60s who emphasized the barriers to economic development facing postcolonial nations. Of the individuals profiled, some led the conventional lives of academics, although their thinking was far from conventional. (Thorstein Veblen, John Maynard Keynes, Joan Robinson, and Stuart Hall are examples.) Others were gentlemen scholars (William Thompson and Thomas Carlyle); journalist-authors (Henry George, John Hobson, Paul Sweezy); socialist revolutionaries (Karl Marx, Rosa Luxemburg); and economists who worked for international organizations (Raúl Prebisch and Samir Amin). One of the subjects—Friedrich Engels—doubled as a revolutionary and a capitalist co-owner of a Manchester cotton mill. Another, Eric Williams, started out as a historian and ended up as the prime minister of his country, Trinidad and Tobago.

In addition to Luxemburg and Robinson, some more pioneering women feature in the book. The chapters on Anna Wheeler, an Irish feminist who was an associate of William Thompson, and Flora Tristan, a French writer who called for the establishment of a General Union consisting of all male and female workers, discuss the rise of female factory workers, who outnumbered male workers in many early textile factories. The chapter on Silvia Federici, an Italian expatriate who cofounded the New York branch of Wages for Housework, focuses on domestic work, which typically has been unpaid and carried out by women. As Federici and her colleagues emphasized, this unwaged labor is essential to the maintenance and reproduction of the capitalist workforce, without which the system couldn’t operate.

The history of capitalism is usually told through accounts of depersonalized forces; competition, technology, colonialism, profit, and so on. While there are advantages to this methodology—it helps us see the broad trends that have shaped modern life—there is also a potential downside to it. Certain historical outcomes, such as the rise of fascism or the demise of communism, can appear to have been largely inevitable. Focusing on individual critics at definite points in time allows us to see the contingency that is also part of history, the avenues and ideas that were not pursued, and the enduring possibilities of imagining other economic arrangements.

During the first half of the nineteenth century, critics from the right as well as the left made a moral argument about how the factory system dehumanized workers and upended long-established social norms. The word socialism came into usage in Britain and France, but its meaning then was very different from its modern association with redistribution programs and state intervention more generally. Many early socialists had little faith in the government, which they regarded as a corrupt institution dominated by the upper orders. They believed the best way forward was to establish self-ruling cooperative communities in which both work and rewards would be shared on a more equitable basis. After some efforts to establish these new communities foundered, Marx and Engels, in their 1848 Communist Manifesto, dismissed the ideas that motivated them as “utopian socialism.”8 Marx, particularly in his early writings, emphasized that industrial capitalism alienated workers from their true selves, but his main goal was to discover and analyze the system’s laws of motion. He focused on the system’s inner contradictions and the emergence of the industrial working class, the proletariat, as a revolutionary force.

In the United States and other countries, the late nineteenth and early twentieth centuries saw the emergence of huge industrial combines and a spendthrift plutocracy, which Thorstein Veblen, for one, subjected to merciless inspection. This period also saw the rise of imperialism, which Vladimir Lenin famously described as the highest stage of capitalism. Rosa Luxemburg, a Polish associate of Lenin in the socialist Second International, but very much her own thinker, argued that the capitalist system could survive only by assimilating and destroying precapitalist societies. Lenin and Luxemburg viewed the outbreak of the First World War as confirmation of their theories, but their hopes that it would lead to wholesale revolutions in the imperialist countries were dashed. The only successful uprising took place in peasant-dominated Russia, where Lenin’s Bolsheviks eventually seized power and were then confronted with the monumental task of building a socialist economy from scratch.

Capitalism survived the Great War, but it was about to meet its greatest test. During the Great Depression, economic output plunged, jobless rates skyrocketed, and political extremism flourished. Karl Polanyi, who witnessed the rise of authoritarianism in Austria firsthand, concluded that fascism and socialism were the only logical outcomes of unbridled capitalism. Would-be reformers looked for a less drastic alternative. Keynes, a defender of free market capitalism but not an uncritical one, provided the theoretical justification for a fix that in retrospect seems obvious: using tax and spending policy to drag the economy out of slumps. This approach, when it was combined with the expansion of social insurance promoted by Franklin Delano Roosevelt and William Beveridge, and the reforms of the international economic system introduced at the 1944 Bretton Woods conference, seemed to cure capitalism of some of its pathologies—only for them to turn up again in spades after the Keynesian system unraveled, the Soviet Union collapsed, and the neoliberal era dawned. The “end of history” lasted for but a couple of decades before it generated a fierce populist backlash.

Throughout the book, I emphasize the global nature of capitalism, which was evident even before it metamorphized into industrial capitalism.