Why Write the History of Capitalism?

Louis Hyman

Why Write the History of Capitalism?
Where is agency when you need it? A bank run in Massachusetts, October 1929. (OFF/AFP/Getty Images)

A new generation of scholars is rewriting the story of capitalism by shaking off the old assumptions of both the Left and Right.


Note: This article was originally published on July 8, 2013.

Earlier this spring, I received a phone call from a reporter at The New York Times. Since I have written a couple books on the history of American personal debt, the occasional inquiry from journalists was not out of place, but usually they want to hear about the five best financial tips for success, not “real” history.

This particular journalist, Jennifer Schuessler, asked me a very odd question: What does it mean to write the history of capitalism? I was dumbfounded. I paused. I asked her where she had even heard that term. She evaded the answer — “oh, it’s in the air” — but I began to tell her about where I thought the burgeoning subfield had come from, peppering my response with “agency,” “contingency” and other history jargon. She told me she could translate.

As I spoke, I kept wondering why she cared. After all, The New York Times does not usually run stories on the subfields of academic disciplines, especially history. So you can imagine my surprise when I woke up the next Sunday and saw the front-page headline: “In History Departments, It’s Up With Capitalism.” For days, it was the most emailed story on the Times web site, with hundreds of people suddenly weighing in to comment on what capitalism meant.

The discussion forums were, in many ways, more revealing than the article itself. Internet trolls had their say, but I was struck much more by the forums’ threads of disagreement. Many readers pointed out what they thought all the scholars has missed or excluded, all in an effort to determine whether we were pro-corporate apologists funded by big money (no) or communist “fifth columnists” (a more interesting charge, but again, no).

For me, the ad hominem attacks were less telling than the fact that there was simply a fresh discussion of capitalism. For most of the readers who weighed in, capitalism is totally explained by either Karl Marx or Adam Smith (with the occasional John Maynard Keynes or Joseph Schumpeter tossed in). That is, capitalism is a system that can be universally explained through one theory or the other. Either you understand it or you do not. Either you read the right author or you are an ignoramus. In this view, the history of capitalism is simply the logical unfolding of a natural law, like an apple falling from a tree. As one reader put it, “a history of capitalism would be as revelatory as a ‘history of gravity.’”

If only events befell us as predictably as Isaac Newton’s proverbial apple. History is not about proving a universal theory, but seeing how change occurs over time. As a scholarly practice, history is about explaining how events actually played out, with all their attendant unruliness. The essential problem is not to primly define capitalism like a schoolmarm, but to think about why capitalism, which appears to be so simple, evades easy definitions. And in the last decade, there has been a renewed interest among historians in not only challenging existing definitions, but in historicizing that very untidiness (much to the consternation of nominalists everywhere).

As the United States emerges from the most severe financial crisis since the Great Depression, the sudden urgency is not difficult to understand. Booms and busts buffet us with alarming frequency. But it is important to note that the term “history of capitalism” began to assume a currency in the historical profession sometime in the mid-2000s, between the tech crash and the Great Recession. While the Recession has sparked renewed interest from the public, the new work preceded 2008 and marked an important shift that was not just intellectual but generational.

For two generations, almost no historians who wanted to make a name for themselves worked on economic questions. New Left scholars of the 1960s and 1970s emphasized movements that fought for social change (labor, women, and African-Americans). The postmodern shift of the 1980s and 1990s pushed traditional subjects of economic history out of the field, and with it the stillborn subfield of cliometrics – a quantitative approach to economic history. If a scholar wrote about the history of business, or even worse, businessmen, he or she seemed to betray right-wing tendencies. If you wrote about actual businesses, many on the Left felt it was only to celebrate their leaders, the way that most historians wrote celebratory histories of the oppressed. Some stalwarts remained (of all political persuasions), but on the whole, they were marginalized.

By contrast, for the generation of graduate students that came of age in the late 1990s and 2000s, the world looked very different. Social movements had either won — or lost — decades earlier. Radical reform, in the midst of seemingly unending economic stagnation, seemed a fantasy. Most importantly, American capitalism, as of 1989, had beaten Soviet communism. The either/or distinctions of the Cold War seemed less relevant. The questions that motivated so much of social history seemed naïve. The old question “Why is there no socialism in America?” became “Why do we even talk about socialism at all since we are in America?” We knew endless amounts about deviationist Trotskyites but nothing about hegemonic bankers.

