Forging Capitalism: Rogues, Swindlers, Frauds, and the Rise of Modern Financeby Ian KlausYale University Press, 2014Ian Klaus's new book Forging Capitalism has a good deal of superficial things working against it, no matter how you approach it. How you approach it literally, in fact: seen from the front, as a “common reader” would do at a bookstore, the thing's cover is about as forbidding as it could be – underneath the title and author, the front illustration is … the book's first paragraph, a block of script, and that first paragraph doesn't exactly help much, since it's a premium snoozer starting with “Trust, to be simple with our definition, is an expectation o behavior built upon norms and cultural habits.” And things don't get much better if the book is approached from the rear, the way a scholar or reviewer might do it, with an aim to finding out something about the author before plunging into his work; the Acknowledgments section is one steadily-escalating cyclone of name-dropping, starting with a phalanx of agents, works its way through Leon Wieseltier and Niall Ferguson, and winds up thanking Hillary Clinton and John Kerry. And as if that weren't insufferable enough, Klaus' dust jacket photo is easily the most abrasively smug author photo of any book published in the Western hemisphere in the year 2014, and that was an extremely crowded field.The combined impression of all these things is that of a preening vanity exercise, something light on substance and given the green light because its author knows the right people, attends the right parties, and used to date Chelsea Clinton. That impression hints at a string of anecdotal stories about the swindlers, frauds, and rogues in the book's subtitle … and not much more.Readers getting that impression should press on, however, because there's much, much more to Forging Capitalism. It's a relatively short but jam-packed volume in which the colorful swindlers and rogues serve mainly as garnish for a much deeper and more searching examination of the flourishing of speculative commerce in the 'long' 19th Century. Through muscular archival research and some subtle and insightful readings of the literature of the period, Klaus builds of a portrait of a grubbier, almost shadow-version of the Victorian era (“If polite Victorians – honest, sexless, Christian – still live in your historical cupboard, throw them out,” he writes, “We don't like them anymore, and they never existed anyway”). He picks the choicest quotes from the giants in the history of economics, starting with David Hume:
Thus men become acquainted with the
pleasures of luxury and the
profits of commerce; and their
delicacy and
industry, being once awakened, carry them on to farther improvements, in every branch of domestic as well as foreign trade. And this perhaps is the chief advantage which arises from a commerce with strangers. It rouses men from their indolence.
The era Klaus brings to life for his readers is anything but indolent. Instead, it bustles and trims along the principles laid down, as Klaus so perfectly notices, by, of all people, Edward Bulwer-Lytton, who maintained that there were two rules in life: “First, Men are valued not for what they are, but for what they seem to be. Secondly, if you have not merit or money of your own, you must trade on the merits and money of other people.” Counterbalancing the image of those “polite Victorians” everywhere in Klaus' book is that Bulwer-Lytton world:
There is another vision of the London street of the 1820s, and it is filled with fraudulent food hawkers, strutting dandies, global goods, London men seeking capital for mines abroad, and foreigners seeking capital for their newborn countries. This world was interested in the maximization of everything, from mines to waistcoats.
Klaus fleshes out that world not only with the help of Hume but also, of course, of Hume's friend Adam Smith, whose Wealth of Nations is handled adroitly (and, delightfully, whose Theory of Moral Sentiments is given the weight it deserves but so seldom receives), and also later major figures like Joseph Schumpeter, the coiner of that much-abused term “creative destruction,” whose gleeful prose is sampled extensively in Forging Capitalism for its all-or-nothing figures of speech:
Bourgeois society has been cast in a purely economic mold: its foundations, beams and beacons are all made of economic material. The building faces toward the economic side of life. Prizes and penalties are measured in pecuniary terms. Going up and going down means making and losing money.
At heart, and perhaps a bit ironically, Klaus has written a fascinating study of an intangible: trust (hence that snoozer of first line). Specifically, what happens to the concept of trust when it's mapped onto the pursuit of futures-oriented speculative financial workings. 19Th-century England saw the raw, stumbling beginnings of such workings, and Klaus traces those beginnings with a finely-wrought balance between those colorful rogues and swindlers and broader process they're unwittingly shaping:
Along with financial developments came a profound distrust of credit, debt, and financial innovation – a position that came to be known as the “country” ideology. This position saw luxury as a menace to virtue, and war and commerce as potentially destabilizing of a political balance built around land and agriculture.
A study of the development of 19th century British economics will strike many potential readers as, to put it mildly, off-putting. But again, those readers should jump right in: Forging Capitalism is firmly grounded in the past, but make no mistake: we're all still living in that world. And who knows? Maybe the paperback will have a different cover – and, pretty-please, a different author photo.