Policy Tensor

The Balance of Naval Power

In Realism on October 21, 2014 at 8:34 am

If you aren’t new to these pages you probably already appreciate the centrality of naval power in the policy tensor’s framework for understanding world affairs. The primacy of naval power is due to the fact that the world is made up of large landmasses separated by large bodies of water, so that the plumbing of global capitalism is necessarily maritime. Whereas the ‘global balance of power’ is determined regionally by land-based military power, the maritime realm is a natural monopoly. It is this latter fact that centers the international system. Merchant oligarchs flock to the dominant maritime state for protection. It is the job of the “central government” to undertake system-wide tasks, organize politico-military action at the global level, and ensure the smooth functioning of global capitalism.

The maritime realm is a natural monopoly for two reasons. First, the existence of natural control points allows the dominant state that garrisons them to bottle-up rival navies, deny rivals access to world markets, and monopolize intercontinental politico-military interactions. This is especially important in peacetime, when the field-guns on land are largely silent. There is a reason why international coercion is called ‘gunship diplomacy.’ Basically, the army is a very blunt instrument of power. It is maritime power that is the instrument best suited for international coercion. Second, Mahan was right all along in arguing that contests for naval supremacy are settled by decisions reached in great battles between the major battle fleets of opposing navies. The balance of naval power is determined by the most formidable ships of the contestants. The side fielding superior firepower prevails almost surely because there is nowhere to hide at sea. Like squash, small differences in capabilities yield largely one-sided decisions. Moreover, naval battles are short affairs. In 1904, the Japanese fleet sunk the entire Russian fleet in a single day’s action. In World War I, Germany’s “risk fleet” remained bottled-up in the North Sea for the entire duration of the war. The only major naval engagement of the war—the Battle of Jutland—failed to yield a conclusive decision; proving to be a major disappointment to British Admirals who were fully expecting to crush the German fleet there and then. Similarly, the war in the Pacific was decided largely at Midway when the Americans sunk four Japanese aircraft carriers.

The balance of naval power, then, is a question of the relative strengths of the major battle-fleets of the adversaries. And the strength of a state’s fleet is determined overwhelmingly by the number of capital ships it can field. Capital ships are those warships that can put up a fight against the most formidable ships of the time. As usual, this is largely a question of firepower and armor. In the two-and-a-half millennia preceding the advent of ocean-going sailing ships, the galley was the only game in town. The Phoenicians, the Carthaginians, the Athenians, the Persians, the Romans, the Ottomans, and the Venetians imposed navel hegemony in the Mediterranean Sea by means of fighting ships powered by human muscle. The tactic was always the same: sink the adversary’s vessel by ramming it from the side, and/or “parallel park” next to the adversary’s vessel and board it to settle the contest by sword, spear, and/or firearms. Even after the arrival of gunpowder, the tactics changed only marginally. Hardly any ships were sunk by broadsides from galleys until the late fifteenth century. That is to say, the beginning of the long sixteenth century (1450-1650).

The simultaneous emergence of sail and sea-borne artillery changed the nature of the game for good. The King of Portugal (unlike elsewhere in Europe, private merchants hardly played any role) began exploring the Atlantic seaboard off Africa early in the fifteenth century. The Portuguese navy pioneered cannon bearing ocean-going ships powered by sail. Innovations in navigation (the astrolabe, marine cartography), sailing (multi-mast ships and multiple sails per masts), and gunnery (lighter and safer bronze artillery) coupled with an intense desire to seek an alternative route to the Indies propelled the Portuguese sailors further and further south along the long African coast. They rediscovered the southern route to the Indies in 1488. Soon after, they replicated the 2000-year-old Phoenician feat of circumnavigating Africa. By the close of the century, the Portuguese had a formidable ocean-going navy that had no counterpart in the world. The 100-ton caravels that were used in the initial explorations gave way to the 500-ton carracks, which in turn gave way to huge naus, “the Great Ships” sometimes displacing a thousand tons, and finally, the galleons.

The nau, while it was equipped with guns, was primarily a cargo ship; while the galleon—with its superior speed, firepower, and maneuverability—was a true capital ship (even though it too carried cargo). In some sense, the Age of Sail (1490-1860) is synonymous with the galleon—the beautiful design was to dominate the oceans for three centuries. But it was the Great Ships that led the way in the Age of Exploration. The Portuguese set up many factories in India where most of the Great Ships that were used in the Indian Ocean were made. The decisive naval battle that marks the modern era apart took place at Diu in 1509. A small Portuguese fleet of just nine Great Ships obliterated the joint fleet of the Mumlûk Sultanate of Egypt and the Sultan of Gujarat which sported a hundred dhows (a generic name for the small sailboats that were a staple of the Indian Ocean trade; many can still be seen plying the routes today). The latter had the support of the Venetians and the Ottomans whose joint stranglehold of the pepper trade the Portuguese had sought to break. Already by this point though, even the formidable Venetian fleet in the Eastern Mediterranean was absolutely uncompetitive against the Portuguese warships. Luckily for the Venetians, the Portuguese never ventured up past the Red Sea.

