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What Was Capitalism?

James Livingston

February 19, 2024

24 MIN READ

What Was Capitalism?

What isn’t ending nowadays? What isn’t on the verge of extinction? The list of exemptions is short, and we – human beings – aren’t on it.

Neither are bees, butterflies, coastlines, childhood, civility, coral reefs, democracy, elephants, facts, families, frogs, gender, glaciers, God, the humanities, love, morality, middle classes, minibars, national borders, objectivity, party systems, patriarchy, religion, science, whiteness, work, and much more.

According to activists, journalists, and writers of every political persuasion, all of it is endangered.

And now, if we are to believe Quinn Slobodian, Clara E. Mattei, McKenzie Wark, and Yanis Varoufakis, capitalism, too, is past its expiration date.

Once upon a time, as the saying goes, it was easier to imagine the end of the world than to imagine the end of capitalism. No longer.

Karl Marx liked to say that the effect of an external shock on any organism depends as much on the condition of the organism as it does on the nature of the shock.

These authors agree in the sense that they regard the economic crisis of 2008-09 and the pandemic of 2020-21 as blows to a market society that was already staggering – hollowed out by the “financialization” or “dematerialization” of assets and the concurrent development of algorithmic means of predicting, even producing, consumer behavior, and shaping, even controlling, markets.

And perhaps, they suggest, intellectual decadence – the gross deficiencies of logic, evidence, sympathy, and taste inscribed in the complacencies of monetarism, neoliberalism, populism, and/or free-market radicalism – had fueled ideological decomposition, making the justification of capitalism more difficult for anyone inclined or employed to do so.

FANTASY ISLANDS

This last possibility is the one explored by Quinn Slobodian in Crack-Up Capitalism, which reads like the peer-reviewed publication of a newly-minted anthropology PhD who has witnessed the sanguinary ceremonies of a lost tribe on a dark continent and returned, barely alive, to tell the tale.

One wants to get a look at his field notes, where, by the light of a kerosene lantern, he had expressed his raw wonder and horror when he stumbled upon these gruesome rituals.

Here, the continent is Hong Kong (before China ended its autonomy), scaled as a global archipelago of de-politicized, tax-free “zones” which, per Milton Friedman’s original design, are miniature nation-states that function as pastures for free-range capitalists to roam.

And yet these are the “thought leaders” of our time, and their “leadership style” is consistent with that of Donald Trump and his authoritarian heroes.

The tribe is the imagined community known as “tech bros”: boyish, boorish men united by their belief that they would have survived Lord of the Flies.

And the ceremonies and rituals include those conducted by shamans like Peter Thiel and Marc Andreessen, whose every utterance is an incantation meant to stir lesser beings into bloodthirsty action.

The tribe’s members, each a “sovereign” in his own right (to date there are no hers to cite), worship various deities, some of them with mere months of shelf life.

But the presiding figure in their pantheon is a god called by seemingly interchangeable names: Technology or the Market.

From Hong Kong to Dubai, Honduras to Somalia, Madagascar to South Africa, tribe members seek places where they think, wrongly of course, that capitalism can thrive because Technology or the Market is unfettered, unregulated, and untaxed.

To prevail, it must be invulnerable to government, or, more precisely, government conceived as an undertaking that requires the consent of the governed.

In other words, such places must be free of democracy. Insofar as they require governing or public policy, inhabitants are to be treated as shareholders, not citizens.

These places don’t even have to be real “places.” The tribe’s uniform urge is to carve out safe havens, create empty spaces, find “virgin land,” whether virtual or not: the metaverse or the digital universe of tax-free corporate “headquarters” will do as well as a brick-and-mortar plantation like, say, Singapore.

The point is to escape or secede from the failed state of post-industrial, quasi-democratic modernity rather than to repair it.

Applying the classic framework of Albert Hirschman’s Exit, Voice, and Loyalty, Exit is the only option for “sovereign individuals” like Thiel and Andreessen, or Elon Musk and Balaji Srinivasan, because their Voice can’t be heard by the unwashed masses, and their Loyalty can’t be bought by or attached to anything but themselves.

If Slobodian is the chastened anthropologist who faithfully records the remnants of a civilization close to the edge of extinction, Mattei is the clinician whose approach to the available evidence in The Capital Order is more epidemiological, yielding a longitudinal, diagnostic study of the same decay and its underlying disease.

The enduring significance of the frontier in American history has never seemed so obvious, and so poignant.

If the projects and manifestos of these “market radicals,” as Slobodian calls them, seem comically inane and woefully inept (see: Twitter/X), it is because they derive from a resolute ignorance and contempt of their creators’ fellow sapiens.

