Idea of Capitalism

Review: Richard Teichgraeber on Richard Grassby

Richard Grassby, The Idea of Capitalism before the Industrial Revolution. Lanham, MD: Rowman & Littlefield, 1999. ix + 145 pp. $50.00 (cloth), $14.95 (paper), ISBN: 0-847-69362-1 (cloth), 0-8476-9633-2 (paper).

Reviewed for EH.NET by Richard F. Teichgraeber III, Murphy Institute of Political Economy and Department of History, Tulane University.
Published by EH.Net, June 2000.

This book appears at a time when the bloody struggle between capitalism and socialism unexpectedly seems to have ended, and now we must wonder why capitalism triumphed and where it is leading us. Yet Richard Grassby, who has written several books on the economic and social history of early-modern England, and is currently a member of the Institute for Advanced Study, suggests almost all our talk of the triumph of capitalism is mistaken. Investigating the origins and evolution of the term, he reminds us that "capitalism" did not exist as a distinct idea before the Industrial Revolution, and that it first gained prominence only at the turn of the last century as "the essential Manichean bogeyman of socialist theory" (p. 68). Since then, "capitalism" has been revised and expanded in various ways to provide explanations for innovations in almost every field of modern human activity. The result, according to Grassby, is an idea that retains some symbolic importance but little historical reality or explanatory power. "When we try to understand the modern world," he concludes, " the idea of capitalism constitutes the problem, not the solution" (p. 61).

Grassby's insistence that even the most refined models of capitalism fail to account for how change takes place over time should sound familiar to specialists who know the economic and social history of pre-industrial Europe. In fact, many historians have shared Grassby's doubts about the explanatory power of capitalism, and his argument perhaps would have been stronger had he directly enlisted their support, rather than assembling a familiar inventory of ambiguities and inconsistencies that color the work of those who have refused to heed the call to cut the term "capitalism" from their vocabulary.

Readers more interested in understanding where capitalism, currently unchecked by any substantial opposition and giddy with self-congratulation, may be taking us, will find that Grassby has disappointingly little to say. Although we are told his book will explore the influence of this still powerful idea on the formation of the world in which we live, the issue is never directly or systematically addressed. Those who recall Andrew Shonfield's brief yet persuasive justification for the continued use of the word "capitalism" -- "no one, not even its severest critics, has proposed a better word to put in its place" -- are not likely to be swayed by anything Grassby says. (Andrew Shonfield, Modern Capitalism: The Changing Balance of Public and Private Power, Oxford University Press, 1965, p. 3.) For in rehearsing the complex and contested history of the word, he too offers nothing to take its place.

That the biggest questions in history often seem intractable is no breath-taking insight. What is capitalism? How has it changed over time? Can various conceptions of capitalism be unified? Grassby has raised these questions, however, not to open them to further inquiry, so much as to dismiss them out of hand. He, perhaps, could have addressed them more helpfully by beginning with a query of a different order, and one that can be answered: "Why must capitalism constitute the central problem in any effort to understand the modern world?"

Richard F. Teichgraeber III is author of 'Free Trade' and Moral Philosophy: Rethinking the Sources of Adam Smith's Wealth of Nations (Duke University Press, 1986).

Copyright © 2000 by EH.NET. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.NET Administrator (; Telephone: 513-529-2850; Fax: 513-529-3308).

Posted: 15 June 2000