Capitalism’s Lifeblood

Yale sociologist E. Wight Bakke spent the 1930s interviewing unemployed New Haveners. Expecting to find politicized anger, he was puzzled by the “damper on radical tendencies” he discovered. After scores of interviews, Bakke determined that workers lived in “a culture whose beneficial aspects apparently are dependent upon capitalistic arrangements.” As he put it, “workers have a vague feeling that ‘it all hangs together.” “Those who wonder at the inertia (or patience, according to the point of view) of the working class and their lack of revolutionary fervor,” Bakke concluded, “forget how thoroughly all the foundation stones of the worker’s life are held together by capitalistic mortar.”¹

Essential components of that mortar—credit and life insurance—are the subjects of two recent works of business history, each of which foreground profoundly moral or ethical questions posed by economic life within democratic capitalism. Dan Bouk’s How Our Days Became Numbered is a fascinating account of how life insurers created statistical systems that measured the value of human life. As they sought to translate lives into abstracted “risks,” statisticians confronted and recast thorny issues of race, gender, class, and body type. In Rowena Olegario’s The Engine of Enterprise, we follow the development of U.S. systems of credit from the founding through 2008, engaging questions of creditworthiness, predation, and surveillance. Each author traces processes by which market dealings moved from the scale of face-to-face transactions—such as personal lending or fraternal associations offering funeral benefits—and became routinized, statistically abstracted, and nationalized. In the process, insurance and credit emerged as interlocking financial systems that expanded and limited opportunity while also disciplining Americans to ever-more abstract market logics. Amidst a bumper crop of new work considering such “capitalistic mortar,” business historians and historians of capitalism are extending the “financialization” of American life further into the past.² The best are offering rich new context that helps explain some of the reasons that, in the midst of the economic and social depredations of the Great Depression, for instance, workers somehow expressed faith that the system yet “hangs together.”

Bouk and Olegario each owe conceptual debts to pathbreaking studies of capitalism that built economic and social histories around particular commodities or processes of abstraction; Sven Beckert’s recent work on cotton, William Cronon’s explication of commodities futures trading, and Sidney Mintz’s pioneering work on sugar all come to mind.³ By zeroing in on particular loci of market activity, these authors offered penetrating insights into social systems, regimes of racial exclusion, labor markets, political orders, and global flows of capital, labor, and calories.

Olegario builds her narrative around credit, an instrument of economic transaction both ubiquitous and constantly in motion. Rather than buoy her narrative around key actors or institutions, Olegario makes credit itself her central actor. This is no easy task, and The Engine of Enterprise’s wide-ranging ambitions are admirable. Olegario’s point of departure is Alexander Hamilton’s famous conception of credit as “the invigorating principle.” Credit, Hamilton argued (and Olegario agrees), was a productive and progressive “substitute for capital”—“mercantile and public, foreign and domestic”—and became the essential ingredient in the country’s “mature growth” (p. 3). Olegario’s introduction offers an overview of a range of thinkers who called for the extension of credit on the basis of “character” rather than merely collateral. From Hamilton and Benjamin Franklin, she visits Daniel Defoe, then springs centuries forward to Joseph Schumpeter before moving back a century to the Whig economist Henry C. Carey. We then head back across the Atlantic to John Stuart Mill, who called for improving public education and laws to cultivate “personal character” to ensure “a sufficient guarantee” for lending (p. 8). Despite the flow of these ideas within the broader Atlantic world, and...