Caitlin Rosenthal is a business historian and an assistant professor at UC Berkeley. Her research focuses on the history of business management practices, and her book Accounting for Slavery: Masters and Management, reveals how slaveholders developed advanced management techniques to control their workforce and maximize their profits. Her work has received several awards and honors, including the first book prize of the Economic History Society. 

As a student in her course, The History of American Capitalism, I had the pleasure of interviewing her about her journey and research. 

Ozgun: As a business historian who initially studied political science as an undergraduate, can you describe your journey toward economics and economic history in particular?

Rosenthal: I had always been interested in academic research — towards the end of undergrad, I took a couple of history classes and found them to be super interesting. Later on, during my work as a management consultant — which is its own story — I realized that businesses were in many cases as big as governments, and that people’s employers had a significant impact on their lives. From here, I became interested in the history of businesses, especially their labor management practices, and how they wield data. When businesses grow in scale, they often begin to view workers as inputs of production rather than as human beings. 

I then applied to graduate school in American Studies, intending to explore this topic using both history and economics. Can businesses be a force for social good? Conversely, can nonprofits use business-like practices to make themselves more sustainable? I ended up writing about business practices and slavery, exploring how slaveholders used some techniques we usually associate with free labor.  

Ozgun: Given your work is at the intersection of economics and history, what do you believe contributes to the divide between these disciplines? How can we bridge this gap, and what role do you see your work on American capitalism playing in this regard?

Rosenthal: As a graduate student, I was super optimistic that historians and economists could cooperate — yet economics and history are divided on almost every level. The methods of historians are almost fully qualitative, whereas for economists they are mostly quantitative. Economists usually consider policy implications and they like to think they can frame their questions in ways that are not normative. In contrast, historians see normative implications to everything. Historians are also really reluctant to speak about the present: we can tell you about what happened, but are very hesitant to tell you what we should do. 

But among these, right now, I think the biggest barrier is how economics is set up as a discipline: it is highly structured and hierarchical, with little room for qualitative, historical analysis. 

Ozgun: How do you define the word “capitalism?”

Rosenthal: Academically, I think the word is not usually useful since people have such different definitions. But if I were to define capitalism, I would place emphasis on capital. Capitalism is a system or an economy where the owners of capital can dictate and control prices and labor. There is a market, but it’s not a free market of many small contributors — it’s a market where capitalists have disproportionate amounts of power and thus can shape or even set the rules of exchange. 

Ozgun: You write that “the crucial characteristic of capitalism is not commoditization itself but the power to commoditize.” Can you elaborate on this statement?

Rosenthal: One of the things that sparked my interest in writing about slavery is that lots of theorists associate capitalism with wage labor. While slavery is different from wage labor, I think that both are similar in that workers are highly commoditized. They’re seen as replaceable and fungible, as if they’re simply vessels of labor power rather than individuals with whom you have to negotiate directly. 

Even in a market where labor is commoditized, capitalists can choose to not treat labor as a commodity; they sometimes take advantage of the fact that people are complex human beings, and they invest in human capital and emotional relationships with workers. Other times, they treat workers as if they’re interchangeable, disposable units of production. The fact that somebody has the power to decide whether you’re a commodity or not — that’s a critical characteristic of capitalism. 

Ozgun: Based on your definition, capitalism appears to be rooted in exploitative power dynamics. If that’s the case, do you think that certain social ills such as exploitation and inequality are intrinsic characteristics of capitalism, or rather undesired consequences that we can rectify?

Rosenthal: I know they’re undesired consequences that we can rectify. But again, it all comes down to the word. If you think we’re currently living in a capitalist society, we could implement changes to reduce inequality and exploitation. But if we did, would we surpass the boundaries of  “capitalism?” Rectification should reduce the power, which I mentioned earlier, of employers over their employees. So, yes we can make our economy more just —whether it will still be capitalist is a question of semantics. 

Indeed, by my own definition, maybe a gentler capitalism isn’t capitalism at all. But I do think there’s a possibility for a more equitable, market and business-based economy. 

Ozgun: In your book, Accounting for Slavery, you illustrate how sophisticated data collection and management techniques facilitated the dehumanization of the enslaved by plantation owners — shedding light on the importance of assessing the narrative behind the data. In today’s corporate landscape, how can companies ensure they don’t lose sight of their workers while striving to maximize efficiency? What tactics can be employed to foster a more holistic approach to data analysis?

