Book Review: The Monied Metropolis, by Beckert

                This is yet another book review on my adventure in reading over the summer.  Hope you enjoy it, because I certainly enjoyed reading it (the book that is).

There can sometimes be a lot of debate about whether or not capitalism should be, or is, directly associated with the state.  You hear it all the time in the mainstream media/culture:  “Capitalism would be better off without government interference.”[i]  Or, conversely, perhaps you know someone who argues that capitalism is intrinsically linked to government.  Some might even go far enough to suggest that the government is subordinate to those in control of capitalism, suggesting that the republic itself is a façade.  A lot of this becomes conjectured debate, where one side polemically decides that it is sticking to its guns and not budging on the issue.  With respect to the goals and aspirations of bourgeois elitists in the late 19^th century, however, it seems quite clear how government and the interests of capital learned to play nice.

                Most narratives of labor and capital in the 19^th century focus their attention on the working-class side; its culture, its politics, and its activism.  Historians showed how proletarianization—the conscious development of a sense of class among working class Americans—shifted against the interests of landowning elites after 1850.  In his 2001 text on the development of class in the late 19^th century, Sven Beckert focused his attention, instead, on the elites.  But it wasn’t just any elites—which he makes clear in his preface: “The term bourgeoisie grasps more precisely the historical formation with which I am concerned.  ‘Elite,’ for example, does not sufficiently distinguish the bourgeoisie as a fundamentally different kind of elite from other elites who have come before or after.”[ii]  His text, The Monied Metropolis, examines the formation of the contemporary, post-Civil War bourgeoisie in New York City—the famed “new capital of the world.”[iii]  New York City was a fitting icon for the narrative, since much of the post-Reconstruction boom is associated with the city’s immense commercial and industrial growth until superseded by Chicago and Los Angeles in the 1920s.  Beckert’s book provides us a unique view, however, into the complicated world of industrial and merchant wealth in the late 19^th century to show that government involvement with capital interests was certainly a matter of fact.

                Merchant and industrial capitalists saw a major turn in the 1850s away from conditions that allowed them to succeed in a politically fragmented manner.  Previous agreements between slave-owning elites in the South reached conflicts as Abolitionism swept the Northern states.  Karl Marx once famously argued in a series of articles posted for the Viennese paper Die Presse that the Civil War was the inevitable outcome of two opposing class interests (industrial/merchant capitalists in North, slaveowners in South) both seeking expansion of their productive systems.[iv]  The previous conflicts between industrial and merchant businessmen—primarily over political party preferences and economic competition—quickly dissipated in the wake of tension with the South.  Beckert describes how both industrial and merchant bourgeois elites, “which had been so sharply divided in the 1850s and earlier, had merged into a common agenda, one centered on the matrix of domestic industrial development.”[v]  Whereas previous generations of business and upper-middle class elitists built separate and isolated cultural and social institutions, the bourgeoisie of New York City build common ones that they “defined as part of a conscious effort at stabilizing their own class.”[vi]

                In order to frame their culture and impose social institutions to reflect said culture, the late 19^th century bourgeoisie had the vestige of the State to rely on.  Whatever people want to claim about the history of laisse-faire capitalism in the United States, “capital accumulation was still in numerous ways based on the power of local, state, and national governments: court enforced contracts; Congress determined tariffs; the federal government registered patents; state legislatures passed incorporation laws, build canals, and gave railroad grants; state militias forced Indians out of western territories; and local police enforced the social order.”  Because of this fundamental reality of late-19^th century American life, many of those in the industrial and merchant businesses—including bankers, builders, and renters—felt “compelled to involve themselves in politics.”[vii]  As well, most revenue generated by the state in the form of taxation and customs duties “paid for more of the operations of the federal government.”  The actions of the federal government that could be considered breaching of states’ rights and personal liberties, such as territorial expansion and re-districting, “depended ultimately on resources mobilized by economic elites.”[viii]

