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A History of Capitalism

A History of Capitalism Perilous Passage: Mankind and the Global Ascendancy of Capitalism by Amiya Kumar Bagchi; Rowman and Littlefield, Lanham, Maryland, Indian reprint: Oxford University Press, New Delhi, 2005;


A History of Capitalism

Perilous Passage: Mankind and the Global Ascendancy of Capitalism

by Amiya Kumar Bagchi; Rowman and Littlefield, Lanham, Maryland, Indian reprint: Oxford University Press, New Delhi, 2005; pp xxv + 425, Rs 695.


his is a very ambitious, often interesting, and ultimately unsuccessful book. In it, A K Bagchi sets out to provide a history of capitalism (broadly defined) over the last 500 years, describe its impact on the lives of ordinary people around the world, and survey contemporary possibilities for creating something better.

A lengthy introductory section leads into Part II, which makes three basic points. First, the claims of some scholars that western Europe was significantly wealthier than other densely settled parts of the world by an early date (according to some, ca 1000; according to others, by ca 1500) is belied by most of the evidence we now have; it is only with the onset of industrialisation in the late 18th century that first Britain, and then other parts of the north Atlantic world, began to pull away. Insofar as this is an argument about per capita income or (even more so) about levels of consumption among ordinary people, Bagchi is repeating a point made by various scholars over the last decade, including myself; the same is true when he criticises literature that sees modern living standards as the product of a “European miracle” derived solely form European sources, without acknowledging the importance of ideas, products, profits and resources derived from the rest of the world. Bagchi’s objection to claims that European growth was essentially self-generated is particularly sweeping, because he includes all sorts of “foreign” influences, without either trying to categorise them or discuss their relative importance; but for the same reason, his argument becomes both vague and close to tautological.

The potato, Latin American silver, aspects of Greek thought preserved by Muslim scholars when they were lost in Europe, the slave trade, and Britain’s early 20th century rubber plantations in Malaysia all benefited at least some Europeans, and all involved places beyond Europe, but they are not things of the same kind, magnitude, or period; nor are they alike in the extent to which they were windfalls to Europe alone or came at the expense of other groups of people. Lumping them together may reinforce the point that the growth of “the west” was never fully independent of trans-continental processes, but it does not get us any closer to understanding the importance of any particular influence. And unless we make such distinctions, an abstract “extra-European contribution” becomes non-controversial, but of uncertain significance. That printing, for instance (not to mention writing) originated elsewhere and was important is not hard to establish, but doing so would not really shake standard accounts of a post-1500 “European miracle”; but establishing that the Atlantic slave trade made an essential contribution to European growth would force changes in that basic narrative.

Second, Bagchi quite rightly insists that measuring economic growth is quite different from measuring human welfare, or even human material welfare. Borrowing Amartya Sen’s notions of development as “freedom” and “capabilities”, Bagchi insists that we consider growth to be true development only when we see larger numbers of people enjoying improved levels of legal rights, physical health, learned capacities (e g, literacy) and enough time free of draining kinds of labour to make good use of these abilities. And once one adds these criteria, western success is more recent, less complete, less secure, and less far ahead of some other parts of the world than it appears in standard narratives of European exceptionalism and/ or the unique virtues of liberal capitalism.

Early modern European societies had very unequal income distributions, and inequality in Britain was particularly sharp.

Consequently, even when early industrialisation made western Europeans (and then North Americans) particularly rich in terms of per capita incomes, ordinary people in those societies were not necessarily all that well off. Whether measured by life expectancy, height (as a proxy for health and nutrition) or other standards, Bagchi argues, most Europeans did not begin to benefit significantly from economic growth – or come to be better off than their counterparts elsewhere in the world – until the late 19th or even the early 20th century. Similarly, in the areas of civil and political freedoms, Bagchi reminds us how profoundly undemocratic most western political systems remained until at least first world war, and that in many places the promises of liberalism were actually made real only under pressure from socialists and social democrats after 1945.

Most of these arguments are not new, of course. A good deal of recent work strongly suggests that even measured by strictly economic criteria such as real wages – or in the case of societies with fewer wage labourers, the average earnings of small farmers and artisans – the welfare of ordinary people in parts of Japan, China, Java, and perhaps India remained close to that in north-western Europe well after average income per capita had diverged. (The four cases above are listed in order of the strength of the known data as of this writing; we lack adequate information for most other places.) Or, to put it another way, improvement in living standards lagged well beyond economic growth in the Atlantic world. And other kinds of evidence pointing to the same conclusion

– the huge gap between working class and middle class heights in Britain as late as 1914, for instance – has been around even longer. But Bagchi does a very good job of assembling this data into an overall picture, arguing forcefully that they are not, as some literature suggests, simply a series of anomalies that are marginal to a general story of 19th century improvement; instead, extreme inequality and limited welfare gains was the predominant pattern in the “core” of the 19th century world economy. This is probably the part of the book that most effectively combines claims that will surprise many readers and a convincing case for those claims.

