I am still waiting for my copy of Sven Beckert’s “Empire of Cotton: A Global History“, which Amazon promised me for January. But I have read Eric Herschthal’s review in Slate, and I am a bit perplexed.
Herschthal offers qualified praise for the book, that he considers “remarkable and unsettling”. But why? Because the book

insists that many of the myths we tell ourselves about capitalism–how it functions best when government gets out of the way, how it broke clean from slavery–are as false today as they were during its 500-year history. In Beckert’s account, not only does slavery play a pivotal role in capitalism’s rise, but so does the state. Governments supplied the guns, built the roads, enacted the tariffs, and regulated the markets that made, and continue to make, capitalism thrive.

Empire of Cotton.jpg

Herschthal makes the interesting but somewhat dubious point that the “history of capitalism” is gaining new attention after the financial crisis. Is this really true? The names of many great economic historians immediately come to mind, from Eric L. Jones to Joel Mokyr, not to mention Nobel Laureates Robert Fogel and Douglass North. They may not have been, though, “historians of capitalism” in the sense that Herschtal appears to have in mind, since he writes:

If anything like “the history of capitalism” existed, it exalted entrepreneurs and inventors, extolled the efficiency of the factory and the free market, and suggested that the whole system thrived only in the absence of a regulatory state.

So, Herschthal associates proper history of capitalism with a reflection on the role of government and slavery, and improper history of capitalism with history of entrepreneurs and inventors. Now, this is a rather complicated issue: certainly “real” capitalism emerged in history intertwined with government actions and regulations of different kinds. Lobbying is not “new” in any sense. And yet was government patronage what defined capitalism, and made for its success? At the end of the day, was this or that kind of regulation/protection/subsidy more important than entrepreneurial ingenuity and creativity, for industrial capitalism to transform the world?

Certainly American slavery played a role in the global supply of cotton, which in turn was an important part in the British industrial take off. And yet, as Herschthal asks, then “Why did the British government, at precisely the moment cotton was fueling its Industrial Revolution, back the anti-slavery movement?”

One answers lies perhaps in those very ideas that suggested the whole system may thrive by keeping the regulatory state to a minimum: classical liberalism. During the American Civil War, John Bright and Richard Cobden were known as “the two honourable members from the United States” in the House of Commons, though they had never abandoned their committed anti-interventionism (read Cobden here). Workers in Manchester famously sided with the North, in spite of their own self-interest, which was hindered by the blockade of confederate exports.

This is not to say that the British cotton mills did not take advantage of cotton imports from the American South. But to deduce that slavery played an _essential_ part in the development of capitalism, or better, to say that early capitalism couldn’t make it without it, is a rather difficult logical jump. Both government intervention and slavery are ubiquitous in human history: industrial capitalism is not, and it developed into what Deirdre McCloskey calls “the great enrichment” in a very peculiar situation. So, we shall search for what differed from previous periods – thus slavery, which was widespread in human societies, is hardly the right single “enabling factor” of capitalist development.

On a slightly different point… Read David Levy and Sandra Peart on why Carlyle coined the sentence “dismal science”. I think it is safe to say that economics (and those classical liberal ideas that were, for quite a few years, associated with it) played an _emancipating_ function too. It discovered consumers, and by placing a new emphasis on peaceful cooperation, dethroned ideas such as the “great man view of history” so dear to Carlyle. Perhaps there was something exhilarating and inspiring in the stories of inventors and entrepreneurs, and “history of capitalism” should thus take notice of them.