Capitalism's Hidden Worlds

by Kenneth Lipartito (Editor), Lisa Jacobson (Editor)

Overview

A dynamic social history of shadow capitalism spanning the late nineteenth and twentieth centuries

Observers see free markets, the relentless pursuit of profit, and the unremitting drive to commodify everything as capitalism's defining characteristics. These most visible economic features, however, obscure a range of other less evident, often unmeasured activities that occur on the margins and in the concealed corners of the formal economy. The range of practices in this large and diverse hidden realm encompasses traders in recycled materials and the architects of junk bonds and shadow banking. It includes the black and semi-licit markets that allow wealthy elites to avoid taxes and the unmeasured domestic and emotional labor of homemakers and home care workers. By some estimates, the unmeasured economic activity that occurs within the household, informal market, and underground economy amounts to a substantial portion of all economic activity in the world, as much as 30 percent in some countries.

Capitalism's Hidden Worlds sheds new light on this shadowy economic landscape by reexamining how we think about the market. In particular, it scrutinizes the missed connections between the official, visible realm of exchange and the uncounted and invisible sectors that border it. While some hidden markets emerged in opposition to the formal economy, much of the obscured economy described in this volume operates as the other side of the legitimate, state-sanctioned marketplace. A variety of historical actors—from fortune tellers and forgers to tax lawyers and black market consumers—have constructed this unseen world in tandem with the observable public world of transactions. Others, such as feminist development economists and government regulators, have worked to bring the darkened corners of the economy to light. The essays in Capitalism's Hidden Worlds explore how the capitalist marketplace sustains itself, how it acquires legitimacy and even prestige, and how the marginalized and the dispossessed find ways to make ends meet.

Contributors: Bruce Baker, Eileen Boris, Eli Cook, Hannah Frydman, James Hollis, Owen Hyman, Anna Kushkova, Christopher McKenna, Kenneth Mouré, Philip Scranton, Bryan Turo.

Product Details

ISBN-13:	9780812251814
Publisher:	University of Pennsylvania Press, Inc.
Publication date:	01/24/2020
Series:	Hagley Perspectives on Business and Culture
Pages:	320
Product dimensions:	6.10(w) x 9.10(h) x 1.00(d)

About the Author

Kenneth Lipartito is Professor of History at Florida International University. Lisa Jacobson is Associate Professor of History at the University of California, Santa Barbara.

Read an Excerpt

Introduction
Mapping the Shadowlands of Capitalism

Kenneth Lipartito and Lisa Jacobson

Ruthlessly exposed to the market. That might be the most common way of thinking about capitalism today. Many observers see free markets, the relentless pursuit of profit, and the unremitting drive to commodify everything as capitalism's defining characteristics. These most visible economic features, however, obscure a range of other less evident, often unmeasured activities that occur on the margins and in the concealed corners of the formal economy. Some of these activities may enhance capitalism's dynamism, while others may bolster its legitimacy. Still others provoke outrage and calls for regulation. The range of practices in this large and diverse hidden realm encompasses traders in recycled materials and the architects of junk bonds and shadow banking. It includes the black and semi-licit markets that allow wealthy elites to avoid taxes and to offshore assets or enable the marginalized and dispossessed to survive despite inadequate incomes. It also includes the unmeasured domestic and emotional labor of homemakers and home care workers. By some estimates, the unmeasured economic activity that occurs within the household, informal market, and underground economy amounts to almost 30 percent of the total U.S. economy and globally probably much more. We do not know the full measure of these hidden features of capitalism because all these activities have one thing in common: they are not recorded in the economic statistics, stock indexes, tax registers, and account books that historians typically draw upon.

Capitalism's Hidden Worlds sheds new light on this shadowy economic landscape. In doing so, it also reexamines how we think about the market. In particular, it reveals the missed connections between the official, visible realm of exchange and the uncounted and invisible sectors that stand right next to it. While some hidden markets have emerged in opposition to the formal economy, much of the obscured economy we describe operates as the other side—and in some cases, as the dark underbelly—of the legitimate, state-sanctioned marketplace. A range of historical actors—from fortune-tellers and foragers to tax lawyers and black market consumers—have constructed this unseen world in tandem with the observable public world of transactions. Others, such as feminist development economists and government regulators, have worked to bring the darkened corners of the economy to light. By peering into these corners, we explore how the capitalist marketplace sustains itself, how it acquires legitimacy and even prestige, and how the marginalized and the dispossessed find ways to make ends meet.

Our point of departure differs from the typical way that scholars look at the market. Usually the market is treated as a place where wants, desires, resources, and opportunities are exposed and made visible, quantifiable, and graspable. As we show, however, no study of the market can stop there. In fact, the creation of legally sanctioned markets gives rise to the demand for invisible market transactions and privacy. The decision to hide assets from tax collectors, protect trade secrets and tacit knowledge from would-be competitors, or simply to limit the exposure of one's identity all constitute ways that people have found to obscure their economic visibility without withdrawing from economic activity. The most extreme cases take place in the shrouded realm of illegal activities, where smugglers traffic in prohibited or heavily taxed goods and sellers supply wants for banned substances and banned pleasures.

We should not rest with a simple opposition between the visible or sanctioned market and these sorts of black market activities. In fact, substantial economic activity takes place in the gray economy, where business transactions may be technically legal but not wholly respectable or may be formally illegal but widely tolerated. Often such activities occupy a liminal zone—being neither illegal nor legal because they have not yet come under juridical scrutiny. Sometimes innovations like shadow banking and financial derivatives that originate in the unregulated gray zone become widely embraced by the public marketplace. In fact, an important feature of the capitalist cycle of creation and destruction may involve just this move from gray market to white market. New products, techniques, and forms of competition may arise powerfully and suddenly in remote corners of the economy through social interactions, leisure activities, and hobbies. Students of innovation can find many examples—from the amateur labor performed by the early devotees of radio a century ago, to the hobbyist enthusiasm and information sharing about early personal computers, to the uncommercialized experiments with such social media platforms as Myspace and Facebook.

