The Radical Force That Built Markets and Reshaped Society

"But it's only in the late 19th century that stock exchanges have become much more important to capitalism," he says.

In the interview with Beckert, author of "Empire of Cotton," a Pulitzer Prize finalist, he also refutes the notion that capitalism emerged naturally. As opposed to the accepted belief that the economic system started in Europe, Beckert pegs its origin to port cities around the world.

Here are highlights of our conversation:

THINKADVISOR: You write that the first stock exchange, in 1602, was in the open air — the second one, in a building. Each traded just two companies, West India Company and Dutch East India Company. Why only two?

SVEN BECKERT: Because this was a radical departure from how businesses were organized. Most were owned by single individuals, merchants especially. They invested their own capital, or maybe they partnered with someone for a particular trade or enterprise they would create.

But there were no publicly traded stocks in the companies. That came about much later.

This is one of the themes of the book: The structures of businesses shift drastically in the course of the history of capitalism.

THINKADVISOR: Were there any individuals who spearheaded capitalism?

BECKERT: That's one of the core arguments I'm trying to make. I give a prominent place in the history of capitalism to the world's first capitalists.

The crucial actors in the emergence of capitalism are clearly only people who owned the capital or invested it. These were merchants.

THINKADVISOR: Did you have a hypothesis in writing this book?

BECKERT: Yes. I observed that a lot of people have very strong opinions about capitalism, but they don't necessarily know that much about it. So, I thought that, as a historian, I should contribute to understanding our present by writing about what is perhaps one of the most important topics we can think about: capitalism.

I believe strongly that capitalism can only be understood from a historical perspective.

THINKADVISOR: Anything else you set out to prove?

BECKERT: I observed that much of the writing about capitalism is deeply Eurocentric. All the books start out in Florence, Genoa, Venice or Amsterdam or deal with London and Manchester, [thereby] ignoring much of the human population.

I felt that in the 2020s, it's impossible to think about capitalism from a purely Eurocentric perspective; you need to think about it from a global perspective. I wanted to write a book about that.

Also, sometimes people think that capitalism is a natural state of the world and that world has always been as it is now. I wanted to show that capitalism is not natural, that it's a radical departure from other forms of organizing economic life.

THINKADVISOR: You write, "Capitalism is a monster that shapes society daily and globally." How does that affect the stock market?

BECKERT: The stock market is a result of the capitalist revolution. We see trading in stocks as early as the 17th century. We see the emergence of stock exchanges in Amsterdam, London, Paris and elsewhere. Stock exchange trading is an offspring of the capitalist revolution.

But for a long time, stock trading was quite marginal to economic life. It was only in the course of the late 19th century that stock exchanges, trading in stocks, became much more important to capitalism. And for the first time, industrial enterprises were traded on stock exchanges.

THINKADVISOR: The golden age of capitalism, you frame it, was 1945 through 1973. Talk about that and its impact.

BECKERT: Capitalism shifted its shape drastically in the course of the past 500 years. In 1750, it looked radically different from the capitalism of today.

One of those moments in which a particular kind of institutional regime emerged was in the postwar decades between approximately 1945 and 1973. I call those years the golden age of global capitalism.

This was a moment of rapid industrial growth, a moment in which massive bureaucratic industrial enterprises came to dominate; for example, the American economy.

Wages increased significantly. This was about three decades in the history of capitalism with features that really set it apart drastically from what came before, but also what came thereafter.

THINKADVISOR: Why did the golden age end?

BECKERT: There was a slowdown in productivity growth, and there was high inflation linked to the Vietnam War. There were massive increases in the price of commodities, especially oil. That brought this model of capitalism to an economic crisis.

But there was also a lot of political mobilization, which came from both the left and the right. It came from the student movement, the women's movement, the civil rights movement.

But it also came from institutions such as the Business Roundtable — so it also came from the Republican Party.

THINKADVISOR: You say that eventually there will be a moment when capitalism ends. Why?

BECKERT: I'm not predicting the end of capitalism; people have predicted that for about 200 years. But capitalism has a history. And anything that has a history, has a beginning and also an end.

The book does not predict capitalism's imminent end; leave the future to others. I'm just interested in how this way of organizing economic activities is so different from other forms that have existed, how it emerged and became so dominant on the planet.

THINKADVISOR: What revelations in your book can advisors use in helping clients invest?

BECKERT: There are three. One is that you need to think about capitalism, or any problem you're facing, from a global perspective.

Second, you need to think about capitalism as an institutional order that seems very stable at a particular moment in time but that can suddenly shift into a very different kind of institutional order. This is obviously strikingly clear today.

And third, you cannot think about capitalism without also thinking about the political economy.

THINKADVISOR: The new mayor of New York, Zohran Mamdani, is a Democrat and a socialist. How is he going to achieve a balance between his economic philosophy and the city that is synonymous with capitalism?

BECKERT: There have been very different institutional orders within capitalism. And, of course, if you think about the United States in the 1940s and 1950s, New York City was a kind of socialist democratic order.

This form of capitalism went hand in hand with a massive expansion of the welfare state, with [major] state intervention and massive reductions in social inequality.

This could happen again. That's just part and parcel of the history of capitalism.