Was the True Meaning of Capitalism Forgotten?

Was the True Meaning of Capitalism Forgotten?

Was the True Meaning of Capitalism Forgotten?

A conversation with historian Michael Sonenscher about the tricky task of defining capitalism and his new book, Capitalism: The Story Behind the Word


So often we take the meaning of terms for granted without knowing their complicated histories and changing definitions. “Capitalism” is one such example. In his new book, Capitalism: The Story Behind the Word, Michael Sonenscher argues that the term remains difficult to define, even though it has myriad associations. A historian of political thought at Cambridge University, Sonenscher observes that we may link it to industrial organization, technical specialization, producers, competition, or markets. The main aim of his book, however, is to suggest that, although “capitalism” might now be understood as a kind of umbrella term that encompasses a range of subjects, it once had a very specific meaning that we have largely forgotten.

Coined in France in the early 19th century, “capitalism” was the name given to the investment of private wealth in public debt, particularly as a means of funding wars. This is to say that capitalism was the product of the private ownership of capital. “Its beneficiaries were its owners,” Sonenscher writes, “while its victims were those without capital.” In other words, capitalism, originally understood, was a property theory. Seen as such, capitalism itself was not principally blamed for economic exploitation. The question instead turned on who owned the capital.

Sonenscher argues that far worse than capitalism is the modern division of labor, for which there are no clear solutions. Not by coincidence, and unlike today, this division of labor was originally viewed as distinct from capitalism. By “division of labor,” Sonenscher specifically has in mind the interdependence and the technical/occupational specialization of the modern commercial state governed by the fluctuation of markets and prices. Unlike capital, Sonenscher asserts, markets and prices are not the kind of things that can really be owned—they cannot be physically occupied like a house or a field—which explains their relentless and remorseless nature. Much of what passes as a critique of capitalism today, Sonenscher concludes, is really a critique of the division of labor.

I spoke with Sonenscher on the implications of this older understanding of capitalism, on why the division of labor is now considered an essential aspect of capitalism, and on whether any solutions to it can be found today.

—Daniel Steinmetz-Jenkins

Daniel Steinmetz-Jenkins: You state the following about defining capitalism: “Although it is still quite hard to define, it remains quite easy to see.” What do you mean by this?

Michael Sonenscher: Think of a cityscape. The cityscape could contain streets, houses, shops, workshops, people, and animals. It could be Rome or Athens. It could be Lyon or Bruges. It could be Chicago or Shanghai—or a landscape in Brazil, Zimbabwe, or Bangladesh. But it will still be the case that quite a large number of extra ingredients will be needed to make it look like a cityscape or landscape housing capitalist agriculture or capitalist industry, finance, or trade. There will certainly be disagreements over what those ingredients should be, but some of the more obvious would consist of large-scale industrial buildings or agricultural units; high-rise offices; mechanized, automated, or electrified processes of production; huge urban and suburban agglomerations; integrated networks of transport, communication, information, or finance; and the myriads of differentiated human occupations and activities that they house. Capitalism, in short, is visible—built into our lived environment. But this does not mean that capitalism is transparent.

DSJ: What, then, is your own working definition of “capitalism”?

MS: The most straightforward working definition I can think of is “working to live,” as against “living to work.” But in saying this, I am talking as much about the division of labor as about capitalism, because, as I have tried to explain in my book, capitalism is fundamentally a property theory, while, as Adam Smith’s term “commercial society” was intended to indicate, the division of labor is fundamentally a market theory. (The division of labor, Smith wrote, was limited by the extent of the market.) Property can be owned, but markets have to be managed, maneuvered with, outsmarted, put up with, or generally dealt with. The underlying idea in this working definition is the initial absence of choice. In its initial usage, “capitalism” described something quite different from this, because it was associated with the subject of public debt and war finance. Capitalism is therefore a hybrid concept that has more to do with correcting the effects of the division of labor than promoting them.

In this context, the initial thought came from Rousseau and his examination of what he called the “separation of professions.” This, he argued, was responsible for the subordination of agriculture to industry—or of primary producers to other types of producers. It also, he argued, explained why the production of necessities—as against the production of what are now usually called “discretionary goods” or, in the 18th century, was called “luxury”—is the key to understanding measurable forms of economic and social inequality. In more recent terminology, these differences are frequently described in terms of development and underdevelopment, Global North versus Global South, imperialism and exploitation, etc.

