This chapter presents a critical analysis of how historians have used the concept of capitalism. It argues that the financial history of capital needs to be integrated more fully into the histories of all social relations if we want to use history to refine a ‘presentist’ concept about financial power and its effect on society and political choice. It is a contention of what has been termed the ‘new history of capitalism’ that financial history is often too narrowly institutional in that it focuses to narrowly on economic growth and not the social effects of financialisation on broader society. Finance, in these histories, when socialised, is generally presented as having a negative role on broader social relations. However, capital was created institutionally through relations of interdependence first, and then once created was used by those who accumulated great amounts of it to become more powerful.

This chapter outlines the history of previous institutions that created forms of capital in Europe, including land, dowries, banks, bills of exchange, and government debt. It examines the reasons why the system of informal oral credit, as it had developed over the previous 100-odd years, began to be criticised during the Commonwealth period. Many authors started to claim that it was both inefficient and an obstacle to economic growth. Many pamphlets were published containing proposals of different sorts of banks, which would issue paper currency to speed up circulation. Some of these were based on previous European examples. The nature of these proposals is examined, together with a summary of how they related to the creation of the Bank of England. Its establishment is normally seen as the successful outcome of this debate, but in fact it was not primarily created as an institution to expand the supply of credit, but to help fund the government debt. The increasing cost of the War of Spanish Succession did, however, result in the issue of things like Exchequer or Treasury bills, as well as South Sea and Bank stock to fund the war. The last part of the chapter focuses on the significant effect these multiple forms of paper currency had on liquidity within London.

Did capitalism, including the ethics of some of its leaders, go astray as a result of the upheavals of World War I and democratic politics? Did one witness a new phase of “political capitalism,” a term sociologist Max Weber coined originally with respect to ancient and premodern forms of capitalism? These questions not only reflected anticapitalist resentments but were a way to describe the close cooperation of political and economic interests and some of the more excessive forms of “booty” and “adventure capitalism,” including political and economic corruption. They also addressed certain enterprises, social groups, and individuals. Although not outright antisemitic, “political capitalism” always provided a springboard for antisemitic agendas. With the onset of the Great Depression, the latter was to become crucially important in the context of efforts not just to restore forms of a “rational” neoliberal economic order but also to purge the excesses of the previous years, including the persons who appeared to represent this “political capitalism.” These purges lasted well into the National Socialist period, which at the same time witnessed new and excessive forms of booty capitalism directed against the “enemies” of the Volksgemeinschaft and later also the occupied countries.