Rosenthal: Regulation is the big-picture answer. Certainly, slavery didn’t become good if slave owners were just nicer — we needed government action and the resistance of enslaved people to put an end to slavery. But on the other hand, I do think that it is important for business people to think broadly about ethics. When we ask, “why do people go into business?”, the easy answer is to make money. And that’s usually there, but I think almost nobody goes into business only because they want to make money. They go in with a huge range of considerations and goals, and by keeping broader aims in mind I think it’s absolutely possible to run ethical businesses. 

As for data, businesses should consider how to broaden the range of collected data. There are two main ways of doing this; one is about having new data indicators, and the other is by recognizing what’s not provided by your current numbers and reflecting on what might be missing. 

First, data is quite sticky, especially because it’s useful to have consistent, comparable intervals over time. Keeping the same unit of analysis makes it possible to make comparisons. But we also need to recognize what we lose when we don’t shift our indicators. For example, if you’re selecting a potential strategy but you’re only comparing labor costs, you won’t be able to see whether those costs are based on a viable living wage that will be good for your community over the long run. That doesn’t mean you don’t look at labor costs, but it does mean you remember that they aren’t everything!

Profitability is an intoxicating metric: it’s easy to calculate and translate all your different values into one unit. But of course, so much is lost when we try to set things that are fundamentally different equal to each other. It will be different for every business, but a critical part of the solution is to be creative in implementing alternate ways to measure objectives. 

Ozgun: You have a surprisingly optimistic view of businesses and how their intent is not solely to maximize profit. So what advice would you give to students who wish to channel their careers in economics or business towards social good?

Rosenthal: I think that the most important thing is to always be questioning what you’re doing. Whether you’re working for someone else, or starting your own business, have clarity on what your goals are — and keep returning to and evaluating those goals. 

Importantly, do not think that by being successful, you’re automatically doing good. For me slavery is such a powerful warning against this: enslavers just followed the rules and sought profit. They were committing horrible injustices along the way. So, in practical terms, you want to consider what good you are doing at each stage in your career. People do build remarkable social enterprises, and those businesses do act like businesses — they certainly calculate profits, and they may even have to lay people off. But, there is nothing automatic about doing this well. Propelling businesses in a positive, powerful direction requires the people who are stewarding them to constantly question their actions, and, sometimes, being willing to make decisions that aren’t the most profitable.

Ozgun: What inspired you to create a course on the History of American Capitalism? What is the one thing you would like students to take away from it, and why? 

Rosenthal: That’s a tough question. A lot of the inspiration came from my advisor. When I was in grad school, there was a new move in history towards people writing the history of capitalism aiming to integrate both history and economics, and today, it’s offered in many universities.

At a more abstract level, I would want students to take away the idea that there is nothing inevitable about capitalism producing good outcomes. There are sometimes narratives that posit capitalism as a natural economic state that eventually produces prosperity, and I think capitalism is not natural. This doesn’t mean that capitalism can’t generate prosperity, but that it’s a lot more work than just having the economy automatically produce wealth. 

Ozgun: What are some additional research questions you are exploring after publishing your book, and what are some new projects you are engaged in? 

Rosenthal: The biggest new project I’m working on is on the history of human resources departments. You put it very well when you said: for someone who writes a cynical history of business, you have a rosy opinion about the potential of businesses. And I think this is the tension in a lot of my work — that I have a lot of optimism about what large organizations, including businesses, can do. And yet, historically we see them fall short again and again. 

As a field, HR and personnel administration are really optimistic about making corporations a more humane place to work.  Many people working in HR are interested in helping people love their jobs and develop their career paths, and the field as a whole is about ensuring that companies have better policies. And yet, HR has become a field that’s more concerned with limiting legal liability than actually making workplaces better. For instance, HR is highly involved with sexual harassment and discrimination; and while there have been efforts to improve these issues, a lot of the work feels like it is more about protecting companies from being sued than protecting employees from being harassed. 

Ultimately, I ask, “Why isn’t HR better?” And, is there a possibility for a kind of HR that makes companies better? In some ways, it’s a negative story …. But also, as bad as HR is, it’s even worse to be at a company with no HR. So it’s also a story of progress. 

Ozgun: Fascinating! I wonder if you will still have this optimism after completing your research. 

Rosenthal: [Laughs] We will see. 

We thank Professor Caitlin Rosenthal for sharing her research and journey with the Berkeley Economic Review.

Featured Image Source: Caitlin Rosenthal
Disclaimer: The views published in this journal are those of the individual authors or speakers and do not necessarily reflect the position or policy of Berkeley Economic Review staff, the Undergraduate Economics Association, the UC Berkeley Economics Department and faculty,  or the University of California, Berkeley in general.


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