The story of corporate capitalism is often articulated as “the benevolent spread of progress,” as historian Nan Enstad observes in her new book Cigarettes, Inc.: An Intimate History of Corporate Imperialism (p. 5). This narrative often begins in the West and moves further and further East, eventually consuming the world. This perceived natural experience, we are often told, not only exported modern products, technologies, and commercial formations to the East, it also transformed ‘primitive’ societies into ‘civilized’ ones.
The leading protagonist of this West-to-East movement, the story goes, was the innovative entrepreneur. Using metaphors of natural mutation, the late economist Joseph Schumpeter argued that the entrepreneur was the central driver of creative destruction, which involved the (destructive and eventually productive) transformation from “water wheel to the power plant” or “craft shop to the factory.” 1 For American entrepreneur James B. Duke, it was the reorganization of the tobacco industry.
Scholars such as Alvin J. Silk and Louis William Stern have argued that “Duke accomplished [a] Schumpeterian type of innovation” by consolidating the largest US tobacco manufacturers into the American Tobacco Company and then merging it with the British Imperial Tobacco Company in 1904.2 Following the narrative legacy of Schumpeter, Silk and Stern articulate a story of Duke single-handedly reorganizing the tobacco industry to create one of the largest transnational corporations: the British-American Tobacco Company (BAT). These and other stories of entrepreneurial driven capitalism expressed by scholars such as Patrick G. Porter and Alfred D. Chandler, Jr., among many others, have been repeated so many times that they have come to be viewed as natural.
These Schumpeterian inspired narratives of corporate capitalism, as Enstad astutely argues, create a narrow view of capitalism, overlooking the real and influential ways in which economic life intersect with gender, sexuality, and race. We must “look beyond” the story of the brilliant entrepreneur, Enstad writes, to understand the real story of innovation, which involved “cultural intermediaries, significant geopolitical events, and the social circulation of goods” (p. 7).
The rise of the tobacco industry offers a particularly good example of how corporate capitalism was not only shaped by the entrepreneur, but also by factory workers, tobacco farmers, sex workers, consumers, and a multitude of other lives the transnational corporation had intimate contact with (p. 264).
Most British and American men did not smoke cigarettes in the late nineteenth and early twentieth centuries — they either chewed tobacco or smoked pipes. Cigarettes had a foreign mystique, often viewed a product for immigrants and outsiders (p. 17). Unlike the cheaper and less acidic bright leaf tobacco used for pipes, Turkish cigarettes had a potent smell and flavor, which led early cigarette consumers to smoke them like cigars, holding the smoke in their mouth rather than inhaling it deep into their lungs (p. 23).
Recognizing the problematic image of cigarettes in both the United States and Britain, the Virginia tobacco man Louis Ginter leveraged his international contacts to transform the social appearance of cigarettes. By marketing his Old Verginny brand in British gentlemen’s clubs, where they circulated among the British elite, cigarettes gained a sense of sophistication and became a pastime of “professional men” (p. 25).
Making Cigarettes Cool
In the United States, meanwhile, tobacco man R.J. Reynolds introduced a new cigarette brand with clever marketing. In 1913-14, he published a series of newspaper ads to build anticipation for his product. The first simply read “Camel,” the second said “The Camels are Coming,” and the last exclaimed “The Camels are Here!” with an introduction to the new “Turkish blend” cigarettes that combined the expensive Turkish tobacco with the cheaper burley kind, which helped to transform the tobacco industry (p. 155).
At ten cents a pack, Camel cigarettes offered the same quality as competitor blends for a lower price, allowing Reynolds to gain 35 percent of the US cigarette market by 1917 and 45 percent by 1923.
Along with the owners of Lucky Strikes, Chesterfields, and Old Golds, Reynolds sought to make Camel cigarettes a cultural spectacle in the United States, while the BAT spent lavishly on marketing their Ruby Queens in China. Both Camels and Ruby Queens, Enstad writes, campaigned to connect their brands to “the aura of jazz” (p. 186). By sponsoring jazz radio shows in both the United States and China, these companies fueled a smoke-filled jazz culture. Smoking became a way for people to participate in this jazzy culture of sophistication and become a “modern” man or woman (p. 186).
