Latest / Book Club with Jeffrey Sachs / Season 5 Episode 7: Sven Beckert; Capitalism: A Global History

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Season 5 Episode 7: Sven Beckert; Capitalism: A Global History · Book Club with Jeffrey Sachs

• 0:00
  SPEAKER_01: Hello, I'm Jeffrey Sachs.
• 0:01
  SPEAKER_01: Welcome to Book Club, a monthly conversation with world-leading authors who have written scintillating, inspiring, and remarkably important books about history, social justices, and the challenges of building a decent world.
• 0:21
  SPEAKER_01: Welcome to Book Club with Jeffrey Sachs, and I'm absolutely thrilled to have a wonderful world-leading historian and friend and great scholar with us today, Professor Sven Beckert of Harvard University, who has written an absolutely remarkable single volume.
• 0:44
  SPEAKER_01: It's a huge one-volume history of capitalism.
• 0:49
  SPEAKER_01: Not just a history of capitalism, but as the subtitle says, a global history of capitalism, meaning that it spans the entire world from Tierra del Fuego up to Siberia, the Americas, Europe, Africa, Asia.
• 1:08
  SPEAKER_01: It's all here.
• 1:09
  SPEAKER_01: It's a thousand years of coverage.
• 1:13
  SPEAKER_01: It starts in Aden in the medieval period.
• 1:17
  SPEAKER_01: We're going to start there ourselves in the discussion.
• 1:21
  SPEAKER_01: But let me first say that Sven Beckard is the Laird Bell Professor of History at Harvard University.
• 1:28
  SPEAKER_01: I'm proud to say he's a PhD of Columbia University.
• 1:34
  SPEAKER_01: He is author of uh not only this fabulous book, but one of my favorite all-time books, uh, Empire of Cotton, which uh is also reprised in this book.
• 1:47
  SPEAKER_01: Cotton was one of the great early global industries of uh global capitalism.
• 1:54
  SPEAKER_01: And he told that story remarkably in his award-winning study, Empire of Cotton.
• 2:02
  SPEAKER_01: Uh so if you think about that great book as telling us about how one key industry shaped the world and shaped politics and society and economy uh and uh biogeography, this book tells it all.
• 2:18
  SPEAKER_01: So welcome, Sven.
• 2:20
  SPEAKER_01: Great to be here, Jess.
• 2:21
  SPEAKER_01: So happy uh that we're together and that you've written this uh really remarkable study.
• 2:28
  SPEAKER_01: Ah, capitalism's a very big subject, uh, and it's a world subject.
• 2:32
  SPEAKER_01: And as your book makes clear, it's not a recent topic, it's at least a thousand years old in some form.
• 2:40
  SPEAKER_01: But you tell the history of it from a global point of view because, in a way, it is intrinsically a global system.
• 2:48
  SPEAKER_01: Uh, capital doesn't know, respect, much care about national boundaries, though nation states are huge shapers of capitalism.
• 2:59
  SPEAKER_01: So it's very, very interesting.
• 3:00
  SPEAKER_01: It's a global enterprise heavily managed by competing nations, and therefore it's a politically and economically and financially complex enveloping institution.
• 3:16
  SPEAKER_01: Take it from there, please.
• 3:17
  SPEAKER_01: Right.
• 3:18
  SPEAKER_00: So thank you so much, Jeff.
• 3:20
  SPEAKER_00: I wrote the book because we live now in a world that is deeply structured by the capitalist revolution.
• 3:27
  SPEAKER_00: Uh, the largest uh processes that uh structure our lives, such as how we work, how we consume, how we trade, are structured by that capitalist revolution, but so are some of the most intimate aspects of our lives.
• 3:40
  SPEAKER_00: So, in order to navigate our life today and also to navigate our contemporary politics, in some ways we must have an understanding of capitalism.
• 3:50
  SPEAKER_00: And the book is basically an effort to explain to us and to show how this uh capitalism emerged over the past 1,000 years and to tell it as a history that is uh trying to keep, as you just mentioned, trying to keep the entire world in view, because uh the capitalist revolution is uh is a global process.
• 4:15
  SPEAKER_00: Uh it can only be understood from a global perspective.
• 4:18
  SPEAKER_00: Capitalism was born global, and uh, so much of our thinking in the past about capitalism has been deeply Eurocentric.
• 4:26
  SPEAKER_00: You all know the stories about the Florentine merchants or about the Amsterdam merchant or about the British Industrial Revolution.
• 4:33
  SPEAKER_00: But what this book really decisively shows is that you cannot even begin to understand the capitalist revolution without looking at it from a global perspective.
• 4:42
  SPEAKER_00: And this is, of course, particularly necessary today, because today we live in a world in which the former economic powerhouses, namely uh Europe and the United States, are not anymore at the center of the global economy.
• 4:56
  SPEAKER_00: So much of the present-day dynamics of capitalism is taking place uh outside the old Western industrial heartlands.
• 5:04
  SPEAKER_00: And thus in the year 2026, we cannot write histories of capitalism of the kind that we wrote in the mid-19th century or the kind that we might have written in the 18th century.
• 5:15
  SPEAKER_00: No, we need to reconsider this history and we need to understand it from a global perspective.
• 5:20
  SPEAKER_00: And once we do so, as I try to do in the book, a completely different view of capitalism emerges.
• 5:26
  SPEAKER_01: I love how the book opens in uh Aden, uh in the Indian Ocean, in a place that has our attention every day now, uh, because of uh the war in Iran.
• 5:38
  SPEAKER_01: To tell you, Sven, I spent uh the past summer uh in a car, actually, uh BYD, driving from Rome to Hong Kong in an electric vehicle.
• 5:51
  SPEAKER_01: And so I wanted to reproduce uh much of Marco Polo's journey uh and uh did that by car.
