THE
RELENTLESS
REVOLUTION
ALSO BY JOYCE APPLEBY
A Restless Past:
History and the American Public
Thomas Jefferson
Inheriting the Revolution:
The First Generation of Americans
Telling the Truth about History
(with Lynn Hunt and Margaret Jacob)
Liberalism and Republicanism in the
Historical Imagination
Capitalism and a New Social Order:
The Republican Vision of the 1790s
Economic Thought and Ideology in
Seventeenth-Century England
The
RELENTLESS
REVOLUTION
A HISTORY OF
CAPITALISM
Joyce Appleby
W. W. NORTON
& COMPANY
New York • London
Copyright © 2010 by Joyce Appleby
All rights reserved
For information about permission to reproduce selections from this book, write to Permissions, W. W.
Norton & Company, Inc.,
500 Fifth Avenue, New York, NY 10110
Library of Congress Cataloging-in-Publication Data
Appleby, Joyce Oldham.
The relentless revolution: a history of capitalism / Joyce Appleby.
—1st ed.
p. cm.
Includes bibliographical references.
ISBN-13: 978-0-393-07723-0
ISBN-10: 0-393-07723-3
1. Capitalism—History. 2. Economic history. I. Title.
HB501.A648 2010
330.12’209—dc22
2009035676
W. W. Norton & Company, Inc.
500 Fifth Avenue, New York, N.Y. 10110
www.wwnorton.com
W. W. Norton & Company Ltd.
Castle House, 75/76 Wells Street, London W1T 3QT
I dedicate this book to my son, Frank Appleby,
who has been an unfailing source of comfort, knowledge,
humor, and enthusiasm
CONTENTS
Acknowledgments
1. The Puzzle of Capitalism
2. Trading in New Directions
3. Crucial Developments in the Countryside
4. Commentary on Markets and Human Nature
5. The Two Faces of Eighteenth-Century Capitalism
6. The Ascent of Germany and the United States
7. The Industrial Leviathans and Their Opponents
8. Rulers as Capitalists
9. War and Depression
10. A New Level of Prosperity
11. Capitalism in New Settings
12. Into the Twenty-first Century
13. Of Crises and Critics
Notes
ACKNOWLEDGMENTS
W
was actually fun, and even more pleasurable were the many conversations I had
about capitalism with Flora Lansburgh, Jim Caylor, Linn Shapiro, Perry Anderson, Ruben Castellanos,
Bruce Robbins, and Lesley Herrman. I had a band of readers to whom I am deeply, deeply indebted.
Jack Pole brought to the reading of The Relentless Revolution a welcome and profound knowledge of
history. David Levine, another fellow historian, was my toughest critic, but he generously praised the
parts that he liked and always encouraged me to press on. Ware Myers gave me the kind of crisp
advice you’d expect from an engineer with intellectual leanings. Susan Wiener, a poet and writer, read
the book with sympathy and the sharpest eye for errors grammatical, syntactical, and orthographic that
I have ever known. Carlton Appleby pushed for clarity and precision. My dear friend Ann Gordon
brought her care for the English language to my prose. Several colleagues—Margaret Jacob, Robert
Brenner, Peter Baldwin, Nikki Keddie, Fred Notehelfer, Stanley Wolpert, Jose Moya, Mary Yeager,
and Naomi Lamoreaux—contributed valuable expert knowledge. My nephew, Rob Avery, saved me
from making several errors about computers, as Seth Weingram did for the arcane world of finance.
Karen Orren listened and read with her usual acuteness. I was fortunate in having Steve Forman as my
editor at Norton, for he was a shrewd, yet sympathetic, reader of my text. My son, Frank, to whom I
have dedicated this book, read each chapter with critical insight. What was even more helpful, he
shared his expansive knowledge with me and never tired of talking about capitalism. Through the
kindness of Peter Reill and the Center for Seventeenth-and Eighteenth-Century Studies, I found Vic
Fusilero, the finest research assistant I have ever had. It’s rare that someone not only gives you an idea
for a book but persists in convincing you to write it, but such is the case with Michael Phillips. After
interviewing me for his radio show many years ago, he decided that I should write a book on
capitalism, and so I have. I am grateful to all these friends. I may have to claim my mistakes, but I am
certain that I would have had to claim a lot more without these superb readers.
