The concept of capital

This work is licensed under the Creative Commons | © Michael Ralph. ISSN 2049-1115 (Online). DOI: http://dx.doi.org/10.14318/hau5.1.025


The concept of capital

Michael RALPH, New York University

Comment on Piketty, Thomas. 2014. Capital in the twenty-first century. Translated by Arthur Goldhammer. Cambridge, MA: The Belknap Press of Harvard University.

Professional economists seldom write best sellers, especially not with books that contain extensive references to academic arguments. Yet Thomas Piketty’s Capital in the twenty-first century (hereafter CitT-fC) has been embraced by thoughtful readers across the ideological spectrum and from varied walks of life.1 Only professional polemicists2 have registered a formal complaint to Piketty’s foundational premise that economic growth, since the late eighteenth century, has been accompanied by the growth of inequality. CitT-fC’s success in mainstreaming economic analysis is arguably its impressive accomplishment—and it’s most glaring weakness.

Eager to distance himself from any semblance of bias, Piketty takes turns critiquing Adam Smith, who represents normative views of economic growth, and [502]Karl Marx, who embodies angst about the growth of inequality and the “misery of the proletariat.” Piketty seeks to temper Marx’s familiar take-down of Smith by suggesting they each have powerful insights to offer yet both were victims of their historical horizons and were thus without data that has since been corralled to develop a more sophisticated understanding of economic transformation. Fair enough. But Piketty’s narrow and inadequate reading of Marx ultimately undermines this argument. This oversight is surprising, given the title and topic Piketty has set for himself. It is especially disappointing for anthropologists, given the tremendous influence Marx’s theory of society has enjoyed in economic and political anthropology, as evidenced by such authors as Nancy Munn, Terence Turner, Sidney Mintz, and Michel-Rolph Trouillot, among others. In short, despite his stated investment in interdisciplinary social science and “capital” specifically, the productive potential of vibrant trajectories such as this one is lost on Piketty.

Critiquing the stance of Malthusian scholars historically concerned with pragmatic questions like “whether farmers could feed a growing population or land prices would rise sky high” Piketty articulates an affinity with Marx, whose central intellectual project is “how to understand the dynamics of industrial capitalism, now in full blossom” (Piketty 2014: 7). Despite this shared investment in the dynamism that defines economic and historical transformation, Piketty’s engagement with the nineteenth-century social scientist is unsatisfactory. Piketty’s analysis centers on Marx’s presumed political stance, not the thousands of pages he devoted to theorizing capital:

[For Marx,] the bankruptcy of the existing economic and political system seemed obvious. People therefore wondered about its long-term evolution: what could one say about it?

This was the task that Marx set for himself … [claiming that] what the bourgeoisie therefore produces, above all, are its own gravediggers. Its fall and the victory of the proletariat are equally inevitable. (Piketty 2014: 9)

Piketty then characterizes Marx’s subsequent scholarship as a rearguard action to shore up his polemical prediction that capitalism would suffer an “apocalyptic end”: “Over the next few decades, Marx labored over the voluminous treatise that would justify this conclusion and propose the first scientific analysis of capitalism and its collapse…. Marx’s dark prophecy came no closer to being realized than Ricardo’s” (Piketty 2014: 9).

Piketty centers this dismissive argument on the sentiment that Marx evokes,3 (ostensibly highlighted in the Communist manifesto) rather than the structure of nineteenth-century industry that Marx analyzes in Das Kapital, volumes I–III ([1887] 1992), [1893] 1967, [1894] 1954); The economic and philosophical manuscripts of 1844 ([1844] 1964); Theories of surplus value ([1862–63] 1952); The Grundrisse ([1857] 1973), and elsewhere. Neither Marx’s nonfiction essays on the US Civil War nor his correspondence with US President Abraham Lincoln on [503]the global workers’ movement show up in Piketty’s “interdisciplinary” account.4 It is baffling that Piketty would center his discussion of Marx’s work on the brief pamphlet that makes up the Communist manifesto and derive his sense of what Marx was up to from the political context that supposedly inspired him. It inclines one to wonder what would happen if we do the same for Piketty: To what extent does Piketty’s effort to position himself as an ecumenical economist derive from the aftermath of the 2006 subprime and 2008 financial crises and the dismay of the general populace that academics are often ill-equipped to anticipate and address problems plaguing the world we inhabit? In what sense is Piketty riding the more precise backlash against Milton Friedman and the marginal utility school of economics championed perhaps most notably by neoclassical economists associated with the University of Chicago Economics Department? Might Piketty’s stance be a crafty response to the wave of interdisciplinarity sweeping the academy? Is it fair to read Piketty’s intervention as a shrewd way to benefit from the fact that the aforementioned economic dynamics have created an audience—a market—for specialists who can translate economic science into accessible prose and parlay that skill on presses that bridge the academic and trade book marketplaces? If so, does the resurgence of intellectual interest in “capital” have anything to do with a broader tendency to promote finance capital as a solution to social problems that might otherwise be conceived as problems of infrastructure?

