New History of Capitalism meets the History of Economic Thought

Jonathan Levy has a paper forthcoming in Business History Review, “Capital as Process and the History of Capitalism.” If you have access to the journal it is available on First View. He attempts to develop a definition of capital that is useful for the study of capitalism. I should be grading papers right now so I will make this quick.

Unfortunately, it bears many of the hallmarks of some of the most celebrated work in the new history of capitalism.

1. Misunderstanding basic economics: Here for, for instance, is his description of the problems associated with thinking of capital as a produced means of production

And yet, because it equates capital with a produced physical factor of production, the materialist conception is a highly restrictive definition of capital. For the writing of history, there are chiefly three almost natural consequences of the materialist restriction. First, because of its emphasis on a produced factor of physical production, capital becomes almost synonymous with industrial machinery and equipment. Second, likewise the materialist capital concept abstracts from money—treating monetary and financial dynamics as extrinsic to both capital and the “real economy” in general. Third, for reasons to be explained later, the materialist capital concept is a temporally static concept. Thus, in addition to money it also abstracts from historical time—or at least, in pursuit of analytical clarity, it abstracts from the many eventful historical processes that are extrinsic from the point of view of the physical characteristics of the masses of objects that materialists define as capital.

Reference to a principles of economics textbook would have made clear that capital is not synonymous with industrial machinery and equipment.

2. Use of sources that can at best be described as sloppy. I have been interested in Veblen since I was an undergraduate. Levy seems interested in Veblen as well. When I checked the places where Levy specifically quotes Veblen this is what I found. Levy is in bold  

“At the most abstract level, capital, in this line of thought, is what Thorstein Veblen once called a “pecuniary magnet.”^{11 (Levy page 5)}

^“11 Thorstein B. Veblen, “On the Nature of Capital II: Investment, Intangible Assets, and the

Pecuniary Magnate,” Quarterly Journal of Economics 23, no. 1 (1908): 104–36.”

One might think that Veblen used the phrase “pecuniary magnet” in this paper. He did not. He did use the phrase “pecuniary magnate.” But a magnate is not a magnet. Veblen is referring to people, “captains of industry,” not capital. If Veblen ever referred to capital as a pecuniary magnet it was not in the cited paper.

Oddly enough, Berch Berberoglu made this same mistake earlier this year. Since neither references the other one has to conclude that they made the mistake independently.

“By becoming the exclusive legal owners of capitalized goods, capitalists over time had politically and legally “cornered” the market in immaterial “technological expedients.”⁴²” (Levy page 14)

“⁴² Thorstein B. Veblen, “Fisher’s Capital and Income,” Political Science Quarterly 23, no. 1 (1908): 117.”

Again, one might think that the quoted phrases appear on page 117; they do not. Like “pecuniary magnet” they do not appear anywhere in the paper.

 “Addressing culture, Veblen argued that capital was merely one economic “method of

doing things” in the world among others.⁴⁴” (Levy page 14)

“⁴⁴ Thorstein B. Veblen, “Why Is Economics Not an Evolutionary Science?” Quarterly Journal of Economics 12, no. 4 (1898): 389.”

Levy is at least in the ballpark this time. Veblen uses the phrase “methods of doing things.” He does not, however, use it on page 389. Page 389 is devoted to his critique of the hedonistic conception of man, not an argument that capital was merely one economic method of doing things.

“If capital has no fixed, authentic value, the question becomes, as Veblen put it, “Whose imputation of value is to be accepted?”⁷¹ (Levy page 20)

“⁷¹ Veblen, “Fisher’s Capital and Income,” 120.”

This time Levy almost nailed it. The quote is in the paper, and he only missed the citation by 5 pages; its on page 125.

At what point does putting quotation marks around things that were not a actually said by the person they are attributed to become a problem in historical scholarship.