RITING THIS BOOK
THE
RELENTLESS
REVOLUTION
1
THE PUZZLE OF CAPITALISM
L
detective story, the history of capitalism begins with a puzzle. For millennia trade had
flourished within traditional societies, strictly confined in its economic and moral reach. Yet in the
sixteenth century, commerce moved in bold new directions. More effective ways to raise food slowly
started to release workers and money for other economic pursuits, such as processing the sugar,
tobacco, cotton, tea, and silks that came to Europe from the East and West Indies and beyond. These
improvements raised the standard of living for Western Europeans, but it took something more
dramatic to break through the restraints of habit and authority of the old economic order. That worldreshaping force came when a group of natural philosophers gained an understanding of physical laws.
With this knowledge, inventors with a more practical bent found stunning ways to generate energy
from natural forces. Production took a quantum leap forward. Capitalism—a system based on
individual investments in the production of marketable goods—slowly replaced the traditional ways
of meeting the material needs of a society. From early industrialization to the present global economy,
a sequence of revolutions relentlessly changed the habits and habitats of human beings. The puzzle is
why it took so long for these developments to materialize.
Most of the marvelous machines that transformed human effort began with simple applications
of steam and electricity. How many people had watched steam lift the top off a pan of boiling water
before someone figured out how to make steam run an engine? Couldn’t someone earlier have begun
experimenting with lightning? The dramatic success of eighteenth-and nineteenth-century innovations
compels us to wonder why human societies remained fixed for millennia in a primitive agrarian order.
How can it be that brilliant minds penetrated some of the secrets of the cosmos but couldn’t imagine
how to combat hunger? The answer that the times were economically backward is of course semantic
and doesn’t really help us pierce the conundrum of great civilized accomplishments in the face of
limited economic productivity.
Starting with these questions, I am going to explore the benchmarks in capitalism’s ascent,
looking at how this system transformed politics while churning up practices, thoughts, values, and
ideals that had long prevailed within the cocoon of custom. This is not a general study of capitalism in
the world, but rather a narrative that follows the shaping of the economic system that we live with
today. Nor does it cover how various countries became capitalistic, but rather concentrates on those
specific developments in particular places that gave form to capitalism. My focus is on economic
practices, of course, but it can’t be stressed too much that capitalism is as much a cultural as an
economic system. A new way of establishing political order emerged. People reversed how they
looked at the past and the future. They reconceived human nature. At a very personal level, men and
women began making plans for themselves that would once have appeared ludicrous in their
ambitious reach. Tucked into this account will be an examination of how different societies have
responded to the constant challenges ushered into their lives during the past four centuries.
If we were to visit ancient Florence, Aleppo, and Canton, we would be astonished by the rich
array of foods and goods for sale in their vast bazaars, souks, and markets. We would marvel at the
IKE A GOOD
beauty of their churches, temples, and mosques, as well as the merchants’ elegant city houses and the
country homes of the nobility. We would discover a population of talented artisans, knowledgeable
statesmen, shrewd traders, skilled mariners, and energetic people everywhere. Yet they all were in
thrall to an economic system so limited in size and scope that it could barely feed them. They
accepted as normal that they would regularly suffer from drastic shortages of all kinds of goods
because it had always been so.
