In the period 1800 to 1830 when the Industrial Revolution was in full swing and the country had virtually no competitors, the United Kingdom grew by an average of 1.4 per cent a year. France did a little better (but starting from a lower level) with an average of 1.8 per cent after 1840. In fact growth in the nineteenth century in Europe was low – around 1 per cent.35 Even the United States averaged only a little more than 1 per cent between 1860 and 1910, and this was not evenly spread throughout the country, given its size, but it was enough to overtake Britain, as early as the 1850s, in industrial production.36 By 1890 the USA had become the leading manufacturing power in the world. As in Britain, coal extraction was a key factor, in the area from Pennsylvania to Kentucky. Iron-ore mines were discovered in the northern Midwest. Pittsburgh became the steel town par excellence while the post-bellum South and the American West remained undeveloped.
Britain has now long lost her position of pre-eminence and we do not know how long the present Western ‘lead’ will last, or indeed precisely what we mean by ‘lead’. Is it just military supremacy? The rate of technological breakthrough? Cultural power? A greater concern for human rights? Or is it simply a matter of wealth? Western modernity was imposed on much of the rest of the world after 1800, and sometimes it was eagerly welcomed. And today the objective of many (though not all) outside the West is neither the now extinct Homo sovieticus nor Homo islamicus but Homo occidentalis.37
The state and its institutions are not automatic champions of economic development: the state must be a willing and purposeful actor. In some circumstances it can be an obstacle to productivity growth and innovation, even an instrument for maintaining a particular anti-industrial class in power or entrenching bureaucratic interests.38 But institutions matter. Capitalism needs a strong state, and it must be a state that is willing and able to promote capitalism. This had been the case in Europe: in the nineteenth century in Belgium and in Russia and elsewhere the state developed the railways; in France and in Italy it mobilized loans and offered guarantees;39 in Britain, it regulated the raising of capital by introducing the Limited Liability Act of 1855, a formal system of company registration, auditing, and a process of bankruptcy.40 The post office was in state hands virtually everywhere. In England it had been a monopoly since the seventeenth century, a monopoly considerably strengthened in the nineteenth century when mail delivery expanded considerably. A uniform penny postage was introduced in 1840 ensuring delivery anywhere within the country irrespective of distance – the first country to do this.41 By the mid-1850s mail delivery in Britain had been brought completely under state control, thus establishing, in effect, a nationalized industry. The telegraph system followed in 1870.
With the purchase of a 40 per cent holding of Suez Canal shares in 1875 ‘the British government became the largest single shareholder in the greatest international public utility in the world’.42 Finally, on the eve of the First World War, the government (technically the Admiralty, whose First Lord was then Winston Churchill) bought the majority shareholding of Anglo-Persian Oil Company (which became BP in 1954), saving it from bankruptcy.43
So states and capitalism grew increasingly intermeshed, but it is not clear when a society can be called ‘capitalist’. Presumably manufacturing should have acquired a substantial weight. But what is substantial? How can one calculate the level of industrialization? If we use pig-iron production (gross figures and not per capita) we find that, in 1800, the United Kingdom with 190,000 tons was the leader, but it was followed by ‘backward’ Russia with 160,000 tons, then France (120,000 tons), then Sweden and Germany with 50,000 tons each, and, not far behind, the United States (40,000 tons) and Belgium and Austria with 30,000 tons each.44 Yet it would be difficult to argue that Russia, in 1800, was the second industrial country in the world or that in 1850 it was more capitalist than Belgium. A league table on a per capita basis would obviously not see Russia near the top.
It was understood that civilization was connected with industry and industry with power, yet no single power dominated Europe. Britain was the leading industrial power and her navy ruled the waves, but her army was of no great importance in continental Europe. The major industrial continental state in the late nineteenth century, Germany, was never in a position to establish political supremacy, not even after defeating France in 1870. Belgium was an industrial state, but too small to matter in wider European affairs. Portugal, Holland and Sweden had lost the power and the wealth they once possessed, as had Spain, which, by the end of the century, had also lost her empire. In 1880, Latin America, Africa and Asia – taken together – accounted for only 20 per cent of world trade.45 How different from the situation in 2010, when Europe’s share of world exports was 17 per cent and that of the United States only 12 per cent!46
In the nineteenth century, Europe was divided, then as now, into a multiplicity of states (see Chapter 1), but it would be wrong to treat it simply as an uncoordinated bickering Tower of Babel, fatally divided by protectionism and national identities.47 Besides, industrial development does not coincide precisely with state boundaries: advanced sectors often coexist with backward ones. If we ignore national borders, and hence politics, mid-nineteenth-century European industrial society would include areas in Lancashire, Yorkshire, the Midlands, and parts of southern Scotland (the Glasgow area), parts of German-speaking Switzerland, francophone Belgium, Alsace and Lyon in France, the Ruhr in Germany, Piedmont and parts of Lombardy in Italy. There were regions in the ‘periphery’ of Europe which, had they been states, would have been in the top league of industrializing countries. Thus in what had just become the Austro-Hungarian Empire (1867), there was a significant industrial sector but largely confined to Bohemia and Moravia (now the Czech Republic).48 France may have been backward compared to Britain and Germany, but Alsace, at least in the decades following the Napoleonic Wars, outperformed Britain.49