What came next was not a radical new ship design; it was a conceptual innovation. By the late sixteenth century, the Spanish, the English, the French, and the Dutch had all acquired armed sailing ships. These were overwhelmingly private. No one other than the Portuguese had a state navy worth speaking of. For instance, the “invincible armada” sent by the King of Spain to invade England that met its fate at the hands of the Anglo-Dutch fleet in 1588 was mostly made up of leased private ships. Even the Dutch, who prevailed against the might of Spain and emerged supreme in 1609, were barely organized. Naval battles were still mêlées—with individual ships firing and maneuvering at will with no order of battle; fighting in whatever arrangement they found themselves in. The potential firepower of sea borne artillery was finally unlocked during the Anglo-Dutch naval wars (1654-1656, 1665-1667, 1672-1674), when both sides increasingly followed the ‘line of battle’ with heavily armed gunships arranged in one file to allow the full fury of their artillery to be brought to bear on the adversary. Specifically, it was the second Anglo-Dutch war (wherein the Dutch prevailed handsomely over their inferiors) that marks the final victory of this concept. During the first war, it was used inconsistently and mostly by England. This was one reason why the English “won”; the other being the actual existence of a “national” navy. During the third war—the one where the Dutch took on the combined might of England and France—the Dutch navy itself remained grounded.


The ‘ships of the line’ were to remain the capital ships until the arrival of steam power and armor on the high seas in the mid-nineteenth century (reigning from 1660-1860). While the Dutch may have adopted ships of the line at the end of their reign at the summit of world affairs, it was England that really mastered the technique. The Royal Navy had emerged as a formidable force during the English Civil War (ironically, siding with Parliament). By mid-century, it had become an effective instrument of national policy. The fight against the Dutch had led to a series of institutional innovations such as the “Fighting Instructions” and a permanent staff. By the end of the War of Spanish Succession in 1715, England emerged with a preponderance in naval power. The Royal navy commanded 124 ships of the line; more than all the other powers combined. Of course, capabilities alone aren’t sufficient. It took nearly another half-century for England to secure control of the world’s sea lanes. It was only at the end of the Seven Years’ War (1756-1763), that the question of who will succeed the Dutch was finally settled. Even though England lost the War of the American Revolution (1775-1783), she maintained a firm grip on the maritime realm. The wars of the French Revolution (1792-1802) and the Wars of Napoleon (1803-1815) only confirmed what was already clear: no one could challenge the Albion at sea.

The ships of the line were dethroned with the arrival of the ironclads in 1858-1860. Armored and powered by steam, the ironclads almost immediately made sailing ships—that had dominated the high seas since at least 1490—obsolete. It was not that the ironclads were per se superior to the sailing warships. It was the advent of the exploding shell that made wooden hulls simply uncompetitive. More generally, the industrial revolution had changed the naval game permanently: from now on, the balance of naval power came to depend on industrial strength. The ironclad era (1860-1910) was one of constant innovation. As the century matured, the armor became thicker, the displacement larger, and the guns bigger and more numerous. Capital ships became more and more expensive. British naval mastery for the rest of the century rested on the firm foundations of her industrial strength, her unrivaled financial resources, and a virtual monopoly of stoking coal. By the close of the century however, seemingly out of nowhere, naval competitors of an entirely new magnitude had arrived on the world stage.

Germany, Japan, and the United States embarked on naval expansions at the turn of the century, following on the heels of France and Russia. The story is an old one on these pages by now, but these developments forced Britain’s hand in two ways. First, she realized that competing with the American Republic was the surest path to financial ruin, and therefore decided to surrender naval mastery in the Western Hemisphere (1901). Likewise, the naval expansion of the continental powers (France, Russia, and Germany) forced her to forge an alliance with Japan (1902); whereby she effectively ceded Asian waters to Japan. Second, the Royal Navy, under the far-sighted stewardship of the First Sea Lord, Sir Admiral Fisher, decided to raise the stakes. Fisher decided on the production of new capital ships of almost imponderable power. The HMS Dreadnaught, commissioned in 1906, was not simply an ironclad. It was such a decisive break that earlier designs are now referred to as pre-Dreadnaughts. The HMS Dreadnaught featured steam turbine propulsion; 11-inch Krupp cemented armor (German, obviously); 12-inch guns that delivered hitherto unheard of firepower; an unprecedented speed of 21 knots; and a displacement of 20,000 tons. No other warship in any fleet could even begin to compete with the Dreadnaughts (the name immediately given to warships in the same class as the HMS Dreadnaught). The Americans, the Japanese, the Germans, the French, the Russians, and the Italians, as indeed the British themselves, all suffered a massive capital loss as their standing fleets became irrevocably redundant.