But I think that Rousseau’s initial approach to these differences is still worth considering, because it provides a more capacious setting for thinking about politics, the division of labor, and the history of political ideas. People have to eat and drink. This means that people are likely to produce subsistence goods wherever and whenever they are needed. The goods in question are perishable and, unlike manufactured goods, are less easy to produce to order. There is, therefore, a built-in likelihood that the quest for food security will mean that the production of subsistence goods will take place everywhere and under initially adverse conditions. This, according to Rousseau, was why returns to the agricultural sector will standardly be lower than returns to the manufacturing sector, and why the quest for food security will entrench inequality into those parts of society least able to deal with the problems that inequality brings in its wake.

One counterintuitive solution was to promote productivity and free trade. Another, in the light of this pair, was to think about how to find ways to have the benefits of productivity and free trade without succumbing to the spiraling logic of inequality that free trade could bring in its wake. This is what my book is about: It’s about how credit and capital, products and product cycles, money and prices, administration and entitlement, government and welfare can be used to offset the otherwise remorseless effects of the division of labor. It is also, more schematically, about the types of states and the forms of politics that seem to have acquired a measure of ability to establish these neutralizing, stabilizing, risk-avoiding, and sometimes creative functions.

DSJ: So let’s step back here and try to place this definition in a broader historical context. Your book stresses that in the first half of the 19th century, there was a fundamental historical difference between capitalism and the division of labor. Can you elaborate on this?

MS: The difference follows from my working definition of “capitalism.” It is important, to begin with, to see that we are talking about concepts as much as about historical arrangements and historical realities. The fundamental historical difference between capitalism and the division of labor was that “capitalism” referred initially to war finance and public debt, while the “division of labor” referred initially to technical and occupational specialization on the one side and markets and prices on the other. The concept of capitalism, in short, did not initially have anything to do with the concept of the division of labor. They both, however, had and still have a lot to do with capital. Capital can be no more than a simple monetary or financial resource, but it can also be a productive asset, an intellectual property, a creative resource, a material good, a cultural endowment, or a competitive advantage. Capital can be a form of property or part of a system. Capital can be owned, but it is not clear whether the division of labor can be owned, because it is not clear whether it is possible to own a price or a market. Prices and markets can all, of course, be managed, controlled, neutralized, or circumvented. The division of labor means “working to live,” because it means that human lives have become irrevocably interdependent. Capital means “living to work,” if that is what takes your fancy. Most of us have to work to live and, for better or worse, also have to live with the consequences.

DSJ: In what way did Marx contribute to the transformation of Smith’s “commercial society” into “capitalism”? Why did he err in conflating capitalism with the division of labor?

MS: The subject of property is a central part of Marx’s thought, but the concept of property is one of the most slippery aspects of Marx’s thought. I don’t think that it is particularly helpful to discuss Marx in terms of rights or wrongs, because this is an exercise that has been repeated for many years, with very few benefits. I do think, however, that the subject of property had a great deal to do with how Marx contributed to the transformation of the concept of commercial society into the concept of capitalism. As every reader of Marx is able to see, the focus of his thought is on how, usually for the worse, singularities like that river, those chickens, or that house come to be seen as universals like property, commodities, or money. With time, history, capitalism, and class struggle, those universals will, Marx claimed, recover something like their singularity, but now at a far higher and richer level of singularity. Property is the key to this process of ruin and recovery, because it is the engine driving the switch from particularity to generality, labor power to individuality, material reality to fetishized reality, agency to alienation, and so on.

DSJ: I think it often comes as a surprise to many that Marx proved hostile to the idea of equality. What were the specific reasons for such hostility?

MS: Marx’s hostility to the idea of equality was based on the initial idea that laws or rules work like markets and prices, because they apply generally to everyone irrespective of their real differences. Markets, as the saying goes, are impersonal, because the things that make markets possible, like quantities and prices, are measurable. But people have personalities, and some aspects of personality are incommensurable. Marx’s hostility towards equality was connected to a set of distinctions between singularity and universality, particularity and generality, irrationality and rationality—or, to put it more directly, between whatever is involved in making me different from you, although we are both human beings and, in this respect, are subject to the same sort of causal processes that are built into natural and human life. We live, in short, in a causally determined world, and the propensity to subordinate individuality to generality is an effect of how the idea of causation presupposes something fairly general that can be applied to something fairly particular.