The history of hidden economic activity also takes into account boundary zones, where the formal and informal, visible and invisible meet. Perhaps the prime example is the family home, which functions simultaneously as a site of women's unwaged toil, a place of refuge, and point of opposition against capitalism's advance. Feminist scholarship has long noted that in many periods of history, women's reproductive labor—the uncompensated work of caregiving, cleaning, cooking, and child-rearing—provided the support that allowed others (usually men) to work in the marketplace. Much of this unwaged activity goes uncounted in measures of GDP, yet it has bolstered capitalism's legitimacy by putting a floor under otherwise unsustainable family incomes. The cultural invisibility of women's reproductive labor made it easier to overlook inequitable wages even as it cemented women's disadvantaged position in both the family and the labor market.

The visible and invisible marketplaces map onto each other in complex ways. Sometimes they intersect to their mutual benefit. Other times they collide on a path of conflict. Such complexity reminds us that no natural or preset border exists between the formal, legal, or visible market and the spaces where the hidden, obscured, and illegal market activity occur. At different historical moments different states and different actors have drawn the line separating the visible and the invisible market in different ways. Activity that may be formally illicit or prohibited can still enter the licit economy, as when entrepreneurs funnel the profits from illegal activity into the legitimate banking system. In other cases, features of the licit economy transform into outright exploitation, as when labor mobility becomes trafficking. Writing about the history of hidden markets invites us to explore these crevices in capitalism. It requires us to reconceptualize the relationship between the margins and the center—between the licit and the illicit, the waged and the unwaged, the public and the private—to better understand the mutual dependence of the visible and invisible markets.

Histories of Capitalism Old and New

The idea that capitalism has hidden dimensions is not new. Economists and historians have produced studies of black markets and illicit enterprises, underground economies, the informal sector, and smuggling and fraud—covering a full array of activities that slip beneath the radar of state surveillance and the state's taxing authority. Traditional ways of conceptualizing capitalism and its origins, however, have largely ignored these hidden dimensions and the complex interplay between the formal economy and hidden markets. For Adam Smith and the neoclassical economists who followed, capitalism burst forth once markets were unshackled from restraints and brought into the open. Once societies freed the market, trade connections grew, incomes rose, demand for goods increased, and creative entrepreneurship flourished. It is no surprise then that many neoclassical economists can trace capitalism, in some rough form or another, all the way back to ancient Babylonia. Karl Marx had a very different explanation of how capitalism emerged, but he too looked at the way the extension of the market and commodification of human activity provided the conditions for capitalism.

Whatever model of capitalism one uses—and however one explains capitalism's origins—scholars all begin with the centrality of the market as the driving force that makes capitalism possible. Once the market is allowed to allocate labor and other resources, the pressures of competition and the imperative of profit take command. Owners of capital seeking profit under market competition must find ways to increase labor productivity by enlisting new technologies, creating new organizational efficiencies, and preying on the vulnerability of workers. Capitalism also thrusts outward, seeking fresh resources and markets, eventually engulfing the entire world in its tentacles.

Missing from such accounts is the sense that capitalism is something that people and states had to create and that states and societies had to legitimize. Missing, too, is the sense that alternative institutions and modes of economic organization may persist alongside or in opposition to capitalism. Taking a less deterministic view, the historical sociologist Karl Polanyi argued that this triumph of the market was actually a radical project, even a utopian one—just the opposite of natural and inevitable. It required great effort and the power of the state to pry market activity out of the matrix of social life and custom that had long governed the terms and meanings of economic exchange.

Polanyi called attention to the way that economic activity had throughout history been embedded in social relationships, religious norms, cultural values, and political institutions. Like Marx and Smith, though, he contended that capitalism had erased this earlier type of marketplace. While agreeing that capitalism represented a radical break from the past, Joyce Appleby, by contrast, recognized that capitalism was "as much a cultural as an economic system." It came into being when new ways of understanding human capacities and the wealth-generating effects of efficiency, ingenuity, and work discipline dethroned traditional society's emphasis on "status, stasis, and communal obligations." More recently, however, economists, historians, and sociologists have called into question this idea of a radical break with the past. Mark Granovetter has proposed that even under capitalism markets are necessarily embedded in society and culture. Far from being holdovers or inefficient blockages to a free market, these social features promote trust and reduce risk, making them functional with respect to market operations. In Granovetter's conception, Polanyi's radical separation of the market from society never occurred, and markets could take different forms depending on how they were embedded in society.

Granovetter and other institutional economists take a rather mechanistic view of embeddedness, but others have contended that the ends of economic action matter as much as the means when it comes to defining what separates capitalism from other economic systems. The economic historian Bas van Bavel, for example, argues that while product and commodity markets can be found throughout history, the factors used to produce commodities in capitalist societies—land, labor, and capital—become sites of intense conflict and controversy under capitalism. Markets are continually reembedded in various ways because both workers and capitalists find that too much market freedom can work to their disadvantage. It is not just that the social and political features surrounding markets are needed for market functioning; it is that markets themselves provoke conflicts, political reactions, and attempts to bring them under control.

In the most recent attempt to understand the workings of capitalism, the so-called new historians of capitalism also start with markets. Their approach combines aspects of Marx's focus on commodification as the driving force behind capitalism's emergence and Polanyi's emphasis on the market's interaction with the sociopolitical matrix. Commodification turns everything into a saleable item and therefore a potential source of profit, the lifeblood of capitalism. While earlier historians paid close attention to workers, consumers, peasant farmers, and artisans who carved out spaces that resisted capitalism and capitalist values, the new historians of capitalism see commodification as a rolling tide that engulfs all and reformats politics, society, and culture in the process.