This gap came from the belief that there was very little to know. Alfred Chandler’s The Visible Hand was the only business history book most American graduate students of history continued to read. And it reaffirmed everything that the New Left thought about capitalism: that it was inevitable, mechanical, efficient, and boring. Capitalists operated with an inexorable logic, whereas the rest of us were “contingent agents” pursuing our free will. If pressed, few scholars would have put this assumption in these words, but it colored the questions that people asked. “Hegemony,” a term appropriated from Antonio Gramsci by cultural studies scholars in the 1970s, became diluted into silly analyses of advertising. In some sense, historians believed that they “got it” when they read Marx or Smith, and there was nothing much left to say.

My generation was shaped by all of those New Left social movement historians, taking race/gender/class as the essential lens. Business archives look very different when you are trained by reading Judith Butler. Banks look different when approached like Michel Foucault. This type of history starts by assuming that people on the margins matter, that culture is essential, and that questions of gender and racial power cannot be divorced from questions of class. Capitalism must be written from margin to center, to borrow a title from bell hooks. This history, however, must be written, even if the people we write about are not our heroes (something my generation never really had).

When capitalist institutions such as banks and corporations are treated as real places with real people, the stories begin to change. The imperatives of profit remain, but the choices on how to make that profit, if at all, begin to look much less inevitable. Moreover, it becomes impossible to ignore the ways in which those choices are shaped, not only by inter-firm competition, but also by culture and politics. Though important, profit becomes only one factor among many guiding the choices of executives, whose decisions matter more than perhaps anyone in determining our everyday lives, especially those on the bottom.

In short, scholars like me, who would become historians of capitalism, came to it backwards. As an undergraduate at Columbia, my labor history class with Joshua Freeman was standing room only in a large auditorium. By contrast, when I took a class on the history of capitalism as an undergraduate with J.W. Smit, there were only four students. He was amazing, but such courses were far outside the norm. When my undergraduate thesis advisor, Elizabeth Blackmar, told me I should stop studying labor and start studying capital (my thesis was on the radical collision of syndicalism and prohibition in the “No Beer, No Work” Movement of 1919), I looked at her as if she were an alien. She was right, but only over time, in graduate school, did I realize that to understand the history of labor, I really needed to understand the history of capital.

Nearly everyone I know now who identifies as a historian of capitalism had a similar awakening. Kim Phillips-Fein, a historian of business leaders, supply-siders and financial crises, trenchantly wrote that “in another generation we would all have been labor historians.” As graduate students, we felt isolated from the normal kinds of projects that excluded business and finance. We found each other haphazardly, often in archives, when we asked each other about our work. I first met Julia Ott, now my long-term collaborator, while we were waiting out a thunderstorm at the National Archives in Washington, D.C. I had not met a self-described “financial historian” before I met her, and it sounded like the most boring thing in the world. But later, as I started to write more about bond markets, I began to think of myself as one, too (and neither of us is that boring). Still, when I told people that I worked on the history of personal debt in the early 2000s, the response I most often received was a glassy-eyed stare of boredom. (Before the crash, no one wanted to talk about mortgage-backed securities. Trust me.)

Friendship begot friendship, even across generations, as people who felt isolated in the 1980s and 1990s, such as Blackmar and Richard John, now found themselves as the bridge to older historiographies of political economy that took the power of capitalist institutions seriously. Historians who had been working on these questions for years saw a surge in interest. Conferences, small ones at first, organized by graduate students, became slowly bigger, until the 2012 national American history conference had “Frontiers of Capitalism and Democracy” as its main theme.

Simply showing that capitalism had changed over time is in itself a major shift, as the responses in the discussion forums of The New York Times reminded me. Capitalism is not the end of history—as Francis Fukuyama famously put it at the end of the Cold War—it is our history. The changes in capitalism demand explanation. Even in just our lifetimes, we have seen how basic processes of capitalism, like work and investment, have been altered by policy, culture and invention. Topics such as inequality, unemployment, and debt crowd our newspapers and blogs.

Key to all of this was the curious divide between economists and historians, who would seem to naturally share our interest in economic history. By the 1990s, economists held enormous sway in the academe, with their robust models, high salaries, and public profiles. Americans, at least in elite forums, actually listened to them. We humanists ceded the public sphere, retreating to obscure journals but confident that critical theory was still much hipper than math, even if the White House did not call us.

The voices of dissent from the market orthodoxy suddenly found new opportunities after the Great Recession. After years of economic stagnation in the United States, we can no longer blindly accept the hypothesis that the free market is efficient in the long run. Opinions that flourished on the margins could now acquire a currency in the middle. As historians love to observe, most economists have failed to provide an explanation that makes sense to people. Stories, in most situations, are more powerful than regressions. Historians clearly should triumph over economists; after all, Americans hate math as much as they love the History Channel.