Because the global cigarette market was dominated by Western companies such as the BAT, many Americans believed modernity progressed linearly from the West-to-East, bringing modern systems of production and a ‘civilized’ culture of consumption in its wake. Enstad’s critique of this narrative, along with that of the ‘heroic’ entrepreneur, is a central thread that ties all seven chapters of Cigarettes, Inc. together.
Rather than a unidirectional movement, Enstad demonstrates how cigarettes circulated in both directions — it was a Western product to the East and an Eastern product to the West (p. 50). “The bidirectional flow of cigarettes, brand imagery, and tobaccos,” Enstad writes, “contradicts the capitalist story that globalization and modernity flowed from West to East and that Western companies set the codes for consumption and taste that the rest of the world adopted” (p. 18).
The Big Tobacco Network
This bidirectional construction of modernity, as Enstad further shows, coincided with the formation of a transnational tobacco network that created a manipulative system of labor. Inspired by the Jim Crow South, the new tobacco industry not only maintained racial hierarchies in the US, it expanded them into China (p. 87).
BAT executive Henry Gregory, for instance, managed the company’s agricultural department in China, creating a system of production that was very similar to sharecropping in the American South (p. 88). While bright leaf tobacco brought a higher price than other agricultural commodities, making it attractive to Chinese farmers, it was also one of the most expensive crops to grow, requiring “seeds, fertilizer, flue pipes, and coal for curing tobacco” (p. 98). Since many farmers did not have this equipment, BAT executives began loaning it to Chinese farmers and charging an interest. Farmers went further into debt from coal and fertilizer they borrowed from Chinese landowners, making Chinese bright leaf tobacco farmers dependent on both BAT and local elites (p. 99).
Because cigarettes could be produced in China for a fraction of the cost they could in the American South, BAT leveraged the political influence that both British and US governments had “won by a half-century of imperial wars and arm-twisting diplomacy” to create one of the largest cigarette production operations in the world (p. 14). By the 1930s, around two million Chinese farmers were producing bright leaf tobacco in three provinces, including Anhui, Henan, and Shandong (p. 101). BAT employed both farmers and factory workers, many of whom struck fifty-six times between 1918 and 1940 because they were both overworked and underpaid.
As one of the largest employers in Shanghai, BAT tobacco factories created “their own internal systems of governance,” Enstad writes, and “functioned as important sites of governance in their societies, becoming a form of polity. In both the US and China, factory hierarchies entwined with local political hierarchies and legally ensconced inequalities” (p. 153).
Cigarettes, Jim Crow, and Commercial Imperialism
Through her analysis of the transnational tobacco industry, which had intimate contact with laborers in China and the American South, Enstad also reveals how the relationship between the corporation, imperialism, and Jim Crow changed the nature of Western expansion in the first years of the twentieth century. The connection between formal state imperialism and informal commercial imperialism was not new during this period, but it was changing (p. 13). Imperial power no longer emerged from the strength of a single state led empire. Rather, the transnational corporation linked US and British political networks and expanded Jim Crow labor techniques to create new ways of extracting resources from foreign nations.
As we have seen, the BAT did more than create smoked out jazz clubs and a culture of consumption. It also played a leading role in reorganizing society, shaping the lives of farmers, factory workers, managers, and millions of consumers, demonstrating how the transnational corporation a was not just an economic organization, it was also a social and cultural one. Enstad shows how people who had intimate contact with BAT were not passive bystanders. They all played an active role in shaping the corporation, which leaves an important question about why we still hear the echo of Schumpeter in narratives of corporate capitalism that are centered around one (often white) man: the capitalist cowboy.
By viewing economic theory as the dominant prism through which the story of corporate capitalism is told, Enstad argues, we maintain a depersonalized and abstract view of economic society. Throughout Cigarettes, Inc., Enstad demonstrates how social and cultural histories of labor management, branding, consumption, and entrepreneurship, were “integral to how the economic story unfolded” (p. 264).
Corporate capitalism does not follow the natural laws of economics, as some market minded thinkers have argued, it follows the whims of people who have the capacity for both innovation and exploitation.
About the Author: Johnny Fulfer received his M.A. in American History from the University of South Florida, and his B.S. in Economics and B.S. in History from Eastern Oregon University. Johnny is interested in U.S. history during the Gilded Age and Progressive Era, monetary history, political economy, the history of economic thought, and the history of capitalism. You can find his published work on Academia. @Johnny_D_Fulfer.