Since I have a formal area of expertise in political economy as part of my PhD credentials, I can help Congressman Alexandria Ocasio-Cortez with something I recently learned she said in a 2018 interview with Margaret Hoover on Firing Line. Ocasio-Cortez stated that, when the United States was founded, it did not operate on a capitalist economy. “Capitalism has not always existed in the world,” she said. “When this country started, we were not a capitalist—we did not operate on a capitalist economy.” The first part is true enough. The second part is entirely false.
Putting the matter charitably, Ocasio-Cortez profoundly misunderstands both economic history and the conceptual frameworks used by scholars of capitalism’s long development. While popular historical memory and political discourse often treat capitalism as synonymous with industrial capitalism, the major traditions of classical political economy—as well as Marxist, neo-Marxist, and world-systems scholarship—define capitalism as a mode of production and exchange that long predates America’s founding. Agrarian capitalism and merchant capitalism are not stages preceding capitalism but expressions of capitalism in its developmental phases. By the mid-eighteenth century, when the United States emerged, the transatlantic world was already deeply embedded in capitalist relations, both legally and structurally.
World-systems theory offers one of the clearest accounts of this long historical view (the longue durée, as the Annales School calls it). Immanuel Wallerstein argued that capitalism consolidated as a world-system during the “long sixteenth century,” roughly 1450 to 1620. This period saw the emergence of a Europe-centered network of production and trade characterized by core–periphery relations and market-oriented forms of labor control and exploitation.
For Wallerstein and others in this tradition, capitalism is not merely a national economic system but a world structure of accumulation and exchange. Within that framework, mercantilism, colonial resource extraction, coerced plantation labor, and early wage labor are all unmistakably capitalist. The system was already centuries old by 1776, the year Adam Smith described its logic in the Wealth of Nations and the Continental Congress passed the Declaration of Independence. (For a primer on these matters, see Ronald Chilcote’s 1984 Theories Of Development And Underdevelopment. Although fewer than 180 pages, it manages to present a comprehensive review of the capitalist history and the various theories developed to understand it.)
Legal historians have similarly emphasized capitalism’s deep medieval roots. In his 1977 Law and the Rise of Capitalism, Michael Tigar argues that the legal architecture of capitalism—the commodification of labor obligations, contract doctrine, merchant law, and private property norms—developed from the early Middle Ages onward, a period of eight centuries. As feudal society matured, the growing prominence of towns, trade guilds, merchant capital, and money rents created institutional and juridical conditions conducive to capital accumulation. By the fifteenth century, capitalism was not merely an emergent possibility but an increasingly visible reality woven into European social and economic life.
Marxist historiography reinforces this view. Karl Marx found capitalism developing in the womb of feudal society, emerging through long-term shifts in property relations, labor control, and market dependence. Far from appearing suddenly in the eighteenth or nineteenth centuries, capitalism unfolded immanently from contradictions within feudalism itself. The steady commutation of feudal labor dues into money rents, rise of agrarian capitalism in England, expansion of commodity markets—all signaled the internal maturation of capitalist relations long before industrialization. Thus, for Marx and the generations of scholars who followed him, capitalism is a process, not an event or a structure—and the process in all its foundational elements was in place well before America’s founding. Indeed, it was a central cause of America’s founding.
Before continuing, I want to head off at the pass resort to the social constructionist dodge, in which things come into existence because power names them. It is true that, before the mid-nineteenth century, people described the system with different terms. However, even before the modern name for the system came about, those who described the system recognized it for what it was.
Enlightenment writers speak of the “commercial society,” emphasizing markets, trade, and profit-seeking. Smith famously describes Britain in these terms. Others refer to the “mercantile system,” highlighting the state-directed, trade-oriented economic order of the transatlantic world. In political debates, in Britain and the early United States, observers write about the “moneyed interest” or the “monetary system,” calling attention to the power of financiers. Early nineteenth-century commentators describe a “system of wage labor” or “free labor,” capturing the dependence of the system on labor markets. Although historians now use the term “agrarian capitalism,” we read in the texts of past historians about “enclosures,” “improvement,” “money rents,” and “tenant farming”—all features of rural capitalist transformation. In short, before the label capitalism existed, the same underlying system was identified through the language of commerce, industry, money, trade, and wage labor.
