Capitalism

What really drives the modern world—the invisible hand of markets, or the visible pressures of history, class, and innovation? In Capitalism: A Very Short Introduction, sociologist James Fulcher traces how capitalism grew from medieval merchant networks to today’s planetary financial web. He argues that capitalism isn’t just an economic system of profits and investments—it’s a transformative social order that has reshaped work, politics, and even how we understand freedom and progress.

Fulcher contends that capitalism’s central heartbeat is the investment of money to make more money. Whether through 17th-century spice monopolies, Victorian cotton mills, or 21st-century derivatives, the same logic persists: capital seeks growth. What varies are the institutions, technologies, and social relations that shape how that growth occurs. The book challenges the reader to see capitalism as a dynamic, evolving organism—sometimes anarchic, at other times managed and restructured by states, corporations, and crises.

From Merchants to Industrialists

Capitalism began long before smoke stacks and assembly lines. Fulcher opens with the spectacular voyages of the English East India Company, whose voyages in the 1600s yielded staggering profits for risky spice trades. This form—merchant capitalism—revolved around buying scarce goods cheap and selling them dear across continents. Yet even then, monopolies and state alliances, not free competition, were the keys to success. These merchant networks laid the groundwork for the accumulation of capital and the birth of global trade.

Industrial capitalism in the 18th and 19th centuries transformed this mercantile logic into a system of mass production and wage labor. Think of James M’Connel and John Kennedy, two Scottish entrepreneurs who turned £1,770 of initial capital into £88,000 within fifteen years by investing in cotton spinning. Here, profit depended not just on trade but on controlling labor, organizing machinery, and maximizing productivity. This was a new world where people sold their time, not just their goods. Employers gained wealth by disciplining “time itself”—through timed shifts, factory bells, and moral supervision (a theme also explored by historian E. P. Thompson).

The Shift to Financial Capitalism

As capital accumulated, it detached further from production. 20th- and 21st-century financial markets created wealth from what Fulcher calls “financialized capitalism.” Through derivatives, futures, and speculative trading, money itself became the product. The 1995 Barings Bank crash, caused by trader Nick Leeson’s hidden derivative bets, revealed both the global reach and the volatility of this new system. Here, risk-taking had replaced manufacture as the route to profit—a phenomenon economic sociologist Susan Strange called “casino capitalism.”

Despite these dramatic changes, Fulcher argues that the core logic of capitalism—investment for profit—remains constant. This persistent pursuit links the spice trader to the stockbroker, the cotton spinner to the hedge fund manager. Over time, this pursuit has reorganized labor, spurred revolutions in technology, and spread market logic into nearly every human activity—from healthcare and education to leisure.

Why Understanding Capitalism Matters

Fulcher’s book is not an ideological defense or critique of capitalism—it’s a compact historical sociology of how economic life came to dominate modern civilization. He examines capitalism’s mutations in Britain, America, Sweden, and Japan; its global expansion through colonialism and globalization; and its recurring crises, from the tulipomania of 1637 to the crash of 2008. Each phase shows capitalism’s twin nature: its extraordinary ability to generate innovation, and its equally consistent tendency to create inequality and instability.

For Fulcher, capitalism is not “one thing everywhere.” It’s an evolving system shaped by local politics, class struggles, and cultural norms. Yet the recognizable drive for profit and reinvestment links every version—from welfare states to Silicon Valley. The author invites you to see your own daily life—your wage, your spending habits, even your leisure—as part of capitalism’s global web. Understanding how these dynamics emerged helps you navigate a system that continues to define our work, wealth, and world.

Why did capitalism flourish first in Britain and not, say, in China or Italy? Fulcher builds on historian Ellen Meiksins Wood’s thesis that capitalism’s origins lay not in trade alone but in changes in rural property and labor relations. England’s distinctive agricultural evolution—especially the enclosure of common lands and the transition to rented tenancies—created a market-driven society centuries before the Industrial Revolution.