Sven Beckert's global history of cotton shows the strengths and weaknesses of the new literature. Following the world-systems model of Immanuel Wallerstein, Beckert maps the process by which global production was reorganized along capitalist lines from the sixteenth century forward. Europeans structured the world into multiple spheres of labor, from peasant producers in India dependent on merchant credit, to landless workers in Manchester selling their labor power at the factory gate, to slaves in the New World bending to produce commodities on plantations. All of these parts came together in a global commodity supply-and-production chain by the nineteenth century, making modern capitalism. Yet when it comes to origins, it seems that capitalism starts by pulling itself up by its own bootstraps. Beckert claims that an early "war capitalism" phase harnessed the power of the state to the interests of the merchant classes who were organizing the global production system. Within this system there was certainly violence and conflict but no real possibility of alternatives or agency outside of the European capitalists. As the Caribbean historian Trevor Burnard has pointed out, Beckert's history places the engine of all transformation in the hands of the West. The rest of the world is only present as its subjects and victims.

In their sweeping approach to commodification, exploitation, and profit, the new historians of capitalism do not distinguish capitalism from what scholars had once seen as alternative forms of exploitation or noncapitalist modes of production. This is perhaps most evident in their treatment of slavery. Beckert stresses that slave-grown cotton was essential to British industrialization, linking the two into a single economic system. Others argue that slavery itself was a form of capitalism. Slave owners were relentless improvers of productivity, by whatever means necessary, including by forcing more work out of the enslaved through whippings, threats, and torture. As slavery expanded across the Americas and Caribbean, owners used the political system to protect their investment and increase its value, and they drew on the financial system to turn human property into liquid capital by mortgaging the bodies of slaves. With this financing they bought more land and more slaves, further increasing their profits. Slaveholders even used accounting technologies that Max Weber argued were the hallmark of capitalist enterprise to measure the productive potential of the men and women they owned.

Powerful though this case is, lumping slavery and wage labor together as part of capitalism downplays points of fundamental conflict over what the market is, what it means, how people make and define profit, and what alternatives might exist. One central feature of market-driven capitalism is its "progressive" impulse. It pushes the owners of capital to find new ways to profit and commodify—and to transform whole societies, if necessary—to get what they want. Slavery lacked these "creative destructive" elements, as slave masters were much more concerned with maintaining control and preventing actions that would endanger their property or power. As a result, they underinvested in transportation and education and fell further and further behind the North in literacy and industrial development, a legacy that would keep the South the poorest region of the United States well into the twentieth century.

Our work departs from both the model deployed by the new historians of capitalism and traditional Marxian models. For the new historians, capitalism resides in the networks that interconnect different forms of labor and production more than in the forms of labor and production themselves. Following the world-systems approach, they focus less on the internal workings of markets, labor processes, or production sites than on the ways different forms of each are brought into coordination. Thus, slavery becomes "capitalist" in part because of its function in a larger system connected to industrialization and mass consumption, even if slavery itself has features and aspects that do not seem fully capitalist. The Marxian tradition, by contrast, focuses closely on the development of a capitalist class and transformations that commodify labor (and indeed capital). Both models, however, treat "the market" as a universal, unproblematic entity. Both view commodification as transforming society from a precapitalist state to a capitalist one, either by the qualitative linking of production sites through market expansion, as the new historians of capitalism see it, or by the commodification of labor, as traditional Marxists see it. In both cases, there is a rigid division between the precapitalist world and the capitalist one, with the former a stage on the road to the latter. By contrast, we are interested in the liminal spaces, interstices, and mixed market forms that do not fit neatly into either the capitalist or precapitalist category Our cases involve types of market activity that cannot be simply reduced to commodification but should not be treated as nonmarket or communal or reciprocal either. Indeed, often they have both market and nonmarket characteristics, which involve a complex mixture of values and motives beyond those of pure capitalist profit.

As this volume suggests, mapping the scope of capitalism's operations requires that we also examine the economic shadowlands where hidden markets and alternative economic practices often evade the capitalist state's regulatory gaze and measuring tools. Historians of the nineteenth-century economy have undertaken some of the most exciting work in this vein and have opened lines of inquiry that this volume also pursues. The contributors to Capitalism by Gaslight, edited by Brian Luskey and Wendy Woloson, examine a host of economic players and petty entrepreneurs—prostitutes, fraudsters, dealers in secondhand clothes, traffickers in stolen horses—who helped make the economy work for those who occupied its fringes. These seemingly marginal players, Luskey and Woloson argued, helped to create "capitalism as much as captains of commerce and industry did." Participants in morally and legally ambiguous businesses sparked debates and policy responses that eventually sharpened the boundaries between legitimate and illegitimate commerce.

Like Woloson, Luskey, and others, we argue for a dynamic social history of capitalism that leaves room for bottom-up as well as top-down agency. While the new history of capitalism has mainly put agency in the hands of white male elites, many essays in this volume look at women and minorities who participated in far less visible sectors and spaces of the economy. The elites we discuss are ones who sought to escape the glare of the visible market to operate in its concealed corners. We adopt a perspective that examines the economy from the side, even more so than from the top or the bottom. We peer in from the borders and peripheries to understand the highly contingent, messy, and often contested processes by which capitalism took shape and acquired legitimacy.