Copyright HMS Excellent / Supplied by The Public Catalogue Foundation

There being no choice, the other powers tried to catch up as soon as possible. The newer, richer arrivals—the Germans, the Japanese, and the Americans—were somewhat quicker to catch up. However, the British went into World War I with a formidable lead in capital ships—by 1910, only Dreadnaughts counted in the balance of naval power. In the aftermath of World War I, the victorious allies agreed to a strategic arms limitation with the Washington Treaty of 1922, that put a moratorium on the construction of more capital ships and limited their ratio to 5:5:3 between the United States, Great Britain, and Japan. The treaty was renewed in 1930, and again in 1934, despite Japanese protests. In 1935, Japan simply walked out and launched a major naval armament program. Around the same time, Germany decided to build powerful battleships (including the Bismarck, the most powerful battleship ever built) and a fleet of submarines.

But at the beginning of World War II, the Dreadnaught era (1910-1940) had already come to an end. As usual, previous technology was no longer militarily competitive. Once the aircraft carrier had arrived, flying artillery made warships obsolete. The guns on the battleships couldn’t move fast enough to target the aircraft, while the ships themselves were sitting ducks to the flying cannons. Capital ships were now aircraft carriers. The era of the aircraft carrier was suitably inaugurated on the day that still somehow manages to live “in infamy.” The spectacularly successful attack on the American fleet at Pearl Harbor was, in fact, a blessing in disguise. For the attack largely destroyed America’s fleet of obsolete battleships, allowing her to forge a brand new fleet of aircraft carriers ex nihilo. The Pacific War was decided in the air over Midway. The balance of naval power had become the balance of air-sea power.

USS George HW Bush

Submarines had played a secondary role in the world wars: they were deployed to harass commercial traffic, never to contest command of the seas. Ironically, their most significant contribution was to draw America into the war. During the Cold War, they became the primary carrier of the superpowers’ nuclear deterrent. By the 1970s, the majority of intercontinental ballistic missiles tipped with nuclear warheads were sea based. The inherent stealth of the nuclear-powered submarines, and their unlimited range (restricted only by the need to replenish the crew’s food supply), made them much more suited for ensuring a second-strike capability than land based silos. The United States relied on its fleet of nuclear submarines even more than the Soviet Union.

With the collapse of the Soviet Union and the dawn of the unipolar world, the United States has enhanced its power projection capability both on the high seas and from the high seas. The ability to strike targets far inland from sea borne platforms has increased steadily with the range and striking power of modern aircraft and missiles. The Nimitz class nuclear-powered aircraft carriers are the most formidable instruments of power projection ever made. But the spread of long-range precision strike weaponry is already beginning to undermine the supremacy of the aircraft carriers. To put it simply, hypersonic cruise missiles tipped with tactical nuclear devices can take out any aircraft carrier within a thousand nautical miles (the missile needs to be hypersonic to avoid getting shot down by theater missile defenses such as the Israel’s Iron Dome). Even with a conventional warhead, a long range anti-ship cruise missile can down even the biggest ships with high probability. Indeed, the United States Navy is itself developing such a weapon.

And the problem is only going to get worse from here on. There is nothing very complicated about long-range precision strike; certainly nothing that cannot be mastered by the Chinese in a couple of decades. It is hard to see how aircraft carriers can maintain their capital ship status for very long at all. Basically, the aircraft carriers are floating dinosaurs. They will be relegated to secondary theaters (where no advanced adversary can threaten them) even before the missiles start to fly. But this does not mean that America’s naval primacy is at an end. Not even the close. The United States has a very neat trick up its sleeve. What the Americans have quietly (so quiet that even someone as obsessed as me didn’t realize it until recently) decided is to bet on a new Virginia Class of nuclear-powered fast-attack submarines armed to the teeth with advanced cruise missiles that can take out other submarines, surface ships, aircraft, and targets deep inside the adversary’s mainland. These boats (submarines are called boats) can operate both in littoral waters near an adversary’s coastline and in the deep ocean. They are the quietest and stealthiest submarines ever built. Equipped with life-of-the-ship reactor core—no refueling needed for thirty years—they have unparalleled endurance and unlimited range. They have the most sophisticated array of sonar and eavesdropping sensors and even a lock-out chamber for inserting special operators ashore.


The Virginia class is America’s answer the proliferation of long-range precision strike weapons to what the Pentagon calls America’s “near peers” (Russia and China). It is the new capital ship of the twenty-first century. The US navy plans to build at least fifty of these stealthy attack platforms. This would certainly go a long way towards solving the dilemma posed by China’s growing anti-access, area-denial capabilities in waters close to the Chinese mainland. The enthusiasm for these plans is very high in the beltway. These developments pose a very tricky problem however. America’s adversaries are likely to develop capabilities to try to counter these attack platforms. They will certainly invest in surveillance and detection capabilities, and develop specialized submarine hunters (perhaps suicidal unmanned underwater vehicles). Since America’s nuclear deterrent is also carried by nuclear-powered submarines, the adversary will have no way of distinguishing between the two. What looks like a theater operation in a limited conflict to the adversary will appear as a counter-force strike to the Americans (that is, a strike against their nuclear deterrent). The indistinguishably of the two platforms therefore undermines crisis stability (whether or not a crisis leads to an escalation to the highest level), thereby significantly increasing the likelihood of inadvertent global thermonuclear war.