                The issues of the North with the South, however, were not the only factors in facilitating the class consciousness of New York City’s (and thus industrial and merchant America’s) bourgeoisie by 1897.  The rise of proletarianization and trade unionism had a particularly powerful impact.  Previously, industrial and merchant businessmen were tolerate of unions to the extent that they created a sense of agency among workers and allowed for production to continue.  However, “a pattern of downturns shook the economy violently in frequent intervals during the 1870s, 1880s, and 1890s.”  Persistent workplace struggles and an increasingly vibrant labor movement directed attention toward the political sphere.  Many working Americans and even small businesses felt that “the spreading dependence on wage work…threatened the very foundations of a republic of small producers.”[ix]  By the 1880s, “the economic and political power of bourgeois Americans remained illegitimate in the eyes of many citizens.”[x]  Further consolidation of political power, clearly, was not in the best interests of the economic elite.

            Previously, political power laid in the hands of landownership and its appropriation, along with the enterprises of the nation’s oldest banks.  Documented from a multitude of schools including political economy, Marxism, the Annals School, and philosophy in general, the shift in the 1850s coincided with the aspiring political ascendancy of the labor movement.  Merchant and industrial leaders were keenly aware of the profound resistance to political power when it became antithetical to the needs and pressures of the broad citizen base.  Beckert shows how, in a unsuspecting fashion, the New York City bourgeois elite found ways to pander down middle-paths which “historians have called ‘progressivism.”  The result was a relationship between society and the state that was “significantly reshaped,” and fostered the booming development of “a new foreign policy” directed at finding “new ways of legitimizing a corporate economic order.”  The bourgeoisie, in other words, were conscious of the risks they took when engaging with politics, and acting accordingly to both shroud their involvement while remaining directly involved in political affairs.

                In their attempt to legitimize their role in American society while avoiding direct attention—since part of Beckert’s thesis is that the bourgeoisie never desired to be portrayed as a uniform or unified class—the industrial and merchant bourgeoisie of New York formed new “preferences rooted in an awareness of the systemic nature of the crisis.”  It was this specific reorientation—this new cultural and social identity—that Beckert claims “reshap[ed] modern America.”[xi]  The overall goal was to reinforce the notion of 'supply and demand' as 'natural functions' of a society, similar to scientific laws that dictated the physical realm.  Everything from wages to job availability was considered to be the almighty result of entrenched economic laws; and consideration for how these laws were both facilitated and encouraged in society were ignored.  And indeed, it worked.  The bourgeoisie emerged more politically and economically intelligent, and by 1890 saw its first major success with the Sherman Antitrust Act and the 1889 New Jersey Incorporation law.  Both laws, pushed and financially backed by New York’s bourgeoisie, “established and legitimized the corporation as a form of business organization that would internalize markets and diminish competition, thus adding to economic stability.”  By the time the Federal Reserve came around, the city’s economic elite established “greater federal regulation of the banking industry.”[xii]

                Beckert’s book begs us to question why we even bother wondering about laisse-faire capitalism—as though the history of the world’s most successful economic elite doesn’t spell it out for us?  In Beckert’s own words, “behind the camouflage of familiarity lurks the history of a social class that can be identified an observed in action, a class that had developed a distinctive sense of itself by the end of the nineteenth century, and that was able to mobilize on that basis.”  It was specifically the actions of the late 19^th century bourgeoisie—“their access to capital, their ability to forge dense social networks, their influence on the state, their capacity to formulate ideas explaining the world to themselves and others have stamped the lives of all Americans”—that defined them as a class.  We can’t pretend that these individuals believed in the success of business on the platform of idealistic free-market capitalism—they purposefully engaged with the state and society at large with an over-arching goal of curbing social development into their favor.  This is a powerful thing to consider when discussion contemporary and historical political economy; thankfully Beckert’s analysis sets a high-bar standard.