• 5:59
  SPEAKER_01: But one of the things that struck me uh as I was replaying uh Marco Polo's journey 750 years ago is that the Polos repeatedly found themselves in Hormuz.
• 6:11
  SPEAKER_01: Uh Hormuz, which we think of as some issue between the United States and Iran right now, was a great trading city like Aden already a millennium ago, a thousand years ago.
• 6:23
  SPEAKER_01: Uh so it was a natural place to go.
• 6:25
  SPEAKER_01: It's not something that is uh new to a US-Iran confrontation or even to the oil age.
• 6:31
  SPEAKER_01: It was a great trading city.
• 6:33
  SPEAKER_01: So start us uh in Aden as you do.
• 6:37
  SPEAKER_01: You know, the Indian Ocean, and that's another thing that I kept thinking about during our trip this summer.
• 6:44
  SPEAKER_01: The Indian Ocean was its own civilization well before Europe really appeared on the scene.
• 6:50
  SPEAKER_01: Right, right.
• 6:51
  SPEAKER_00: Yes, so the book starts in the port of Aden in the uh 11th and 12th centuries, so in the Middle Ages, and it focuses on the merchant community of that port city.
• 7:05
  SPEAKER_00: Uh, and it does so because uh once we look at the way how people organize their economic lives in this port city in the 11th and 12th centuries, we find them to do things that are strikingly modern.
• 7:21
  SPEAKER_00: Namely, they bought and they sold things, they raised capital, they insured voyages, uh, they uh organized long-distance trade, they even organized production on the other side of the Indian Ocean.
• 7:35
  SPEAKER_00: And uh this is not so much to argue that the story of capitalism begins in Aden.
• 7:42
  SPEAKER_00: I mean, I don't think anybody would want to argue that, but it is uh to show that this weird, strange, and bizarre logic that is at the core of capitalism, this logic has a very long history, uh, and it emerged first among communities of long-distant traders, such as the traders of Aden, but also the traders of Western India, China, uh the Arab world, and southern Europe.
• 8:11
  SPEAKER_00: And these uh long-distance traders brought a logic to economic life that was radically different from the logic of economic life as it was organized almost everywhere else in the world.
• 8:24
  SPEAKER_00: And so the history of this logic is old, it's more than a thousand years old, but for a very long time it was very marginal to the economic life on planet Earth in total.
• 8:37
  SPEAKER_00: And the book then ends about a thousand years later, it ends in the country of Cambodia, which uh is one of the newest frontiers of the capitalist revolution today.
• 8:47
  SPEAKER_00: And the problem the book that is trying to resolve is basically how do we get from a world in which this capitalist logic existed but was marginal, such as in the Port of Aden, to a world in which it determines and structures almost everything about our lives.
• 9:04
  SPEAKER_01: And just to say uh a word about the marginal aspect, almost all of humanity, almost uh all through history, were farmers or in farm communities.
• 9:16
  SPEAKER_01: Growing food was our occupation, staying alive, uh, having enough food through uh a dry spell, a drought, or uh some kind of crop failure was the uh greatest uh focus of uh human attention.
• 9:33
  SPEAKER_01: And uh long distance trading, indeed, with quite sophisticated financial means, was there for thousands of years in some sense, but the core of human activity was in the countryside.
• 9:48
  SPEAKER_01: And one of the most fascinating parts of the book that I want to get to, Sven, is your really incredibly trenchant and interesting repeated analysis of how capitalism from the margin, from the port city penetrates into the hinterland, because that's some of the greatest drama of history.
• 10:09
  SPEAKER_01: The merchants were one or two percent of the human population.
• 10:13
  SPEAKER_01: They had the mobile capital that could make investments and organize resources, but the people lived on the land, right, not as wage earners, uh not as landless people trying to be hired, but living on the land, growing food in one way or another, and barely surviving uh doing that.
• 10:35
  SPEAKER_01: And that was that was human history.
• 10:38
  SPEAKER_01: But this merchant class was always there, and then by now it's the reverse.
• 10:44
  SPEAKER_01: A small part lives on the land, and this dominant logic uh is what guides our society.
• 10:51
  SPEAKER_00: Right.
• 10:51
  SPEAKER_00: No, this is so important, and I think that's something that's often being misunderstood about capitalism.
• 10:58
  SPEAKER_00: I mean, for one, capitalism is always thought of as something that happens in cities and it's about modern industry.
• 11:04
  SPEAKER_00: And the book shows very decisively that capitalism was born in the countryside, and yes, it is about cities, but the dynamic of capitalism unfolds to a very large extent in the countryside, which is not surprising for exactly the reasons that you just mentioned, namely that in almost all of human history, most people lived in the countryside and worked in agriculture.
• 11:26
  SPEAKER_01: And if I may say so, your incredible history of cotton informs this whole view because to make a world cotton industry was to penetrate into the interior exactly this way.
• 11:40
  SPEAKER_01: Yeah.
• 11:41
  SPEAKER_01: And it's an incredibly brutal, intricate, long-term process.
• 11:45
  SPEAKER_00: No, I think I learned that from writing the cotton book because my previous research was very much about industry and it was very much about wage workers, and it was very much about cities.
• 11:54
  SPEAKER_00: I mean, the first book I ever wrote was the history of New York City.
• 11:57
  SPEAKER_00: So I was very much an urban historian, and I was very much convinced about the importance of cities, but writing the cotton book really demonstrated to me that we need to pay just way more attention to the countryside.
• 12:10
  SPEAKER_00: And then focusing on these merchant communities and seeing how marginal in some ways their activities were to the total universe of economic activities on planet Earth for a very long time shows something else that is really, really important, namely that capitalism is historical.
• 12:29
  SPEAKER_00: It is not the natural state of the world.
• 12:32
  SPEAKER_00: Often people think that somehow, you know, yes, the world changed and we become more productive and we are becoming richer, but but people think that this logic that is at the core of economic life under capitalism has existed forever and has structured all of human uh economic activities.
