Thursday, 22 June 2017

Kocka's capitalism

Just a very brief note on Jürgen Kocka's Capitalism: A Short History (Princeton University Press, 2016). This is a thin volume grasping an enormous subject, and as can be expected Kocka sometimes becomes too sweepingly superficial. It is rather annoying when entire scholarly traditions are dismissed in a single sentence without even the trace of an argument to back it up.

Still, there are two things in the book that I like. One is the definition of capitalism  The second is his treatment of the "great divergence" in Chapter 2. I believe, however, that there is a slight tension between the two.

The definition stresses decentralization, commodification and accumulation as three core elements in capitalism. To put it more precisely:
(1) Property rights enable economic decisions to be made in a decentralized way
(2) Markets are main mechanisms of allocation and coordination
(3) Investment are systematically made in expectation of future gain.
To these elements he adds that in its fully developed form capitalism is also characterized by, firstly, the enterprise form and, second, the reliance on wage workers and the absorption from them of surplus value (Kocka 2016: 21f). A benefit of this definition is that it allows him to speak of early forms of capitalism when it merely represents a minority formation in noncapitalist environments.

The "great divergence" is the one between East Asia and Western Europe made famous by Kenneth Pomeranz in his 2000 book The Great Divergence: China, Europe and the Making of the World Economy.  Why did industrial capitalism take off in Western Europe rather than East Asia, despite similar levels of economic development as late as the 1750s? Pomeranz's answer (which has been much debated) was England's easy access to coal and to the New World.

Kocka, however, thinks that a better explanation can be found by looking at the relation between economy and state. Contra free-market ideologues, his argument is not that the market was somehow freer of state interference in Europe than in China. In fact, in neither Europe nor China was there a clear differentiation between economy and state. The decisive difference was that "in Europe the political system was intrinsically diverse and positively fragmented, while in China there was a centralized empire" (ibid.51). Hence political rulers in Europe had to compete to promote their economies. This meant that they intervened much more than in China to further the interests of capitalists. Furthermore:
[The] merchants who supported capitalism in Europe... exercised direct influence on politics – in part via a symbiosis with rulers in the city-states and free cities... By contrast, merchants in China, as well as in Arabia and India, were confined to the antechamber of power... This explains how, in the final analysis and in spite of many countervailing trends, politics in Europe was decisive for promoting mercantile dynamism and a capitalistic kind of accumulation. (ibid. 51)
The conclusion, then - which I find persuasive - is that it wasn't differentiation between economy and society that helped capitalism in Europe, but on the contrary the much tighter fusion of economic and political power in European states compared to, for instance, China.

Regarding this point, it's interesting to see that Kocka here draws rather near to Fernand Braudel, despite some critical remarks on the French historian's distinction between market and capitalism earlier in the book. Repeating a common criticism, Kocka thinks Braudel's distinction is much too sharp. When discussing the "divergence", however, he seems to implicitly rely on something very much like this distinction. Braudel stresses precesely the un-marketlike behaviour of great capitalists, who use their connections with political power to secure monopoly-like dominance of the most lucrative trades to make much bigger profits than in the ordinary market economy. Using Braudel's distinction, we might say that while markets were just as developed in China as in Europe, capitalism - in the sense of a system of capital accumulation supported by political and military power - was Europe's forte, and this is what explains the "divergence". Braudel himself writes: "China... is a perfect illustration of the fact that a capitalist superstructure did not automatically emerge out of a thriving market economy” (Braudel 1992: 600). Following Braudel, David Graeber similarly argues that premodern China and Islam were thriving market societies, but since the states were indifferent or hostile to the markets they never developed the Western brand of armed capitalism (Graeber 2011, Chapter 8).

Kocka's argument concerning the "divergence" is very similar to Braudel's and Graeber's (although he doesn't mention them). The problem is that his definition of capitalism is not really congruent with Braudel's. If one goes with Kocka's own definition stressing the market as the central mechanism for allocation and coordination, then the system will be less capitalist the more allocation and coordination instead happens politically or through military force. Considering the entwinement in Europe between commercial interests and political power, this would seem to make Europe less capitalist than China. I am not so sure that this is a conclusion that Kocka would want to draw. However, the only way to avoid drawing it would be change the definition of capitalism - probably one would need to deemphasize the role of the market and instead allow for forms of capitalism that achieve capital accumulation not solely by relying on market mechanisms.


Braudel (1992) The Wheels of Commerce, Vol. 2 of Civilization and Capitalism 15th–18th Century, Berkeley, Los Angeles: University of California Press.

Graeber, David (2011) Debt: The First 5000 Years, Brooklyn, New York: Melville House.

Kocka, Jürgen (2016) Capitalism: A Short History, Princeton: Princeton University Press.

Pomeranz, Kenneth (2000) The Great Divergence: China, Europe, and the Making of the Modern World Economy, Princeton: Princeton University Press.

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