As I have explained in previous essays, cultural and ideological transformations played an important role. Max Weber’s famous analysis of the Protestant Reformation—beginning in 1517—illustrates how religious innovation helped rationalize economic behavior and weaken medieval constraints on accumulation. While Weber’s thesis does not claim that the Reformation created capitalism (he is often misunderstood in this respect), it shows how Calvinist ethics intensified tendencies already underway, giving moral and psychological sanction—the “spirit of capitalism”—to the disciplined, rationalized pursuit of economic gain. In this respect, the Reformation acted as an accelerator of capitalist development rather than its point of origin. Sharp readers will note that, to theorize that Calvinism acted in such a way, one must presume the system already existed. Indeed, in many ways (and Marx would insist this was the case), the emerging capitalist system created the conditions that prefigured the Protestant Reformation.
The Founders of the United States understood that they operated within a capitalist system, and the nation’s founding documents reflect this awareness. The Constitution embeds core principles of capitalist political economy: strong protections for commercial relations, enforceable contracts, private property, and mechanisms to secure credit, money, and interstate markets. The Contract Clause, the Takings Clause, and the Commerce Clause all function as legal infrastructure for a society organized around private ownership and capital accumulation. The Constitution was a conscious and deliberate effort to legitimize and stabilize market relations. By establishing a national framework that ensured rational legal rules for investment, facilitated commercial expansion, and protected property rights, the Founders created a constitutional order designed not to facilitate the future rise of capitalism—or some other system Ocasio-Cortez imagines capitalism corrupted—but to perpetuate and strengthen a capitalist system they already took for granted.
I agree with critics of the congresswoman that she is not up to the task of representing her constituents (I will avoid commenting here about why they would continually re-elect her). Still, we cannot excuse Ocasio-Cortez’s ignorance of the history of capitalism. She and her supporters tout her 2011 bachelor’s degree from Boston University, where she double majored in Economics and International Relations. Her bona fides are referenced to claim that her credentials make her specially qualified to speak on such matters. Yet she doesn’t know that the scholarly traditions she would have encountered in her coursework converge on a clear conclusion: by the time the United States was founded, capitalism was not only present but entrenched in the Atlantic world.
We cannot blame this on her instructors. She would have learned in lectures that colonial commodity production, merchant finance, the plantation complex, the transatlantic slave trade, land speculation, and the increasingly global division of labor were all expressions of a capitalist world-system already in full operation. To describe early America as something other than capitalist is incompatible with the conceptual frameworks of classical and neoclassical economics, world-systems theory (which the congresswoman would have learned about in international relations), Marxist and neo-Marxist theory (one should expect a socialist to know at least that), and standard histories of law and property. I will give the teachers at Boston College the benefit of the doubt; they would have taught students that the United States’ founding institutions, commercial practices, and social relations were already embedded in a centuries-old capitalist order.
Yet, this is not a simple matter of not paying attention in class or natural variation in the range of native intelligence. There’s an ideological and political problem for Ocasio-Cortez and her Democratic colleagues in admitting that the American Republic was founded to guarantee capitalist relations for its citizens. Democratic socialism is difficult to reconcile with a legal system designed with such assurances. The institutional architecture of the United States was built to safeguard private property and support market exchange, and thus limit the state’s ability to interfere extensively in economic life. While democratic socialism seeks to expand public ownership, socialize key sectors, and subordinate market outcomes to collective decision-making, the American framework assumes the primacy of private capital and uses constitutional constraints to preserve it. For any democratic socialist policies to work, they must operate within—rather than replace—a constitutional order fundamentally designed to reproduce the capitalist mode of production. I no longer believe that it possibly beyond a very limited extent.
Being a charitable person, I checked to see whether Ocasio-Cortez ever corrected her comment. I could find no evidence that she ever did. This is troubling enough (she is quite incurious). More troubling is the possibility that she suspects she is wrong but doesn’t care to know whether she is because the fiction that capitalism represents a corruption of the American Republic rather than its foundation is ideologically useful. By remaining ignorant, the congresswoman can advocate for democratic socialism while at the same time feigning support for the Constitution and the Republic’s founding ideals that her politics contradict. To be sure, she doesn’t believe in the American System; she is, after all, a progressive, a functionary of corporate statism, which is an expression of late capitalism brought about by the hegemony of transnational corporate power, which is as much a danger to capitalism as the socialist policies Ocasio-Cortez and her ilk pretend to understand. We must therefore conclude that her alliance with corporate state power is about replacing democratic republicanism with an administrative apparatus she presumes will see in her a useful bureaucrat. It already has, hasn’t it?
freedom and reason 