A social history of capitalism offers a way to think about how diverse actors—from capitalist elites and petty entrepreneurs to scavengers, home workers, and consumers of illicit goods—have created varied markets, generated new sources of profit, and cobbled together a living. We share with classic works of social history an interest in alternative economic forms and values that either persisted or faded into the background as capitalism ascended. We find, however, that many of these alternative forms were not holdovers from a precapitalist past but rather hidden or suppressed variants of market capitalism itself, present and active at the very moment the more public capitalist mainstream was asserting itself. When we look at capitalism sideways—and not solely from the vantage of capitalism's commanding elites or its resurgent resisters—we can better understand how capitalism thrives on, preys upon, and adapts to economic activities that fall outside the boundaries of the measured and the seen. We can see capitalism as a tangled hybrid of many forms. And we won't lose sight of women's crucial roles in sustaining those hidden and unmeasured economic worlds.

Hidden Markets in the Capitalist Ecosystem: Toward a New Framework

Where Capitalism by Gaslight documented a period when "the rules of economic engagement were still being established," the essays in this volume span the late nineteenth and twentieth centuries, when corporate capitalism was ascendant and capitalist ways of doing business wended their way into socialist economies and free trade zones that operated beyond national borders. Yet, even in the late nineteenth and twentieth centuries, when capitalism increasingly eclipsed other economic forms, hidden commerce continued to exert its influence on the economy and on economic development. If capitalism is fluid and ever changing—if it becomes something different when new technologies, new modes of production and distribution, and new systems of regulation displace older capitalist orders—we should pay more attention to how hidden markets shape these new permutations of capitalism.

Instead of treating capitalism as a single, if multifaceted, system anchored by the market, we argue that markets with different features and ways of operating can coexist on the same plane. Sometimes even different economic systems can coexist on the same plane, as we see when communist societies permit private entrepreneurship in certain sectors of the economy. Instead of thinking in terms of "the" market, we acknowledge that markets of various arrangements appear in various social settings and times. The question is, how should we understand these differences? Is capitalism a single structure with variant forms, , functional parts related to a single system, or do separable entities, capitalist and noncapitalist coexist that have different dynamics, histories, and futures?

Our position is that we should start by treating capitalism as a hybrid system—though not necessarily a single organic entity. In this way the story is not one of a global world system with differently positioned markets and economies. Nor is it a story of the "varieties of capitalism," each inflected by the particular sociopolitical circumstances of a nation. Nor is it the classical story of stages, from feudalism to capitalism, from liberal capitalism to monopoly capitalism, imperialist capitalism, or neoliberal capitalism. Finally, it is not even the older social-history formulation that pits capitalists against protestors and resisters sticking to a precapitalist past.

Elements of all these perspectives appear in this volume, but collectively the chapters push beyond them. Where most previous histories of capitalism have emphasized the uprooting of the past and the nakedness of the market, this volume stresses the mixed, partial, and embedded nature of markets even under capitalism. In contrast to the neoclassical model that sees people ready to join the market once the state removes fetters and puts proper institutions and property rights in place, we stress how institutions reflect different social and political conditions and cultural values. Rather than treat these social and political conditions as external to the market, however, we see them as mutually constituted: markets, values, and institutions coevolve. Finally, rather than seeing capitalism pushed by untrammeled market forces and endless commodification, we see an economy that spills outside the boundaries of formal markets, a subsurface of pipes, waterways, and sluices that constitutes a different economic hydrology.

Almost all of those who study capitalism embrace the idea that ruthless competition characterizes the system. Competition may drive innovation, focus profit seeking, or cause actors to recoil and seek protection from its destructive gales, but it is always there. It is a beneficial force for Adam Smith, but even Smith's opponent Marx admired Charles Darwin, whose ideas of competitive struggles for survival were just coming into vogue in Victorian England. Rather than casting capitalism's ruthless profit seeking as a Darwinian struggle for survival of the fittest, we prefer Darwin's other image: the tangled bank. As Darwin observed, in any ecosystem there is not only competition but also complex and supportive interconnections among species. Likewise, the capitalist economy coexists with and even draws sustenance from many different forms of economic activity existing in the same space, even if they operate by different principles. We start with a view of capitalism as a complex ecosystem of institutions and actors that operates at different scales (international, national, regional, local) and in different temporalities. While the ruthless-profit imperative constitutes one defining feature, it does not fully capture the dynamics that animate capitalism and help capitalism achieve legitimacy.

Our model of capitalism, resting on a broader engagement with the varied practices that constitute an economy, draws on the work of the social philosopher Dave Elder-Vass. Elder-Vass argues that economies are best described as collections of diverse appropriative practices. He defines appropriative practices as socially and normatively structured interactions among people that influence who gets what. They are not confined to classic market activity and exchange but may include human interactions and transfers that provide goods, services, and other things of value: labor in the home, gifts, reciprocal exchanges, and the free exchange of knowledge. While historians of capitalism are attuned to the different ways market appropriation may occur—through finance, slavery, property ownership, risk management, patents and royalties, corporate profits—they have not considered the ways nonmarket, semimarket, off-market, and alternative market economies may work. How these varied markets operate within the same capitalist ecosystem—and how capitalist-oriented markets function within socialist economies—is the focus of this volume.

Exploring the hidden precincts of capitalism brings to light a whole set of economic practices that originate on the margins of the formal market economy. In some instances, alternative forms of exchange create viable economic systems that work alongside mainstream capitalism rather than in direct opposition to it. Sometimes they even evolve into profitable multimillion-dollar businesses. Consider the place of secondhand goods in the U.S. economy. By the mid-twentieth century, for example, the once morally suspect business of selling junk and used clothes had become thoroughly integrated into U.S. middle-class life as consumers sought out thrift stores and garage sales for affordable secondhand goods. Typically run by women, suburban garage sales generated a billion dollars annually in the 1970s. They simultaneously challenged and buttressed mainstream commerce by enabling some buyers to resist marketing pressures to acquire the newest while generating income that sellers could use to justify their new purchases. The buyers, Jennifer Le Zotte has argued, could imagine themselves as "maverick consumers" while the sellers "operated as . . . lightly rogue capitalists, pursuing profit outside established and taxed corridors."