Consider how libertarian and conservative critiques to the Affordable Care Act rejected the premise of universal health care by suggesting that young people are generally healthy and that the few supposed outliers who will eventually need urgent medical care would be better served by disaster health insurance. This effort to promote finance capital (insurance) as a solution to problems of infrastructure (a robust health care system) shares a logic with the proposition set forth in The Economist in the days following Haiti’s devastating January 12, 2010 earthquake— that the smoothest path to recovery lies in catastrophe bonds that can be purchased in advance of such a calamity and later cashed in5 (as opposed to paved roads and well-maintained health care facilities and resources devoted to emergency response). Of course, the aftermath of Hurricane Katrina in 2005 renders The Economist proposal hollow. While it was common to harangue New Orleanians for not having enough insurance to account for the losses they suffered, it is worth noting that many people in fact had hurricane insurance yet could not collect on their policies because underwriters ruled that it was the flood occasioned by the breach of the levees and not the hurricane that caused damage to their homes. And, contrary to the principles that champions of free market finance promote, the only flood insurance available to US citizens derives from a government program managed by the Federal Emergency Management Agency (FEMA). Whether or not NOLA residents should have anticipated the eventual levee breech and purchased flood insurance just in case is irrelevant since the amount of capital available in government [504]coffers was minuscule compared to the capital required to furnish flood insurance for the vast population who incurred losses.6

From this vantage, Piketty misses a chance to engage with the most salient aspect of Marx’s analysis of capital: his insistence that social life emerges in the tension between material transformation and social perception. Given the complicated social and economic landscape in which Piketty’s celebrity has taken root, his seeming disregard for Marx’s central concern is ironic. It is doubly ironic, given Piketty’s choice of theme and title, a transparent effort to pen his own version of Capital “in the twenty-first century” (echoing Marx’s Das Kapital). It is triply ironic because Piketty spends such little time explaining what he means by capital while Marx’s work sought to demonstrate that capital cannot function apart form the way it is conceptualized and that it is conceptualized anew in different historical moments and geographic locations. Overlooking the robust theoretical tradition that Marx inaugurated, Piketty is scarce on the reasons readers ought to favor his own approach as the most useful way to understand capital since the late eighteenth century.

In sum, Piketty’s “historical” analysis of capital in the eighteenth through twenty-first centuries doesn’t adequately conceptualize capital or capitalism. This has implications for the argument he ultimately develops. For, the historic effort to corral “capital” does not merely provoke a distribution problem for industrial and postindustrial societies. The problem of capital in the eighteenth through twentyfirst centuries has pressed us to ask: What counts as capital? How do we make this determination and who gets to decide? What role do public institutions and private firms play in the production and circulation of capital? What Piketty means by “capital” often amounts to the “capital share of income”—in his words, “industrial profits, land rents, and building rents” (2014: 8).

To illustrate how problematic it can be to neglect these matters, I turn to a historical example—one that began to attract widespread attention during precisely the time period that Piketty views as the forerunner to our own day’s massive bifurcation of wealth between the 99% and 1%. The US life insurance industry and its historical permutations demonstrate the urgent need to conceptualize capital as it works in the world we inhabit and not merely in the hypothetical domain of quantitative data analysis. This example aptly demonstrates the pliability of capital not merely because the life insurance industry has provided innovative strategies for concentrating it in the hands of moneyed elites—though it has done so better than perhaps any other industry. The genius of life insurance as a strategy for generating profit lies in its ability to readily reshape the contours of the capital on which it relies—the monetary value of a human life.


The oldest records available for what we might call life insurance entail quotidian, ad hoc strategies for betting on another person’s fate (Zelizer 1983). These practices have historically included wagers on the life chances of indigent people. Other examples include speculation concerning the mortality of aristocrats or the outcome [505]of death penalty decisions (Clark 1999). The widespread practice of generating capital from speculation on other people’s lives had historically led many polities to ban life insurance entirely, most notably through a British statute known as the Gambling Act of 1774. Also known as the Assurance Act of 1774, this legislation outlawed the practice of affixing a monetary value to another person’s life except in cases where, “the person insuring shall have an interest in the life or death of the person insured” (Maurer 2005: 114; Sealy and Hooley 2008: 1192). The idea of life insurance as a legitimate enterprise relies on the assumption that, ever since 1774, it has been illegal for one person to generate profit from a wager placed on another person. The truth is that Gambling Act of 1774 merely marks a moment in the effort to restrict a practice that preceded and ultimately superseded it.