Economic and Political Weekly March 3, 2007

However, some caveats must be added, even for this section. The long period Bagchi considers, from ca 1500-1900, featured a number of overlapping changes: the growth of more powerful states, increased rights for owners of private property and weakening of collective property, unprecedented population growth, more rapid and global circulation of pathogens, technological change and near-constant warfare (until 1815, after which warfare in the west declined for a century while western conquests elsewhere increased). Some of these changes were matched elsewhere (e g, there was comparable population growth in east Asia, and probably south Asia, ca 1500-1850); some trends, such as the strengthening of centralised states and weakening of communal property, were echoed elsewhere, but not as strongly; and some trends did not have very close parallels that we know of outside of Europe. The interconnections of these diverse trends were very complex, and their implications for human well-being often contradictory. However, Bagchi rather casually combines everything that caused human welfare in the west to lag behind economic growth under the label “capitalism”, often without identifying, much less verifying, any particular causal mechanism tying them to capitalist institutions.

European wars, for instance, certainly provided opportunities for certain capitalists, but it requires an extremely loose definition of “capitalism” to make it the cause of many of them. Meanwhile the growth of wage labour – which certainly was part of capitalism – appears to have raised birth rates in many parts of Europe by making it easier for young people to establish households without their parents’ cooperation; but it would be rather arbitrary to add the resulting downward pressure on wages to the debit side of capitalism’s ledger without chalking up a credit for the gain in personal freedom involved. Moreover, Bagchi insists on making the rate of population growth one of his key indicators of human welfare in the early modern period (e g, pp 77-81); while this makes sense if we assume a world without any voluntary birth control (i e, one in which low population growth rates must be due either to high death rates or to birth rates depressed by poverty), there is increasingly irresistible evidence that some of the most prosperous nonwestern populations (e g, those of Japan’s Kinai region and China’s Yangzi Delta) did practise deliberate fertility control.

Finally, while Bagchi’s argument in this section is an important corrective to overly celebratory accounts of western economic growth, he sometimes overstates his case. For instance, it is true, as Bagchi notes, that English life expectancy for 1871, at 41.31 years, was only slightly higher than that for 1606, at 40.82 (pp 83-84; original data from E A Wrigley and Roger Schofield, The Population History of England, Cambridge University Press, 1981, pp 528-30). But 1606 was an unusually good year for its time, and 1871 an ordinary one. The overall average of Wrigley and Schofield’s data for 1541-1751 is 35.4, while that for 1821-1871 was 40.3. Moreover, infant deaths were less reliably recorded in the earlier period, so the real difference in life expectancy is probably bigger than the 14 per cent that appears here. These gains still pale next to 20th century advances in longevity, but they are hardly trivial. Bagchi’s more general point that improvements in welfare lagged well behind Europe’s economic growth rates remains well-supported and does not need to be buttressed by this exaggeration.

Effects of Euro-American Expansion

Most of the rest of the book is devoted to the effects of Euro-American expansion on the well-being of other peoples. Again, many of these stories are familiar ones – the devastation of native peoples in the Americas and Australia, the slave trade, the “cultivation system” of the Netherlands East Indies, and so on – but it is useful to have so many of the cases assembled in one place. And it is worth reiterating, as Bagchi does, that the principal innovation that Europeans brought to the trading networks of Asia prior to industrialisation was a far closer linkage between maritime commerce and naval warfare than those waters had seen before. He also adds a series of less familiar arguments (made, in their best-known form, by Mike Davis in Late Victorian Holocausts) about how the Mughal and Qing empires at their heights had done more to shield their subjects from famine than either the British colonial state or the late Qing state, operating under imperialist pressures, would do during some of the worst famines in human history. (Bagchi fails to note, however, how much dissent there is from Davis’ claims about the Mughal “safety net” in particular.)