• 12:50
  SPEAKER_00: That is decisively not the case because there were two other logics to economic life that were really dominant until very recently.
• 12:58
  SPEAKER_00: And the logics were for one, as you mentioned, there were a lot of people living in the countryside who were primarily organizing the economic life around securing the subsistence of their families or their smaller communities.
• 13:12
  SPEAKER_00: That was the majority of people on planet Earth for most of human history.
• 13:16
  SPEAKER_00: And then elsewhere, there were tributary rulers such as the feudal lords that populated the European countryside, and they basically became rich and they sometimes also built infrastructures, they advanced productivity and all of it, but they did so principally by coercing the peasant to give up some of its surplus.
• 13:35
  SPEAKER_00: And this is, of course, also very different from the logic of capitalism.
• 13:40
  SPEAKER_01: And one could say, in an imperial way, that's the Mongol Empire or other step horse-based uh warrior empires that would raid or would pillage or would uh rule over agrarian societies and take tribute or taxation or forced uh work or whatever.
• 13:58
  SPEAKER_00: Yes, and and the these people were very powerful.
• 14:00
  SPEAKER_00: Uh, both the tributary rulers were very powerful, but also farmers, peasants defended the ability to uh engage in subsistence agriculture.
• 14:12
  SPEAKER_00: They were both these elites and both these uh agricultural producers were often very resistant to the capitalist logic.
• 14:19
  SPEAKER_00: They did not want the merchants to come in with their different way of organizing economic lives to disturb the ways how they made a living.
• 14:28
  SPEAKER_00: And this explains why this capitalist revolution took very many centuries to unfold and encountered tremendous resistances, both from elites and from commoners, throughout its entire history.
• 14:42
  SPEAKER_01: As we move on, could you just say one word about uh in Aden or uh in any of the great ports of the Indian Ocean?
• 14:50
  SPEAKER_01: This was a very cosmopolitan world.
• 14:53
  SPEAKER_01: Who were some of the people you would meet?
• 14:55
  SPEAKER_00: Yes, so if you would uh walk down along the shore of the city of Aden in the 12th century, uh you would meet Arab traders from the Arab Peninsula, of course, but also from Cairo, from as far away as Morocco.
• 15:11
  SPEAKER_00: Uh you would meet traders uh who traveled across the Indian Ocean from the western coast, from Gujarat, let's say, from the western coast of India.
• 15:21
  SPEAKER_00: And you would also meet merchants who came up the African coast to trade some of the products of the African continent.
• 15:29
  SPEAKER_00: So this was a multi-religious city.
• 15:32
  SPEAKER_00: It was Muslim, it was Hindu, it was Jewish, and it was a city of uh people who were very different from one another.
• 15:42
  SPEAKER_00: They spoke different languages at home.
• 15:45
  SPEAKER_00: I mean, they might have all spoken Arabic because that was kind of the lingua franca of this world, but uh but they spoke also different languages, uh, they came from very different places, but they did understand one another because their economic lives were organized along a similar principle, and that was to use their privately owned capital, invest it productively, with the goal of producing more capital.
• 16:09
  SPEAKER_00: And that in a nutshell is what capitalism is about.
• 16:12
  SPEAKER_00: That is the core of the capitalist logic.
• 16:14
  SPEAKER_00: And of course, capitalism changed drastically in the next 1,000 years to the present, drastically.
• 16:19
  SPEAKER_00: But this logic to economic life remained the same.
• 16:23
  SPEAKER_00: Multiply your money.
• 16:25
  SPEAKER_00: Yeah.
• 16:25
  SPEAKER_01: And uh just to say, as we made the inland journey that is parallel to the sea route of the Indian Ocean, when you uh visit places like Samarkand or Bukhara, as we did, of course, now we're in the 21st century, but we could still see all of the historical traces in the architecture, uh in the culture, actually in the names of people of exactly that incredible mix.
• 16:54
  SPEAKER_01: And uh just to mention this Ven, when we reached Bukhara in this uh auto journey, our guide locally, I asked her what her native language was, and she said Farsi, Persian.
• 17:06
  SPEAKER_01: And I was very surprised.
• 17:08
  SPEAKER_01: I was naive, but she said, Of course, we all speak Persian here.
• 17:12
  SPEAKER_01: And Persian traders have been there basically 2,500 years, the Sogdians.
• 17:18
  SPEAKER_01: So it's an incredible global merchant community.
• 17:22
  SPEAKER_01: So I think just to emphasize that capitalism was uh not European and it wasn't any particular group, it was international from the start, uh amazingly so.
• 17:34
  SPEAKER_00: Yeah, you can see this logic in many different parts of the world.
• 17:37
  SPEAKER_00: As I mentioned, you can see it in India, you can see it in China, you can see it in uh the uh eastern and western Africa, and of course you can see it in Central Asia as well.
• 17:45
  SPEAKER_00: And I, you know, I also did spend some time in Bukhara in Samarkand because uh I wanted to, you know, see what are these merchant cities, what did they look like?
• 17:57
  SPEAKER_00: And I was at lit at this point, I was living in the city of Florence, which obviously is very well known as an important city for the history of capitalism.
• 18:04
  SPEAKER_00: And I just wanted to kind of see what these Central Asian cities look like, and they are impressive, and and in some ways, you know, they are also similar.
• 18:14
  SPEAKER_00: You see also that merchants in Bukhara or somewhere kind, for example, they invested in religious institutions like the merchants of Florence did.
• 18:22
  SPEAKER_00: Yeah, exactly.
• 18:23
  SPEAKER_00: They they revested in social institutions, also in cultural institutions, they supported science, so so they're not categorically different from European cities that are much better known.