Scarcity in Traditional Society
Traditional societies around the globe were built on the bedrock of scarcity, above all the scarcity of
food. Whether in ancient Egypt or Greece, Babylonia or Mongolia, it took the labor of upwards of 80
percent of the people to produce enough food to feed the whole population. And because farmers often
didn’t even succeed in doing that, there were famines. All but the very wealthy tightened their belts
every year in the months before crops came in. The fear of famine was omnipresent. Hungry subjects
tended to be unruly ones, a fact that linked economic and political concerns. The worry about famines,
which most adults shared, justified the authoritarian rule that prevailed everywhere. Few doubted that
those vulnerable to food shortages needed to be protected from the self-interested decisions that
farmers and traders might make about what to do with the harvest if they were left to themselves.
To prevent social unrest, rulers monitored the growing, selling, and exporting of grain crops.
Where there were legislatures, they passed restrictive laws. Hemmed in by regulations, people had few
opportunities to make trouble—or undertake new enterprises. Most manufacturing went on in the
household, where family members turned fibers into fabric and made foodstuffs edible. Custom, not
incentives, prompted action and dictated the flow of work throughout the year. People did not assign
themselves parts in this social order; tasks were allocated through the inherited statuses of landlord,
tenant, father, husband, son, laborer, wife, mother, daughter, and servant.
Despite the great diversity of communities around the world, they conformed in one way: Their
population grew and retrenched like an accordion through alternating periods of abundance and
scarcity—the seven fat and seven lean years of the Bible. You can see this “feast or famine”
oscillation in the construction record of European cathedrals. Most of these magnificent structures
took centuries to complete, with a spate of years of active building followed by long periods of
neglect. When there was a bit of surplus, work could resume, only to be succeeded by stoppages
during times of acute scarcity.
If we could go back in time, we would probably be most surprised by the widely shared
resistance, not to say hostility, to change. Novelty has been so endemic to life in the modern West that
it is hard for us to fathom how much people once feared it. The effects of economic vulnerability
radiated throughout old societies, encouraging suspicions and superstitions as well as justifying the
conspicuous authority of monarchs, priests, landlords, and fathers. Maintaining order, never a matter
of indifference to those in charge of society, was paramount when the lives of so many people were at
risk.
The wealth of the Western world has created something of a safety net against global famine, but
there are still societies whose powerful traditions echo those of premodern Europe. Through our
engagement with the Muslim world we now also recognize the hold of ideas about honor, the
separation of male and female roles, the importance of female virginity, and the submersion of each
person’s desires into the will of his or her community. Recent terrorist attacks have prompted many
Westerners to hope that improved economies might otherwise engage the young men who carry out
the violence. More jobs would certainly be welcome, but such a response bears the traces of our
capitalist mentality. What we don’t sufficiently weigh are the powerful ties of shared rituals and
beliefs and how threats to them affect people. Men and women in traditional societies see our concern
about efficiency and profits as fetishes. These preoccupations of ours are as distasteful to them as they
were to men and women in sixteenth-century Europe.
Capitalism’s Distinctions
The word “capital” helps define my tack on this historical cruise. Capital is money destined for a
particular use. Money can be socked away in the mattress for a rainy day or spent at the store. Either
way, it is still money. It becomes capital only when someone invests it in an enterprise with the
expectation of getting a good return from the effort. Stated simply, capital becomes capital when
someone uses it to gain more money, usually by producing something. We can add an “ism” to
“capital” only when the imperatives and strategies of private investments come to dominance as they
did first in England and the Netherlands, next in Western Europe, and then in the American colonies.
Outside these areas, capitalism moved next to Eastern Europe and Japan. In our own day capitalist
practices hold sway through most of the world.
Capitalism of course didn’t start out as an “ism.” In the beginning, it wasn’t a system, a word, or
a concept, but rather some scattered ways of doing things differently that proved so successful that
they acquired legs. Like all novelties, these practices entered a world unprepared for experimentation,
a world suspicious of deviations from existing norms. Authorities opposed them because they violated
the law. Ordinary people were offended by actions that ran athwart accepted notions of proper
behavior. The innovators themselves initially had neither the influence nor the power to combat these
responses. So the riddle of capitalism’s ascendancy isn’t just economic but political and moral as
well: How did entrepreneurs get out of the straitjacket of custom and acquire the force and respect that
enabled them to transform, rather than conform to, the dictates of their society?