The Problem with Islam

In Thinking on October 10, 2014 at 5:22 pm


Bill Maher’s recent description of Islam as “the mother lode of bad ideas” predictably generated an endless fusillade of denunciations by patronizing liberals defending the right of Muslims to believe in—what said liberals agree—is utter nonsense. Let me be candid about my position: You can believe in the spaghetti monster all you like, do not ask me to respect that belief. If you are a sane adult, I will defend your right to speak your mind. But I will hold you accountable for the positions you espouse. Do not ask me to treat your beliefs with kid gloves, just because they are religious. Why should religion be treated differently from other forms of irrationality? Liberals’ insistence on “respect” for religion is motivated by fear of backlash (there are 1.6 billion Muslims in the world). This is unfortunate. For if the West has anything to teach to the world, it is that it is necessary to fight your own demons. Put simply, religion is only acceptable in polite society if it adherents do not take it seriously. Or if they do, they keep it to themselves and do not bother us with it. Anyone serious enough about their religion is a drag. In a truly cosmopolitan place, religious people hide their convictions for fear of ridicule. In New York, bibles disappear faster than southern accents.

The problem with religion in general is straightforward. It is flat-out wrong. It is wrong for the obvious reason that it was concocted by people who knew next to nothing about the world, about the cosmos, and about nature. We have learned a great deal about the universe since the seventh century. And this advance was only possible because valiant Europeans challenged religious dogma and took on the Church. The war against religion was the decisive turning point in the rise of the West. The reason why Christians are less threatening than Muslims today is that they have been defeated and marginalized. It is the powerlessness of Christianity in the West that makes it more palatable. Imagine a truly evangelical US state bent on imposing the faith on American society and the world at large. The ‘problem with Islam’ pales by comparison. The Islamic world never had a reckoning with religion. Muslims never fought for their emancipation from dogma. This is the root of the problem.

In Islam, there is no separation of Church and State: the fusion of political and spiritual is total. Unlike Christianity, which was born outside power and remained underground for centuries, Islam was born fighting. Mohammad and his followers immediately set about taking over the Arabian Peninsula. Under the first four caliphs (632-661), it is most accurately described as a “Jihad-State” that expanded at an alarming rate, subjugating most of the Middle East in a single generation. From the get-go then, unlike other traditions the military-political aspect was not peripheral to Islam; it was absolutely central. For a true Muslim, jihad is not optional: it is obligatory to physically fight for the faith. There are Muslims who claim that jihad refers to ‘personal struggle for improvement’ akin to the German Bildung. It is true that the word is used with two different meanings in the Koran, but it is the military one that is overwhelmingly dominant. Indeed, there is no ambiguity about it at all. There should therefore be no surprise that the establishment of the Islamic State in the twenty-first century is energizing Muslims everywhere.

The Islamic world’s brilliant cultural achievements were manifold. The great flourishing of Islamic culture—in Cordoba, in Baghdad, in Damascus, in Delhi—was everywhere, without exception, an achievement that involved a relaxing of Islamic principles. All the great builders and patrons among the Mughals, for instance, were all bad Muslims. Akbar, the greatest of them all, went so far as to renounce the faith. The most pious, Aurangzeb, was uniformly hated in his time and all the way down to the present day. His insistence on an austere version of Islam was quite a drag for the court and for his poor subjects. He was the party pooper par excellence.

The second great problem with the Islamic world is the unfortunate fact that the most unimaginative, austere version of Islam flourished in the place with all the oil. For it was not until the seventies when the oil bonanza unfolded in the gulf, that salafi ideology became a formidable force. This was enabled in no small part by Arabia’s central position in the Islamic imaginary. The flow of petrodollars allowed the Saudis to propagate salafi ideology from Morocco to the Philippines. Under the patronage of the Saudis, this viciously literal interpretation has become the hegemonic interpretation of Islam in the world. I mean that in a very precise sense: even those who are too lazy to follow it agree that it is more ideal. That this is the ideology espoused by al Qa’ida and the Islamic State is no coincidence. I got a taste of this myself when my pious grandmother changed her goodbye from “Khuda hafez” (a Persian import) to “Allah hafez” (Arabic version, both equivalent to “may God be with you”): the only name allowed for God being Allah, per salafi principles.

The defenders of the open society must remain eternally vigilant against the intrusion of religion in the public sphere. In particular, we have to carefully watch political actors who are routinely tempted to exploit religious identities to rally the public. In the 1940s, Jinnah, otherwise a brilliant atheist, succumbed to the temptation of calling for an independent state for Indian Muslims, who he (wrongly) reckoned would otherwise live under perpetual Brahmin hegemony (the Congress had dismissed the idea of a unity government with the Muslim League after the British exit). His dream for a secular home for Indian Muslims turned into an endless nightmare as leader after leader exploited Islam to secure obedience to the garrison state. Pakistan never really recovered. How could it? It was genetically flawed: Islam was built into the identity of the state.