And yet these are the “thought leaders” of our time, and their “leadership style” is consistent with that of Donald Trump and his authoritarian heroes.

If they represent a new ruling class, as Varoufakis and Wark suggest, they have already lost, or never acquired, what I understand to be the essential trait of any such class, at least in its modern renditions: a profound belief in its capacity to rule, not by birthright or by force, but by creating public opinion and constraining volition, or “manufacturing consent.”

This belief presupposes, and eventually requires, control (not ownership, as per Musk’s purchase of Twitter) of the means of communication, what the sociologist C. Wright Mills and his Frankfurt School teachers called the “cultural apparatus.” Without such control, an upper class is an empty shell.

It has power, but neither legitimacy nor authority, and is therefore prone to invoking fatuous ideas in defense of its privileged standing and calling on armed forces to impose the law and “restore” social order, as for example in England in the early seventeenth century, in North America and France in the late eighteenth century, and in Russia, Mexico, and China in the early twentieth century.

Or, in these farcical times, inviting miscreants and malcontents to storm the citadel of a constitutional republic on behalf of a clownish buffoon willing to pimp out his daughter.

The summary statement from the Brussels conference of 1920 acknowledged that the “first step” toward restoring social order was “to bring public opinion in every country to realize the essential facts of the situation and particularly the need for re-establishing public finance on a sound basis.”

So, the end of something is near; in any case, it is closer than it appears in the rear-view mirror.

THE PROGRESS OF DECAY

If Slobodian is the chastened anthropologist who faithfully records the remnants of a civilization close to the edge of extinction, Mattei is the clinician whose approach to the available evidence in The Capital Order is more epidemiological, yielding a longitudinal, diagnostic study of the same decay and its underlying disease.

She argues that “austerity” is the name of the ideological regime that the maintenance of social order under corporate capitalism requires, and by capitalism she means something greater than the sum of its economic parts: a social system wherein the allocation of resources is determined more or less anonymously, according to criteria supplied by markets.

It is a system that, of necessity, includes laws, rules, regulations, theories, and cultural norms or political expectations that are powerful forces of production, not ephemeral superstructural filigree.

Austerity organizes these elements into a coherent compound by imposing a scarcity of imagination as well as of the material requirements of everyday life – again, by constraining volition and establishing the boundaries of public opinion.

As a program of “restoration,” austerity is an old idea. It was the reflexive response of governments threatened during the Great War by the revolt of the masses against received wisdom and business as usual, in full view of what war planning and mobilized workers’ self-management could accomplish: material abundance and social democracy.

The response was perfected in the aftermath of the war at conferences convened by the League of Nations, which became the preserve of economics professors who would teach the masses that government budgets bloated by war spending (including pensions) required balancing, and that expectations heightened by workers’ wartime empowerment needed to be lowered.

As the organic intellectuals of a nascent transnational political bloc that would convene an “ultra-imperialist” world order, these “technocrats,” as Mattei calls them, understood that their mandate from the representatives of finance and industry was ideological.

Mattei never gets around to explaining these very different outcomes in the 1930s, by which time austerity had presumably become received wisdom.

The summary statement from the Brussels conference of 1920 acknowledged that the “first step” toward restoring social order was “to bring public opinion in every country to realize the essential facts of the situation and particularly the need for re-establishing public finance on a sound basis.”

Otherwise, as a banker at the conference pointed out, even “manual workers” would continue to assume that the socialization of private enterprise was a means to the end of a better way of life, not just a wartime measure:

“The war has led to an almost universal demand for the extension of Government functions,” he intoned.

“Everyone has grown accustomed to State assistance and State activity. Socialism and nationalism are the order of the day.

The manual workers … were encouraged to expect, and do expect, some new way of life, some great betterment of their lot.

These changes, they believe can be achieved if the system of private industry is replaced by a sort of Government or common ownership.

They do not realize the hard truth that … a better life can, owing to the losses of the war, be now reached only through labour and suffering.”

The remainder of Mattei’s book is a close, angry reading of austerity’s career in Britain and Italy during what Americans know as the Roaring Twenties.

In all three countries, a return to “unadulterated capitalism” was effected by the rapid re-privatization of industry, by “open-shop” union-busting campaigns, and by the curious kind of “fiscal discipline” which combines severe reductions in public spending with huge tax cuts.

The Great Depression waited on the other side of this wholesale transfer of income from labor to capital; in the United States, and to a lesser extent in the United Kingdom, it would be mitigated by policies that, like public spending during the Great War, redistributed national income, re-empowered workers, and replenished household budgets at the expense of corporate profits.