Many elements, some fortuitous, had to be in play before innovation could trump habit.
Determined and disciplined pathbreakers had to persist with their innovations until they took hold
well enough to resist the siren call to return to the habitual order of things. It’s not exactly a case of
how small differences can have large impacts through a chain of connections. The better simile would
be breaking a hole in a dike that could not be plastered up again, after letting out a flood of pent-up
energy. But breaking that hole required curiosity, luck, determination, and the courage to go against
the grain and withstand the powerful pressures to conform.
Just as the capitalist system has global reach today, so its beginnings, if not its causes, can be
traced to the joining of the two halves of the globe. Europe, Africa, and Asia had been cut off from the
Americas until the closing years of the fifteenth century. Even contact between Europe and Asia was
confined to a few overland trade routes used to transport lightweight commodities like pepper and
cinnamon. Then European curiosity about the rest of the world infected a few audacious souls, among
them Prince Henry the Navigator. Prince Henry never left Portugal, but he funded a succession of trips
down the west coast of Africa. Merchants, enticed by a trade in gold and slaves along the western
Africa coast, increased the number of voyages. Soon Portuguese ships were rounding the Cape of
Good Hope on their way up the east coast of Africa. By the beginning of the sixteenth century, the
Portuguese had established strongholds on both African coasts and across the Indian Ocean to the
Indian subcontinent itself. Simultaneously another Portuguese, Ferdinand Magellan, leading a Spanish
expedition, circumnavigated the globe in 1517.
Seventy years before these Portuguese voyages, a Ming dynasty emperor sent out seven great
expeditions from China. Led by Zheng He, who must have been a brilliant commander, the
expeditions involved more than twenty-seven thousand sailors and two hundred vessels, the largest of
them weighing fifteen hundred tons. (Columbus’s first voyage, by contrast, involved a crew of eightyseven and three ships weighing no more than one hundred tons.) From China these flotillas sailed
through the East Indies, past Malacca, Siam, Ceylon, across the Indian Ocean, and down the east coast
of Africa, possibly going as far as Madagascar. Sailors grew herbs on the ships’ broad decks and
managed to return from Africa with a couple of giraffes. Greatly aided by the magnetic compass, the
Chinese voyages advertised the technological sophistication of the Chinese. Yet after three decades
the expeditions stopped.
After Bartolomeu Dias rounded the Cape of Good Hope in 1488, dozens of similar caravels
followed in his wake, bringing Europe into continuous contact with the East Indies. The seafaring
Portuguese had only whetted the appetite of European adventurers. This shift in European travel to
Asia, starting overland from Italy, to countries on the Atlantic Ocean had profound consequences. In
the next century, Spain, Portugal, France, England, Sweden, Denmark, and the Netherlands
permanently eclipsed the commercial dominance of the Mediterranean countries. The Atlantic became
the new highway for world travelers, leaving behind the city-states of Genoa and Venice.
In these different responses of equally capable Chinese and Portuguese mariners we have one of
history’s great riddles. Why the retreat of the Chinese and the Europeans’ rush to “see the world”? The
Chinese had long demonstrated more interest in trade than men in Portugal, so monetary motives
don’t help us. Looser political control probably enabled many more Portuguese to act on their own
impulses, even if royal purses were needed to bear the expense of the first exploratory voyages. In the
absence of certain knowledge, we are free to rush in and tell stories that confirm our biases. Western
storytellers have emphasized the intrepidity of their explorers, the readiness of Europeans to move
away from their customs. Such explanations of the differences in the societies of East and West won’t
bear up under serious scrutiny. The story is more interesting than that.