• 18:35
  SPEAKER_00: And and I mean the entire book, it's it's it's an effort to you know to tell kind of the whole history of of capitalism, and sometimes I tell that history from a kind of satellite perspective, but in the end, I always try to tell that history from local perspectives.
• 18:50
  SPEAKER_00: I dig down very deeply into particular places, such as the merchants of Aden, exactly, to understand something important about this particular moment in the history of capitalism, and that's why I you know travel to the far ends of the word to research that book.
• 19:04
  SPEAKER_01: Yeah, absolutely.
• 19:05
  SPEAKER_01: And I want to come to uh next hinge moment of history, yeah, which is Columbus's voyage and Vasco da Gama's voyage, 1492 and 1498, respectively.
• 19:16
  SPEAKER_01: And I like that you quote my favorite passage from The Wealth of Nations, uh, which is that these are the two most significant events in the history of mankind.
• 19:25
  SPEAKER_01: Yeah.
• 19:25
  SPEAKER_01: But for me, Europe was a fringe of uh of this whole story, not insignificant, but uh, you know, not at the center by any means, until a drama started around the year 1500 with these two voyages.
• 19:40
  SPEAKER_01: And I, in my own thinking, think that the opening of the Americas and the tragic but pivotal fact that the European conquerors brought diseases that killed off most of the local population, exposing two giant continents to European dominance changed the history fundamentally.
• 20:02
  SPEAKER_01: This is uh a hinge moment in your story as well, obviously, but like to turn to that.
• 20:08
  SPEAKER_00: Yeah, I definitely agree with that.
• 20:10
  SPEAKER_00: I mean, the history, as I said, is very, very global, but of course, it is also true that at a certain moment in time, Europe and Europeans did come to play a central role in this unfolding of capitalism, and we need to explain that.
• 20:25
  SPEAKER_00: So, why is it that after centuries of uh other parts of the world being perhaps more important nodes of capital, how come that the European capitalists, the European merchants came to play such an important role after the 1500s?
• 20:40
  SPEAKER_00: And what I observe is that with Europe's expansion into the Americas, the age-old problem of inserting capital into the countryside and to allow merchants to become more uh significant players in the organization of production, which was something merchants had always tried to do, but they often encountered tremendous resistances in trying to do so.
• 21:07
  SPEAKER_00: That once Europeans arrived in the Americas, this became much easier for European merchants for exactly the reasons that you mentioned.
• 21:19
  SPEAKER_00: Uh, Europeans arrived in the Americas and there was a grave imbalance between the power of European states and European merchants when they encountered uh indigenous people of the Americas.
• 21:31
  SPEAKER_00: And that now allowed them, the Europeans, to radically recast agriculture, to insert their capital into the countryside in ways that was not possible even on the European continent until 300 years later.
• 21:47
  SPEAKER_00: They could actually reorganize everything about agriculture, and of course, they did so by taking the land of indigenous people and mobilizing vast amounts of human labor by enslaving.
• 22:00
  SPEAKER_00: the workers, both in the Americas itself, but then of course, especially in Africa.
• 22:05
  SPEAKER_00: And I think that really now sets the capitalist revolution in motion in ways that it that it had not been set in motion previously.
• 22:14
  SPEAKER_01: Aaron Powell By the way, Sven, really an ingenious insight.
• 22:18
  SPEAKER_00: I've always and uh it's new for me in in uh your book and uh in this discussion in that I always felt that the opening of the Americas was decisive uh that the accident of uh old world pathogens killing perhaps ninety or ninety five percent of uh Native Americans was another part of that accident and that at an economic level purely material level the fact that uh suddenly two almost open continents appeared for the Europeans since you can't even imagine such a windfall but you're adding something very very important which is that this became the proving ground for an institutional revolution that what the merchants wanted to do was not only to trade in goods but to organize production and could not do so when they were a fringe but now they're not a fringe now it's an open right opportunity for them right is really a great insight by the way uh very important yeah and so I I I tell that story through the history of Barbados which in my reading is one of the first really fully capitalist societies in which uh all production and all consumption is organized around this bizarre, weird and strange logic that the merchants had represented for a very long time.
• 23:48
  SPEAKER_01: And of course just to add if I may sorry to interject people you know will know that Barbados was the quintessential slave colony and they may say slavery that's not capitalism but owning people is part of commodification which is at the core of capitalism.
• 24:04
  SPEAKER_01: Maybe not today's capitalism but absolutely core to the logic of capitalism you can own people you can own land you can commercialize anything including human beings was was the logic.
• 24:17
  SPEAKER_00: No at this particular point that was very important but of course not throughout the history of capitalism but at this particular point it was very important.
• 24:23
  SPEAKER_00: And then of course the Americas provide another resource to Europeans namely it provides them with a lot of silver which they find on the American continent and that now allows them to trade with Asian merchants in an entirely new way because finally they have something that the Chinese or Indian merchants actually desire which was something that wasn't the case before.
• 24:45
  SPEAKER_00: And so one further reason of why all of this is possible at this particular moment in time is that European merchants unlike merchants let's say in China or India develop an unusually close relationship to European states for a variety of reasons that we perhaps cannot get into now.
• 25:06
  SPEAKER_00: And so it's not just the merchants on their own going abroad but they go abroad across the Atlantic Ocean with the support of European states.
• 25:16
  SPEAKER_00: And that gives them now a power that they didn't have when they were just traders and and trying to buy and sell uh sell goods.
• 25:25
  SPEAKER_00: And that tells you something else important about capitalism namely that uh the state matters a great deal to its history.
• 25:32
  SPEAKER_01: Yes and I think it is a distinctive aspect like you're pointing out to European capitalism at this point because the merchants were more on the fringe before but now they're the central actors.
• 25:48
  SPEAKER_01: And there's so many fascinating things about this but one of the observations uh you make is an observation that I make frequently about our current situation where I say that in China uh the government dominates the business sector uh it can tell the business sector you stay in your place.