In Italy, as in Germany, the depression’s force would be mitigated by permanent war mobilization under fascist auspices and the public spending that followed.

Or, as I would prefer, as brooding, melancholy detectives who arrive at the crime scene and, drawing on their deep knowledge of similar scenes, find the murder weapon, identify the perpetrator, and tell the story of what happened before the forensics team shows up?

Mattei never gets around to explaining these very different outcomes in the 1930s, by which time austerity had presumably become received wisdom.

This would seem to be a glaring omission, except that, by her accounting, the Keynesian Revolution was a theoretical departure that didn’t make much of a difference.

John Maynard Keynes himself, Mattei argues, shared the “technocratic” fear of any alternative to capitalism.

Accordingly, he insisted, even in and after The General Theory of Employment, Interest and Money (1936), that investment by entrepreneurs was the key to economic growth and thus social stability.

I don’t see how to square this argument with the second volume of A Treatise on Money (1930), where Keynes uses evidence from US sources to document extraordinary economic growth in the absence of increased private investment; nor with his essays of the early 30s in The Nation and Athenaeum and The New Republic, where he claims that the material conditions for the “ideal society” – that is, socialism – are already in place.

Nor can I reconcile Mattei’s argument with Lawrence R. Klein’s The Keynesian Revolution (1944), an education for the educators which instructs the “technocrats” that they will discredit themselves without the new theoretical tools, and teaches businessmen how deficit spending and social welfare can prevent fascism and improve the bottom line.

Still, in view of Mattei’s argument, I would ask, in the spirit of the literary critic Fredric Jameson, whether fascism is the political unconscious of economic theory, here understood as the court poetry of corporate capitalism.

Mattei emphasizes that austerity worked then as it does now, by means of ideological exclusion, repression, and domination, not persuasion; it is as much a political program as an economic agenda, because it requires the subservience, not the willing cooperation, of the working population.

“[T]he subordination of the majority was an essential prerequisite to safeguard the smooth function of capital accumulation,” she writes.

The lesson capital learned in the 1920s would be used to similar worldwide effect in the 1970s and after – including in the aftermath of the post-2008 Great Recession.

So we still stand at the edge of the same precipice, staring into the abyss of fascism, and there is as yet no counter-hegemonic narrative in place, unless Occupy Wall Street, Bernie, #MeToo, and Black Lives Matter qualify as its components.

TRUE DETECTIVES

I have portrayed Mattei as a diligent public-health official who patiently explains the origins of the epidemic imbecility Slobodian captures in his thick description of what happens when market radicals start “thinking.”

How, then, to cast Wark and Varoufakis? As prophets who announce that, because the future has already arrived, it needs a name and, beyond that, a realistic characterization that relinquishes any hope for a social-democratic successor?

As futurists who, like the physicist Herman Kahn or the marketing savant Faith Popcorn, have enough theoretical acumen and street smarts to predict, with uncanny accuracy, what is rushing toward us?

They might as well be clueless peasants producing crops for their suzerains. Hence the title, Technofeudalism: “To use the language of early economists like Adam Smith, it is a classic case of feudal rent defeating capitalist profit, of wealth extraction by those who already have it triumphing over the creation of new wealth by entrepreneurs.”

Or, as I would prefer, as brooding, melancholy detectives who arrive at the crime scene and, drawing on their deep knowledge of similar scenes, find the murder weapon, identify the perpetrator, and tell the story of what happened before the forensics team shows up?

Whatever we call them, we are in their debt, simply because they have re-opened the question of periodization that most academics evade, consciously or not.

For some time now, anthropologists, historians, economists, sociologists, social theorists, and literary critics have been unable or unwilling to define capitalism and its consequences.

To some, it seems to be a trans-historical phenomenon rooted in human nature, and thus impervious to political critique and control (we have David Graeber and the new historians of “racialized capitalism,” among others, to thank for this resurrection of Werner Sombart’s blithe spirit).

To others, capitalism seems to have been already superseded by forces of production that are too dynamic, even explosive, to be contained by the commodity form and the capital-labor relation of production (thank Jeremy Rifkin and certain Silicon Valley technophiles, among others, for this sunny outlook on the worst of times).

Wark and Varoufakis adjourn the intellectual inertia that comes with this either/or proposition by declaring capitalism dead and enumerating the immaterial energies that have outlasted it.

Indeed, Varoufakis cites Wark’s twitchy book, which is more theoretical travelogue than empirical investigation, as his principal inspiration, because it convinced him that Shoshana Zuboff and Cédric Durand hadn’t gone far enough in identifying Big Tech as just another stage in the evolution of monopoly capitalism.