Marx’s complaint was that transferring this way of thinking about causation to relationships among humans had the effect of turning particularity into generality and of reducing human individuality into generic uniformity. The basis of this complaint was not only the market but, more fundamentally, the idea of equality. Equality does to people what prices do to commodities: It overrides whatever it is that makes them who they are. It subordinates individual personality to impersonal generality and turns individual creativity into labor power. Marxists have, accordingly, associated equality with the concepts of alienation or reification and, inversely, have usually associated the concept of communism with the ideas of individuality, personality, and, perhaps, autonomy. The underlying claim is that something about the causality built into capitalism will, ultimately, get humanity out of the causality built into the idea of equality—and if this were to happen, equality would give way to singularity. Marx’s approach to understanding equality was the other side of his initial endorsement of the concept of personality.

DSJ: Perhaps your major claim in this book is that, pace Marx and others, the division of labor cannot be overcome. But what about attempts to overcome it through communal living arrangements? Or what about anti-colonial alternatives to the global division of labor, such as the New International Economic Order of the 1970s? The philosopher Martin Hägglund at Yale University, for instance, has suggested that spending an hour per week mopping classroom floors and running cafeteria dishwashers is expressive of his commitment to being a university professor, and that society can be arranged along these lines for everyone. Why don’t you find these examples convincing?

MS: Questions about Marx are always interesting, but so too are questions about Rousseau, Smith, Hegel, David Ricardo, and even August Cieszkowski, who all figure as prominently as Marx in my book. There was a point to writing about these people as well as to writing briefly about Marx, because one of my initial reasons for writing the book was to challenge the assumption that, to me, seems to underlie the question. This is the assumption that there are good modern ways and bad earlier ways of thinking about how to deal with the division of labor. Part of the point of my book was to show that the problem was there right from the start, and that long before there were discussions of communal living arrangements, the New International Economic Order, or dealing with dishwashers, there were many equally interesting discussions of how variously to deal with, manage, circumvent, bypass, challenge, or override the many problematic aspects of the division of labor.

I should, perhaps, have said more about product cycles and product or process innovation; price-making and price-taking; segmented markets and competitive markets; households, work, and housework; legal entitlements and legal competition; institutional centralization and decentralization; transaction costs and corporate personality; and so on. The one thing, I think, that all these things have in common is a concern to find viable, durable, and stable ways of dealing with the division of labor. My aim in doing this was to show rather more of the Janus-faced quality of capitalism. Capitalism began as the name given to the means to fund warfare. This debt-based concept of capitalism became the means to fund welfare. In this context, capitalism was seen as a solution rather than a problem, because the real problem was initially taken to be the division of labor. This, I think, is interesting. Dealing with the division of labor has always been a matter of trying to find ways to circumvent, neutralize, or deflect the power of markets and prices. Sometimes, but far less frequently than is assumed by the idea of a binary choice, it has been a matter of trying to ride them both. But, to my knowledge, it has never been a binary choice between the division of labor and its alternatives. This is why the earlier examples are as interesting and salient as those that came later.

DSJ: What then are you trying to recover from the older understanding of capitalism, especially if, as you argue, the division of labor cannot be overcome?

MS: I live and work in Britain and, particularly since 2010, have frequently been dismayed by how little both the political left and the political right have been able to offer to their potential supporters that, at least to me, looks imaginative, creative, and substantive. On the British left, at least in this respect, things have begun to get better, but there is still a lot more to think about, find out about, and talk about. This is why I think that the assumption underlying the final part of the question looks to me to be a counsel of despair. There is no more reason to be disheartened by the fact that the division of labor cannot be overcome than by the fact that the weather cannot be overcome. It is an asset, not a liability. This does not mean that either the division of labor or the weather is an unequivocal blessing, but it does mean that both are available to be used rather than abused and to be added to rather than subtracted from. This is why it is worth trying to recover more of the content of—and connections between—those subjects that were involved in the older understanding of capitalism. As I tried to show, these were once bundled together under such rubrics as “social democracy,” “liberalism,” or the idea of a “representative” system. In themselves, the names can often be as much obstacles as guides to how to think. This is why the work of history is worth doing.

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