• 26:10
  SPEAKER_01: In the United States it's the opposite the business sector owns the government uh it uh actually pays the campaigns if you ask what's the power between Silicon Valley and uh Washington hands down Silicon Valley's more powerful it paid for the elections of all those politicians and you point that out exactly you actually say that in Asia Asia tended to control enterprise whereas in this new capitalism especially in the Americas the enterprise controls government or partners with government and indeed you know Queen Elizabeth is a shareholder in the East India Company and everyone is together in this well I'd like your take on that but I think what you you say and I agree with very much in China for example there was basically political unity for almost 1500 years from the Sui dynasty the Tang the Song uh it changed over time the Yuan uh Ming and Qing dynasties but it was centralized rule whereas in Europe it's competition of all of these wannabe empires and so the merchants become the great vehicle for competing states which are not all powerful they're competing with their neighbor so they need capital for their armies they need so uh the upper hand is with the capitalists.
• 27:38
  SPEAKER_00: Right and they uh I mean the states fought many wars with one another and in order to be able to fight the wars they pressed the peasants at as hard as they could but eventually there were limits to how hard you could press your peasants and so they turned to the only other people who had resources at the disposal and these were the merchants who were only too happy to oblige but of course the merchants then became much more powerful vis-a-vis these states.
• 28:03
  SPEAKER_00: So they they were driven I mean partly by their relative position of weakness they were driven into each other's arms and that made a powerful mixture that allowed the capitalist revolution now to be propelled in ways that was not the case in other parts of the world or it was not the case earlier.
• 28:21
  SPEAKER_01: And it is utterly fascinating in history that British imperialism and Dutch imperialism in particular were uh basically corporate activities the joint stock companies and as you point out the joint stock companies actually invented for this purpose to pool capital but then uh it's not that the British monarch was the one that created the British empire it was joint stock companies privately owned maybe with the king or the queen having some shares in this but basically the privatization of empire it's which is phenomenal and that's a pretty deep part of uh the capitalist order right the the European capitalist order right and there you see now how powerful European merchants had become not just in the world but with vis-a-vis their their own governments vis-a-vis their own states and that's distinctly different from let's say the Chinese empire in which for example the Chinese emperor at certain points disallows Chinese merchants to trade overseas.
• 29:28
  SPEAKER_00: So this is a completely different balance of power and that of course allows European merchants to propel their capital into the world and the East India companies are a very good example for that because they are state created institutions that become the most powerful and certainly the largest business enterprises of their times but they also become one of the most important military powers in the world they have some of the largest fighting forces of anybody these private companies and they also of course become territorial rulers in certain parts of Asia.
• 30:05
  SPEAKER_01: When I was reflecting on this in recent months of course the British philosopher Thomas Hobbes who is probably the most influential single uh thinker for American and British politics maybe together with John Locke wrote that government is a contract and it's a little bit of a strange idea because uh Aristotle would never have said government is a contract it's a community he would have said but Hobbes said no it's a contract and I wonder to some extent whether Hobbes was just reflecting look we're making government all over the place they're called joint stock companies so of course it's a contract.
• 30:48
  SPEAKER_00: I think all of these reflections about the word both in terms of politics in terms of organizing states in terms of philosophy but also very much in terms of thinking about economic life have to be read as part of the moment in which they emerged and in some ways they of course are born out of particular words and yes that this is a world in which that kind of privately organized colonial expansion is very very important and this is certainly then also reflected by Hobbes just like uh you know thinkers like Adam Smith or Karl Marx or Max Weber at later moments you know interpret the word uh powerfully so but they also interpret the word based upon the word in which they themselves find themselves.
• 31:38
  SPEAKER_00: So I think that is uh the the way we most productively think about this.
• 31:42
  SPEAKER_00: And that's also how I try to bring the history of economic ideas in our thinking about the history of capitalism.
• 31:48
  SPEAKER_00: Because so often scholars try to be kind of judges you know they weigh Adam Smith against Max Weber and then they somehow seek to adjudicate you know who's right and who's wrong.
• 32:00
  SPEAKER_00: And I never try to do this because instead I'm trying to read all of them as smart observers of a particular moment in the history of capitalism that is limited by the very fact that they couldn't know the future just like we can't know the future.
• 32:16
  SPEAKER_01: And sometimes as uh direct participants like John Locke being secretary of the Carolinas colony or John Stuart Mill for heaven's sake working for the East India Company, which is incredible.
• 32:28
  SPEAKER_01: Yeah yeah absolutely a paradox.
• 32:32
  SPEAKER_01: So you vividly explained that this new style post-1500 style of capitalism of Europe is a a war capitalism it's a partnership of state and enterprise and it turns into a European military control over the oceans.
• 32:55
  SPEAKER_01: And this also was a a very good insight for me because I have always thought that Europe's dominance over Asia is only really definitive in the late eighteenth century or the nineteenth century because until then from a military point of view on the ground Europe really couldn't defeat populist Asia.
• 33:18
  SPEAKER_01: But your point I think is very important and right and was a eye-opener for me which is that even before the balance of power on land in Asia turned in Europe's favor say in the 19th century in the 1800s when so much of Asia was colonized, Europe's control over the oceans comes before that.
• 33:41
  SPEAKER_01: So already in the 1700s Europe is dominating the seas in in an effective way so it's shaping global trade even before it's colonizing the land.
• 33:54
  SPEAKER_00: Both is very important.
• 33:55
  SPEAKER_00: Both it is important to see that uh Asian capital owners Asian merchants remain quite dynamic they remain quite important they continue to remain quite important to the capitalist revolution as it unfolds so this is important to recognize but on the other hand I think you're exactly right that there is now a certain kind of path dependency that increasingly marginalizes the once more powerful nodes of capital, these islands of capital that we find for example throughout the Asian continent and they are marginalized not so much in the trade that they organize with their own hinterlands, but they are marginalized exactly as you say in the in the transcontinental trade which once upon a time as we saw when we talked about the merchants of Aden were really quite important to the dynamic of merchant capital in these parts of the world.