For the Gambling Act of 1774 merely prohibited the practice of speculating on a free person’s life—it said nothing about attempts to affix the monetary value of a slave or debtor, a practice that we can trace as far back as 1402. The same merchants concerned to ensure their enslaved cargo would sometimes take policies on their own lives and those of family members in advance of voyages.

US life insurance did not become popular among citizens of the United States until the latter part of the nineteenth century, when scores of Americans abandoned rural homesteads for urban employment opportunities, leaving behind the large, agrarian households and community networks that had previously sustained them in times of crisis. These developments, coupled with the declining significance of the church as the primary arbiter of moral judgment regarding commercial matters, led many Americans to find security in emergent investment strategies, like life insurance. We might also consider a parallel sequence of events that helped to reshape longstanding views concerning the value of a human life: the formal abolition of slavery in Britain, and its reverberations in an American polity that took the shape of an attempted secession, as well as a civil war and its attendant widespread casualties.

But it also crucial to integrate a pivotal maneuver in historic efforts to establish the monetary value of a human life—a story that professional historians have treated as altogether separate and distinct. Between the time that the slave trade to the United States was outlawed in 1808 and slavery was abolished in 1865, slave life insurance was a crucial element of industrial insurance, a key feature of slave shipping, and a central element of credit networks throughout the agrarian south. During this period, the nature and function of slave insurance was reconfigured.

After the slave trade to the United States was legally abolished in 1808, planters could only acquire bonded labor by breeding, renting, or kidnapping enslaved persons. As breeding took many years and a great deal of calculation, and kidnapping relied to an uncomfortable degree on serendipity, planters operating in the principal enterprises of an emerging industrial order routinely rented slaves to serve as workers. As planters contracted enslaved workers and trained them to labor in railroads, steamboats, and coalmines, they had these increasingly valuable assets insured—enslaved workers had acquired unique skill sets and worked in dangerous industries. As such, it was folly to deploy them in work under hazardous conditions without first establishing security against the potential loss of such labor. Amid this shifting employment landscape, the value of a slave as capital would no longer be determined primarily by the bonded person’s physical [506]characteristics. Instead, policies crafted during the domestic slave trade emphasized the slave’s skill set. The most highly valued slaves were domestic workers with decades of experience and intimate knowledge about how to run a household, artisans (like blacksmiths and shoemakers), workers with highly coveted expertise (like butchers, coal miners, and clerks) and those who excelled in especially dangerous industries (like railroad and steamboat workers).7 This means that slave insurance foreshadowed postbellum genres of industrial insurance, as owners of capital sought to shield themselves against the risks associated with the loss of an individual’s capacity for labor.

A thriving industry in slave insurance was extinguished with formal emancipation in 1865. Consequently African Americans, instead of providing the capital for a policy upon which someone else could collect, could purchase life insurance like any other person (even though most firms preferred not to bother taking policies on people whose weak vital statistics and poor histories of family health made them precarious investments, leaving black-owned companies that indeed assessed higher premiums to corner the market in capitalizing African American lives) (Ralph 2012). The turn of the twentieth century, however, witnessed practices thought altogether unconscionable by many, though they are usually perfectly legal—corporate-owned and stranger-owned life insurance policies (abbreviated COLI and STOLI, respectively).

Corporate-owned life insurance comes in two forms: “dead peasant” or “janitor’s” insurance policies on rank-and-file employees and “key man” or “key person” insurance for high-earning executives. In recent years, news outlets from NBC to the Wall Street Journal and critics of capitalism like Michael Moore have drawn public attention to the fact that a number of Fortune 500 companies—including Bank of America, Citibank, McDonnell Douglas, Hershey, Nestlé, Wal-Mart, Proctor & Gamble, and American Express—have dabbled in these policies. Former Texas governor and presidential candidate Rick Perry had even proposed brokering a deal with the Swiss banking firm UBS to generate revenue for the state of Texas by taking out life insurance policies on aging public school teachers, thus turning a profit once they expired (if not right when they retired).

In 2006, the US Congress passed the Pension Protection Act, which specified that employers must notify employees when taking out policies based on the value of their lives (even if, as typically happens, this quantity derives from a composite based on family medical history, risk factors, and projected future earnings). Yet, corporate-owned life insurance is classified as a security—as a corporate asset. It is thus difficult for the ordinary citizen to participate in the legal protocols by which the life insurance industry is regulated. And yet public outrage regarding a given corporation’s success in generating tremendous profits from an employee’s [507]life is not a bad place from which to begin an analysis of the concerns this practice raises and the financial strategies it encourages us to consider more carefully.


