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"This magazine is flush with tight smart writing."
Washington Post

Alan Ryan
The Relentless Revolution: A History of Capitalism
By Joyce Appleby (Norton 494pp 19.99)

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Thomas Jefferson famously observed that nobody without a very strong stomach should watch sausage-making or the way Congress tackles legislation. The past few months have proved him right. Congress has displayed a gutlessness and lack of principle over banking and financial reform unusual even for a body not known for its resistance to finance and big business, while its behaviour over healthcare reform defies description, uniting as it did the striking of corrupt bargains, hiding from hard decisions, and the ventilation of prejudices that were primitive when they were first wheeled out in 1948 to defeat Harry Truman's attempt to institute a national system of healthcare.

The relevance of these events - and non-events - to Joyce Appleby's The Relentless Revolution is very direct. The book is a brisk, well-written, even-handed and highly persuasive account of the origins, growth, and rather iffy current situation of the capitalist economic order. It begins in the European Middle Ages and ends in the global yesterday afternoon - at the end of 2008, when it was anybody's guess whether the assorted rescue operations put in place around the world would in fact work. Its downbeat conclusion is that American capitalism is not only in a mess, but has been in a mess for some thirty years, and that it threatens malign social and economic consequences unless the American political system shows itself more capable of tackling large systemic failures than there is any reason to think it actually is.

Joyce Appleby is a distinguished social and economic historian, recently retired from the University of California at Los Angeles. She has written about the ways the British thought about economics in the seventeenth century, but is best known for her work on the early years of the American republic, on Jefferson, and on the tensions in those early years between the American urge to get rich and the urge to establish an unusually incorrupt republic, living up to the standards that the Romans professed. She is a radical and a sceptic, not in the least a Marxist but something of an old-fashioned populist, rightly believing that unless the common people use the political system to keep the rich and powerful in check, they will get much less than their fair share of the social cake.

But she is a great admirer of drive, energy, imagination, and persistence, which means that this is a history that not only praises the achievements of capitalism - in particular, its extraordinary development of human productivity - but its romance. So, as she launches into a warts-and-all portrait of Rockefeller, Vanderbilt, Carnegie, Zeiss, Krupp and others, she observes, 'These men didn't just make huge fortunes: they pioneered the industries that were to dominate their age: railroads, steel, oil, electrical-powered tools, scientific apparatuses, pharmaceuticals, and dyes.' 'Swashbuckling heroes of enterprise' is what she calls them, and with good reason. That they could be hell to work for and to compete against, she takes for granted.

The greater romance, of course, lies at the beginning of capitalism. Appleby insists that capitalism is harder to explain than many commentators suppose, while others who produced elaborate explanations of its origins - Marx above all - grossly exaggerated some features to the exclusion of the rest. In her view, neither spare cash, nor scientific knowledge, nor technical skill are of themselves sufficient; this, of course, has present-day resonances as a rebuke to the over-optimistic American policy-makers who, in the aftermath of the collapse of communism, thought that every other country in the world was longing to become just like America, and paid far too little attention to the cultural preconditions that make capitalism possible. Nor, as she sees it, have writers always been attentive enough to the difference between what it takes to get capitalism started and what it takes to keep it going. Aside from anything else, it is plainly inconsistent with human nature to work eight, ten or fourteen hours a day at boring and repetitive tasks; once capitalism was firmly entrenched, that became the normal working day, but it's not surprising that workers found the transition deeply disruptive.

The oddity of capitalism's origins is perhaps that there was so little reason why capitalism could not have begun in the Roman or Hellenistic empires, or in the Italian city-states two centuries earlier than it did. People bought and sold at a profit; the technology of sixteenth-century Europe was scarcely more advanced than that of the Roman Principate at the time of the birth of Christ; the technique of moving money around by way of letters of credit was well known. What the cultural shift was that made it possible to move from the profit-making of the merchant, who bought cheap and sold dear but did nothing to transform what he bought and sold, to the profit-making of the capitalist, who deployed his resources for production, is exceedingly hard to say.

The cultural heroes here are above all the Dutch, and the humble herring whose abundance in the North Sea enabled the Dutch to become prosperous on the back of the herring fishery and taught them the arts of boat-building and navigation, which led them out of the North Sea and towards the establishment of a seaborne empire ahead of the British. But it was the Dutch luxury trades that enabled the economy to take off, and the financial institutions these trades spawned that allowed the Dutch to invest with an eye to continuous economic growth. At a time when few people could borrow money elsewhere in Europe at less than 12 per cent, the Dutch kept interest rates at 4 per cent for years on end.

In the end, of course, the British leap-frogged the Dutch, and then the Americans and the Germans leap-frogged the British, and with every passing of the baton to the new leader, the nature of capitalism changed as well. All this is described with great verve, and makes for a very good read. What makes this more than just a celebratory volume testifying to human ingenuity and productivity are three themes that provide a good deal of the shade in a story of light and darkness. The first is a strong sense of the extent to which the upsurge of productivity has been built on the exploitation of fossil fuels that will eventually run out and whose combustion may make the earth uninhabitable long before that; the second is an emphasis on the disastrous effects of imperialism both on those who were colonised, enslaved, and otherwise brutalised and on the Europeans who fought two world wars; and the last is what historians are good at and economists on the whole are not, which is balancing the economic and the political. The free market is a tremendous force for good, but it is driven by private interest; it produces all sorts of side effects that it is in nobody's private interest to take care of and that only a well-organised, public spirited and politically intelligent government can deal with. If, as has happened with the United States, short-sighted private interests succeed in undermining the capacity of government to do its job, everyone is going to do a lot worse than they ought.

Alan Ryan was until 2009 Warden of New College, Oxford. He is now Senior Research Fellow in Political Theory.