Agriculture, Markets, and Enclosure

English lords shifted from sustaining themselves through feudal dues to earning money rents from competitive tenancies. Land ceased to be a social obligation and became a commodity. This fostered agricultural innovation and efficiency, freeing labor for new industries and creating consumers with cash to spend. Enclosures fenced off previously shared lands, displacing peasants into wage labor—an epochal transformation Karl Marx would later call primitive accumulation.

Unlike continental societies where feudal power remained dispersed, England’s centralized monarchy (dating back to the Norman conquest) prevented local warlords from maintaining feudal militias. This concentration of political authority paradoxically produced more economic freedom. By the 16th century, a national market linked countryside and city through London’s trade networks, further embedding market relations in daily life.

European Networks and Merchant Capital

Yet British capitalism was also European. Putting-out systems in Flanders, mining enterprises in Germany, and merchant-financing innovations in the Netherlands and Italy all fed into the same transformation. Antwerp’s 16th-century invention of bills of exchange and joint-stock arrangements prefigured modern credit markets. The Dutch East India Company’s creation of permanent share capital and the Amsterdam stock exchange in 1609 would later influence English finance.

Europe’s fragmented political map turned out to be a strength. Competing states drove innovation, fostered trade, and allowed persecuted entrepreneurs—like French Huguenots and Jewish merchants expelled from Iberia—to relocate and spread skills. The migration of these skilled refugees to England and Holland enriched industries from textiles to glassmaking. The “cultural receptiveness” of Elizabethan England, Fulcher notes, was an early example of how openness to migrants stimulates economic dynamism (a point as relevant today as then).

Feudalism’s Flexibility and the European Advantage

Paradoxically, it was feudal Europe’s partial unfreedom that made it the cradle of capitalism. Unlike ancient slave economies or self-sufficient peasantries elsewhere, feudal peasants had defined duties but some autonomy and markets in which to sell goods. Over time, lords commuted labor service into money payments, spreading wage labor. Christian Europe’s institutional diversity, urban networks, and multi-state competition fostered growth that giant bureaucratic empires like China’s could not easily emulate. As sociologist Robert Brenner argued, peasants’ capacity to resist and organize against feudal lords in the West broke old systems earlier than in the East, facilitating capitalism’s birth.

In short, capitalism’s emergence required not just profit-seeking merchants but a new social order—one based on private property, legal contracts, centralized states, and “free” yet dependent wage labor. Britain happened to assemble these ingredients first, but the recipe was European in flavor and global in consequence.

Fulcher divides capitalism’s evolution into three broad eras: anarchic capitalism, managed capitalism, and remarketized (neo-liberal) capitalism. Understanding these transformations helps you recognize recurring patterns in capitalism’s rhythm—unregulated growth, crisis, and reorganization.

Anarchic Capitalism (18th–mid-19th century)

In capitalism’s breakneck youth, industrial cities grew chaotic as small workshops competed ferociously. The state largely withdrew from economic regulation, leaving workers to face brutal conditions. The laborers’ only security came from early trade unions and mutual-aid societies, many of which were crushed as “combinations.” The infamous workhouses of the 1834 Poor Law institutionalized punishment for poverty. Liberal thinkers glorified free markets while ignoring their human toll. Yet this unrestrained system also unleashed innovation, building railways, canals, and factories on unprecedented scales.

Managed Capitalism (mid-19th century–1970s)

By the late 1800s, states, corporations, and organized labor began to regulate capitalism’s excesses. Welfare reform, trade unions, and later nationalization of key industries marked this phase. Britain’s welfare state, Germany’s industrial coordination, and America’s New Deal exemplified a new mix of capitalism and state planning. During the post–World War II “golden years,” government intervention, high employment, and welfare provision tempered markets and sustained growth. Fulcher calls this incorporation: the inclusion of organized labor and social provision to stabilize capitalism.

Yet this system had limits. As international competition increased in the 1970s—with rising oil prices, inflation, and militant unions—it began to crumble. Corporatist structures couldn’t adapt to global pressures. Managed capitalism had outgrown its own safety nets.