Reciprocity, sharing, and recycling are all forms of production and exchange that can operate alongside and sometimes in conjunction with traditional market capitalism. Open-source software, bartering goods online, appropriating the trash of others, and sharing content on the web do not involve the traditional market, let alone the wage-labor relationship. There may be a monetary aspect to them, as when YouTubers gain advertisers, yet a large percentage of web content does not generate sales—nor does it intend to. Social media companies and data collection firms, on the other hand, benefit from just this sort of open sharing when they monitor social media accounts and internet forums to acquire free data for their advertising algorithms and mass marketing campaigns.

Instead of viewing these diverse economic practices as a way station on the road to full capitalism or as appendages to the main capitalist economy, we see them as key elements of the complex capitalist ecosystem. Capitalism's veiled face can exist at the national or regional levels, within distinctive cultures, and even across nations within transnational communities. Sometimes hidden markets come together peacefully with the more visible features of capitalism in the mutually supportive way of the tangled bank. Sometimes they collide contentiously as mainstream capitalists seek to push aside or uproot alternatives. The different elements of the capitalist ecosystem will overlap, but they do not have to be subsumed into an organic whole. Nor does capitalism have to be defined by some essential feature like wage labor, commodification, or exploitation of the economically weak and marginal (although it contains all of these elements). If we instead treat capitalism as a field of analysis, our empirical and interpretive tasks must be redirected. We need to be more attentive to how capitalism changes over time, how it picks up different features and drops others, and how it relates its many assorted elements.

The essays here wrestle with all these issues. They address questions of power, agency, and contingency by interrogating the relationship between the manifest and the hidden, the mainstream and the marginal, and the licit and the illicit. They examine the conditions that enable the marginalized and the powerful to create concealed economic spaces and the circumstances that inhibit players (big and small) from using those concealed spaces to their advantage. As the essays in the volume show, policy makers and elites have deployed state power so that some markets can thrive unseen while others are constrained and subjected to tighter surveillance. Often the wealthiest and most powerful have used such devices as tax havens and offshore accounts to increase their wealth. In other cases, hiding can be a form of creative adaptation, as when smaller players learn to exploit the economy's interstices for modest gain or even just basic survival. In still other cases, racial minorities and outsiders enter shadow economies to participate in activities from which discrimination has excluded them.

One important implication of the research in this volume is that we cannot always find the answers to questions about the legitimacy of hidden markets in clear rules of law. Legality itself is a place where issues of power get played out. A banker might view the offshore tax haven as a legal instrument to preserve wealth, but other citizens might see it as a fraudulent tool that allows the wealthy to dodge their civic responsibility. A street peddler who sells fashion knock-offs might be condemned by high-end labels as a dealer in counterfeit merchandise, but to others he is simply a worker trying to make a living in an economy with limited opportunities. A dealer in black market goods might be condemned as a cheat or cheered for working the black market in opposition to an authoritarian regime. Many of the essays contained here highlight just these sorts of tensions and dualities.

Part I, "Measuring and Unveiling Markets," addresses a major methodological issue in policy studies and the histories of economic and feminist thought: How do we account for economic activity, and what gets lost in our accounting? How does such accounting render some activities visible and others invisible? The essays by Eli Cook and Eileen Boris both show how reliance on price-based metrics has tended to obscure inequality, ideology, and nonpecuniary values. Capitalist countries have long approached such economic indicators as GDP, the CPI, or the Dow Jones Industrial Average as objective metrics that ostensibly reveal the health of the economy and the progress of society. Cook's essay shows, however, that these statistical indicators were built out of an ideological project to efface questions of distribution and equality. He traces the U.S. origins of price-based economic metrics to the mid-nineteenth century, when statistics increasingly took stock of societal well-being by measuring the economy's capacity to produce income and increase wealth. The new interest in monied metrics departed from an earlier antebellum-era focus on "moral statistics" that linked social welfare to rates of pauperism, prostitution, and mental illness—all "important aspects of the human condition . . . that could not be measured in dollars and cents." Cook demonstrates how the increasing reliance on monetized economic metrics in the late nineteenth and early twentieth centuries privileged the interests and values of ruling elites by placing certain aspects of our modern lives on a pedestal, while covering others in a veil.

Eileen Boris examines how feminist development economists, working in conjunction with women lace makers in India, started to push back against the limits of such accepted metrics as market-based GDP. They created new forms of economic knowledge by bringing rural women's unmeasured and unremunerated labors to light. In the 1970s, pioneering feminist economists who studied rural women and development in the Global South identified a hidden market space overlooked in economics: the category of reproductive labor—the daily activities like cooking and care that sustain and socialize people. Development planners had long discounted the economic value of women's work because women's uncompensated family and farming labor went uncounted in official statistics and measures of GDP. As a result, poverty-reduction programs that focused on increasing employment and accelerating economic growth often intensified gender inequalities and the heavy burdens that reproductive labor imposed on women. Feminist economists called upon researchers to decolonize economic knowledge by enlisting rural women and scholars from the Global South in research that sought to identify and expose the exploitative conditions that impoverished women home workers. This collaborative research facilitated the creation of cooperative organizations that improved the Indian lace makers' earnings and helped to revise the ways economists have measured and conceptualized reproductive labor. The resulting economic knowledge laid the groundwork for the International Labor Organization's subsequent efforts to create labor standards for home-based and domestic workers.

