Richard Grassby - The Idea of Capitalism Before the Industrial Revolution

The nature of capitalism and of free-market economies, as Richard Grassby explains, presents the student of economic history with a complex set of problems: What is the definition of capitalism? Are free-market economies the same as capitalist economies? What is the significance of capitalism to our understanding of economic development, social and political order, and culture? Indeed, when did capitalism first emerge? Finally, is capitalism good or bad?

In this book, Professor Grassby, a historian of seventeenth-century England, answers these questions by framing capitalism as a historical process that has changed over time. In providing this context for our understanding of capitalism, he posits that the idea of capitalism has symbolic importance but little historical reality or explanatory power when applied categorically to every economy, society, political regime, or culture. As a consequence, the significance of the idea of capitalism is that it is a creature of myth rather than historical reality. The development of economies, including market economies, is not predetermined but is conditioned by human action and the balance of power. Economic change occurs continuously and proceeds at an uneven pace. This change is not universal or absolute and therefore needs to be studied within the particularities and relative context of each society and historical period.

In stating his case that capitalism needs to be explained within specific historical contexts, Grassby reexamines the rich historical debate over the meaning of capitalism, the nature of production and exchange, the nature of contract, and the spirit of capitalism and its ideological rise in the industrial period. He offers to the reader a general definition of capitalism in terms of the market economy and the growth of financial markets and consumerism, but he qualifies this definition by arguing that these attributes must be located historically within each society. Moreover, he warns that many of the characteristics attributed to capitalism, including the concept of modernity, were a consequence of the Industrial Revolution, which transformed the economic basis of society with its new technological and energy sources. Social scientists and historians, he adds, have focused their greatest attention on the transition from feudalism to capitalism, not on the transition to industrialism.

Readers of this terse study will find Grassbys work challenging and controversial. By arguing that capitalist development is an uneven historical process, without determined attributes or consequences, he challenges marxist, neoclassic, feminist, monetarist, rational-choice, and institutionalist theorists who have imposed deterministic, abstract models on historical developments unique to each given society. He accuses these theorists, both marxists and nonmarxists, of assuming the existence of the capitalist system and then looking to the historical record for illustrative examples. Instead, he calls for students of capitalism to grapple with the diverse and contradictory sources found in the historical record. Societies, he concludes, develop piecemeal and can continue to function even when certain sectors of the economic, political, and cultural sectors no longer function properly. Outcomes are not predetermined.

In the end, Grassby finds that central to understanding economic and social development is the importance of individual agency. Because societies are composed of individuals whose behavior cannot be predicted, all social systems are potentially unstable. Even capitalism with its great benefits (and costs) appears to have its own life cycle, falling victim to old age, lack of direction, disagreement over priorities, and incompatible ends. Yet neither its rise nor collapse can be determined. The task of the student of history is to examine the process of uneven and nonlinear development within specific localities by keeping in mind the importance of societal peculiarities and individual action. Perhaps one of the ironies of this conclusion is that Grassby agrees in the end with Karl Marxs observation that humankind makes its own history.

Donald T. Critchlow
Series Editor