Capitalism as Theology
In his seminal work, The Spirit of Democratic Capitalism, Michael Novak provides his readers with a “Theology of Democratic Capitalism.”1 Now, some might find his theology a bit eccentric, elevating, as it does, competition and the will to power to the status of quasi-theological virtues,2 yet his central insight is still correct: every economic system implies a theological one, some view of man and his relationship to his society, to nature, and to God. This is a crucial point in light of the claim of modern economics to be a “pure” science, and hence exempt from the moral order. As we do not subject the findings of the chemist to moral scrutiny (although we may subject the uses to such examination) neither can we subject the findings of the economist to such a test. But if it is a science that deals with human relationships, then it is indeed a moral science, and the “morally neutral” space claimed by the economists simply does not exist.
Novak spends a good deal of space excoriating Liberation theology, but he seems to differ with them only in the question of the meaning of “liberation,” but not with the end. In his view, the locus of true liberation is democratic capitalism, under which “the individual is freer than under any other political economy ever experienced by the human race.”3 And critical to this freedom, for Novak, is the freedom of labor to sell itself for a wage and to move where it will. Commodity and mobility are what characterize “free labor” for Novak and without these, the only alternatives are slavery or serfdom.4
But for any question of “liberation,” we must ask, “Liberated from what? And towards what? And at what price?” And now that the whole world has experienced this liberation, whether they wanted it or not, and the system itself seems to be experiencing yet another crisis, it is good to inquire into the origins of this freedom and the means of its globalization to see whether this “liberation” was something man in general desired, or what he was required to pay to get it. And there can be no better vehicle to examine this question than by examining the history of the first commodity to be industrialized and globalized: cotton.
Empire of Cotton
When we speak of grand ideas and themes like “freedom,” “industrialization,” “globalism,” and the like, the conversation tends to get very abstract and theoretical. It is good, indeed necessary, to have a concrete example and a real process that can be examined in its historical fullness and its full social, political, and economic consequences. Only in this way can we grasp the full scope and meaning of the liberation provided by global capitalism. And perhaps the best example is the first, the original model for all subsequent global industries. Sven Beckert has provided us with a richly detailed history of the growth and globalization of the cotton industry, and its effects on the economic, political, and social lives of all that it touched. As Beckert puts it,
European trade in cotton textiles tied together Asia, the Americas, Africa, and Europe in a complex commercial web. Never before in the four millennia of the history of cotton had such a globe-spanning system been invented. Never before had the products of Indian weavers paid for slaves in Africa to work on the plantations in the Americas to produce agricultural commodities for European consumers.5
Beckert lays out in often excruciating detail precisely how this world-wide “liberation” was accomplished by capitalism. In the common narrative, the superior technology of England combined with the free market to out-produce all competitors to create a global market, universal prosperity, and, as a by-product, liberate millions of peasants from a lifetime of drudgery and hopelessness. The actual history is otherwise, and has very little to do with the freedom of the markets or even with technological superiority. But any account of the industrial history of cotton must begin with its pre-industrial history, a history that was stable for millennia.
The Pre-Industrial History of Cotton
Cotton is a remarkable fiber, easily grown in a wide variety of warm climates. Unlike wool, it easily takes up dyes or can even be printed so that the people who wore cotton were simply more colorful, more fashionable, than their northern neighbors clothed in drab woolens. Cotton was grown for millennia as part of subsistence farming or for local industry. “Subsistence” has a bad odor for us, indicating ignorant peasants spending their lives in an endless routine of drudgery that provided a precarious existence at best. This is certainly true of subsistence wages, but on the farm, subsistence meant self-sufficiency, ownership of land (in greater or lesser degrees), and security. But above all, it meant family and community, for these were vital to the success of the farm and without them it could not exist at all. The subsistence farmer in warmer climes interplanted cotton among his food crops in sufficient quantity to meet his family’s needs, with some extra, perhaps, to sell to local manufacturers as a cash crop. In the winter months, the cotton would be cleaned, carded, spun into yarn and made into cloth to provide clothing for the family.
Each homestead was equipped with a variety of machines and tools to process the cotton into yarn and cloth and clothing. Home production was supplemented by commercial production which established local, regional, and long distance markets, mainly in finished cloth to furnish the needs of urban populations. But change was coming, which first manifested itself in technology. The first was the rather simple device of the “flying shuttle” in 1733, which doubled the productivity of weavers. This produced a bottleneck in the supply of yarn, since the spinsters at their wheels could not keep up with demand. This bottleneck was broken by the “spinning jenny” in 1760. This was further improved by connecting the jenny to water power in 1769. The spinning jenny was mainly used in homes, but the Arkwright water frame allowed for industrial production. At first, this was a boon to home weavers, as “putting-out” networks brought prosperity to the weavers, and commercial production quickly overtook home or local use. But this prosperity was short-lived, as weaving itself became automated.
