III
THE FRENCH WORD capitalisme first began to be used in the third decade of the nineteenth century. At that time, its use was redolent of the eighteenth century and the more obviously personal noun, capitaliste, that began to appear, mainly after the War of the Austrian Succession of 1740–48, in French discussions of war and debt to refer to someone who supplied one or other of the branches of the French royal government with the capital they needed to fund the costs of war.1 In this earlier usage, a capitalist was a person, while in later usage capitalism was a system. Initially, in the early nineteenth century, the overlap between the two terms was considerable. Among the commentators of this period was a once well-known journalist named Emile Morice, who had made his name by publicising the Parisian underworld characters of Vautrin and Vidocq now usually associated with the novels of Balzac, but who in this context was also the author of an essay on Holland and Belgium published in 1834 soon after Belgium established its independence from Holland. The relationship between the two countries, Morice wrote, was something like a duel, but not a real, weapons-based duel, because diplomacy would not allow it. It was instead “a commercial, economic, and fiscal duel” in which, unless something unforeseen occurred, victory would go to the “biggest bags of money” rather than, as Prussia’s most famous eighteenth-century monarch, Frederick II, had once said, to “the biggest battalions.” It was true, Morice continued, “that Holland can no longer count, as it could in the days of Jan de Witt, on a 10,000 strong fleet and 150,000 sailors, but it still disposes of a power of which Great Britain once had the monopoly. That power is capitalism and this is how this power was conquered”:
In the age of its greatest prosperity, Holland not only took hold of the monopoly of the seas and of trade, but amidst all its wealth, it also contracted habits of order and parsimony that were to endow it one day with immense resources. Trade enriched all the classes of the nation; they all accumulated capital and, soon, having been the intermediary between Europe and distant lands, the Dutch became Europe’s banker. No power failed to have recourse to its bourse and the dealers (négociants) of Amsterdam became the money suppliers and money managers (argentiers) of every sovereign.2
This transformation of traders into financiers, Morice explained, began to happen in the eighteenth century when the combination of growing reserves of capital and rising levels of taxation encouraged Dutch capitalists to look for more profitable investments abroad. By 1815 and the end of the Napoleonic Wars, the process had grown so much in scale and scope that the immense expenditure generated by more than two decades of global conflict gave rise to a worldwide credit squeeze that pushed up interest rates and revived the value of large quantities of discredited paper left over from earlier state issuance. Holland, with its huge capital reserves, was one of the beneficiaries of the resulting redistribution of financial resources, and, Morice wrote, although Belgium had established its nominal independence, it was easy to see that it would not be able to escape its real dependence on Dutch financial power.3
Belgium’s limited prospects, Morice explained, were an effect of both the makeup of its own economy and the structure and composition of the other economies with which it could be expected to trade. Belgian textiles, for example, were certainly of as good a quality as those produced in Britain, but they were not as cheap. This meant that Belgian producers would not be able to export to the growing market in the United States unless the Americans were to give them a preferential tariff, which, however, would come at the price of making British textiles unavailable in the United States. This was very unlikely. France on the other hand could offer only competition, not outlets, because French textiles were used to offset domestic trade imbalances between the wine-producing French South and the wine-consuming French North and, in these circumstances, imported Belgian textiles could not be allowed to disrupt this function. A scenario involving French imports of Belgian textiles in return for French exports of French wine was, therefore, as unlikely as a Belgian export surge to America. Further north, the creation of the Prussian Zollverein was likely to be more a threat than an opportunity to the Belgian economy because it would block exports of Belgian coal but would also enhance the viability and productivity of the many centres of textile production situated within the German confederation. Prussian living standards and labour costs were, in particular, much lower than those in Belgium, which meant that competitive exports from Belgium to Prussia would be viable only under the conditions of a highly implausible fall in Belgian living standards and wage costs.
Matters were complicated further by the legal, financial, and political ramifications of Belgium’s secession from Holland. In this context, what has come to be called Brexit was preceded by Belgxit. As Morice pointed out, Belgium’s new sovereign status raised a question not only about how much of the earlier single Belgian-Dutch state’s holdings in external sovereign debt the new Belgian state was entitled to own, but also about whether Holland might be expected to get compensation—and if so, how much—for the loss of part of its capital-generated income stream. As with the subject of trade, Belgium’s own room for manoeuvre was limited. It was not rich enough to afford the claims upon its tax revenue, and the broader industrial and agricultural sectors on which that revenue was based, to be able to compensate Holland without adversely affecting its own economy. Nor was there any prospect of help from the outside because, Morice claimed, neither Britain nor France would be willing to take over part or all of the Belgian debt. In addition, but from a different standpoint, neither Holland nor the German confederation would be willing to allow Belgium to have access to the benefits of a single market. Dutch canals and German rivers would now be only as accessible to Belgian merchants and shippers as they were to any other inhabitant of a foreign power. Uncertainty over the status of the Belgian public debt and the end of the single Belgian-Dutch common market would usher in a new age of tariffs and tolls, just at a time when the constitution of the new Belgian government was poised indecisively between a republic and a monarchy.4 To Morice, the point of the analysis was self-evident. The Dutch government simply had to wait. Belgian independence would slowly give way to Belgian dependence. There was no need, as some feared, for the Dutch government to think about war to bring Belgium back under its control.
The concept of capitalism that Morice used in the early 1830s was clearly quite similar to many later versions of the concept. It drew attention to commercial competition and to the inequality and dependency that it brought in its wake. But it was also different from later usage in at least two significant respects. The first was the centrality of public debt and the part played by capitalists and the state in giving capitalism both its name and its nature. In contrast to later Marxist versions of the concept of capitalism, it was not so much the state that was the organised form of capitalist development as it was capital that was the organised form of the state’s development, powered initially, and notably, by its military and naval development. In this early version of the causal relationship between capitalism and the state, the state came first, because it was the state’s debt that formed the core of capitalism. Although there were several well-established eighteenth-century synonyms for the concept of capital, such as a stock, a fund, an undertaking, or an enterprise, indicating, contrary to an old claim found in histories of economic thought written by economists, that the concept of capital did not have to wait for Adam Smith or Turgot to be discovered, a capitalist, especially in eighteenth-century French usage, was simply someone who invested in royal and public debt. This has a bearing on the second aspect of the concept of capitalism that Morice used. In his version of the concept, the emphasis fell firmly on international, rather than national, trade and industry as something simultaneously limiting the room for manoeuvre of any single state but magnifying relationships of subordination and dependency between states. Economics, in short, imposed limits on politics. The two points are worth stressing because together they indicate something significant in the odd mixture of continuity and discontinuity underlying both the name and the concept of capitalism. Although it was called capitalism, it had, as Morice indicated, more than a little to do with the state. But, despite this, it was still called capitalism and not, for example, statism, even if the much later concept of state capitalism has allowed the capitalist noun and the state-oriented adjective to coexist. The semantic relationship between capitalism and public debt also has a more substantive and durable significance. This is because it makes it possible to see more of a connection between capitalism and the related concepts of negative and positive liberty and the liberty of the ancients and the moderns than the truncated modern concept of capitalism has been able to supply.