Remarketized Capitalism (1980s onward)

The Thatcher and Reagan revolutions sought to resurrect the self-reliance of early liberalism. Privatization of public industries, deregulation, and attacks on unions rolled back the state’s economic role. Public housing was sold, health services outsourced, and markets celebrated as the ultimate judge of efficiency. Yet, as Fulcher echoes Andrew Gamble’s observation, “a free economy requires a strong state.” Rolling back welfare demanded rolling forward surveillance, law enforcement, and market regulation. Even amid talk of freedom, power concentrated in new forms—global finance, corporate conglomerates, and the managerial elite.

Remarketized capitalism expanded choice but deepened inequality and insecurity. Job precarity, debt-driven consumption, and financial crises reveal that laissez-faire never stays free for long. Each era of capitalism solves one set of problems only to generate new instabilities, preparing the ground for the next transformation.

Capitalism may seem universal, but Fulcher shows how it has developed distinct “national flavors.” By comparing Sweden’s corporatist welfare capitalism, America’s individualist capitalism, and Japan’s state-guided capitalism, he highlights that there is not one capitalism but many—and that culture and institutions profoundly shape economic life.

Sweden: Cooperation Through Conflict

Sweden’s famed labor peace arose not from harmony but from class confrontation. The devastating 1909 general strike led unions and employers to form centralized organizations capable of managing wages and labor relations nationally. The Social Democrats’ rise from the 1930s created a robust welfare state financed by high taxes. Wage solidarity compressed inequality, while bankruptcy and retraining policies maintained efficiency. But by the 1980s, globalization and internal rivalries undermined Sweden’s “third way.” Neo-liberal reforms in the 1990s privatized welfare services and cut benefits—even as Sweden retained unusually high union density and collective bargaining coverage.

The United States: Corporate Capitalism and Individualism

American capitalism reflects deep individualism and suspicion of state intervention. From early “Gilded Age” trusts to postwar corporate giants, the U.S. developed a managerial corporate capitalism rather than the European corporatist kind. Its unions—focused on contracts, not class revolution—won material gains but never political dominance. The New Deal temporarily expanded state power, introducing social security and labor rights, but postwar prosperity rested on private welfare systems run by employers. By the 1980s, neo-liberal policy, deregulation, and “shareholder value” culture shifted power back to financiers. Financial scandals like Enron and WorldCom, Fulcher notes, reflected deeper forces: the “financialization” of the American firm, where paper profits now outpace production.

Japan: The Managed Miracle

Japanese capitalism has always been guided capitalism. Since the Meiji Restoration, the state deliberately fostered industrial groups, or zaibatsu, such as Mitsubishi and Mitsui, linking finance, trade, and manufacturing. After 1945, the Ministry of Trade and Industry (MITI) became the command center of postwar growth. Long-term bank–corporate relationships, lifetime employment, and enterprise unions created stability and loyalty. However, the “bubble economy” collapse of the 1990s revealed the downside: rigidity, collusion, and deflation. Despite deregulation in finance and more precarious labor markets today, Japan remains distinctly collectivist and cautious—avoiding the financial excesses that upended the West in 2008.

Comparing these three systems reveals capitalism’s adaptability. Each faced globalization pressures; each responded differently. Sweden preserved egalitarian coordination, the U.S. embraced competitive deregulation, and Japan retained state-guided cohesion. No single model has triumphed—nor solved capitalism’s contradictions.

Fulcher dismantles the myth that globalization created something “new.” Instead, global capitalism is the revival of processes centuries old—only accelerated by modern communication and deregulated finance. The driving forces—trade, migration, capital mobility—were already in motion with the 19th-century steamship and telegraph. What has changed is the speed, scale, and dominance of capitalist logic worldwide.

Factories Without Borders

Late-20th-century globalization spread wage labor across continents. Transnational corporations multiplied from 7,000 in 1973 to 26,000 by 1993. Mexican maquiladoras and Southeast Asian contract factories absorbed millions of workers, many young women, earning a fraction of Western wages. Capital chased low labor costs while shedding unions and regulations. The Nike sweatshops of Vietnam and call centers in India symbolized a new world of “flexible labor”—mobile capital and immobile workers. The result: cheaper goods for Western consumers, declining bargaining power for Western workers, and uneven development across the developing world.