The new loom created another bottleneck, namely in the supply of raw cotton. After all, cotton was the first major industry not dependent on local raw materials.6 Subsistence farmers were not willing to supply the need. But if cotton could easily be sold for cash, why not convert the whole farm to cotton and earn a whole bunch of cash? However, this would make the farmer and his family dependent on markets, and markets are notoriously volatile. Throughout the world, regardless of the culture, clime, or country, farmers and craftsmen preferred to provide for themselves whatever they could, and rely on their communities for what they could not. Cash was simply not a great requirement and certainly not the nexus of all economic and social relations, as it is for us. It had specific purposes, primarily for the payment of taxes and to buy the relatively few necessities that could not be produced by the family or the local community. In order for the empire of cotton to exist at all, this self-sufficiency had to be broken, and broken it was by a combination of commercial pressure and state violence. This is the period that Sven Beckert calls “War Capitalism.”
The Paradoxical “Freedom” of the Market
In 1600, most Europeans were clothed in linen and woolens. Over the next 200 years, that would change, and the change did not derive from technical advances, but from the willingness to project power and capital across vast oceans.7 In 1492, Columbus opened up America to exploitation and conquest, and in 1497, Vasco da Gama performed the same service for India. And it is in India that the story really begins to take shape. The East India Companies of France, England, and Holland each allied with native rulers against each other until eventually the French were pushed out, Holland was given a monopoly over the spice trade with Indonesia in return for quitting India, while the British East India Company gained control of nearly the entire subcontinent. These were trading companies, but they came not as traders, but as rulers. New laws limited the native weavers’ access to markets, forcing them to sell only to the Company; they set prices (the weavers’ share fell from 33% of the price to 6%), and established working conditions.8
At first the Company opposed the export of raw cotton, since they had their own textile industry, but British policy was to make India an importer of finished goods and an exporter of raw wool. The Indian products were directed Eastward, away from Europe, while a series of tariff laws and prohibitions kept the Indian produce from the home market. And the home market had to be protected because the market and the State had become co-dependent. The “free traders” were dependent on protection from the state, and the State needed them to finance constant warfare.9
But it was not India, but America that would be War Capitalism’s greatest achievement, and the Southern Plantation that would become the cotton lifeline of the mills of Manchester. The Indian government had to deal with systems that had been in place for millennia, but America had unlimited supplies of land and access to capital, and the planters had nearly unlimited political power. By expropriating vast tracts of land from the American Indians, the planter opened new vistas to War Capitalism.10 But mostly, the planter had labor, docile and degraded, in the form of slaves. And the slaves could be used as collateral for loans, to open up new fields which required more slaves. The cheapness of American cotton drove out local manufacturers everywhere, as Britain could undersell the whole world. The American planters became the most important suppliers of the world’s most important product.11 The wages paid in Manchester were dependent on slavery in the South.
Other mass industries were made possible by the growth of the cotton mills, especially the railroads and the iron industry. But cotton was the vanguard.12 Industrial capitalism required powerful state actors to build infrastructure, provide administrative frameworks, discipline labor, and, especially, to provide protection for its products. The techniques of mass production pioneered in the cotton industry spread rapidly to other industries. But aside from a strong state, what the industrialists needs was free access to capital, while capital required free access to the world. Great banking houses like the Barings and the Rothschilds forged important connections to cotton,13 and from there they become important in mass production everywhere and in every product. And this capital was international, liberated from all national boundaries and free to roam the earth in search of profit; profit, not the improvement of man or the community, would be (and remains) the sole motivation and single measure of economic success.