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[i] http://www.foxnews.com/opinion/2012/05/29/truth-about-capitalism-government-and-fairness.html (Paraphrase)

[ii] Beckert, Sven.  The Monied Metropolis (Harvard University Press, 2001), 6

[iii] Ibid, 78

[iv] Karl Marx.  "The North American Civil War," Die Presse (October 25, 1861)  www.marxists.org/archive/marx/works/1861/10/25.htm (accessed September 27, 2013)

[v] Beckert, 323

[vi] Ibid

[vii] Ibid, 79

[viii] Ibid

[ix] Ibid, 324

[x] Ibid, 325

[xi] Ibid

[xii] Ibid, 327

Book Review: Arrighi's "The Long Twentieth Century"

         

        To some, world history can seem a tricky subject.  For one, we have to consider questions that are not even addressed in a common national history curriculum such as “American History from 1776-1865.”  Questions such as the role of statehood, the rise and fall of state models, the cultivation and manipulation of trade/exchange, as well as the nature of history itself as a method (social science).  Georg Hegel described world history as a subject “not concerned with general deductions drawn from history, illustrated by particular examples from it—but with the nature of history itself.”[i]  World history is much more than simply depicting and interpreting external actions and events; it is a process of reason, culminating into an over-arching theory for not just society, politics, and economics—it is a process of the development of all ideas through reason.  Few books have I come across in recent years that have the quintessential essence of Hegel’s historical logic than Giovanni Arrighi’s The Long Twentieth Century, which is the focus of this review.

                This review is part of a series of reviews I’m writing not only for others but also for myself, to keep a log of some of the particular texts that have a large or profound influence on the way I develop my understanding of history in general as well as my specific field in world history—historical capitalism.  This is the first review I’m actually posting from this series, but is not necessarily the first review written on major books that I’ve read.  I am also engaging in this project (so to speak) because of an article in one of the more recent editions of the American Historical Association’s Perspectives on History.  The article, by Seth Denbo, emphasized that history as a subject was losing traction as a “book discipline” due to “rapid changes” with both “engagement” as well as “the communication of ideas” among scholars and their students.[ii]  Overall, it is important for emerging scholars and especially historians to consider the utility of the blog format in order to not only maintain standards of writing and professionalism but also to maintain flexibility and roots with dominant streams of communication and student engagement.

                Arrighi’s subtitle to his early 1990s text is “Money, Power, and the Origins of Our Times,” but the typical reader might be off put when they learn the real meaning of Arrighi’s overall title; “The Long Twentieth Century.”  Arrighi’s work stems from two schools of thought primarily, a tradition following Braudel and Immanuel Wallerstein, and a tradition following Joseph Schumpeter; all of whom examined what Wallerstein described as “historical capitalism.”[iii]  Arrighi’s title comes from Braudel’s notion of a longue durée, or a prolonged period of historical development outside the strict confines of “centuries.”  Braudel credited his concept to Karl Marx, stating that it was ultimately his “true genius.”[iv]  Because of this, Arrighi’s “Twentieth Century” spans nearly 450 years, from the mid-16^th century to the late 1980s, and with good reason.  Arrighi’s central concern, made clear in his preface, is an attempt to examine the confusion and bewilderment by social historians over the rapid development of a flexible economic order with hegemonic control remaining in the West, and no possible hint of an overall collapse:

“Over the last quarter of a century something fundamental seems to have changed in the way in which capitalism works.  In the 1970s, many spoke of crisis.  In the 1980s, most spoke of restructuring and reorganization.  In the 1990s, we are no longer sure that the crisis of the 1970s was really resolved and the view has begun to spread that capitalist history might be at a decisive turning point.”[v]

On this premise, we are invited to understand the development of capitalism from a big scale view—one where the immediate instances of crises actually are found to have a pattern, rooted in the very development of capitalism as a world-system.

                 Expanding onto the works of David Harvey and other 20^th century Marxist economists/social theorists, Arrighi described the perceived rigidity of the Fordist-Keynesian period of the 1920s-1960s as an illusion:  its rigidity was one sway of a larger process between flexible and structural capital investment.  These fluctuations exist on the larger, “long twentieth century” scale, and can be read “as a restatement of Karl Marx’s general formula of capital: MCM’.”  This is directly related with the long-standing notion that Marx’s reduction of capitalism’s overall crisis, the tendency for the rate of profit to fall (P), was proven false by the 1970s.  Even recent publications such as Thomas Picketty’s Capital in the 21^st Century alluded to such an idea because of the fact that “after the initial boom of mechanization, the most advanced kind of capitalism reverted to eclecticism—to an indivisibility of interests.”[vi]  Referencing the bounce-back of capital gains during the 1980s, the seemingly flexible nature of world capitalism appeared to defy the long-standing perception of an overall crisis.  In other words, it appeared that capitalism was adaptive as opposed to rigidly fixed.  Utilizing a longer time scale, however, Arrighi suggested that Marx’s formula for capital contained the explanation of capitalism' flexibility long before Marx even addressed P, two volumes later in Das Kapital:

“Marx’s formula tells us that capitalist agencies do not invest money in particular input-output combinations, with all the attendant loss of flexibility and freedom of choice, as an end in itself.  Rather, they do so as a means towards the end of securing an even greater flexibility and freedom of choice at some future point.  Marx’s formula also tells us that if there is no expectation on the part of capitalist agencies that their freedom of choice will increase, or if this expectation is systematically unfulfilled, capital tends to revert to more flexible forms of investment.”[vii]

In other words, we can understand the flexible nature of capitalism as a system if we simply accept that P (the tendency for the rate of profit to fall) explains the cause of this flexibility, as opposed to being the reason for its rigidity and supposed-necessary crisis.  Capitalist agencies “prefer liquidity,” but need periods of rigidity to maximize the potential flexibility at some future point.

                Arrighi uses the oscillating phases of Marx’s MCM’ formula throughout the text to continue to explain the development of “material expansion” versus “financial expansion.”  Material expansion finds its highest levels of success in (MC) phases of production, where “the capitalist world economy grows along a single developmental path,” while financial expansion sees success only after “the established path has attained or is attaining its limits, and the capitalist world economy shifts through radical restructurings and reorganization onto another path.”[viii]  It is precisely these “radical restructurings and reorganization” that direct Arrighi towards his sense of historical agency.  Examining the three major hegemonies of historical capitalism, Arrighi draws on the dynamic shifts—both internal and external—to the capitalist world system under, first, the Italian City-States during the Renaissance, second, the rise of Dutch trading and its supremacy under the English/British, and third, the global hegemonic order established by the United States.

                Mixed into the shifts of capital investment during this time, however, Arrighi does take the time to address periods of state-formation which highlight the various regime orders that existed throughout capitalism as a world-system.  In doing so, he makes some very powerful observations and arguments by building off the works of Wallerstein and Janet Abu Lughod.  By discussing the development of capital alongside state-formation, Arrighi coaxes the reader into the notion that the two are directly linked; a prime example being his explanation of why Europeans discovered America:

“It follows that the expected benefits for Portugal and other European states of discovering and controlling a direct route to the East were incomparably greater than the expected benefits of discovering and controlling a direct route to the West were for the Chinese state.  Christopher Columbus stumbled on the Americans because he and his Castilian sponsors had treasure to receive in the East.  Cheng Ho was not so lucky because there was no treasure to retrieve in the West.”[ix]

Following Arrighi’s logic to its natural conclusion, the “West was won” by simply a matter of beneficial economics working through the powers and accumulated wealth of states.  It should not be considered, however, that Arrighi is suggesting that agencies of capital and agencies of statehood operate on the same motives, nor that states themselves always operate on the same developmental path.  In fact, Arrighi splits the motives for power into two categories.

                “Capitalism,” for Arrighi, represents the first and primary strategy for state-formation and “logic of power.”  It is contrasted with “territorialism,” which seeks “control over territory and population.”  The "territorialist" logic of power utilizes mobile capital and the flexibility of exchange as a means to an end: “mobile capital [is] the means of state- and war-making.”  For the "capitalist" logic of power, “the relationship between ends and means is turned upside down….and control over territory and population” become the means for advancing capital return.[x]  This not only explains the aforementioned example of how the West was “won,” but also the variances of state formations throughout the world-system in all its regions; the Core, the Semi-Periphery, and the Periphery (Third World).