The second part of the book moves from the macro level of knowledge creation to the gaps of the formal economy, where alternative economic practices thrived alongside the major corridors of capitalism. "Working the Margins" examines how men and women from working-class and minority communities, including African Americans in the U.S. South and Nuevomexicanos in the Hispano borderlands, set out to make a living at a moment after the abolition of slavery when the governing ideas about property were in flux. Bruce Baker's study of the trade in loose cotton, or "the city crop" as it was known in late nineteenth-century New Orleans, illuminates the difficulties of both sustaining and restraining an underground economy awash in legal ambiguity. In some cases, the dockworkers and scavengers who made their living around the cotton wharves gathered and then sold the cotton that had fallen out of the bales—a semilegal practice of recycling the cotton trade's "waste." In other cases, scavengers actively encouraged those leavings, committing what the New Orleans Cotton Exchange regarded as theft. The men who inspected bales to grade the cotton further delegitimized the loose cotton trade when they took overly generous samples and pocketed them for later resale to the junk shops and cotton pickeries that purchased low-grade cotton. Whether stolen or recycled, the city crop eventually found its way to the bottom layers of the legitimate trade, which sold it to regional and overseas markets for use in commodities that did not require high-quality fiber.

The close and functional relationship between the legitimate trade and the illegal or semilegitimate trade highlighted the challenge of regulating loose cotton. The very processes that made cotton profitable—measuring, weighing, and sorting cotton into grades—made it vulnerable to theft, but the marketability of low-grade cotton made the loose cotton trade difficult to eradicate. As studies of organized crime, counterfeiting, and knock-offs in fashion also show, formal and self-represented legal and legitimate enterprises often condemn these activities, yet the capital circulated by them often ends up in the legitimate market and can create profits even for those who condemn black and gray markets. Counterfeit merchandise can bolster the allure of luxury brands and may even serve as the gateway purchase to the eventual acquisition of branded luxury goods.

While Baker highlights the mutual interdependence of gray markets and official markets, Owen Hyman and Bryan Turo turn our attention to the economic borderlands of the U.S. South and Rocky Mountain West, where corporate capitalism eroded but never entirely displaced alternative economies on the margins of the formal economy. Both study communities of racial minorities whose long-standing practice of sharing communally owned resources came under pressure from large, land-hungry corporations. Focusing on the decades between 1870 and 1910, Hyman examines black freed people who acquired land through the 1866 Homestead Act in the piney woods on the southern Mississippi-Louisiana border. Black and white small farmers both relied on shared access to the forests to provide for their own sustenance and raise cattle for the market. Many also grew sugarcane and processed it into bottled syrup—a valuable commodity that they marketed and offered as payment in kind to the hired hands who harvested the cane. At other times they took on work for wages. Operating in a complex economic ecosystem, black and white farmers combined small-scale industry with subsistence farming and processed cane syrup for both the market and the barter economy. Neither purely capitalist nor precapitalist, this interracial economy blurred the boundaries that traditionally divided the formal and informal markets.

As the lumber industry moved aggressively to clear the forests, it destroyed the varied sources of capital on which both black and white farmers depended. Contrary to many assumptions, farmers joined forces across the color line to beat back the advance of large-scale lumbering, sometimes making their land claims visible through violence and intimidation. Ties of interracial marriage and family and a common interest in preserving the ecology of the woods fostered cross-racial cooperation, but in the end many black farmers lost their property and livelihoods to outright land and lumber grabs. While environmental historians have seen the destruction of black capital as a byproduct of the capitalist drive to rapidly liquidate timber, Hyman recasts deforestation as a story of outright theft, legitimized by the culture of Jim Crow. Biased judges, the defunding of black education, and unaffordable court costs deprived African Americans of their ability to seek legal recourse when lumber companies took advantage of widespread black illiteracy to overstep their timber-cutting contracts. The theft of black capital undermined the material basis for small farming and interracial cooperation, leaving blacks more dependent on wage labor and alternative economies, including bartering, to piece together a living.

Bryan Turo's study of the Hispano borderlands in New Mexico and Colorado between 1890 and 1930 examines similar conflicts over land-use rights between large cattle companies and Nuevomexicanos, whose property claims dated back to the Mexican era. Nuevomexicanos pushed back against large cattle operators by reorganizing an assortment of previously legal economic practices into a shadow economy that existed alongside the more visible economy. Although Nuevomexicanos who continued to practice open-range herding risked prosecution as trespassers, they relied on their deep knowledge of the land and social networks to gather intelligence about places where their cattle could graze without detection. Such practices often enabled them to evade attempts to pin them down to the formal practices and legal documentation required by white society. Rather than viewing the alternative economy sustained by Nuevomexicanos as simply informal or subsistence-based practices, Turo stresses how multiple logics of capital came into play in confrontations over land use.

In attempting to explain how fluid economic systems hardened into one dominant form, the new historians of capitalism overlook these sorts of alternative economies comprising mixtures of practices. The networked relationships, embedded ties of material and symbolic resources, and common interest in sustainability found in the economic borderlands studied by Turo and Hyman seem, in fact, to operate much like the most advanced and innovative sectors of modern economies today. As Turo observes, the scope and significance of these older, alternative economic practices often remain hidden from public view and hidden in the historical record because the state typically only measures and records the economic activities and resource exploitation of economic elites. Instead, the older economic practices of Nuevomexicanos and Native Americans came into public view as commodified attractions for Anglo-American tourists. After corporate capitalism uprooted their alternative economies, New Mexico built a profitable tourism industry around the crafts of Native American artisans and the pastoral rusticity of Nuevomexicanos. Both became emblems of the state's romanticized "precapitalist" past, ones that belied the actual dynamics of a now vanished economic world.

