“Need I comment that these capitalists, both in Islam and in Christendom, were friends of the prince and helpers or exploiters of the state? […]”
“Thus, the modern state, which did not create capitalism but only inherited it, sometimes acts in its favor and at other times acts against it; it sometimes allows capitalism to expand and at other times destroys its mainspring. Capitalism only triumphs when it becomes identified with the state, when it is the state.
In the first great phase, that of the Italian city-states of Venice, Genoa, and Florence, power lay in the hands of the moneyed elite. In seventeenth century Holland the aristocracy of the Regents governed for the benefit and even according to the directives of the businessmen, merchants, and moneylenders […].”
- Fernand Braudel, (1977) Afterthoughts on Material Civilization and Capitalism, (pp. 92-3).
The job of the capitalist is to allocate capital for the generation of profit. However, this motivation does not always result in an optimal outcome for the majority of people, and, for some, its consequences are so egregious that the utility of state-backed capitalist profit-seeking should be reconsidered and replaced with another, voluntary model.
One reason people are willing to accept opulence in the face of destitution, the destruction of the environment, a manufactured consumerist culture, and the existence of a permanently impoverished, hard-working class that labors for a permanently wealthy, capital monopolizing leisure and power-wielding class is this: They think these are the prices we must pay for market relations and the wonders of modernity and efficiency – that is, they conflate the market, or agora, with the system of corporation-state capitalism.
They believe that from markets and trade follows Exxon, Halliburton, Lockheed Martin, McDonalds, Monsanto and Goldman Sachs. But, on the contrary, these multinational corporations would be unlikely to thrive without the protection and privileges granted by the monopoly on violence known as the state.
Before we can critique capitalism, we should solidify our definition of the functional unit of capitalism, the capitalist. The liberal economic theory of Adam Smith, David Ricardo and Joseph Schumpeter holds that capitalists are entrepreneurs, who take the risk of starting a business and are appropriately compensated with profit (though certainly these thinkers were not as sanguine about capitalism as depicted by the Right of today, particularly regarding rents and monopoly). The risk-reward definition of the capitalist is specious, because capitalists are much more than mere entrepreneurs.
Capitalists, often using the state, mould the economy to their will. They, unlike our notion of the small-time or innovative entrepreneur, are not subject to the whims of shifting economic forces. Compare the large capitalist merchant or financier’s power over the market to the humble shopkeeper, craftsman or inventor. All participate in the market as risk-takers, but there is something unique about the capitalist. In order to interrogate the legitimacy of capitalism, we need a historically informed definition of the capitalist.
I will draw upon the work of the Anneles School historian Fernand Braudel, considered by many to be the greatest historian of the twentieth century, founder of cliometrics, and author of the foundational three volume Civilization and Capitalism, 15th-18th Century. A student of Lucien Febvre, Braudel held no illusions about the inequality inherent in capitalism and the extra-entrepreneurial role of the capitalist in the early modern period.
Braudel distinguishes between capitalism and the market, and if anyone is qualified to do so, it is the historian who actually established the empirical study of the emergence of capitalism. Braudel asserted three defining features of the capitalist versus the entrepreneur: 1. The refusal to specialize, 2. avaricious speculation in financial markets, and 3. monopoly control of the market rather than simply filling in a niche demanded by consumers. ...