                Arrighi concludes his text by reminding readers of the persistent crises in capitalism as illustrated by former great thinkers.  Rather than perceive "crisis" as a single, history-defining event, Arrighi poses to us the suggestion that crises are not only a recurring tendency of capitalism, but also serve as a self-balancing mechanism which allow flexibility of investment, which then sustain capitalism by handicapping it.  In other words, Schumpeter’s 1941 suggestion that capitalism might survive another prolonged run of development has “been proven right; but the chances are that over the next half century or so, history will also prove right his contention that every successful run creates conditions under which it becomes more and more difficult for capitalism to survive.”[xi]  This further highlights a powerful argument against perceptions of an unfettered, anarchistic capitalism:

“Such an institution could not exist for any length of time without annihilating the human and natural substance of society; it would have physically destroyed man and transformed his surroundings into wilderness.  Inevitably, society took measures to protect itself, but whatever measures it took impaired the self-regulation of the market, disorganized industrial and agricultural life, and thus endangered society in yet another way.  It was this dilemma which forced the development of the market system into a definite groove and finally disrupted the social organization based upon it.”

Tracing the development of historical capitalism across three hegemonic epochs and examining the world-system from the top down (that is, from the Core to the Periphery), Arrighi sets a gold standard for examining world history that could effectively replace the traditional Western Civilizational approach.  For too long history has been a narrative of nation versus nation, people versus people.  Arrighi’s text challenges that perception by examining social order versus social order, and class versus class.  Nations, statehood, and people are the agencies by which social orders and classes act, or cause, history.  Hegel would certainly appreciate Arrighi’s contribution here, as it breaches further away from the “original history” of Herodotus and Livy, the “reflective history” of Braudel and Wallerstein, and instead embodies “philosophical history;” or—to paraphrase Hegel—a strand of history that is both conscious of itself and conscious of its effect on social ideas.

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[i] Hegel.  “The Three Methods of Writing History,” in Reason in History: A General Introduction to the Philosophy of History (New York: Bobbs-Merrill Inc, 1953), 3

[ii] Denbo, Seth.  “History as a Book Discipline” in Perspectives on History, Vol. 53, No. 4 (April 2015), 19

[iii] See: Wallerstein, Immanuel.  Historical Capitalism (New York: Verso, 1983)

[iv] Braudel, “History and the Social Sciences” in On History, p. 50-51

[v] Arrighi, Giovanni.  The Long Twentieth Century (New York: Verso, 1993), 1

[vi] Braudel.  The Long Seventieth Century, quoted in Arrighi, 5

[vii] Arrighi, 5

[viii] Ibid, 9

[ix] Ibid, 35

[x] Ibid, 34-36

[xi] Ibid, 325

Debate Topic: Is State-Capitalism a valid term?

 I was recently presented with this question on social media, and I felt prompted to respond since I'm currently reading Arrighi's excellent "The Long Twentieth Century" and hopefully going to do a review of it by the end of the week.

It seems as though people discussing the concept of "state-capitalism" mix it up with the overall general argument that "capitalism cannot exist without a state."  Anyone engaging in this discussion/debate needs to realize that these are two separate ideas.  The supposed "inability of capitalism to exist without a state" is an old argument; very old.  So old, in fact, that the philosophers of the 19th century were perfectly capable of accepting this facet, even though they may have supported one side or the other more (state versus capital).  

The other argument, pertaining to the existence of "state-capitalism", is much newer as an argument than the former.  The newer argument extends primarily from two sources:  V.I. Lenin's statements on State-Capitalism as a result of the Russian Revolution, and Raya Dunayevskaya's criticism of the USSR in 1935 by calling it a "capitalist society."  To understand these differences, I've laid out below a general explanation of how A) The first argument can be seen very plainly by simply observing history and B) the second argument has validity, even if it isn't fully correct in its depiction of specific states (USSR in particular).  Most importantly, I offer a definition for "state-capitalism" that rests on the differences between the First and the Second worlds in the capitalist world-system.