The British lead was evident in 1850 when the United Kingdom produced a staggering 2,390,000 tons of pig iron, but the United States was second, at some distance, with 670,000 tons, followed by France with 450,000 tons. Russia (with 220,000 tons) still managed to out-distance Germany (210,000), the Austrian Empire, Belgium, and Sweden.50 Pig-iron production gives an indication of the huge take-off into industrialization: in fifty years the UK increased production by 12.5 times, Germany quadrupled it and France doubled it. By 1900 the UK had lost its European lead in steel production to Germany, and the USA was already producing as much steel as the UK and Germany combined.51 If one chooses cotton spindle production, then the British lead over all other countries put together lasted until circa 1890; then the ‘rest of the world’ overtook Great Britain.52
What if one chooses numbers of those employed in industry? Here too we encounter problems: countries today still generally regarded as ‘capitalist’ have a relatively low level of people employed in industry (and that includes white-collar workers in industry). World Bank figures for 2010–14 suggest the USA has circa 17 per cent employed in industry, the UK does a little better with 19.2 per cent, Portugal, Italy and Germany are around 28 per cent, which happens to be the world average, Poland has 30 per cent, less than Iran (32–34 per cent), while China is by far the most ‘industrial’ country in the world with 44 per cent of its people employed in manufacturing.53 Today, being ‘industrial’ is no longer the hallmark of an advanced economy. In fact, as the UN acknowledges, the boundaries between manufacturing and other sectors ‘can be somewhat blurry’.54
At the end of the nineteenth century, the nine large conurbations with more than 500,000 consumers (Amsterdam, Paris, the Ruhr, Birmingham, Glasgow, Lancashire, Yorkshire, Hamburg, and London) formed an area of greater industrial concentration than the corresponding one in the United States (New York, Boston, Philadelphia, Pittsburgh, St Louis, and Chicago).55 There was some specialization: cotton in Lancashire, in Scotland, and later in Lille and Rouen; wool in Scotland, Yorkshire, Catalonia, and parts of northern France; steel in Yorkshire, Wales, and the Midl
ands, but also in parts of France and Germany. Before 1880 large factories were rare. There were some giants, such as the Schneider steel works at Le Creusot in France, employing 9,950 workers in 1867, and the Krupp works in Essen (8,500 workers in 1865), but most enterprises were relatively small – employing on average fewer than ten workers.56 The financing of these enterprises was largely done by the entrepreneurs themselves. Banks played a role only for major projects, often with a state guarantee. And there was a constant flow of people and capital across barely controlled state borders.
By the 1880s the ‘modern’ encompassed virtually the entire world, not, of course, in the sense that the whole world had become ‘modern’ – far from it – but in the sense that modernity had become a near-universal goal. The modern is, of course, largely an ideological construct. Westerners took some of the political, cultural, and economic features of their most industrial regions and countries and defined them as modern. As they became modern a cult of tradition developed. This cult was ‘modern’ too since in traditional societies no one chooses to venerate traditions; they are just part of the cultural environment. Glancing back towards the past is a deliberate choice. As Théophile Gautier noted in 1867 in a review of a book on the Danish sculptor Bertel Thorvaldsen: ‘On the one hand the most extreme modernity, on the other an austere love for the antique.’57 But modernity has many meanings. For John Stuart Mill it was linked to commerce and international trade, which put people in contact ‘with persons dissimilar to themselves, and with modes of thought and action unlike those with which they are familiar’.58
When modern capitalism started, there was little resistance to it. In Britain, during the Napoleonic Wars, there were the luddites, workers resisting their harsh conditions and the increase in food prices more than (as is commonly believed) the imposition of new technology, but they were quickly repressed. The Chartists, whose struggle was virtually over by 1857, wanted more democracy. The unions wanted higher wages. The socialist movement wanted social reforms and the regulation of the labour market. Yet the new economic system was seen as the inevitable future for the whole of humanity, a future full of hope but also of anxieties. Capitalism was seen as the natural consequence of everything that had gone before, even though it was ‘a startling departure from the norms that had prevailed for four thousand years’.59
There was nothing inexorable or predestined about the rise of capital. And this may account for the anxieties that have troubled and are still troubling those who live within its compass. Anxiety is an enduring trait of capitalist societies, but it is part of the system, not external to it. In the past, the vagaries of the weather and the ever-present threat of famine, war, and pestilence were the main sources of anxiety for the majority of the population who lived on the land. For most people, unacquainted with the notion of progress, anything new, anything unexpected was a cause for alarm. Then one could blame God, the sinners among us, or just bad luck. Not so with modern capitalism; since it is so obviously a human system that rests, apparently, on the accumulation of a mass of individual decisions, it creates losers and winners by constantly innovating. This chronic instability is the foundation of its advance, not a fault in the system or an incidental by-product.
