Capital Ideas
This article appears in the April 2026 issue of The American Prospect magazine. Read more from the issue.
Capitalism: A Global History
By Sven Beckert
Penguin Press
Capitalism and Its Critics: A History: From the Industrial Revolution to AI
By John Cassidy
Farrar, Straus and Giroux
The wreckage of the postwar economy of broad prosperity, intensified by the Democratic embrace of neoliberalism by Presidents Carter, Clinton, and Obama, created the backlash that led directly to Donald Trump. Why did the highly regulated and egalitarian capitalism established by the New Deal slip its political moorings? Is there something inherent in capitalism that defeats democratic efforts to housebreak it? Or was the turn to neoliberalism that began in the 1970s mainly the result of bad leadership and bad luck?
As a reader of the Prospect, you will have some thoughts on these questions. If you’ve studied political economy, your views may be informed by Smith or Marx, Veblen or Gramsci, Keynes or Polanyi.
Some of the classics on capitalism are witty and compelling, while others are dense and daunting. If you didn’t get around to reading them in the original, you can curl up with two superb recent books, John Cassidy’s Capitalism and Its Critics and Sven Beckert’s Capitalism: A Global History.
Cassidy, The New Yorker’s lead writer on economic topics, has written the more concise book of the two, though it clocks in at 518 pages. The book is entirely accessible to a lay reader, and a pleasure to read a few chapters at a time. Even if you thought you were pretty familiar with Marx or Keynes, I guarantee that you will learn something new. Other names will likely be new to you, as they were to me (and I thought I knew this literature pretty well).
My generation used to call books like this a pony—an elegant cheat sheet. It will spare you from reading tens of thousands of pages of the originals, and make you feel very well-read indeed. It may even stimulate you to read some of the originals yourself.
Beckert writes his own grand history, at almost 1,100 pages. An economic historian best known for his Pulitzer finalist Empire of Cotton, Beckert provides more detail than most readers will want, except as a reference work. There are plenty of what my book club calls skip-’ems. But if you have mastered the art of skim reading, Beckert is also well worth your time.
BECKERT BEGINS WITH SMALL ISLANDS of pre-capitalist commercialism, such as the port city of Aden on the Red Sea in the 12th century. In ports like this, “a new kind of trader rose to prominence—traders who did not travel with their goods.” These traders, “the world’s first capitalists” in Beckert’s telling, “demonstrated that large profits could be had from controlling flexible, fungible capital,” using “market-based exchanges.”
Until about 1600, these small islands of capitalist exchange were contained in a larger sea of dominant feudal, church, and monarchic economic relations. Capitalist merchants operated at the sufferance of pre-capitalist rulers. What caused capitalism to take over? Beckert cites the breakdown of hereditary monarchies, worker shortages caused by plagues, and the riches that capitalists provided, coupled with the monarchs’ insatiable need for new resources in an era marked by incessant wars.
For both Beckert and Cassidy, the key drivers of the capitalist breakout were imperial conquest and slavery. Cassidy invokes Adam Smith, a stringent critic of the 18th-century capitalists who worked hand in glove with European governments to plunder Asia and Africa. They did so via state-protected monopolies such as the Dutch East India Company and the British East India Company. In South America, the prime mover was the Spanish crown. “At the particular time the discoveries were made,” Smith said, “the superiority of force happened to be so great on the side of the Europeans that they were enabled to commit with impunity every sort of injustice in those remote countries.”
In both China and the United States, different variants of authoritarian capitalism govern.
By the mid-19th century, capitalism was politically dominant. Marx’s description at the time of the state as the executive committee of the ruling capitalist class was not far off. Beckert describes, in rich detail, the growing symbiosis. “As states played a crucial role in the expansion of trade,” he writes, “rulers everywhere became more dependent on the fortunes and whims of the capitalists whose expansion they had enabled.”