Here, too, the book pays a price for attempting to combine so much material, for treating “capitalism” and “the west” as synonymous, and for treating that as the same historical formation across the centuries. It is possible to link the Spanish conquistadors in 16th century Peru to “capitalism,” but making capitalism the main source of their depredations is already stretching the point. It is also quite plausible to link Japan’s slaughter of Chinese peasants during the early 1940s to the ways Japan learned from western powers and the pressures it faced in a system of competitive national states and empires. But to see a single (albeit evolving) formation as an adequate explanation for both of these events requires such a multiplication of loose causal connections that the assertion becomes useless. A related problem occurs when Bagchi emphasises the role of racism, manifesting itself in the belief in a “civilising mission” in justifying the predatory behaviour of westerners.

There is certainly something to this point

  • westerners (and others) have been able to rationalise a wide variety of horrifying actions by seeing themselves as uniquely positioned to confer “salvation”, “enlightenment”, “civilisation”, “development”, etc, on others. But by lumping together the wildly different forms that this conviction of superiority has taken over time
  • forms which required very different kinds of behaviour – while ignoring the ways in which other conquerors have paralleled some (if not quite all) of these rationales, Bagchi’s premature synthesis short-circuits historical analysis rather than stimulating it. (Conflating the “civilising mission”with Norbert Elias’s very different notion of “the civilising process” – essentiallyastory about changing behavioural norms, including the increasing unacceptability of private violence, within Europe – only confuses matters further.) And when Bagchi tries to cinch the tightest possible connection between capitalism and human catastrophe by arguing, apropos of the Nazi holocaust, that “modern warfare [is] essentially the extrapolation of the heart of the capitalist principle that everything is fair in search of profit and an advance of competitive prowess (288)” – meanwhile omitting Stalin and Pol Pot from his catalogue of 20th century genocides – he reveals a troubling arbitrariness that accords great weight to some loose connections while ignoring others that may be stronger.
  • Another troubling pattern that recurs in this book is a tendency to treat everything that happened during a particular period as something that was necessary in order to sustain the world system as it existed at that moment. (This problem is logically complementary to the problem mentioned above of lumping together every kind of extra-European contribution to European

    Economic and Political Weekly March 3, 2007 prosperity without trying to sort out the more important and the less important ones.) For instance, Bagchi combines a generally helpful account of various ways in which the London-centred world economy of the late 19th century extracted profits from the “periphery” – much to the detriment of those places – with a much weaker argument that this extraction was essential to this system. He notes, quite correctly, that Britain ran significant trade deficits with the rest of the Atlantic world in the last years before first world war, while also making significant investments in the most rapidly growing of these countries (especially the US)

    – something that would eventually have weakened the pound had it not been for large surpluses that Britain was running with Asia especially India. (These surpluses are calculated in a rather odd way here, but the point stands even if we revise that.) So Bagchi is right that in the absence of those surpluses, either Britain would have had to improve its trade balance with other western countries (perhaps slightly reducing consumption at home), or exported less capital (perhaps slightly slowing American or Argentine growth), or slightly devalued the pound – but is this the same as saying that the surpluses extracted from India (relatively large compared to net trade balances, but quite small compared to the total volume of trade, much less compared to overall economic activity) were critical for the improvement of western living standards in this period (pp 112-13)?

    The point is more than a purely historical one. We live in a world today where capital exports from some very poor countries – now enforced through IMF austerity plans to insure debt repayment – again cause enormous misery; and the sums involved are once again large relative to some standards (e g, the balance sheets of particular banks) but small relative to overall flows of goods and money. This time, however, the countries suffering from drain loss of wealth are formally sovereign states, while a century ago most were colonies; and this time there are also some substantial groups within the rich countries arguing for a cancellation of at least some of these debts. To what extent one thinks the wealthy countries can be persuaded to write off those debts – and to what extent one thinks that would matter – has a profound bearing on whether one can imagine the world economy becoming at least somewhat more humane in the absence of enormous upheavals. It is odd that Bagchi, whose historical narrative makes sense only if we allow that “capitalism” can have transformed itself numerous times while still remaining one system, and who also insists (quite reasonably) that many of those who do enjoy relatively good lives within this system gained the chance to do so through peaceful political struggles, suggests at the same time that most of the horrors of the last five centuries were necessary rather than contingent products of a single system. A great deal that we have seen before is indeed still or again relevant to today’s global capitalism, and Bagchi usefully reminds us of how many of these parallels are harrowing rather than hopeful; one hopes this book will reach people who believe the stories Bagchi debunks, and enrich a vital set of debates. But in painting too monochromatic a picture, he sometimes impedes the discussions that work like this should stimulate.



    Economic and Political Weekly March 3, 2007

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