Liberals do a disfavor to Muslims by holding their horses. They need to be more forthcoming in their criticism. Specifically, it needs to be repeated ad nauseam that there is no space for religion in public life. But in the larger scheme of things, it doesn’t matter what talking heads in America have to say about Islam. The Islamic world will have to fight its own demons.

Braudel’s Vengeance

In Capitalism on September 26, 2014 at 2:24 am


In part I, we saw how for Wood and Brenner the defining characteristic of capitalist society, the one that sets entirely novel “laws of motion” into play, is market-dependence. Following Chomsky, I rather prefer the term ‘market discipline’—the dependence on the market for their very survival means that everybody has to obey market imperatives. In capitalism, it is market discipline that replaces “extra-economic” forms of coercion that characterize surplus extraction in non-capitalist societies. Market competition generates remorselessly rising productivity. But markets have always existed, as did the drive for profits. What is new in “true capitalism,” pace Wood, is that producers do not have non-market access to the means of production and subsistence. It is competition for access to the means of production (land, labor, and capital) and subsistence (food and shelter), that gives the market its bite. That is, it is the market for the factors of production and life’s necessities that turns market competition into market discipline. I submit that what Wood and Brenner are describing—“true capitalism”— is not capitalism but market society. I am, of course, borrowing Karl Polanyi’s famous phrase. In The Great Transformation, Polanyi goes at great lengths to emphasize the role played by the state in coercing society to accept market discipline. The divorce between politics and economics that Wood makes so much of, never happened. But I digress.

Capitalism does not equal ‘market society’ for the simple reason that capital has been in the saddle far, far longer than market society has been in existence. Capitalism is not merely an economic system; for were it to be so, there would be no need for a new word, we might as well refer to it as the “free-market.” No, the element of domination simply cannot be taken out of capitalism. The history of capitalism is not merely an economic history. When I speak of the history of capitalism, I am interested in the political career of capital. To regard the “extra-economic” coercion as pre-capitalist is to miss this crucial point entirely. This is why in Wood’s telling, Britain’s overseas activities were never really “capitalist.” For Wood, the distinction between “on the one hand, the practice of gaining economic ascendancy by means of commercial monopolies, and, on the other, innovative and competitive production to ‘undersel’ [sic] all others, nicely sums up the differences between non-capitalist patterns of commercial imperialism and the new [capitalist] conception of empire.” [i]

But the English would “never be able, in any settler colony, to reproduce England’s distinctive property relations.” The drive for profit that led the English merchants to corner the slave trade, set up slave plantations in the New World for the extraordinarily profitable production of sugar, tobacco, and cotton were “non-capitalist.” Slavery “is a striking example of how capitalism has, at certain points in its development, appropriated to itself, and even intensified, non-capitalist modes of exploitation.” It is “unclear” what role Canada played in British capitalism. As for India, “Beginning as a commercial empire dominated by a monopolistic trading company, British domination gradually took the form of a territorial empire dominated by the Imperial state. In both these guises, the empire was essentially non-capitalist in its logic.” What about global capitalism under American primacy? “Actually existing globalization, then, means the opening up of subordinate economies and their vulnerability to imperial capital, while the imperial economy remains sheltered as much as possible from the obverse effects. Globalization has nothing to do with free trade. On the contrary, it is about the careful control of trading conditions, in the interests of imperial capital.”[i] Staying true to the definitions offered, we should regard neoliberal globalization—can you get more capitalist than this?—as a “non-capitalist” regime of accumulation. Alright then.

The problem is clear as daylight. By defining capitalism as a market society, the Marxist framework, while being internally consistent, offers little explanation of the central dynamics of capitalism in the real world. There is no explanation of why “globalization has nothing to do with free trade.” No explanation of the core-periphery structure of the global economy. No explanation of the role played by “central governments.” There are no sea lanes as far as the eye can see. The state is relegated to foster markets at arms’ length. Capitalists’ profit maximization is restricted to price competition. “Monopoly capitalism” is regarded as a “late development,” as is “finance capitalism”—could anything be further from the truth? There is a deeper problem however. In really competitive markets, there is no fat, cigar-smoking capitalist to be found. Great wealth through profit—real capitalism—is simply impossible without what Wood calls “non-capitalist” accumulation. This is because capitalism is not about the market; it is about the anti-market: market power, unfair trade, and yes, “extra-economic” advantages.