The history of the US life insurance industry suggests that, in addition to exploring how elites manage to corral and exploit privileged access to capital assets, we ought to interrogate the legal and conceptual parameters that determine what constitutes capital and the conditions under which any individual or firm can establish unique access to it. Piketty’s claim to the contrary: there is nothing especially dark or apocalyptic about treating the analysis of capital as a matter of life or death, though the task at hand is indeed—often—mired in misery.


Blackburn, Robin. 2011. An unfinished revolution: Karl Marx and Abraham Lincoln. London: Verso.

Clark, Geoffrey. 1999. Betting on lives: The culture of life insurance in England, 1695–1775. Manchester: Manchester University Press.

Marx, Karl. (1844) 1964. The economic and philosophical manuscripts of 1844. Edited with an introduction by Dirk J. Struik. Translated by Martin Milligan. New York International Publishers.

———. (1857) 1973. The Grundrisse: Foundations on the critique of political economy. Translated with a foreword by Martin Nicolaus. New York: Random House.

———. (1862–63) 1952. Theories of surplus value. Translated by G. A. Bonner and Emile Burns. New York: International Publishers.

———. (1887) 1992. Capital. Vol. 1: A critical analysis of capitalist production. Edited by Frederick Engels New York: International Publishers.

———. (1893) 1967. Capital. Vol. 2: The process of circulation of capital. Edited by Frederick Engels. New York: International Publishers.

———. (1894) 1954. Capital. Vol. 3: A critique of political economy. Edited by Frederick Engels. Moscow: Foreign Languages Publishing House.

———. 1961. The Civil War in the United States. New York: International Publishers.

Maurer, Bill. 2005. Mutual life, limited: Islamic banking, alternative currencies, lateral Reason. Princeton, NJ: Princeton University Press.

Piketty, Thomas. 2014. Capital in the twenty-first century. Translated by Arthur Goldhammer. Cambridge, MA: The Belknap Press of Harvard University.

Ralph, Michael. 2012. “‘Life … in the midst of death’: Notes on the historical relationship between life insurance, slave insurance and disability.” Disability Studies Quarterly 32 (3). http://dsq-sds.org/article/view/3267/3100.

Sealy, L. S., and R.J.A. Hooley. 2008. Commercial law: Text, cases, and materials. Oxford: Oxford University Press.

[508]Zelizer, Viviane. 1983. Morals and markets: The development of life insurance in the United States. Bloomington: Transaction Publishers.


Michael Ralph
Department of Social and Cultural Analysis
New York University
20 Cooper Square, office 434
New York, NY 10003 USA


1. Despite their modest critiques, Piketty’s work has been embraced by Doug Henwood and Paul Krugman among other sophisticated analysts of economic matters. See Henwood, “The Top of the World,” Bookforum, April/May 2014 accessed at http://www.bookforum.com/inprint/021_01/12987, and Krugman, “Piketty Panic,” http://www.nytimes.com/2014/04/25/opinion/krugman-the-piketty-panic.html and “Is Piketty All Wrong?” http://krugman.blogs.nytimes.com/2014/05/24/is-piketty-all-wrong/, publishedin the New York Times on April 24 and May 24 of 2014 respectively. Accessed on February 23, 2015.

2. On this matter, consider the professional polemicist par excellence Ross Douthat of the New York Times, who in his April 25,2014 article “Piketty and the Petit Rentiers,” pans the French economist without bothering to engage his scholarship. Accessed on February 23, 2015, at http://douthat.blogs.nytimes.com/2014/04/25/piketty-and-the-petits-rentiers/?_r=0.

3. A more complicated, yet theoretically superior, way of putting this is to say that Piketty centers his argument on the affective dimension of Marx’s work.

4. For Marx’s essays on the US Civil War and related topics, see The Civil War in the United States (1961). On his correspondence with Abraham Lincoln, see Robin Blackburn (2011).

5. “When calamity strikes,” The Economist, January 21, 2010, accessed at http://www.economist.com/node/15331141, on February 23, 2015.

6. See Christopher Drew and Joseph B. Treaster, “Politics stalls to bolster flood insurance.” (New York Times, March 31, 2015).

7. It is likely that planters also insured slave doctors, by that I mean women who delivered countless babies on US plantations. Recall that in the nineteenth century medical expertise was based largely on practical experience rather than professional licensing and that enslaved women were more highly prized for their knowledge than many medical doctors with degrees from highly esteemed academic institutions. Records for insured slaves with medical knowledge use the vague term “nurse”—possibly a reference to someone with knowledge of obstetrics.