The Rise of Global Finance

Modern globalization is as much about finance as factories. Once exchange rates were floated in the 1970s, currencies became tradable commodities. By 2011, daily global currency turnover exceeded $5 trillion. As sociologist Manuel Castells remarked, “capital’s real home is cyberspace.” London’s “Big Bang” deregulation of 1987 and Wall Street’s ascendance turned finance into capitalism’s gravitational center. The globalization of money eclipsed the globalization of production, introducing wild instability—as crises from Asia (1997) to Wall Street (2008) showed.

Uneven Globalization

Despite talk of global integration, Fulcher notes that most investment still flows among rich nations. Half of all foreign investment circulates within the developed world; Africa receives less than 3%. The supposed “flattening” world remains steeply hierarchical. Even capital’s institutions push homogeneity in rhetoric but inequality in results. When the IMF and World Bank imposed market reforms on indebted nations in the 1980s and 1990s—advocating austerity, privatization, and liberalization—the results were often social fragmentation and poverty, not prosperity. Economist Joseph Stiglitz later blasted these “shock therapies,” comparing Russia’s 1990s plunge into chaos with China’s gradual reforms that lifted millions.

For Fulcher, global capitalism’s spread has been real but lopsided—a network of many capitals, not one world market. National states remain central, even as corporations operate transnationally. Globalization has amplified capitalism’s contradictions: mobility without equality, interconnectedness without integration.

If capitalism thrives on constant growth, what happens when growth falters? Fulcher argues that crises aren’t aberrations—they’re capitalism’s natural heartbeat. From the 17th-century tulip bubble to the 2008 global crash, booms and busts have been the inevitable outcomes of speculation, overproduction, and debt.

From Tulips to Factories

The tulip mania of 1636–37 in Holland, when prices for flower bulbs soared above houses’ worth and then collapsed, became the first recorded speculative bubble. Fulcher recounts how ordinary craftsmen wagered their livelihoods on promissory notes for future tulips, until the market collapsed overnight. The episode showed capitalism’s timeless traits—irrational optimism, easy credit, and the delusion that prices only rise.

In the 19th century, industrial capitalism introduced a new crisis engine: overproduction. Factories produced more goods than workers could afford to buy, sparking cycles of collapse and recovery every decade. Karl Marx saw this not as failure but as capitalism’s self-purging mechanism—crises destroyed weak firms, devalued assets, and paved the way for renewed expansion. Yet they also entrenched inequality and social misery.

The Great Depression and Beyond

Capitalism’s first nearly fatal crisis, the 1930s Great Depression, wiped out 80% of U.S. stock value and produced mass unemployment worldwide. Fulcher identifies three triggers: weak global demand, an unbalanced world division of labor (industrial vs. primary producers), and protectionism that strangled trade. Keynesian economic theory—state spending to boost demand—emerged as capitalism’s rescue formula. Postwar welfare and Keynesian policies then sustained a long boom, until the oil shocks and inflation of the 1970s reignited instability.

The Great Recession and the Future

The 2007–08 crisis, Fulcher explains, stemmed from debt-driven growth and financial engineering. The U.S. “subprime” mortgage bubble and the collapse of Lehman Brothers spread panic through a globalized credit web. Governments rescued banks, nationalizing losses but socializing austerity. Quantitative easing revived markets but inflated new asset bubbles; debts rose rather than shrank. Fulcher cites economist Michael Hudson’s warning that today’s capitalism is dominated by “balance-sheet wealth”—profits through lending, not production—and risks sinking into perpetual debt deflation.

For Fulcher, crises expose capitalism’s paradox: its capacity to rebound through innovation and its tendency to erode its own foundations. Environmental degradation, income inequality, and over-financialization threaten long-term viability. Yet history shows capitalism rarely dies from crisis—it mutates. As Immanuel Wallerstein and Michael Mann argue, the future may belong not to one capitalism but to many, shifting eastward as Western systems stagnate. In this sense, capitalism’s greatest weakness—its instability—is also its secret strength.