Before I lay out my conception of capitalism, there is one more business to attend to. The labor theory of value so central to the Marxist frame—“capitalism is, by definition, based on the exploitation of wage labor”— explains a very minor fraction of economic output. Say you make 1 widget an hour and I pay you $10 an hour and sell the widgets for $100. The “surplus labor” extracted would be $90. Now suppose I installed a new machine that lets you make 10 widgets an hour and I keep paying you $10 an hour and selling each widget for $100. Am I now extracting $990 of your “surplus labor”? But you didn’t put any more work than you did before, did you? At the minimum then, the labor theory of value makes sense only if technology and know-how are held constant. Even then, one can only faithfully say that “surplus labor” has been extracted if workers are paid less than the marginal product of labor. But that is pocket change. Even purely economic profit via successful price competition is largely accounted for by innovation, not intensified extraction of “surplus labor.” But the larger point is that economic value is an emergent phenomenon and cannot be traced to anyone’s “surplus labor.” Indeed, with the advances in automation and robotics, a world where there is hardly any wage labor is already on the horizon. I can assure you, such a world will be even more capitalist than the one we live in.

We begin then, not with Braudel, but with Winters’ theory of oligarchy. As will be clear in what follows, Winters’ theory allows us to put Braudel’s historical observations in a solid theoretical framework.

Oligarchs are defined as extremely wealthy individuals in a highly-stratified society. The extreme material endowment of the oligarchs provides them with both an overriding interest in the defense of their property and the material resources to do so. Threats to their property can come from ‘above’ (by the state), from below (by the masses), and horizontally (from other oligarchs). Winters is interested in studying how oligarchs have dealt with these vertical and horizontal threats; and the different political equilibria that have obtained. To bring the theory to bear on the question of nature of capitalism, we first need to go beyond Winters and distinguish between landed oligarchies and merchant oligarchies.

Landed oligarchs are essentially feudal lords whose property takes the form of arable land. They may be armed warrior elites, in which case one cannot really speak of a centralized state at all. In the ‘warring states’ period (fifteenth and sixteenth centuries), Japan was under the decentralized control of around three hundred warlords. Similar decentralization obtained in the ‘High Medieval’ period in Europe. In such oligarchies, there is no state ‘above’ the oligarchs to threaten confiscation. Threats emanating horizontally and from below are dealt with by direct coercion. Therefore, the crucial thread that connects these societies is the ties of vassalage between the lord and the vassal, wherein the vassal offers to fight for the lord in exchange for protection and sustenance. The “laws of motion” of such systems are straightforward: these are balance-of-power systems.

A centralized state can only coexist with a landed oligarchy if it guarantees the protection of the oligarchs’ property. In mature feudal orders, the state is necessarily weak and dependent on the support of big landlords. Micro-locally, pace Anderson, the social order in ‘late feudalism’ is characterized by a fusion of political and economic power in the person of the feudal lord. This is the state in which we find Europe when the peasant-lord conflict broke out the fourteenth and fifteenth centuries. We shall come back to this presently. For now note that the primary interests of the big landlords lie in preserving their unchallenged control of the land, maintaining mastery over the peasants, and preventing the state from using its monopoly of violence to undermine their standing.

The interests of merchant oligarchs are quite different from those of landed oligarchs. Since they derive their wealth and revenue from trade, their primary concern is access to markets, resources, and trade routes. Big merchants were invariably involved in long-distance trade (Braudel’s “super-trade”) where there was much greater scope for large-scale profits. Since it was radically cheaper to transport by sea than over land, the plumbing of the world economy has always been maritime. The protection of sea lanes was thus the paramount interest of the big merchants. Initially, just like the landed oligarchs, merchant ships were themselves armed. This insufficient, decentralized maritime self-protection was soon replaced by sea power organized by the state. The sea power that controlled the sea lanes could not only protect a merchant’s ships, it could exclude him from plying lucrative routes. It was thus supremely important to gain as much influence as possible over the dominant maritime state. We shall come back to this presently.

Whereas the landed oligarchs merely want the state to guarantee their property but otherwise keep out of their way, merchant oligarchs have a direct interest in a broad range of the state’s policies. Beyond the state’s maritime protection, merchant oligarchs seek to design and influence foreign affairs, trade policy, fiscal policy, industrial policy, and financial regulation. If the Rajah of Sumatra or whatever refused to allow the nation’s merchants to ply their trades or pay back a loan, the state had to be mobilized to exercise some ‘gunship diplomacy.’ If rival merchants from another country were outcompeting the nation’s merchants in the carry trade, the state had to be mobilized to secure commercial advantages. The most outstanding instance of such muscular trade policy was the Navigation Act of 1651, passed by Parliament to protect English merchants from their Dutch superiors. (The Act forbid third-parties from English ports and was thus a frontal attack on Dutch supremacy in shipping.) Merchants likewise mobilized the state to promote domestic production. This included not just tariff protection (almost a universal), but also industrial espionage. For instance, the Crown sent expeditions to study Flemish innovations in textile production to promote domestic manufacturing. Finally, banker-financiers in the City of London got Parliament to establish the Bank of England (in 1694) and carry out a number of institutional innovations to stabilize the pound sterling and lay a firm foundation for the emerging fiscal state (the English Financial Revolution). Given the vast demands placed on the state by merchant oligarchs, is it any surprise that the modern state grew up alongside capitalism?