Clearly it was not a lack of knowledge, wealth, or skill that kept the Chinese from maintaining
contact with the Occident. What might it have been? On the practical side, the greater prosperity of
Chinese merchants who had established commercial relations throughout the Indies might have
checked any interest in going farther afield. Perhaps the Ming emperors lost interest in African
countries when they discovered them to be, in most regards, inferior in science, art, and craftsmanship
to theirs. Belief in the utter superiority of the “Heavenly Kingdom,” as they styled it, predominated in
Chinese culture. And why not? In ancient times, in an example of engineering wizardry, a Chinese
innovator was able to cut a long trench through granite mountains to control floods by alternating
bonfires and baths of cold water to crack the rocks.1 The many examples of technical ingenuity and
scientific achievement that highlight Chinese history point to a superior level of excellence in
education. What didn’t take place in China was a continuous path of developments, each building on
its predecessor. Nor did the Chinese share the evangelical imperative of European Christianity, giving
explorers some moral authority to search for converts among foreigners. A lot of “mays” and
“mights.” We’ll never really know, but we can appreciate the significance of these contrasting
responses.
The Dutch, French, and English quickly followed the Spaniards to the New World to carve out
their piece of this unexplored area. As contemporaries quickly realized, almost everything, at least the
things that Europeans wanted and couldn’t grow themselves, grew in the tropics. As they moved from
exploration to exploitation, European adventurers began looking for a source of labor to cultivate the
new crops for export back home. The Portuguese had been trading in African slaves since Henry the
Navigator’s first voyages and soon began shipping enslaved men and women across the Atlantic.
Unlike most of the native tribes in the New World, Africans were accustomed to the disciplined work
of mining and farming. Aboriginal Americans made poor slaves; they often simply died of despair
when chained to work. By the middle of the seventeenth century, with escalating demand, French,
Dutch, and English merchants had entered an intense rivalry with the Portuguese to dominate the slave
trade.
These voyages had an incalculable impact on Europe and Africa. The new demands for labor
created modern slavery, an institution far crueler and more inhumane than the slavery of biblical
times. Over the course of the next two and a half centuries, close to twelve million African men and
women were wrenched from their homes and shipped to the New World to work first for the Spanish
mines and ranches and then on the sugar, rice, coffee, and tobacco plantations that the Spaniards,
Dutch, French, Danes, Swedes, and English created throughout the Western Hemisphere. The sealanes of the Atlantic gave access to this new source of labor.
The Trailblazer
In view of this spectacular activity across the globe, it may seem a bit perverse for me to pinpoint the
beginnings of capitalism in one small island kingdom in the North Atlantic. Yet only in England did
these dramatic novelties produce the social and intellectual breakthroughs that made possible the
emergence of an entirely new system for producing goods. A series of changes, starting in farming and
ending in industry, marks the point at which commerce, long existing in the interstices of traditional
society, broke free to impose its dynamic upon the laws, class structure, individual behavior, and
esteemed values of the people. Although thousands of books have been written about this astounding
phenomenon, it still remains something of a mystery.
Visiting the Vatican Museum several years ago, I was struck by the richness of life captured in
fourteenth-and fifteenth-century paintings there. They were full of plants, furniture, decorations, and
clothing! I couldn’t help but contrast these lavish depictions of everyday life with plain features of
England. How counterintuitive that this poor, cold, small, outlandish country would be the site of
technological innovations that would relentlessly revolutionize the material world! In the early
twentieth century the historian Arnold Toynbee thought he had found the key to all development in the
formula of “challenge and response.” The English might have been challenged by their very lack of
distracting luxury. Toynbee’s hypothesis didn’t hold up under rigorous scrutiny, but there may still be
an element of truth in it.
For generations, scholars concentrated on eighteenth-century industrialization to mark the
beginning of capitalism. They labeled it the Industrial Revolution. This is understandable because the
spectacular appearance of factories filled with interfacing machinery and disciplined workers so
visibly differed from what had gone before. But this is to start an account of a pregnancy in the fifth
month. Critical changes had to take place before these inventions could even be thought of. But which
ones and for how far back?