• 34:53
  SPEAKER_00: And so there we can see kind of a slow shift.
• 34:56
  SPEAKER_00: I mean all of this is unfolding not from one day to the next not even within one generation but over a couple of hundred years we now see that these once powerful very dynamic highly skilled highly innovative nodes of capital that you find in various parts of Asia how they become increasingly marginalized by the presence of private companies militarily equipped private companies in Asia and then of course later by the late 18th early 19th century by the presence of European colonial endeavors.
• 35:30
  SPEAKER_01: Yeah I think for me this is so important in understanding the chronology of the modern world because people should uh appreciate and they will from your book of course this precise idea that the Indian Ocean which is a center of world trade for a millennium was not European dominated at all.
• 35:53
  SPEAKER_01: Of course the first half Europe was only marginally present at all and that even states we associate with land empires like the Mongol Empire was an Indian Ocean trading state as well the Ottomans who we associate very much with land was a major Indian Ocean trading state.
• 36:13
  SPEAKER_01: And it's rather recent not as recent as 19th century direct rule but rather recent in the 17th and 18th centuries that Europe dominates the ocean routes and then like you say I think it's exactly right that the merchants remain in their own communities and hinterlands but they don't guide the long distance trade anymore.
• 36:38
  SPEAKER_01: That's in Europe's hands now and that is a great lever of power that turns into something even uh stronger by the 19th century.
• 36:49
  SPEAKER_01: And I want to turn to that because the next chapter of history and the next part of your book is about the industrial capitalism which you date from 1760 as the birth of large scale mechanization and very interestingly water power first and then steam power and if you could say this next phase when industrial capitalism erupts.
• 37:14
  SPEAKER_00: Yes so by the late 18th century capitalism becomes much more familiar to us looking at it with modern eyes because it's now the moment that really industry mechanized manufacturing comes to be at the center of the capitalist revolution and much of the history that follows after the 1760s until quite recently until let's say the 1960s or 1970s is is really dominated by the expansion and by productivity gains within the manufacturing sector.
• 37:47
  SPEAKER_00: And of course that is a story that is first heavily concentrated in a very small part of the world namely in northern England and Scotland it then spreads to parts of the Western European continent and then it also spreads to the United States.
• 38:03
  SPEAKER_00: But this is really then also the moment in which capitalism becomes heavily Eurocentric and in which the global inequalities in which the small European and North American continent come to dominate so much of economic life on planet Earth become for the first time highly visible.
• 38:22
  SPEAKER_00: So this is in a way a European story but what I'm trying to do in the book is to globalize that history as well because the argument is that no moment of the history of capitalism can be understood from anything but a global perspective.
• 38:34
  SPEAKER_00: And what you can see is the industry that is at the core of the Industrial Revolution, the cotton industry is heavily embedded in larger global connections.
• 38:46
  SPEAKER_00: Some of its technologies come from China and from India.
• 38:50
  SPEAKER_00: The raw cotton that is being worked up in British textile mills of course is grown almost entirely by enslaved workers in the southern parts of the United States.
• 39:01
  SPEAKER_00: And then very soon some of the most important for the products of this industry are to be found in places such as India or West Africa.
• 39:12
  SPEAKER_00: So even at this moment of industrial revolution even at a moment when the capitalist revolution seems to be focused to a very large extent on one small part of the word even then we can only understand that history by looking at it from a global perspective.
• 39:30
  SPEAKER_01: One thing I found wonderful about your account of the early industrial revolution was how you related it also to uh England's or Britain's own hinterland.
• 39:42
  SPEAKER_01: You know I always say well uh the steam engine is the decisive invention uh that brought industrial capitalism but it's of course more complicated than that it was very important.
• 39:53
  SPEAKER_00: Interestingly it wasn't even the source of power for early mechanization which was much more the water uh wheel the the water wheel but you make another point which uh really made me think as well which is uh you need a a workforce for that industry much of it is coming from impoverished or dispossessed rural areas one of the things that happened in Britain was freeing up uh if you could put it in uh euphemistic terms the labor of the countryside by in advance of agricultural technology better crop rotations more scientific farming the Norfolk system so-called but that wasn't just a benign way to raise farmers' incomes that was a kind of brutal industrialization of the countryside that dispossessed a lot of poor people am I right about that no you are you are absolutely right uh throughout the history of capitalism until recently it has been very difficult to mobilize workers to work uh as wage workers in factories or for that matter in agriculture people have resisted that you know if you think about the United States one of the founding ideas of the United States is the the desirability to be independent to be not a wage worker and uh it was difficult especially to mobilize people to work in factories because factories were horrifying places people were literally afraid of factories they thought of them as a kind of form of hell they were noisy they were hot they were very dangerous many people died very soon after entering the factory and so basically the people who ended up in the factories at the beginning were people who had no other options for whom this was the only way to make a livelihood.
• 41:47
  SPEAKER_00: And of course that was related to these changes of the countryside which now made it hard for people to earn a subsistence in the countryside and without that possibility they were forced to work in factories.
• 42:00
  SPEAKER_00: And of course who ended up working in factories first it was women and children because they were the two groups who were least able to resist the pressures that that bear upon them.
• 42:13
  SPEAKER_00: And so the Industrial Revolution was really an industrial revolution that was principally made by young girls.
• 42:19
  SPEAKER_00: They were the dominant part of the of the workforce and in this process of mobilizing workers is of course at the absolute core of of the history of capitalism and you can observe this to the present day except the scale of it has tremendously increased.