What am I calling capitalism here?? I’ll come right out and say it: I think we should regard a polity as capitalist if is dominated by a merchant oligarchy. To be more precise, I am interested in studying the capture of the state by commercial and rentier (and later, industrial) interests. Instead of the relations between the holder of capital and the holder of labor, one is interested in the relations between the holder of capital and the holder of politico-military power. The Netflix series, House of Cards, captures this relationship nicely: Raymond Tusk, the plutocrat, bankrolls President Walker’s campaign for the White House, who in turn in tasked with looking after the former’s interests in China.

In other words, what marks off a polity as capitalist is the simply the primacy of capitalist interests. Whether these interests are predominantly commercial, industrial, or rentier makes a great deal of difference. But it does not change the essentially capitalist nature of the polity, nor does it materially alter the capitalist imperative to capture the state and influence its policies. What does change is the nature of the policies pursued. And it is precisely this dynamic—the struggle for control over state policy between competing capitalist interests—that is the object of study when one is interested in the political career of capital. In my unpublished paper, “Political Economy of the US State,” I tried to do precisely that. 

With the establishment of constitutional government, the impartial juridical guarantee of the oligarchs’ property largely removed the threat from above. The state could still impose punitive taxation, and capitalism has always mobilized to contain that threat. Ditto for threats from below (this is what the class struggle looks like in this lens). But the most important threat is usually horizontal. Why is that? Because once we have an entrenched capitalist oligarchy, the upper class can bring its extraordinary capacity for collective political mobilization to bear on the task of countering and neutralizing threats from above and below. (Braudel says, “…as if money could fail to create both social discipline and an extraordinary capacity for action.”) Therefore, capitalists’ attention and mobilization efforts are usually directed against each other. For instance, the Early American Republic was dominated by southern planters in alliance with northern mercantile interests whose fortunes were based on free-trade with mother England. The rising northern industrial interests instead wanted protection against industrial imports. It is this fight over trade policy that led to the Civil War.

The commercially progressive landlords who pioneered the market for leases in the English countryside were no longer feudal lords; they had morphed into rentiers. Unlike their forefathers who extracted surplus from the peasants directly and were personally responsible for the welfare of all those attached to the manor, the rentiers leased out their land to the highest bidder (tenant farmers who tilled the land for profit and increasingly employed propertyless peasants as wage labor). In the Marxist frame, what is important is the introduction of the market in the landlords’ relationship with the tenants. In my framework, what is more important is that the landlords came to treat their land holdings as investment capital; on which they sought the highest return.

For it was not just the market for leases where they sought to maximize their investment income. The immense wealth of rural England was funneled by the City of London into the rapidly growing commercial empire overseas. An excellent fictional illustration here is to be found in Austen’s Mansfield Park. The lord of the manor in whose care our heroine grows up, has extensive interests in the slave plantation in Antigua. Or take Downton Abbey, in which Lord Grantham’s wife’s fortune disappears with the bankruptcy of a Canadian railroad. The nexus between the banker-financiers in the City of London and the commercially progressive rentier class in the countryside is completely out of frame in the Marxist lens, but is nevertheless the single most important connecting thread of “gentlemanly capitalism” that flowered in England in the late-seventeenth, eighteenth, and nineteenth centuries (1688-1914). In the nineteenth century, they would be joined by industrialists, who would nevertheless remain inferior to the lords and the City magnates. “The great businesses of the City—private and merchant banking, insurance, broking and acceptance, the activities of the Stock Exchange—generated fortunes which were much greater than those acquired in industry before the twentieth century.”[ii]

What I have presented above is just the domestic mechanics of a system that is in reality very far-flung. This is a maritime system. Now, a thalassocracy is obviously harder to discern than a land empire. But recognize it we must, for this goes to the heart of the debate about whether or not the United States is an empire. Well, it is an empire where it matters—where it has always mattered in the history of capitalism.

Regularized naval control of maritime routes (with naval squadrons on standby to exclude rivals, punish pirates, and protect friends) was a Mediterranean innovation. The pioneer here was Venice. By the fourteenth century, the Venetian navy controlled the highly-lucrative Levant routes. Genoa, Venice’s less geostrategically fortunate doppelganger, never managed to mount a serious navy. Nonetheless the Genoese had a few tricks up their sleeves. “For three-quarters of a century,” writes Braudel, “their handling of capital and credit” allowed the merchant-bankers of Genoa to “call the tune of European payments and transactions.” In the ‘Indian Ocean World,’ Arab, Gujarati, and South-East Asian merchant communities had largely traded free from coercion until the arrival of the Portuguese at the dawn of the sixteenth century. The Portuguese ran a straightforward protection racket: they did not have much else to play with. It was only with the arrival of the Dutch with the new century that Europeans gained control of the intra-Asian trade.