Yet historians have failed in their attempt to teach this lesson to a broader public. Readers love stories, but the narratives that we have provided about capitalism have been all but ignored. Some historians are still trying to impress people with clever jargon. Others cling to the puffed-up language of Marxism, or think that to discuss how the economy works is to countenance its operations, as if we become apologists whenever we discuss anything controversial. Mostly, the problem is less one of politics than imagination. We have not fully recognized that the stakes have changed. We are living in a time of tremendous possibility to fashion new ways of explaining the economy.

The history of capitalism is certainly uses statistics (and as well it should), but what makes it compelling are its stories of real people. Policymakers decide to change regulations. Business leaders take risks in bold ventures. Workers actually manage to resist huge corporations. Economic theory, for instance, would tell us that depressions are the worst time to strike and organize. Yet the Flint Sit-Down Strike of 1936 took place in the middle of the Great Depression. A group of auto-workers took on and won a strike against General Motors, then the most powerful corporation in the world. That reality, more than any theory, is what makes the history of capitalism different from economic history. What matters most is what cannot be entirely predicted. In this sense, the most compelling history is about entrepreneurs who challenge market equilibrium and common sense.

Nearly all of our economic theories about development emerge from our histories of capitalist growth over the past 500 years. Only by understanding capitalism’s development can we hope to spur development in emerging economies and steer developed economies onto a path of sustainable growth. Above all else, historians must remind us all that things change, even capitalism. In some sense, this idea is more radical than any millenarian communist tract. While the basic rules of capitalism might appear fixed (excess profits ought to be invested, work needs to be organized, and private property needs protecting), the forms that are possible are quite endless.

Even in the last two centuries, just in our country, the varieties of capitalism reveal how truly protean even simple ideas like “investment” can be. For example, the riskiest investments of the early nineteenth century were factories, while normal investment went into merchant ventures. The trip could be insured. Multiple friends (and it was always personal) could be brought together to split a ship and a cargo, and after the trip, the ship could be sold and the profits divided. How could a factory be divided? When would its “trip” end? The long time horizons just seemed too risky. If you wanted to invest in production, the safe bet was not factories, but slaves. Slaves could work. Slaves could have children. With the expanding frontier, slaves could be profitably sold. If one wanted to borrow money, slaves could be easily mortgaged, or even securitized. That factories, which we think embody capitalist investment, were in some sense the wild fringe of the 1820s and 1830s, complicates everything we think we know about capitalism.

New Left historians knew this bit of history as well as we do. The difference is less one of fact than one of interpretation. In this sense, the “history of capitalism” is perhaps less of a break than continuity with the New Left historiography— as much as every new generation likes to overthrow the last. Agency still matters to us, but we confine it to the powerful few who shaped commerce and industry. We ask more questions about firms, who still have power today, than about movements, who do not. Agency, when we see it, is a problem to explain rather than an assumption.

Would we wish that modern capitalism had evolved in some other way? Of course. But the historian’s task is to confront sober reality, not fashion heroic sagas. In our reality, ordinary people can make real changes only under extraordinary circumstances. The Flint Sit-down strike can happen, but rather than make it just another case of everyday agency, it should be understood as something special so that its lessons can be understood and applied. Luckily, archives always offer more instruction in the specificity of the past, even as they push us to question our assumptions about how capitalism works. Choices were and are made every day, if not by everyone, determining not only capitalism’s past but its future as well. The history of capitalism is not a fad, but something that we should think about, so that we can make better choices — when we have them — in the future.

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About The Author:

Louis Hyman is assistant professor of History at the ILR School, Cornell University. You can follow him on Twitter at @louishyman.

  • Below14th

    This is such a great piece. More excited to add Symposium to my RSS than anything I’ve added to it since setting one up several years ago.

  • toxicafunk

    Great article! But I do have a quibble with this sentence:

    “we can no longer blindly accept the hypothesis that the free market is efficient in the long run”

    This is not a valid statement since there was no free market to begin with. The only valid statement we can make is that a regulated market (or economy if you prefer) is not efficient in the long run. Of course it does not follow that a free market is efficient, we cannot confirm or deny this statement since there was no free market to study or compare.

  • chris_p_a

    Seems more like the author is proposing to study corporatism rather than capitalism. They are not the same, and advocates of capitalism need not be advocates of corporatism.