By his accounting, Alphabet, Amazon, Meta, and the rest do not merely operate digital platforms that function as public utilities and that should therefore be subject, as Lina Khan at the US Federal Trade Commission has forcefully argued, to the relevant antitrust laws and regulations.

For Varoufakis, these platforms are instead fiefdoms whose income must be called rent, not profit, because it’s a surplus generated after hours by the work of consumption, by users – “cloud proles and serfs” (or “hackers,” in Wark’s lexicon) – who produce marketable information for free, to be harvested by “cloud capital” every time they click on a blinking window or a waiting icon.

But since “cloud capital” is by definition a monopoly, markets will be made competitive and conducive to democracy only through cooperative arrangements at the level of the firm, that is, only insofar as each worker has a voting share in the company that employs him.

They might as well be clueless peasants producing crops for their suzerains. Hence the title, Technofeudalism: “To use the language of early economists like Adam Smith, it is a classic case of feudal rent defeating capitalist profit, of wealth extraction by those who already have it triumphing over the creation of new wealth by entrepreneurs.”

If that sounds like Varoufakis is claiming that capitalism’s defenders can claim the moral high ground, that’s because he is:

“Capitalism prevailed when profit overwhelmed rent, a historic triumph coinciding with the transformation of productive work and property rights into commodities to be sold via labor and share markets, respectively. It was not just an economic victory. Whereas rent reeked of vulgar exploitation, profit claimed moral superiority as a just reward to brave entrepreneurs risking everything to navigate the treacherous currents of stormy markets.”

But what’s in a name? What intellectual resources and political will are summoned by calling where we are a post-capitalist stage of development? Varoufakis devotes a whole chapter to an answer, which boils down to this: “[T]he word we use to describe the current economic system can influence profoundly whether we are more likely to perpetuate and reproduce it or whether we might challenge or even overthrow it.”

I am in complete agreement, because words – at least when strung together to compose sentences – do become something more than mere labels for things that already exist.

They become ways of seeing – or, rather, being in – the world, which, by orienting us to a certain past and thus situating us in the present, prepare us for a particular future, not the future as such.

What, then, is gained by claiming that capitalism is giving way not to the barely legible signs of social democracy – an impossibility for Varoufakis, because the left has forgotten class struggle, abjured objective truth, and embraced identity politics – but to the unmistakable features of feudalism?

Absent Mattei’s argument, the answer offered here is not what you would expect from a left-Keynesian with the kind of political credentials Varoufakis acquired when, as Greece’s finance minister, he fought the austerity program that the European Commission, the European Central Bank, and the International Monetary Fund had been trying to impose on his country since 2010.

It goes like this: Whereas feudalism obliterates competitive markets, capitalism sustains them (or once did), and with them the possibility of democracy animated by commitments to both liberty and equality, which require open access to resources, freedom to innovate, arm’s-length bargaining, universal suffrage, and so forth.

They have helped us to decipher the strange language spoken by the tribe on whom Slobodian reports in well-earned wonder, and to parse the generative grammar invented by the “technocrats” to whom Mattei replies with righteous anger.

But since “cloud capital” is by definition a monopoly, markets will be made competitive and conducive to democracy only through cooperative arrangements at the level of the firm, that is, only insofar as each worker has a voting share in the company that employs him.

This answer is troubling, to me at any rate, because it sounds too much like the one offered by those “sovereign individuals” who treat free markets or stakeholder governance as the appropriate answer to any question, whether social, political, or personal.

I have no doubt that consumer preferences, as enabled by and registered in markets and price systems, are the necessary condition of democracy, social or not.

Nor do I doubt that workers’ self-management will be a crucial element in democratizing everyday life, where work is the central preoccupation of almost everyone, or that the socialization of investment will be completed before long, because the banking system is already the common property of the taxpayers who keep bailing it out.

But I do doubt that a syndicalist approach to the restoration of competitive markets and political democracy – whereby my standing as a citizen equal to all others is reduced to my economic function as an employee of a firm – is a promising way to move beyond the current stage of capitalist development.

Social democracy is still within reach, and by the traditional political means of organizing, canvassing, voting, agitating, demonstrating, office-holding, teaching, learning, and re-organizing, whatever the left may be thinking or doing about cultural relativism and identity politics.

That said, Wark and Varoufakis have written indispensable books that map the invisible, imperial infrastructure of our time.

They have helped us to decipher the strange language spoken by the tribe on whom Slobodian reports in well-earned wonder, and to parse the generative grammar invented by the “technocrats” to whom Mattei replies with righteous anger.

(James Livingston is the Professor Emeritus of History at Rutgers University
Copyright: Project Syndicate

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