The period surveyed here was one of capitalist triumph. It was a global triumph. By 1900 Great Britain was no longer almost alone as an industrial power, as had been the case earlier in the nineteenth century. Germany was catching up and the United States had done so. In the decades before 1914 no single capitalist state was ‘hegemonic’ either militarily or economically. But the end of the First World War saw the extraordinary rise of the only true superpower of the modern era: the United States. Its pre-eminence was due not only to its outstanding growth in the decades preceding the war, but also to its continuous rise between the wars. In 1928 a British Foreign Office memorandum noted with a mixture of alarm and admiration that the USA was ‘a phenomenon for which there is no parallel in our modern history … almost invulnerable, and at least our equal in prosperity, vital energy, technical equipment and industrial science’.60 The phrase ‘at least our equal’ was self-delusion: the USA was, by then, clearly superior in wealth, science, energy, etc. The British Empire was on the way out, though many pretended otherwise at the time, blinded by wishful thinking.
Japan had initiated its peculiar process of industrialization from above in 1868. France was worrying it was not catching up fast enough. In the Tsarist Empire the main debate was how to industrialize without endangering the autocratic regime. New states were being created. Territories were being colonized by industrial powers. Industrialize or perish seemed to be the prevailing slogan. Many perished, but many prospered.
Today we in the West are richer than we have ever been, but more unequal. In some places – the USA and the UK – inequalities are particularly pronounced. The old social democratic dream of narrowing inequalities has been almost abandoned along with social democracy. Is this a problem? To have to walk while others ride in carriages – as in the mid-nineteenth century – is certainly a greater inequality than to drive a small car while being overtaken by others in their Maserati. Owners of small cars may envy (or despise) the owners of fast cars, but the power of mobility of the two groups, controlled by speed limits and traffic rules, is substantially similar (during rush hour a cyclist may be faster than either). The gap between the few who toured Europe in the nineteenth century and those who never had a day of rest is certainly greater than the present one between those who go on a cheap package holiday and those who can afford a luxury cruise. Visible monetary inequalities may increase while – at least in the wealthier parts of the world – the inequality of effective capabilities may decrease.
Most people seem to accept that the present economic arrangements of society are the only ones available. Capitalism works. Yet there appears to be a pervasive disaffection. Politicians are despised. They know it (and some despise the electorate in turn) and seek to regain consensus by emulating popular celebrities, emphasizing their personalities and cultivating their use of the media – the triumph of form over content. Fewer people vote and an increasing percentage of those who do so vote for parties that blame immigrants for whatever ills the people might be suffering.
While there are problems, these look to many as temporary glitches, not the death-knell of the system – an unlikely prospect since not even the outlines of its successor are discernible. Since there is no visible alternative, the system looks everlasting. True, there are still many who live in squalor and destitution. But – in the West – they constitute a minority, albeit a privileged one in comparison to those in large parts of the Third World who have barely enough to eat. The poor in late capitalist societies are no threat to the system. The occasional riot, the explosion of popular rage, the violence that surfaces irregularly is almost a recognition that no serious political challenge can be levelled against the market economy. Once, it was believed that the ‘wretched of the earth’ would revolt against the system. Now we know better. When they do revolt it is because they are frustrated at being left out of the system, not because they want to subvert it. Those who are not part of the enchanted world of consumer capitalism – still the majority of the world’s population – knock at its door in an unprecedented wave of migration.
Today the great wealth accumulated by business elites causes envy and scandal, but the remedies proposed (tax them, control them, shame them) do not question the validity of capitalism, only one of its unpalatable outcomes. Indeed, depriving ‘fat cats’ of their greedily acquired fortune presupposes that this would not endanger the system. If it did, would such dispossession really be advocated?
Besides, the seriously rich of today do not visibly grind the faces of the poor into the dust. Unlike some Victorian entrepreneurs or nineteenth-century American robber barons, most capitalists in the West rarely employ oppressed and underpaid workers directly. Those who work for the new plutocrats in finance and the new ‘clean’ dot-com industri
es are usually fairly comfortable themselves. The oppressed and underpaid are far away, in distant countries, or working for sub-contractors of the likes of Apple, one of the most profitable companies in the world. The software ideas and packages that power the smart phones, the iPads, the iPhones, the Kindles and the iPods, as well as the numerous play stations, are conceived in the West. The actual computers, phones, and tablets – the hardware – are made by firms such as Foxconn, the main affiliate of Hon Hai and one of the largest, possibly the largest electronics manufacturer in the world. Foxconn is headquartered in Taiwan but has factories in India, Brazil, Mexico, and other countries, and above all in Shenzhen, near Hong Kong, a centre-piece of ‘socialism with Chinese characteristics’ – the official name for the new market economy. It employs, in China, one million workers and is the largest private employer in China with young migrant workers between the ages of 16 and 29 constituting over 85 per cent of its workforce, and often working over the legal minimum of sixty hours a week.61 The gap in conditions between workers in emerging economies and those in ‘the West’ remains remarkable. There is a chain that joins together those who work for miserable wages in what was called the Third World and those in the West whose incomes are wildly high; but the chain is so long as to be almost invisible.
The Anxious Triumph Page 2