The state defined and defended property, provided currencies, created central banking, authorized joint stock companies and stock exchanges, used protective tariffs to advantage domestic producers, and promoted imperial expeditions that expanded commerce with colonies. “Despite [Adam] Smith’s claims that capitalism was self-generated by utility-maximizing individuals organizing their economic relationships through specialization and exchange,” Beckert writes, “the state emerged as the crucial institution in capitalism’s history.” He calls what capitalists today laud as the free market “nothing more than a figment of scholars’ and ideologues’ imaginations.”
Cassidy and Beckert come together on another central insight: There is nothing recent about globalization. Capitalism was born global. The shift from isolated islands of commerce to today’s interconnected economy was driven by the rise of global trade, which in turn was dominated by plunder. The triangle trade of cotton, sugar, and human slaves dominated Atlantic commerce. State-supported monopolies carried out imperialist trade across the Indian Ocean and the Pacific.
Lenin later wrote that imperialism was the highest stage of capitalism. He got that wrong. As Cassidy and Beckert explain, imperialism was the earliest stage.
CASSIDY IS NO MARXIST, but he credits Marx with powerful and valid insights about capitalism as “a system of incessant expansion and change roiled by class conflict and technological advances.” The idea of a reserve army of the unemployed weakening worker bargaining power looks a lot more plausible today than it did during the anomalous postwar boom.
Cassidy devotes a chapter to William Thompson, an early socialist born in Cork, Ireland, who criticized Adam Smith in his 1824 book An Inquiry Into the Principles of the Distribution of Wealth Most Conducive to Human Happiness. Thompson originated many insights later embellished by Marx. “Thompson referred to value that workers created but failed to receive in wages as ‘surplus value’—he seems to have been the first writer to use this term—and he identified it as the fundamental driver of economic inequality,” Cassidy writes.
Marx borrowed from Thompson, but lumped him with others such as Robert Owen, Saint-Simon, and Charles Fourier, whom he scorned as “utopian socialists” for their reformist support of co-ops, trade unions, and parliamentary democracy. But by demanding and predicting revolution, Marx was the bigger utopian. And the advocates of pure laissez-faire were the most utopian—or dystopian—of all.
One of Cassidy’s best chapters is on Karl Polanyi, who serves as both a complement and counterpoint to Marx. Polanyi, with the benefit of almost a century more capitalist history than Marx, shared his critique of capitalism’s tendency to relentlessly commodify every aspect of human life. But where Marx both predicted and exhorted the unity of the world’s workers, Polanyi believed the more likely reaction to the terrible insecurity wrought by rampant capitalism would be ultranationalism and fascism.
In his masterwork The Great Transformation (1944), Polanyi wrote, “[T]he idea of a self-adjusting market implied a stark utopia. Such an institution could not exist for any length of time without annihilating the human and natural substance of society.” As a refugee from Vienna, where he had seen successful municipal socialism in action undergirded by the strength of the trade union movement, and later as a resident in FDR’s America, Polanyi had witnessed successful democratic leftist governments as well as the turn to fascism.
In earlier writings quoted by Cassidy, Polanyi wrote about “the mutual incompatibility of democracy and capitalism”—the exact opposite of Milton Friedman’s later claims. In an essay titled “The Essence of Fascism,” Polanyi wrote that there were only two solutions: “the extension of the democratic principle from politics to economics, or the abolition of the democratic ‘political sphere’ altogether.”
Many other important works on capitalism were written against the backdrop of the Great Depression. A fascinating theme that emerges in Cassidy’s book is the differences and similarities in Marx, Polanyi, Keynes, and colleagues of Keynes to his left, like Michal Kalecki and Joan Robinson.
Keynes, alone among the pantheon, believed that because he had demonstrated that capitalism could be stabilized for the common good, there was no good reason for it not to be stabilized. For a very worldly person, he was almost willfully oblivious to the politics.
Many of the younger economists around Keynes were far more cognizant of the political obstacle from capital. In 1943, Kalecki, a Polish-born economist who was part of Keynes’s inner circle, published an article titled “Political Aspects of Full Employment,” describing why Keynesian full employment would succumb to what he termed “the political business cycle.”