The third part, "The Licit and the Illicit," examines entrepreneurial men and women and ordinary citizens who created new opportunities and alternative paths for survival through their participation in black and gray markets. These essays do not tell a simple story of defying market controls but rather illuminate the mutual dependency of licit and illicit markets. In many instances, conventional business relied on officially prohibited commerce for revenue while the participants in shadow economies relied on the complicity of legitimate businesses for their survival. Hannah Frydman finds such complicity in her examination of classified ads for prostitutes, abortionists, and illegal or ostensibly immoral services in late nineteenth- and early twentieth-century Parisian newspapers. The market for these services depended on an interrelated series of changes in technology and business organization. Inexpensive printing led to a proliferation of low-cost newspapers, and the need for revenue led newspapers to create back pages for classifieds. The success of the classifieds hinged on one final factor: advertising copy clear enough to those who sought forbidden services yet coded enough that newspapers could still claim plausible deniability. Newspaper publishers left little to chance. Even as the front pages claimed the moral high ground by denouncing prostitution, their sensational reporting on crimes and the white slave trade taught readers how to decode the ads and discover subversive content hiding in plain sight. The market, in short, worked in chiaroscuro, blending light with dark. Indeed, trouble only arose when it became all too clear what was going on.

While Parisian newspapers and illicit entrepreneurs attempted to evade censors with a wink and a nod, the stakes were far higher for the Frenchmen and women who violated state controls on food and other essential consumer goods in Nazi-occupied France. As Kenneth Mouré's essay shows, frustrations with shortages and official market rules that set prices below producers' costs encouraged widespread participation in the black market by both French citizens and German authorities. These wartime black markets worked very much like any other, responding to supply and demand and adjusting prices accordingly. While the Vichy government took steps to punish egregious black marketeers and confiscate their unauthorized profits, it allowed low-level violations by individuals and businesses trying to provide for their families and employees. The black market was so pervasive, Mouré writes, that French citizens and Vichy authorities found it difficult to "separate 'gray' from 'black' markets, survival from profiteering, serving family and community needs from maximizing one's own personal advantage." Although many French citizens regarded their defiance of state controls as patriotic, they sharply rebuked merchants who collaborated with Nazis and profited at the expense of the public good. The "hidden" moral economy of the black market came into play when the wartime and postwar confiscation committees used their authority to exact retribution.

Mouré and Frydman, like Baker, illuminate the ways that official denotations of criminal market activities do not always align with the public's perceptions of illegitimacy. If one trades surreptitiously in defiance of a puppet regime, such as Vichy France, does that count as an "illegal" activity? If one engages in an ostensibly immoral activity to survive, is that necessarily wrong? In other cases, market activities that may be legal nonetheless provoke a deep sense of distrust. Some, for example, might accuse fortune-tellers of commodifying people's aspirations and anxieties and selling them back to the powerless and propertyless. Others, however, might see fortune-tellers as legitimate entrepreneurs who help their clients cope with the instabilities and dangers of the so-called real market.

Similar questions about the boundaries between the licit and the illicit arise when the wealthy and powerful engage in formally lawful activities that provoke public suspicion and resentment. While many commonly imagine offshore tax havens as a post-World War II innovation, James Hollis and Christopher McKenna argue that the offshore economy emerged during the interwar period in reaction to wartime restrictions on trading and partnering with enemy nations and subsequent efforts to restrict capital flight and tax evasion. Whether through legal means or by illegal tax evasion, individuals and corporate executives in Britain, France, Germany, and the United States structured their financial relations to avoid the restrictions and exchange controls then being imposed throughout the world. At the same time, merchant vessels began to fly "flags of convenience" to avoid tax and maritime regulations, and the United States created "foreign trade zones" that suspended U.S. customs law, laying the foundation for the international banking facilities and export processing zones that emerged later. As Hollis and McKenna show, prior to World War II, national governments lacked the institutional capacity, and in some instances the attendant will, to effectively deal with such alternative offshore business models. As the global economy shrank between the wars, the growth of offshore economic activity helped to bolster the remaining remnants of global trade. State officials, business professionals, and corporate executives in offshore jurisdictions keenly appreciated this opportunity and deliberately amended their laws to increase their attractiveness to foreign capital. Moreover, large states sometimes permitted evasion and offshoring in the interest of gaining strategic advantage against rival states.

While much of the present volume analyzes how markets operate in capitalist societies, the essays in Part IV, "Hidden Market Spaces in Planned Economies," make the surprising case that even capitalist-type markets (ones defined by free trade and profit) could receive state sanction in socialist societies. In the 1950s and 1960s, both the Soviet Union and the People's Republic of China authorized delimited market spheres that permitted some degree of private entrepreneurship in the interest of promoting economic development, meeting basic consumer needs, and enhancing the legitimacy of the socialist state. Philip Scranton examines communist China's early experiments with markets and private enterprise before the Cultural Revolution shut them down. Eager to avoid the rigidities that had inhibited economic development in the Soviet Union, the Chinese Communist Party permitted state, individual, and private-public partnerships in retail stores, eating establishments, artisan and repair shops, and on the streets where peddlers sold their wares—the sorts of places and activities that central planning could not effectively manage. The Chinese communists were particularly careful not to eviscerate the managerial and entrepreneurial talent needed for economic development, as the Soviets had done after their revolution.

As it turns out, even the Soviet Union did not completely eschew capitalist-type markets. In her study of Soviet Jewish artels (artisans' cooperatives engaged in small-scale production), Anna Kushkova indicates that the Soviet leadership also supported market activity that could further the aims of the communist state. In the 1940s and 1950s, Soviet officials granted artels a temporary license to make a range of everyday consumer goods that the war-devastated economy could not produce. Though officially sanctioned, the artels created a quasi-autonomous refuge for private enterprise that operated in the spaces between the official and the clandestine spheres of production. Thanks to discriminatory occupational barriers that excluded Jews from work in heavy industry, the artels became an important Jewish economic niche in Moscow's suburbs. Jews also gravitated toward such low-prestige work because the artels created opportunities for otherwise banned entrepreneurship. Knowledge gained from long experience cultivating trade networks enabled Jews to effectively discern whom to trust, whom to compensate, and how to dispose of their profits without arousing suspicion. They transformed their ethnicity from a liability into an asset by forging trusted trade networks with other Jews. Like the essays by Turo and Hyman, Kushkova shows how disadvantaged minorities used kinship-based social networks to carve out hidden spaces within the dominant economy where they could make a living.