How deep are the roots of capitalism? Some have argued that its beginnings reach down into the
Middle Ages or even to prehistoric times. Jared Diamond wrote a best-selling study that emphasized
the geographic and biological advantages the West enjoyed. Two central problems vex this
interpretation: The advantages of the West were enjoyed by all of Europe, but only England
experienced the breakthroughs that others had to imitate to become capitalistic. Diamond’s emphasis
on physical factors also implies that they can account for the specific historical events that brought on
Western modernity without reference to the individuals, ideas, and institutions that played so central a
part in this historic development.2
David Landes entered the lists of scholars recounting the “the rise of the West” with an
explanation that blended many climatic and cultural factors without providing a narrative of how they
interacted to transform Western society. Alfred Crosby, in his assessment of this question, stressed a
change in Europeans’ fundamental grasp of reality. In the thirteenth century they adopted a
quantitative understanding of the world that promoted mathematics, astronomy, music, painting, and
bookkeeping. While presenting a fascinating account of technical achievements, Crosby’s insistence
upon intellectual changes leaves society and politics in a conceptual limbo. Deepal Lal goes back even
farther in time to the eleventh century, where he finds the roots of the “Great Divergence” in papal
decrees that established a common commercial law for all of Christendom.3
The Latin motto post hoc, ergo propter hoc reminds us that because something happened before
something else, it is not necessarily a cause of the following event. The emergence of capitalism was
not a general phenomenon, but one specific to time and place. People who take the long-run-up view
of the emergence of capitalism note factors like the discovery of the New World, the invention of the
printing press, the use of clocks, or papal property arrangements. These were present in countries that
did not change their economic ways. Logically, widely shared developments can’t explain a response
that was unique to one country. What the myriad theories about how the West broke with its past do
have right is that there were many, many elements that went into capitalism’s breakout from its
traditional origins. It is also important to keep in mind that a succession is not a process. A process is
a linked series of operations; a succession is open to interruption and contingency.
European Divergence
There was nothing inevitable about the English moving from the agricultural innovations that freed up
workers and capital for other uses to a globe-circling trade and on to the pioneering of machine-driven
industry. It’s only in retrospect that this progression seems seamlessly interconnected. But it wasn’t.
This appearance reflects a human tendency to believe that what happened had to happen. It is
important to break with this cast of mind if we are to understand that capitalism is not a predestined
chapter in human history, but rather a startling departure from the norms that had prevailed for four
thousand years. Nor did commerce force capitalism into being. There have been many groups of
exceptional traders—the Chinese, Arabs, and Jews come to mind—but they were not the pioneers of
either the Agricultural or Industrial Revolution. We could say that a fully developed commercial
system was a necessary, but insufficient, predecessor to capitalism.
To say that capitalism began in England is not to suggest that the explorations of the Portuguese
and Spanish did not have an impact on the history of capitalism. These staggeringly bold adventures
of the fifteenth and sixteenth centuries opened up minds and pocketbooks in England as elsewhere.
But the examples of Spain and Portugal bolster the case for England’s exceptionalism. Despite
sallying forth in successive expeditions, neither country modified its aristocratic disdain for work or
indifference to the needs of merchants and artisans. Everything that was remarkable about Portuguese
and Spanish voyages got folded back into old ways. What differed in England was that a sequence of
developments never stopped. And they attracted commentary, debate, and explanations. This
intellectual engagement with the meaning of economic change blocked a reversion to old ways of
thinking. Novel practices and astute analysis of them are what it took to overturn the wisdom of the
ages. Many countries had brilliant episodes in their history; sustaining innovation through successive
stages of development distinguishes England’s performance.
Of course to start at any date is arbitrary. All historical developments have antecedents, some
going back centuries. Each cut of the historian’s ax into the layers of the past proves that the roots of
modern society are very deep. Yet the seventeenth century brought fundamental alterations to
England, and contemporaries became acutely and astutely aware of them. At its beginning a venerable