Employers would use their political power to resist full employment because they didn’t want to increase the power of a democratically controlled state, or of workers and their unions. They also feared inflation. “The social function of the doctrine of ‘sound finance’ is to make the level of employment dependent on the state of confidence,” Kalecki wrote prophetically.
This sounds eerily like Alan Greenspan’s warning to Bill Clinton in 1993 that deficit reduction had to take priority over public spending. Likewise Larry Summers’s bad advice to Obama to pivot to deficit reduction in 2010. In Kalecki’s own day, Roosevelt’s more conservative advisers persuaded him in 1937 to cut spending to reassure financial markets, needlessly creating a recession within a depression. As another radical, Antonio Gramsci, would explain, the intellectuals entrusted with power by the capitalist state absorb and reinforce its hegemony, which infects both public understanding and public policy.
Another prescient critic of Keynes was Paul Sweezy, who was Marxian but not slavishly so. In 1942, as a young lecturer at Harvard, Sweezy published The Theory of Capitalist Development, which also explained how capitalists would resist the state’s efforts toward full employment because it would increase worker bargaining power. “The Keynesians tear the economic system out of its social context,” Sweezy wrote, “and treat it as though it were a machine to be sent to the repair shop there to be overhauled by an engineer state.” Sweezy did not get tenure at Harvard. He left academia and co-founded the most influential and eclectic of neo-Marxian journals, Monthly Review.
A key figure in Keynes’s circle to whom Cassidy deservedly gives attention often denied to her is Joan Robinson. While still in her late twenties, Robinson originated the theory of imperfect competition. “In a market where firms have monopoly power,” Cassidy quotes Robinson, “they can set prices above costs without losing all their market share.” Robinson persuasively demonstrated that imperfect competition, where prices were influenced by market power, was the norm and the textbook model of perfect competition the exception.
While she often tangled with Keynes, Robinson reserved her most scathing scorn for the economic traditionalists who tried to tone down the radicalism of Keynes into little more than a countercyclical program of public spending to moderate business cycles. Robinson called them “Bastard Keynesians.” She liked to say: “Study economics to avoid being deceived by economists.”
CASSIDY IS ESPECIALLY GOOD at summarizing and contextualizing the important work of those whom mainstream economics has relegated to a fringe. Their insights are often a lot more useful than those taught in a typical economics classroom.
In standard economics, Thorstein Veblen is treated more as social critic than economic thinker, if he is treated at all. In fact, Veblen had a doctorate in economics from Cornell, and at the University of Chicago he ran the prestigious Journal of Political Economy. But he proved far too heterodox for mainstream economics.
His best-known work, The Theory of the Leisure Class, famous for inventing the concept of “conspicuous consumption,” is remembered mostly as a work of social satire, on the same bookshelf with Mark Twain. But as Cassidy reminds us, in that book and later in The Engineers and the Price System, Veblen as economist makes the important distinction between “industry”—the part of the economy that actually produces things—and the parasitic “pecuniary class” comprised of absentee owners, passive shareholders, and financiers. That surely describes the capitalism of today.
Summarizing the literature on women’s rights in the economy, Cassidy has a fine chapter on Anna Wheeler, who became a close ally of William Thompson. The title of her 1825 book gives you the idea: Appeal of One Half the Human Race, Women, Against the Pretensions of the Other Half, Men, to Retain Them in Political, and Thence in Civil and Domestic, Slavery. Flora Tristan, a contemporary of Wheeler, called for universal trade union organizing of women and men.
More than a century later, Silvia Federici renewed the call for wages for paid housework. As Cassidy points out, unpaid housework and child-rearing are not counted in gross domestic product, but “if a man hired a female housekeeper to clean his house and do his washing, the money he paid her was included in GDP.” The anomaly is more political than statistical.