• 42:36
  SPEAKER_00: So you know in in England we have a few hundred thousand workers ending ending up working in factories.
• 42:42
  SPEAKER_00: In China we had about 400 million people moving out of the countryside into cities.
• 42:47
  SPEAKER_01: But I think uh one of the uh points of most of history is of course there was very little margin thinking economy wide just to feed people so because of the low levels of agricultural productivity most people were farmers to feed feed themselves and feed their families that's one reason uh naturally why people resisted wage labor hey I have to survive I'm a farmer I'm I'm uh feeding my land and then the land gets taken away whether it's the commons the pasture land or uh their land itself uh just taken out from under them and in a near subsistence environment clinging to your food supply is the most natural thing in the world and that was the state of affairs for most of humanity for most of history now they're told no you go work next to that blast furnace uh because that's going to be your subsistence but that's a brutal process to make that transformation and it means taking a great risk because you might lose that employment and you know where are you going to get the food from then and that brings us up to a real drama that you tell Of uh 19th century European imperial penetration of the Asian hinterland, which is a remarkable story because it's replaying these events.
• 44:12
  SPEAKER_01: But in the Americas, the Native Americans had largely died off or were so sparsely settled after the deaths that the Europeans could have their way.
• 44:23
  SPEAKER_01: But here are densely settled, some of the most densely settled parts of the whole world, vast rural populations.
• 44:31
  SPEAKER_01: And uh European capitalists come in and say, You're now gonna work for wage labor on a plantation producing indigo or other cash crops for us.
• 44:42
  SPEAKER_01: And you tell that story beautifully, but that is a huge, huge upheaval.
• 44:49
  SPEAKER_01: We don't think too much about it, uh actually.
• 44:52
  SPEAKER_01: But that dynamic in the Asian countryside is the real drama of European imperialism at the end of the 19th century.
• 45:01
  SPEAKER_00: Yes, and it comes relatively late because obviously Europeans had been present in Asia since uh about 1500, and for the most part, for the first couple of hundred years, they were in port cities and they traded with local merchants, but they did not really involve themselves in production because they just lacked the power to insert their capital into the Asian countryside.
• 45:25
  SPEAKER_00: But this begins to change in the middle of the 19th century, and it changes because uh European capital, partly through its organization of uh production in the Americas, but partly also because of the Industrial Revolution now, has entirely new powers.
• 45:45
  SPEAKER_00: These powers, for example, include the building of railroads or telegraphs, and it has also new uh political powers because they now come to govern large parts of Asia directly, and they use that power to reorganize production in the uh in various parts of the Asian countryside.
• 46:05
  SPEAKER_00: Uh, just think of the tea plantations in Assam, which are largely built upon British investments drawn out of industry and now invested into plantation agriculture and the forceful uh mobilization of workers for these tea plantations.
• 46:22
  SPEAKER_00: Uh think about coffee production on Java organized by Dutch colonial powers with forced labor, or think about the Western Indian cotton growing countryside, which now sees uh the insertion of uh European capital and new forms of debt relation which make local farmers now dependent on producing crops that can be sold on world markets.
• 46:48
  SPEAKER_00: So there are various forms of how this European capital uh is inserted into the Asian countryside.
• 46:55
  SPEAKER_00: Uh, but by the second half of the 19th century that comes to be possible and it's completely recasting agriculture in very large parts of Asia.
• 47:04
  SPEAKER_01: One of the things that it made me uh think about was the connection with uh some of the major horrific droughts, famines, uh hunger, because uh uh effectively the European capitalists and European powers were requisitioning labor.
• 47:22
  SPEAKER_01: One of the themes for a thousand years in your study is there's always a labor scarcity.
• 47:28
  SPEAKER_01: Uh, who's gonna work in all of our enterprises?
• 47:32
  SPEAKER_01: And that's because most people are on the farm trying to grow their food.
• 47:36
  SPEAKER_01: And so getting them to do something else is not easy.
• 47:40
  SPEAKER_01: Here we are at the end of the 19th century.
• 47:42
  SPEAKER_01: They're supposed to be growing cotton and dyes and other cash crops that uh Europe now craves.
• 47:49
  SPEAKER_01: But who's producing the basic food?
• 47:52
  SPEAKER_01: And while it's not all or nothing in this, surely it tipped the balance to much more vulnerability, to bad years, to uh El Nino events, uh, to not having the labor there when the food had to be harvested because the plantation was demanding the labor for the harvest of the cash crop.
• 48:13
  SPEAKER_00: Yeah, and so market dependence, I mean, being able to sell on markets can be a great boon.
• 48:18
  SPEAKER_00: And for example, Indian peasants make a lot of money during the American Civil War when prices of cotton shoot up.
• 48:25
  SPEAKER_00: But of course, producing for the market also entails great risks.
• 48:28
  SPEAKER_00: And when the market turns or when the weather changes, it led to truly horrifying uh famines in India that killed many millions.
• 48:38
  SPEAKER_00: Yeah.
• 48:38
  SPEAKER_01: This brings us finally, and uh, we're moving fast.
• 48:41
  SPEAKER_01: Uh for all the listeners, uh, you know, a thousand years and uh wonderful hour together is not the easiest uh thing to do, but I I want to come to the present.
• 48:51
  SPEAKER_01: I'm gonna say that Sven has uh wonderful chapters about the changing politics uh within the US and European capitalist uh political orders and the rise of trade union social democracy, the pushback in social organization against raw wage labor, and then the effects of this power imbalance in Asia.
• 49:17
  SPEAKER_01: But by the middle of the twentieth century, after two disastrous uh world wars, which were to a significant extent European civil wars and Japan's invasion of uh China in the Pacific region, there is uh decolonization that comes.
• 49:38
  SPEAKER_01: And that uh has led, uh speaking very quickly, for uh the next eighty years to uh a re-globalization.
