Published by EH.Net (April 2016)

Jürgen Kocka, Capitalism: A Short History. Princeton, NJ: Princeton University Press, 2016. viii + 198 pp. $27 (cloth), ISBN: 978-0-691-16522-6.

Reviewed for EH.Net by Paul M. Hohenberg, Department of Economics, Rensselaer Polytechnic Institute.

A joke from the days when stereotypes were more acceptable than they are today concerned a group of people tasked with writing about the elephant.  The Frenchman wrote about the elephant’s love life, the Englishman about hunting the elephant, etc.  As to the German, he (always he) contributed “a short introduction to the elephant” … in fifteen volumes.  Well, things change.  Just as two Americans edit a collection of essays on the history of capitalism … in 1200 pages (Neal and Williamson 2014), a German scholar produces “A Short History” of capitalism in under two hundred (smaller) pages.  Moreover, Jürgen Kocka views his subject rather more broadly than the Cambridge authors, who, a reviewer alleges, focus rather narrowly on the economic dimension (Coclanis 2016).

Short this volume by Jürgen Kocka may be, but compact writing does not necessarily make for quick reading.  The feeling of density in the text is enhanced by the language, as the translator has stayed rather faithful to the German original.  So while the book is lucid, it repays close reading.

As Kocka makes clear, the title can mean two distinct things: a history of the concept of capitalism, which has been as much a call to battle as an analytical tool, or an account of how capitalism, however defined, took over much if not all the world.  This book gives us some of both, the first chapter being devoted to the history of the term and a strenuous effort to define it, of which a bit more later.  Then comes a chronological review starting from the first stirrings of large-scale commerce, where Europe was a minor player compared with China and Arabia, and on to the medieval and Renaissance flowering of trade and towns in certain European regions.  The chapter titled “Expansion” takes the story through the early modern period (1500 to 1800), when Europe greatly extended its reach through trade and colonization.  The period also saw a slow and hesitant invasion of the sphere of production by capitalism, for example through proto-industrialization. The actual capitalist era comes next, the age of industrialization, culminating in a terrible twentieth century crisis (1914-45), then a near-miraculous recovery, and finally a renewed boost after the fall of the Soviet-based alternative and the rise of Asian tigers.

Three themes dominate the discussion.  The first is the “labor question” (quote marks in the text).  While wage labor is clearly the norm for a market-driven capitalist system, unfree labor has had a major role to play historically, particularly in the mines, plantations, and estates that furnished the goods feeding large-scale and long-distance commerce, from sugar to salt, wheat to silver, and rubber to cotton.  Yet one cannot comfortably label the areas dominated by this mode of production “capitalist.”  Otherwise one would, for example, view the southern states as more capitalist than the north in the mid-nineteenth century United States, which is certainly counterintuitive. Closely related is the issue of exploitation of labor, clearly present in many times and places, but offset, one must acknowledge, by the enormous gains in living standards over the long term in the most capitalistic settings.  Here I must interject my disappointment that the author completely omits any discussion of human capital, not only a key to recent and future sustained growth, but the one form of capital that cannot fully be separated from its laboring owner.  Does human capital substantially modify capitalist “relations of production?”  Or will the bosses find a way to capture its surplus returns as well?

A second theme, equally knotty, concerns the relationship between the capitalist economy, both in development and in its mature phase, and the state.  Clearly, the two are both rivals and complements.  Whereas conventional economic theory stresses the impediments government can place in the way of market efficiency and dynamics, Kocka focuses more on the positive contributions of politics to economics and on the necessity of political action to tame the economic excesses of capitalism and also to offset its corrosive impact on nature, culture, and community.  Historically too, European maritime expansion was driven as much by political (and religious) ambition as by the search for gain, while industrialization and state formation went hand in hand, not least in Germany.

Kocka’s third theme, one might almost say obsession, is finance.  It played a leading role in the first or mercantile phase of capitalism, when merchants and bankers were often one and the same, and it has been labeled the dominant sector in the late or mature phase of capitalism, also involving globalization.  Here one senses strongly the impact that the recent financial crisis has had on our author.  Viewed with the perspective of a few more years and from the United States rather than Europe, this focus seems a bit overdone, but who can say whether we have yet experienced the worst.

To close, I want to return to the defining characteristics of capitalism.  Kocka, like many others, stresses the key role of markets, one might almost say of the market.  However, it seems to me that he dismisses a bit too quickly the distinction Fernand Braudel drew (for the early modern period) between the market economy and capitalism (1982).   Kocka claims that Braudel’s capitalism does not require markets, which is absurd.  Instead, Braudel is saying that while one cannot have capitalism without markets, one can have markets without capitalism (though twentieth century authoritarian states have certainly tried to have rapid capital accumulation without free or even clearing markets).  The real distinction seems to me to be between the type of idealized markets we study in Econ 101, with no concentration of buyers or sellers, no pervasive economies of scale or rents, no meaningful product differences or informational asymmetries, minimal barriers to entry or exit, and thus only fleeting profits; and the real world markets where these and other imperfections are the rule rather than the exception.  In the latter, potential rewards are high enough to tempt the capitalist despite the corresponding risks.  To put the matter succinctly, I would reject any definition of capitalism that does not make a place for market power as well as markets.

Having put forward a couple of issues for further discussion, I should reiterate that this book offers a lot of material in a few pages, and a good view of economic history as seen notably from the dual viewpoints of Central Europe and the post-financial crisis moment. The reader will have to judge whether it makes a compelling case for ”capitalism” as the organizing concept for a millennium, or even half a millennium, of economic history.


Fernand Braudel, Civilization and Capitalism, 15th-18th Century. Vol 2: The Wheels of Commerce, New York: Harper & Row, 1982

Peter A. Coclanis, “Review of L. Neal and J. Williamson (2014),” Journal of Economic History, 76 (1) 2016, pp. 286-290.

Larry Neal and Jeffrey G. Williamson, editors, The Cambridge History of Capitalism, Cambridge: Cambridge University Press, 2014.

Paul Hohenberg is past president of the Economic History Association and co-author (with Lynn Hollen Lees) of The Making of Urban Europe, 1000-1994.

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