More recent dissenting writers on capitalism include critics of corporate globalism like Harvard’s Dani Rodrik, Nobelist Joseph Stiglitz on the realities of unequal bargaining power, and Hyman Minsky’s contributions on the chronic tendency of capitalism to induce periodic financial collapses. Cassidy also includes recent critics of capitalism and climate catastrophe.
With the sole exception of Thomas Piketty, the economists are celebrated by Cassidy for insights about capitalism as a system, not for technical, statistical, or methodological breakthroughs. While Cassidy includes many dozens of thinkers, he devotes little space to those who are considered lions of mainstream economic theory, beginning with Alfred Marshall, who first translated the conceits of standard economics into mathematical models. Cassidy sympathizes with Joan Robinson’s critique of the Marshallian framework, which she felt “served to cloak rather than reveal the real dynamics of capitalism.” The same could be said of much of orthodox economics.
CAPITALISM AND ITS CRITICS mostly ignores capitalism’s celebrants. Cassidy includes Friedrich Hayek primarily to show how Margaret Thatcher treated him almost as revealed scripture. The choices of inclusion, he writes, were dictated by a desire for subjects “who capture an entire epoch” or to “highlight lesser-known figures who made interesting contributions.” For the most part, he has chosen wisely.
One important critic Cassidy excludes is Robert Heilbroner. In the 1950s and 1960s, Heilbroner’s book The Worldly Philosophers was required reading for economics students and became a surprise best-seller. Writing while still a graduate student, Heilbroner introduced readers to the great economic thinkers, though unlike Cassidy, Heilbroner focused on fewer than ten.
Later, in 1985, Heilbroner published his own grand synthesis, The Nature and Logic of Capitalism, one of the best things ever written on the dynamics of capitalism as a regime. Unlike Marx, who viewed the state and the capitalist class as two faces of the same entity, Heilbroner believed that this bifurcation created political space for civil liberty, democratic control of the economy, and even democratic socialism, what he called “slightly imaginary Sweden.”
Like many brilliant thinkers whose knowledge was historical and institutional, Heilbroner was consigned to the fringes of a profession that was increasingly abstract and mathematical. At The New School, where he spent his career, Heilbroner in 1971 became the Norman Thomas Professor of Economics, what may well be America’s only endowed economics chair named for a socialist.
Even as late as Heilbroner’s generation, economics students studied the history of economic ideas. No longer. You can get a graduate degree in economics without knowing word one about these thinkers and these arguments, or about the history of capitalism itself.
Joseph Schumpeter, who originated the theory of capitalism as creative destruction, once wrote that if he had to choose between studying history, statistics, or economic theory, he would choose history. “[M]ost of the fundamental errors currently committed in economic analysis are due to lack of historical experience more often than to any other shortcoming of the economist’s equipment,” he wrote in 1954, when the equipment was a lot less abstract than it is today.
Today, the profession is plagued by a myopic refusal to consider history, a kind of learned incapacity (a phrase coined by Veblen). A good remedy for this lapse would be a required economics course on the history of economic ideas, and a good text would be Cassidy.
That splendid Schumpeter quote was unearthed by Sven Beckert, who seems to have read just about everything on capitalist history, and has 156 pages of endnotes in tiny type to prove it. The second half of Beckert’s book includes a fascinating and detailed history of the turbulent adventures of capitalism in recent centuries, from its dependence on slavery and imperialism to its recurrent crises and adaptations. Where Marx described early capitalist history in great detail, but then took leave of history for theory, Beckert offers a rich narrative of capitalist history, well integrated with theory.
In the cold war between capitalism and communism, conservatives like to say that capitalism won. But the wrong kind of capitalism won. In both China and the United States, different variants of authoritarian capitalism govern. Rampant, predatory, and extractive capitalism, with its immense political power over both U.S. political parties, is the prime obstacle to the kind of democratic reforms that readers of the Prospect crave and that America needs. If we want a better understanding of those dynamics, we would do well to gain a deeper understanding of capitalism.
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