My own view on capitalism owes much to the work of Fernand Braudel, the French economic historian, and to his three-volume work, Civilization and Capitalism, particularly the second volume, titled The Wheels of Commerce. The rest is observation of the here and now.
Braudel’s presentation is overwhelmingly persuasive. Capitalism, as he sees it, is a distinct form of economic activity characterized by monopoly (whether clearly visible or not); alliances with political power to maintain control; detached from community, society, and peoples; and focused entirely on getting high returns on money. Therefore capital enters markets capable of being controlled, low in risk, high in returns—and then leaves such markets abruptly when conditions change. Braudel’s emphasis on monopoly, as a defining trait of the capitalist stance, means that capitalism is not entrepreneurial, does not believe in competition, and never mind free markets or the deification of The Market. Capitalists are never specialists.
The broader, more perennial, “always there,” unavoidable economic activity—of which, these days, “small business” is the supposed flag-bearer—is organically linked to community, society, and peoples. It is a necessity. Capital only deals with selected high-yield opportunities—and only while they last.
This form of detached, indifferent monopolistic exploitation of economic exchange, wherever it will work, became visible early in European economic history (Braudel’s subject) with money lending (“usury”) in the twelfth century. The mediaeval economy did not offer much in the way of opportunities; it was too organically structured, based on the interaction of “estates.” The opportunities arose when the first relatively small urban centers began appearing and therefore trade became more intense. Then capital becomes more visible in the form of the great merchants who traded in certain selected goods that fit their needs. Thus after money lending, call it banking, it appears in merchandising and distribution—but, pointedly, not in transportation. Why not? Transportation, as such, was not profitable and highly risky, especially transportation by water. It required high capital investments that had a short life and could be easily and unpredictably lost in a storm.
Capital briefly entered mining late in the fifteenth century—its first foray into actual production of anything at all. Capital left mining after about a 50-year participation. It wasn’t profitable enough. Sure enough, states took over the mines—because mining had become vital to the economies. Next capital selectively entered agriculture ranging from actual ownership of land and management of estates—but this only in a relatively small number of cases. Involvement with agriculture principally took the form of organizing acquisition and then sale and distribution of particularly profitable crops.
Eventually, as the industrial revolution dawned and as technology improved—not least the durability of what have since come to be known as “capital goods,” such as machines, capital entered the production sector as well and has, since, become almost synonymous with it. Its ways of thought have completely saturated, permeated economic thought and behavior—so much so that, these days, it appears to be a “truth from above” that corporations serve their stockholders—rather than the public. That management need not know the product deeply to manage enterprises; lower levels can handle that. That any legal way to save on taxes, thus to avoid contributing to the collective, is a virtue. Note, in this connection, my point above about “alliances with political power” that help the capitalist shape the laws. Therefore comes news today that Google has avoided paying $2 billion in taxes by moving $9.8 billion into a Bermuda shell company. Questioned about this, Eric Schmidt, Google’s Chairman, said: “I am very proud of the structure that we set up. We did it based on the incentives that the governments offered us to operate. It’s called capitalism. We are proudly capitalistic. I’m not confused about this.” What we see here is “capitalism” as a label—a label of virtue. But its real meaning is detachment from community, society, and peoples. There is now another layer of people, above the ordinary masses. In that layer different rules apply.
Meanwhile—and Braudel largely concentrated on capitalism in the pre-industrial period—we may now be approaching another change. It may be that, as capital abandoned mining, so now it may be finding physical production less than suitable as a place to put its masses of money. There are clear signs of capital’s withdrawal in various places. Capital is still investing in virtual reality—along with using other people’s money to gamble on derivates—themselves quite virtual. And then, when oil runs out and once more capital goods became less durable, and people have less and less money to engage in consumption, we’ll all sink back into the good old Dark Ages. At last only usury will remain as an opportunity. And here’s hope that some strong church will erase that infamy too. For a while. For a while.