The Dutch were the most advanced players in the seventeenth century. They pioneered the stock exchange, marine insurance, and large-scale monoculture (the sugar-slave plantations in the New World, cinnamon plantations in Ceylon, and so on and so forth); they controlled the highly-lucrative trade in fine spices, and the bulk grain trade in the Baltic. They were masters of the sea, accounting for nearly half the European fleet. Their shipbuilding was so advanced that their freight rates were half as much as their rivals. Their agrarian innovations were adopted in England, as were their ship-building methods. And here is the kicker: agrarian capitalism was very much alive the Dutch countryside. For as Brenner himself concedes, “by 1500 the landed class received exclusively economic rents” and “farmers had little choice but to specialize output for exchange, for they had to buy grain in the market in order to subsist. From very early on, moreover, tenantry appears to have been widespread, further enforcing the tendency to competitive market production.” The damn Dutch were, if anything, more capitalist than the British in their heyday: they didn’t go around playing Rome; they were in it solely for the money.

Coexisting as it does with pre-capitalist social orders, capitalism does not affect them merely at the margins. (Although this can be said to be true of Venice’s activities in the Ottoman empire.) On the contrary, everyone connected to the current gets silently (or not so silently) reoriented by the ‘rationalization’ of the Weltwirschaft (“world-economy”). The core-periphery structure is not simply a matter of “purely economic” price competition either. Braudel describes the construction process of the Weltwirschaft:

At ground level and sea level so to speak, the networks of local and regional markets were built up over century after century. It was the destiny of this local economy, with its self-contained routines to be from time to time absorbed and made part of a ‘rational’ order in the interest of a dominant zone or city, until another organizing center emerged; as if the centralization and concentration of wealth and resources necessarily favored chosen sites of accumulation…The resultant pattern of domination rests upon a dialectic between a market economy developing unaided and spontaneously, and an overarching economy which seizes these humble activities from above, redirects them and holds them at its mercy.[iv]

This is the real reason why the Black Death had opposite effects in Eastern and Western Europe, as Brenner himself partly concedes:

No doubt, in this instance, the income from grain produced by serf-based agriculture and sold by export from the Baltic to the West enhanced the class power of the Eastern lords, helping them sustain their seigniorial offensive.[iii]

I can’t deny that more favorable “balance of class forces” did not play a part in the West’s fortunes. For as Brenner points out,

But the control of grain production (and thus the grain trade) secured through their successful enserfment of the peasantry was by no means assured by the mere fact of the emergence of the grain markets themselves. In the rich grain-producing areas of northwest Germany, the peasants were largely successful in gaining command of grain output in precisely the period of developing enserfment in northeast Germany—and they appear to have done so after a prolonged period of anti-landlord resistance.[iii]

I agree with Brenner that both factors were in play. His framework suggests that the “balance of class forces” was the decisive factor. Mine suggests that the division of labor between the East and the West—‘rationalization’ from the center, in this case, at the hands of the Hanseatic league, which controlled the Baltic routes before the Dutch grew up—was the more important factor. Why, in any event, was the “balance of class forces” so uniformly favorable in the West and unfavorable in the East? Brenner, in my humble opinion, is skirting close to relying on a sort of cultural determinism. Occam’s razor suggests that the more straightforward explanation—that reserfment in the East was the flip-side of decline of feudalism in the West—is superior.

The transformation of agrarian property relations may have been underway in the countryside well before the mid-seventeenth century, but England was a backwater in capitalist circles. The capitalization of the East India Company at the turn of the century, for instance, was literally one-tenth that of the VOC. There are two decisive moments in the seventeenth century that put England on the path to the top. The first was the simultaneous emergence of the Royal Navy as an “instrument of national policy” and the passage of the Navigation Act in 1651, wherein England began seriously contesting Dutch supremacy. The second, following on the heels of the three Anglo-Dutch naval and trade wars (1652-1654, 1665-1667, and 1672-1674), was the “Glorious Revolution” of 1688. I have put quotation marks because the naming reflects one of the most successful bits of propaganda in history: it was, in fact, a highly-successful sea-borne invasion by the Dutch.[v] This wasn’t simply a case of “tidy” royal patrimony with no large-scale effects on the fortunes of the English. What followed over the course of the next few decades was a massive migration of Dutch capital, Dutch talent, and Dutch techniques into England. From agricultural techniques to shipbuilding and finance, the English had much to learn from the Dutch. They eventually did get their act together and prevail in the succession struggle against France. By 1763, England had a firm grip on the money spinner. 

Octopus grip of European trade


i. Wood, Ellen Meiksins. “The Agrarian Origins of Capitalism.” Monthly Review, New York, 50 (1998): 14-31.

ii. Cain, Peter J., and Anthony G. Hopkins. “Gentlemanly Capitalism and British Expansion Overseas I. The Old Colonial System, 1688‐1850.” The Economic History Review 39.4 (1986): 501-525.

iii. Brenner, Robert. “The Agrarian Roots of European Capitalism.” Past and Present (1982): 16-113.

iv. Braudel, Fernand. Civilization and Capitalism, vol. 3: The Perspective of the World.

v. Jardine, Lisa. Going Dutch: How England Plundered Holland’s Glory. HarperPress, 2008.


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