Before this process had gone very far, the laboring people had been moved from the countryside, crowded into slums of desolation, and thoroughly dehumanized. Large parts of the country disappeared under the scrap heaps of the satanic mills, and the family was on the road to perdition.14 This industrial revolution involved not just new machines, but a new creed and new understandings of politics, of society, and of man himself. But the new creed was thoroughly materialistic; it was the belief that all problems could be solved by an unlimited amount of material commodities.15 Socially, the machines were expensive and required a new work force, raw materials from remote areas, and ever-expanding markets. In an agricultural society, these things were not natural and would have to be created.16 But mostly the new creed required a change of motives, from subsistence to gain. All transactions had to be turned into money exchanges, which meant all goods—and especially the good of labor—must be converted into commodities. And such a system, once established, must be allowed to function without interference, just as did the machines on which it was based.17
The Paradoxical “Liberation” of Labor
The biggest obstacle to industrial capitalism was not capital, but labor. In order for any capitalism to be established, the tendency of farmers to self-sufficiency had to be overcome. As Beckert puts it,
For labor to be turned into a commodity, workers had to be “liberated” from the matrix of mutual obligations that had historically sustained them. They believed, at the same time, that land had to be “liberated” from noneconomic ties and made into a freely marketable commodity. This “liberation” rested ideologically on the naturalizing of certain historically specific ways of organizing production, and was thus enabled by economic, social, cultural, and even racial hierarchies it had helped to produce. Capitalists were the age’s true revolutionaries.18
The liberation of labor did indeed begin with its separation from the land. The war on the cottages, loss of rights in the commons and the absorption of the cottage garden deprived home production of its economic base: family earnings and agriculture. The enclosure movement, which Karl Polanyi called “the revolution of the rich against the poor,” was the first step to creating an army of wage laborers.19 This tactic would be repeated in India, as the farmers lost grazing rights in the “wastelands,” lost their hunting rights, and the communal ownership of the farmlands was privatized.20
But why wouldn’t the peasant or the yeoman want to be liberated from household production? It was, after all, a lot of drudgery; the whole winter might be spent in cleaning and carding the cotton, spinning it into yarn, weaving it into fabric, and making it into clothes.21 The spinster spent her days at the wheel, tedious work indeed. But on the other hand, it was a work in harmony with the home and in rhythm with the family. And most important, it was directed by her own will. She could stop to comfort a crying child, cook a meal, or just step outside for some air. And the product was hers, even if she had to sell it for taxes. Done well or badly, it was an expression of herself; it was a source not just of income, but of pride.
The spinster was liberated from her wheel, the weaver from his loom. But neither was liberated from the wheel and the loom; they were liberated only from the ownership of these things. Their lives would no longer be regulated by the rhythms of their own wheel in their own homes, but by somebody else’s wheel spinning to build somebody else’s home. And this home could never be large enough or grand enough; the wheels had to spin faster and faster to supply its needs.
In the process, Manchester was industrialized but England was deindustrialized. The process of industrialization is more accurately called industrial centralization, as all the wheels were sucked from all the homesteads and into the great city. And the positions of man and machine were reversed. No longer was the wheel the servant of the spinster, but the man the servo-mechanism of the wheel, just that bit of the process that could not, as yet, be automated. And each weaver that lost his loom, each spinster that lost her wheel, and each child that lost his home became a potential laborer for the new industry and a potential customer for its output.
Nowhere is the story of wage labor more telling than in the case of the Freedmen in the American South after the Civil War. The wisdom of the world doubted that cotton could be grown by paid labor. Freedom would make cotton, it was believed, into a luxury fabric, and the vast industry would shrink to minuscule proportions, causing a disaster for the nascent industrialism of Europe. This could not be allowed to happen.
The Freedmen felt they had a right to the land whose value their labor had created. But the fear was that the Freedman, like farmers everywhere, would prefer to produce for home consumption rather than world markets; he would prefer self-sufficiency to market dependence. So the land was quickly returned to the former owners, who also regained their political power. The “Black codes” were passed to enforce labor discipline. The former slaves were required to sign compulsory contracts, with penal remedies for default. These were defended as “guiding the freedman to freedom.”22 Or as President Andrew Johnson put it, “Everywhere measures are being taken to force the Negroes to work, and to teach them that freedom means working for wages.”23
Share cropping arose as the compromise with compulsory contracts. Disenfranchised, stripped of his rights, and trapped under money debts, the newly liberated slave would find very little actual liberation. The system guaranteed that he would have to grow the money crop and abandon any ideas of self-sufficiency to pay for the rents and advances given by the landlord. But mostly it guaranteed that the sharecropper would remain in poverty.24 And it worked. By 1870, more cotton was grown in the South than in 1860.25 And the price of cotton fell, from $0.27/lb in 1870 to $0.07/lb in 1894.26 “Free labor” was cheaper than slavery. Slavery incurred costs in season and out, and could not easily be adjusted to boom and bust cycles. Wages and debt slavery shared neither of these handicaps.
In sum, liberal capitalism had liberated labor from all that had traditionally been its own,27 from all connection with land, with family, with community, and even with the economy, save for the marginal connection provided by the wage and what it could purchase.
