Posts Tagged ‘capitalism’


I’m taking nominations for the best examples of dismal economic scientists.

While I wait for your suggestions, I’m going to offer two of my own nominations: Tyler Cowen and Paul Romer.

I am nominating Cowen because, in his argument that the economy probably needs a “reset,” he only focuses on lowering workers’ wages. First, he makes no mention of resetting corporate profits or the incomes of those at the very top, as if what they manage to capture were completely off limits. All the adjustment in the new, “grimmer future” will be born by those at the bottom. Second, he completely overlooks the mechanisms of his own economic theory: if lower rates of economic growth are the product of lower rates of growth of available workers (a key factor in the theory of secular stagnation), then the relative scarcity of workers should mean higher—not lower—wages. In other words, Cowen is determined to make sure all the costs of the new, slower-growing economy will be born by shifted onto those who can least afford it. For that reason, I nominate Cowen for the title of dismal economist.

I also want to nominate Romer, who continues to double down on his “mathiness” argument, by asserting (against all the work that has taken place in the philosophy of science in recent decades) that (a) there’s a single truth, (b) that truth can only be obtained via science, and (c) mathematical modeling is the singular method for making progress in science to obtain truth. There are so many things wrong with each of those assertions it’s hard to know where to begin. And I won’t, at least right now. Let me just say Romer deserves his nomination as one of the most dismal economists because of the extraordinary arrogance, pretentiousness, and ignorance of the following statements:

About math:. . .I’ve seen clear evidence that math can facilitate scientific progress toward the truth.

If you think that math is worthless or dangerous, I’m sure that there are people who will be happy to discuss this with you. I’m not interested. I’m busy.

About truth and science: My fundamental premise is that there is an objective notion of truth and that science can help us make progress toward truth.

If you do not accept this premise, I’m sure that there are people who would be happy to debate it with you. I’m not interested. I’m busy.

And please do not write to tell me that science is a social process or that the progress it makes toward the truth can be irregular. I know.

Me, I’m not too busy to discuss either the fundamental injustices of contemporary capitalism or the often-worthless and dangerous role mathematics, truth, and science have played and continue to play in the discipline of economics.

I’m also not too busy to post additional nominations for dismal economists.

Is Dan Price [ht:sm], the founder and CEO of Gravity Payments who raised the salaries of his employees and slashed his own pay, a socialist hero?

Well, no. Not really. Price certainly doesn’t think so. And, in the end, he—not Gravity’s employees as a group—is the one who decided what the new pay scheme would look like. He is the one who took the decision to distribute some of the surplus produced by his workers back to them in the form of higher wages and to take a smaller amount of that surplus in his compensation.

But I do like the fact that the two KTVB interviewers, Dee Sarton and Carolyn Holly, are clearly taken with Dan Price and his decision—which presumably stand in sharp contrast to all the other CEOs they’ve been forced to interview over the years.

Even more, Price’s decision proves once again (as I argued back in 2013) that “capitalists do lots of different things.”

They do make profits (at least sometimes, but over what timeframe are they supposedly maximizing those profits?). But they don’t follow any single rule. They also seek to grow their enterprises and destroy the competition and maintain good public relations and buy government officials and reward their CEOs and squeeze workers and lower costs and build factories that collapse and. . .well, you get the idea. In other words, they appropriate and distribute surplus-value in all kinds of ways depending on the particular conditions and struggles that take place over the shape and direction of their enterprises.

So, I’m not prepared to celebrate Price as a “good capitalist,” as against all the “bad capitalists” who are choosing to increase the gap between average workers’ pay and the enormous payments to CEOs.

My point is a actually somewhat different: first, that capitalists—whether in Columbus or Seattle—do lots of different things, and presuming they follow a simple rule (whether profit-maximization as in the usual neoclassical story, or the accumulation of capital in many heterodox stories) means missing out on the complex, contradictory dynamics of capitalist enterprises; and second, that other kinds of enterprises (in which workers themselves make the decisions about how the surplus is appropriated and distributed) would do even more, on a wider scale, to transform the dynamics of the distribution of income and wealth in the U.S. economy.