In both China and the Soviet Union, these early ventures with markets, while at odds with socialist orthodoxy, should not be dismissed as aberrations. Scranton argues that the market experiments of the 1950s and 1960s enabled Communist Party officials to create a "socialism with Chinese characteristics" that permitted flexibility in some economic sectors even as they maintained strict control over finance, agricultural purchasing, and larger industrial enterprises. As did the Jewish artels, the Chinese entrepreneurs found creative practices and work-arounds to operate capitalist enterprises in a sea of official socialism. By the 1970s, Marxist economists were arguing that markets could actually serve socialist ends, disputing the long-standing assumption that the two could never mix. As these case studies show, the idea that the market inevitably leads to full-scale commodification does not account for the way markets can be deployed and embedded in different political and social systems to serve different ends.

The essays in this volume demonstrate that the conventional conception of the market as public, open, visible, and voluntary erases from view a wide array of obscured market activities that flourish within the capitalist ecosystem. The hidden economy exerts its influence by solving problems the official economy fails to address. It offers a place of escape and anonymity where creative or destructive innovation can occur away from the prying eyes of accountants, regulators, and incumbent competitors. It also enables the "losers" in the visible economy to hang on by supplying alternative means of financial survival. These cases call into question claims by such development economists as Hernando De Soto and Muhammad Yunus. They argue that the poor suffer because they lack clear title to their assets and cannot turn them into capital, so greater visibility would help them get the capital they need to progress. While clear title to assets would certainly help in some cases, other times, as we have seen, the marginalized did better when they could hide from the more powerful economic interests bent on expropriating their resources. Capitalists like transparency when it can speed economic transactions, though they themselves may go into hiding when the state comes calling with taxes and regulations. As with everything else, the question of market transparency and invisibility often hinges on whose interests are at stake. To understand capitalism fully, we must continue to chart these hidden worlds.

Table of Contents

Preface
Roger Horowitz

Introduction: Mapping the Shadowlands of Capitalism
Kenneth Lipartito and Lisa Jacobson

Part I. Measuring and Unveiling Markets

Chapter 1.
Lifting the Veil of Money: What Economic Indicators Hide
Eli Cook

Chapter 2. Accounting for Reproductive Labor: Feminist Economists and the Construction of Social Knowledge on Rural Women in the Global South
Eileen Boris

Part II. Working the Margins

Chapter 3. The Loose Cotton Economy of the New Orleans Waterfront in the Late Nineteenth Century
Bruce E. Baker

Chapter 4. Jim Crow's Cut: White Supremacy and the Destruction of Black Capital in the Forests of the Deep South
Owen James Hyman

Chapter 5. In the Shadow of Incorporation: Hidden Economies of the Hispano Borderlands, 1890-1930
Bryan W. Turo

Part III. The Licit and the Illicit

Chapter 6. Capitalism's Back Pages: "Immoral" Advertising and Invisible Markets in Paris's Mass Press, 1880-1940
Hannah Frydman

Chapter 7. Capitalism's Black Heart in Wartime France
Kenneth Mouré

Chapter 8. The Emergence of the Offshore Economy, 1914-1939
James Hollis and Christopher McKenna

Part IV. Hidden Market Spaces in Planned Economies

Chapter 9. Comrades In-Between: Transforming Commercial Practice in the People's Republic of China, 1949-1962
Philip Scranton

Chapter 10. Hidden Realms of Private Entrepreneurship: Soviet Jews and Post-World War II Artels in the USSR
Anna Kushkova

Notes
List of Contributors
Index
Acknowledgments

Editorial Reviews

"Capitalism's Hidden Worlds is a welcome contribution to the study of the history of capitalism. Capturing a wide range of topics-many illustrating the interpenetration of social, political, and regulatory regimes-and geography, the collection pushes the history of capitalism beyond its U.S.-centered focus."

University of New Hampshire Josh Lauer

"In collecting essays that explore historical examples of economic activity overlooked, concealed, or misunderstood, editors Kenneth Lipartito and Lisa Jacobson encourage us to rethink our understanding of how markets have worked historically and how we conceptualize capitalism more generally."

Lancaster University James Taylor

"This is an insightful, thought provoking ensemble of essays that explore the hidden economic forces, agents, and practices in the 19th and 20th century....Capitalist’s Hidden World is a stimulating, insightful collection of much needed empirical studies concerning the shadow economy of the modern world. It contains a number of contributions that offer new perspectives, especially in the fields of global history and discussions on marginalized groups...[I]t is bound to make a big impact in the fields of social and economic history."

Comparativ - Paul Franke

"Capitalism's Hidden Worlds is a welcome contribution to the study of the history of capitalism. Capturing a wide range of topics-many illustrating the interpenetration of social, political, and regulatory regimes-and geography, the collection pushes the history of capitalism beyond its U.S.-centered focus."

Universityof New Hampshire Josh Lauer

"Capitalism's Hidden Worlds is a welcome contribution to the study of the history of capitalism. Capturing a wide range of topics—many illustrating the interpenetration of social, political, and regulatory regimes—and geography, the collection pushes the history of capitalism beyond its U.S.-centered focus."—Josh Lauer, University of New Hampshire

"In collecting essays that explore historical examples of economic activity overlooked, concealed, or misunderstood, editors Kenneth Lipartito and Lisa Jacobson encourage us to rethink our understanding of how markets have worked historically and how we conceptualize capitalism more generally."—James Taylor, Lancaster University

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