• 49:47
  SPEAKER_01: The world looks uh a lot more like Aiden in 1100 than uh the world did 80 years ago.
• 49:54
  SPEAKER_01: Now you have merchants from all over the Indian Ocean, from India, from China, uh from Iran, from uh places that uh were on the receiving end, now our protagonists again in this global story.
• 50:09
  SPEAKER_01: And I wonder if you could uh reflect on that for us as we come to a close.
• 50:13
  SPEAKER_00: Yes, I think that is so important, not just in order to get the history right, but also very much to understand our present.
• 50:22
  SPEAKER_00: And I think if you would push me to tell you what is the most important single event in the history of 20th century capitalism, I think I would tend to say that it was the process of decolonialization.
• 50:35
  SPEAKER_00: Because what decolonialization did is it created a large number of new nodes of state power that were in one way or another aligned with local nodes of capital.
• 50:51
  SPEAKER_00: Of course, we have had these local nodes of capital, for example, on the Asian continent for many centuries.
• 50:57
  SPEAKER_00: So there was nothing new about that.
• 50:59
  SPEAKER_00: But for a long time, because of European colonialism, there was no node of state power that was directed towards the interests of these local capital owners.
• 51:10
  SPEAKER_00: And what happens with the end of colonialization is that now state power aligns more better with the interests of local capital owners.
• 51:19
  SPEAKER_00: And it's a slow process and it created a lot of frustrations along the way.
• 51:26
  SPEAKER_00: But in the end, it does create new centers of a kind of dynamic capitalism in many different parts of Asia.
• 51:33
  SPEAKER_00: And as a result, the balance of uh economic output and the balance of economic power has radically shifted in the past 80 years towards the Asian continent.
• 51:45
  SPEAKER_00: I mean, today I think uh Europe and the United States together uh produce about I think a little less than 40% of global GDP by purchasing power parity.
• 51:56
  SPEAKER_01: Even a little bit less than that.
• 51:57
  SPEAKER_01: Europe and the US probably just EU and US, if I could put it that way, probably uh about 32%, maybe so.
• 52:06
  SPEAKER_00: Okay, so even even less.
• 52:07
  SPEAKER_00: Yeah.
• 52:07
  SPEAKER_00: I mean, a significant share of the rest is being produced in Asia.
• 52:10
  SPEAKER_00: And and that's of course a drastic shift in global capitalism that I think determines almost everything that we are thinking about right now.
• 52:20
  SPEAKER_01: I agree with you completely.
• 52:22
  SPEAKER_01: Uh by the way, I was listening to an interview with a very interesting economist, but he was saying uh that the outcome of World War II was that the American Empire replaced the U the European empires.
• 52:37
  SPEAKER_01: And I think uh while I have some sympathy with the critique of American foreign policy, it's not right because the end of the European empires really truly opened up space.
• 52:49
  SPEAKER_01: And the United States, whether it wanted to or didn't want to, and it the US is a complicated ideology, uh ideological and political system in any event, but it did give space for China to return to center stage.
• 53:04
  SPEAKER_01: And uh that's the real result.
• 53:06
  SPEAKER_01: And that would not have happened with European imperialism having maintained its power had there been the counterfactual of uh no two world wars.
• 53:16
  SPEAKER_00: Exactly, because we have learned from thinking about the entire history of capitalism that you cannot think about the dynamics of capitalism also thinking about state power.
• 53:25
  SPEAKER_00: State power matters greatly.
• 53:26
  SPEAKER_00: Absolutely.
• 53:27
  SPEAKER_00: And uh the basic fact of colonialism was to remove that state power from local nodes of capital, and and this has now uh completely shifted again, and this really determines the world we live in today.
• 53:38
  SPEAKER_00: Of course, you know, when you looked at India in the 1960s, uh at China in the 1960s, you know, it didn't seem like it.
• 53:45
  SPEAKER_00: But many of the kind of preconditions for the current resorting of economic power in the world come exactly out of this post-colonial moment.
• 53:54
  SPEAKER_01: I'm with you entirely.
• 53:55
  SPEAKER_01: This is yet another of your amazing insights, Fenn.
• 53:59
  SPEAKER_01: Let me say you give us a uh profound insight into an enormously complex but also endlessly fascinating, broad phenomenon, which is our reality, capitalism, a global history.
• 54:15
  SPEAKER_01: You know, we've uh had 60 minutes to cover 1,325 pages.
• 54:21
  SPEAKER_01: Uh, so I want to uh say to readers, you can see how brilliant uh Sven is and how wonderful this book is.
• 54:30
  SPEAKER_01: So uh please take your time.
• 54:33
  SPEAKER_01: It's gonna be enjoyable for weeks and months and years uh to think about.
• 54:38
  SPEAKER_01: But Sven, let me uh end by congratulating you on this great accomplishment.
• 54:43
  SPEAKER_01: It's a wonderful book, and it's got very, very deep insights and also very eye-opening windows into the world of the last 1,000 years.
• 54:54
  SPEAKER_01: So that is a great gift to all of us.
• 54:57
  SPEAKER_01: Let me uh thank you for being together with me on Book Club with Jeffrey Sachs.
• 55:03
  SPEAKER_01: Thank you so much for having me, Jeff.
• 55:04
  SPEAKER_01: Yeah, great to be together and congratulations.
• 55:07
  SPEAKER_01: It was a fantastic discussion.
• 55:08
  SPEAKER_01: Thank you.
• 55:09
  SPEAKER_01: Thanks a lot, and thank you to all the listeners, and stay tuned.
• 55:13
  SPEAKER_01: We'll be back with you soon.
• 55:14
  SPEAKER_01: Thank you.
• 55:22
  SPEAKER_01: Thank you for joining in the conversation.
• 55:24
  SPEAKER_01: Please subscribe, rate, and write a review on whatever platform you listen for your podcast.