From viruses to money, how global links spread
A new collection of essays challenges the notion of capitalism as being a largely European phenomenon
The fear of the spread of coronavirus has spooked the public about the possible loss of lives. Stock markets around the world are worried about the disruption in global supply chains. In a sense, this fear stems from the global interconnections formed by the transnational movement of people, goods and services—and, most importantly, capital. That capitalism is associated with global connectivity is fairly obvious. The direction of causality is less so. A deeper question is whether such global linkages are the underlying cause or consequence of capitalism?
The answer depends on what we mean by capitalism. The Cambridge History Of Capitalism, edited by Larry Neal and Jeffery Williamson, for instance, defines it in terms of four characteristics: property rights, contract enforcement, markets, and an enabling government. Since these characteristics can be found even in ancient societies, it leads to a view of capitalism that is ahistorical.
Other theories which historicize capitalism end up looking at it as a sui generis western European phenomenon that is hard to replicate elsewhere. This way of looking posits capitalism as a phenomenon first emerging in certain geographical locations, then spreading worldwide.
Capitalisms: A Global History, edited by Kaveh Yazdani and Dilip M. Menon, is a collection of 13 essays by multiple authors, seeking to provide a different view. It aims to understand the "tangled histories in the making of global capitalism(s)". Instead of a singular, linear and monocausal history, it offers a complex, interconnected chronology of "capitalisms".
The central claim of the book is that "in order to better understand the transition to and the history of capitalisms, developments in East, Central, West, South and South-East Asia between the eighth and 19th centuries should be included in the narrative". One source of this "entanglement" is what modern economists call "knowledge spillovers". Yazdani and Menon argue persuasively that cross-fertilization of European and Asian ideas was key to the scientific and technological discoveries that propelled economic growth in European countries.
For example, the interest in the Wootz steel of India gave birth to metallography. The European fascination with Indian rhinoplasty led to the development of modern plastic surgery. The engagement with Confucian thought led to Europe's awareness of the "science of making laws". Surprisingly, the book does not mention the most important transmission of idea from India: the decimal number system. Decimal numeral system, along with the algorithms for elementary arithmetic operations, was a revolution in quantitative reasoning with profound implications for trade, commerce and scientific discovery.
Apart from the transfer of technical and scientific knowledge, Asian countries provided a source of investible surplus and market for goods produced by European economies. An example of such a link is provided by the medieval trade in silver bullion. The silver bullion was the key driver of global trade up to the 18th century. On the demand side, silver trade was driven by the collapse of paper currency in China. On the supply side, it was driven by the discovery of silver mines in America. The point is that this "double coincidence" is key to understanding European trade in silver bullion.
But, along with silver, biological organisms travelled as well. "Lacking immunity from the Afro-Eurasian diseases, about 75-90% of the New World population died soon after contact," the book notes. Coronavirus is not the first pandemic to cause a global mayhem.
The first part of the book deals with the big debates. The second is concerned with specific case studies in a diverse set of countries such as China, England, Japan, Iran and Egypt. Out of the 13 chapters, two are focused exclusively on India. The one by David Washbrook, for instance, looks at Indian capitalism through three lenses: institutionalist, world system and Marxist, but with India-specific variations.
The institutionalist account is based on the work of noted economic historian Tirthankar Roy. Roy argues that out of the four major characteristics of capitalism, India had long established private property rights, but lacked the other three. Due to high transportation cost, domestic integration of markets was primitive. As a result, the state was less than supportive of domestic trade. Contract enforcement was also costly, if not altogether ineffective.
The Indian version of world system theory—more familiarly known as the "drain theory"—argues that the drain of wealth from India directly financed industrialization in England. While direct estimates of this drain are low, and the claim of this drain financing the industrialization in Britain is contested, Washbrook notes that India benefited the British empire in multiple ways, for example by sending labourers to work on plantations and by earning surpluses from exporting commodities to other countries, which were "creamed" by Britain. These benefits are hard to quantify.
Lastly, the Marxist understanding is based on the dialectical relationship between the two antagonistic classes, namely labour and capital. In India, the units of production were organized around households that were further organized into larger groups like "kin, caste and sect". Consequently, Washbrook notes that "class per se emerged less directly as the axis of social exploitation and conflict than gender, generation and (caste) race". This is a provocative hypothesis that may explain not merely economic development, but also politics—for instance, why the classical Left has been less successful in political mobilization compared to caste-based parties.
The chapter by Yazdani on the "pre-colonial potentialities for capitalist development and industrialization" in Mysore during the reign of Tipu Sultan is fascinating, at least to the Indian reader. In recent years, the reign of Tipu Sultan has come under sharp scrutiny, not necessarily due to scholarly reasons. Yazdani documents the many measures introduced by Tipu that were aimed at "semi-modernization", including encouragement to weavers through tax policy, introduction of technological innovations with the help of French technicians and incentive for exploration of coal ores, among others. Such measures led to many tangible achievements, including an animal-powered machine to manufacture guns and, more famously, rockets. There is also a riveting discussion on the installation of public clocks and their role in coordinating economic activities in Mysore.
While this analysis hints that, in the absence of colonial intervention, Mysore could have charted a journey towards an indigenous version of capitalism, such counterfactual reasoning is not without its challenges. According to historian Asok Sen (as quoted by Yazdani): "Almost all other means and instruments of implementing (Tipu's) policies were laid in the efficiency of statecraft and an ever-expanding bureaucracy." The danger of such a top-down development model turning into a predatory state is always present.
As a whole, Capitalisms provides a persuasive case for understanding modern capitalism as having greater historical depth and spatial breadth than commonly believed. However, the complexity comes at a cost, as one struggles to find the ideas that unify the book into a cohesive whole. Some essays, like the one on silver, globalization and capitalism by Dennis Flynn, differ in tone and emphasis from the central claims of the book. Despite these quibbles, the book, with its analytical framework and rich empirical details, helps explain the roots of global "capitalisms".