The True Liberation of Capital
But if the liberation of labor from place and community was paradoxical, the liberation of capital from these same things was a genuine liberation indeed. The wealth generated in one land was no longer tied to that land and bore no responsibility to its place of origin. Thus wealth generated in, say, Ghana could be invested in an oil well in Texas, an apartment block in Beijing, or a factory in Bangladesh; there is no obligation to the people and nation that built the wealth. Rather, it is free to circle the globe always looking for a higher return. This is liberation indeed.
Capital forms a true brotherhood of the wealthy which if not really catholic, is at least cosmopolitan. The oil official skimming profits in Nigeria or Saudi Arabia, the futures trader in London, the industrialist in Shanghai, and the software magnate in Silicon Valley are more united with each other than they are with the worker down the street in their own home cities or the farmer a few miles away in their own countryside. They shop together in Paris, ski together in the Alps, hold power lunches in Manhattan, and gather in Davos to discuss the fate of all the lesser beings that work in their enterprises, or who can find no work at all. And wherever the workers aspire to join the middle class, capital is free quit that place and seek another, one with a more pliable workforce. In this way, they are liberated to divide the workers against each other. If the government of Indonesia demands that Nike pay its workers $2/day, Nike can move to Vietnam, where they are willing to work for $1.50/day. The solidarity of the capitalist is used to break the solidarity of the worker.
The Limits of Liberation
Writing in 1982, Michael Novak could be optimistic about the liberation theology of capitalism. The American and Western European worker had indeed gained a foothold in the middle class. This was that tail-end of “The Great Compression,” a period between 1942 and 1985 when income inequality reached its lowest level and America became, arguably, the most egalitarian society on earth and quite possibly in human history. The share of income going to the top 10% declined from the nearly 50% it achieved in 1928 to a narrow band of 32 to 35%, where it remained for four decades.28
But there were two problems with Novak’s thesis. The first was that he touted the “free market” as the engine of liberation, or what Novak called “the natural system of liberty.”29 But if the history of cotton shows us anything, it shows us that this “free” market never existed; it was and is a complete myth. The industrialized world had been built by a combination of government power and private privilege. Nor was this more egalitarian society achieved by the market, but by the policies set in place by the New Deal or by similar “Social Democratic” policies in Western Europe. But these policies would be largely reversed in the United States by Ronald Reagan, and Margaret Thatcher would perform the same service for Britain. A good deal of our social and political dysfunction can be explained by the fact that the expectation of good jobs and a middle-class life that was normal in the 70’s and 80’s have been placed out of reach for too many of our fellow-citizens.
The real problem, however, is that Novak’s understanding of “liberty” is abstract and individualistic; he reduces “community” to contractual relations and deprives freedom of any material content. But humans are social and political beings; they can only flourish in connection with a community, and communities can only be sustained by flourishing individuals. And since the human is also a material being, he can only flourish with material means, such as land, tools, and education. Take away natural communities and material means, the person become a pure individual, isolated and alone. And such an individual becomes a prey to collectivism and mass society.
And a prey as well to demagogues.
- Michael Novak, The Spirit of Democratic Capitalism (New York: Simon & Schuster, 1982), 333ff.↩
- Novak, 344–49.↩
- Novak, 339.↩
- Novak, 42–43.↩
- Sven Beckert, Empire of Cotton: A Global History, Kindle (New York: Vintage Books, 2014), 36.↩
- Beckert, 85.↩
- Beckert, 29.↩
- Beckert, 36–45.↩
- Beckert, 47–49.↩
- Beckert, 104.↩
- Beckert, 119.↩
- Beckert, 75.↩
- Beckert, 214.↩
- Karl Polanyi, The Great Transformation: The Political and Economic Origins of Our Time (Boston: Beacon Press, 1944), 41.↩
- Polanyi, 42.↩
- Polanyi, 43.↩
- Polanyi, 44.↩
- Beckert, Empire of Cotton, 309.↩
- Polanyi, The Great Transformation, 37.↩
- Beckert, Empire of Cotton, 299.↩
- Beckert, 442.↩
- Beckert, 293–94.↩
- Beckert, 270.↩
- Beckert, 284–85.↩
- Beckert, 287–91.↩
- Beckert, 311.↩
- Patrick Deneen, “Inescapable Liberalism? Rescuing Liberty from Individualism and the State,” ABC Religion & Ethics (blog), May 13, 2013, http://www.abc.net.au/religion/articles/2013/05/20/3763423.htm.↩
- Thomas Piketty and Emmanuel Saez, “Top Incomes and the Great Recession: Recent Evolutions and Policy Implications,” IMF Economic Review 61, no. 3 (August 2013): 456–78, https://doi.org/10.1057/imfer.2013.14.↩
- Novak, The Spirit of Democratic Capitalism, 350.↩