Capitalism manifests itself in various ways dependent upon not the whims and desires of those in reign of its controls, but rather upon the conditions and historical situation of geographic regions.  In the West, as the dominant Core of the capitalist world-system, it manifested a polarity between the State and the capitalist "class": The two are not the same, but they both serve the same interests. Giovanni Arrighi called the difference between the two a separation of "power ideology."  But Arrighi was referring specifically do the different approaches made by state power (West versus East, and England + France versus Spain).  I however, will use it to explain the duality between "state" and "capital."

The state operates on a primarily "territorialist notion of power"; meaning that it seeks to expand itself and bring more physical territory as well as people into its domain. Its support for capitalism is a means to an end: It allows capitalistic endeavors to occur provided that it ultimately yields more territorial control (both within and outside of its direct sovereign).

The capitalist class, however, operations on a "capitalistic notion of power"; meaning that it seeks to expand its accumulation of capital. In this, the State and its territorialist endeavors are the means to the end: The capitalist class supports the State to the extent that it ultimately yields more profits and concentration of resources.

It is here where the "unity" of State and Capital are made overt, but also blurred by ideological frameworks (such as saying the US is "state-capitalist" but France "isn't").

Consider how the United Provinces formed a loose alliance that allowed wars to continue between the states but agreements prevented a disruption of trade. This was a dual process: The state, dependent upon the profits made via trade (to expand its territory), prevented disruption of the economic order...not because they thought it was a good idea....but rather because the capitalistic class--the "monied elite"--would never have gone along with it. This class, however, was more than willing to support a State's war efforts if it ultimately yielded more accumulated capital.

Ultimately, what we see is that these two groups--not united--are engaged in two separate "power processes" that happen to overlap with regard to the MEANS by which each group obtains (or gets closer to) its goal.  The difficulty lies in determining at what point which "means to an end" is exerting dominance. In other words, it's hard to tell if a specific policy or act is the sole derision of "capitalistic" or "territorialist" notions of power.

Now that I've built up this explanation of the polarity occuring in the Core of the capitalist world-system, I shall explain "state-capitalism" as a term:


In the USSR and many other regions of the "Second World", however, there is no polarity between the State and the Capitalist class. There is no separation of power ideology. The goals of the state and those in charge of it are the same. In this sense, it doesn't matter if the nation is territorialist (like China) or capitalistic (like the USSR) in its notion of power; all that matters is that the polarity that exists in the Core (First World) does not exist in the Semi-Periphery (Second World).  As such, "state-capitalism" is a perfectly acceptable term to apply to Second World powers such as the USSR and China---they are not Western Capital bastions and they are not engaged in a dual process of power.

The big question, for those who regularly read this blog, is "what does this have to do with American Communism?"  Well, for one, it should be noted that the term "state-capitalist" has been used in reference to the United States since the 1980s.  This alone presents a conundrum:  How can the term which applies to nations that have no polarity between "capital" and "the state"...also apply to a nation from the Core where there *IS* the polarity?  The direct answer is:  You can't.

If I've tried to make anything clear, it's that "state-capitalism" as a term applies specifically to a nation where the aforementioned polarity does not exist, and power is wielded unilaterally by a single group.  What makes this group "capitalist" is not their position in the government, but rather their existence within a capitalist world-system.  There is no escaping a world-system that has come to entrench itself on all corners of the globe.  If we lived in a socialist world-system, then the term "state-socialist" would equally apply to a nation where there is no distinction between "the workers" and "the state."

American Communism, as a movement, has been historically resistant to the depiction of Core nations as endemic of "state-capitalism"---instead, it has typically been the argument that the capitalistic class (the bourgeoisie) are in control of everything.  It has also been common for American Communists to label politicians and leaders within the Core as subservient and slaves to the capitalistic class.  This suggests not capitalism, nor democracy, nor state-capitalism; it suggests an oligarchy.

Far be it from me to tell people what they should think and define; but American Communism has an overt tendency to dramatize terminology for the sake of rectifying pre-conceived notions of power and hegemony.


For further reading, I'd recommend:

Wallerstein, Immanuel. "Historical Capitalism"
Arrighi, Giovanni. "The Long Twentieth Century"
Harvey, David. "The Limits of Capital"

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