The other day, I remarked that we appear to be in the midst of a veritable renaissance of research into the history of capitalism.

That post was about the role slavery played in the emergence and development of capitalism in the West. But another aspect of capitalism’s history that seems to be receiving a great deal of attention these days is religion, especially in the United States.

Kate Bowler’s 2013 book, Blessed: A History of the American Prosperity Gospel (to which I responded with a recently published essay called “American Hustle“) was devoted to this topic. Now, there are two new books: The New Prophets of Capital by Nicole Aschoff and One Nation Under God: How Corporate America Invented Christian America by Kevin Kruse.

Capitalism is not a natural phenomenon; it required a great deal of work, historically, to bring it into being, and it requires a lot of ongoing work, socially, to reproduce it over time. And part of that work, historically and socially, has involved the production of a whole set of identities and meanings that celebrates the winners and blames the losers, all the while creating the hope that everyone is a potential winner.

As Elizabeth Stoker Bruenig explains,

Capitalism is a system braced by stories. Consider the rise of the liberal individual, a kind of atomistic personhood, distinct from all other persons. It seems the whole Enlightenment had a hand in creating this particular view of man—yet the concept was unknown to the people of the medieval and ancient worlds. The idea was not intentionally developed as a thread in capitalism’s web of self-justification, but it has been recruited for such purposes, where it underwrites much free-market discourse about the primacy of the individual over the collective. This is only one of the many accounts which have been absorbed into the vast narrative support structure of capitalism—that is, the series of stories that make life under capitalism seem plausible, positive, and even necessary. In the United States, Christianity might be capitalism’s most impressive conscription so far.

Sale Of Slaves

We seem to be in the midst of a veritable renaissance of research on the history of capitalism, especially on the role slavery played in the emergence and development of capitalism in the West.

Two new books on the subject have just received the Bancroft Award: Sven Beckert’s Empire of Cotton: A Global History and Greg Grandin’s The Empire of Necessity.

As Grandin [ht: ja] explains,

Despite all this scholarly work, each generation—from WEB Du Bois’s to Robin Blackburn’s, from Eric Williams’ to Walter Johnson’s—seems condemned to have to prove the obvious anew: slavery created the modern world, and the modern world’s divisions (both abstract and concrete) are the product of slavery. Slavery is both the thing that can’t be transcended but also what can never be remembered. That Catch-22—can’t forget, can’t remember—is the motor contradiction of public discourse, from exalted discussions of American Exceptionalism to the everyday idiocy found on cable, in its coverage, for example, of Baltimore and Ferguson.

Right now, we are living that history—of the spectacular failures of capitalism and the enduring effects of slavery.


Back in 2010, when I first watched The Wire, I was struck by the fact that David Simon had done an amazing job narrativizing the ravages of capitalism without depicting capital itself.

Or perhaps better: capital is the abstract, ghostly presence of much of what transpires in the worlds of politics, drugs, policing, and international trade (through season 3). The capitalists themselves exist mostly just off-screen (except, perhaps, for short appearances by “The Greek”) but the logic of capital (its calculative rationality and homogenizing economistic project) can be felt throughout the various spheres of economic and social life that characterize life in Baltimore.

And so it is with the current situation in the real Baltimore: capital is the abstract, ghostly presence that has created a tinderbox of segregation, poverty, and unemployment that was lit on fire by the recent death of Freddie Gray.

What’s interesting, at least to me, is the fact that precisely that idea—of the specter of capital—that has surfaced in some of the recent commentary on the clashes between Baltimore’s citizens and the police.

So, we have Alyssa Rosenberg expressing her worries about our Wire-induced fatalism and then concluding that “The Greek and global capitalism will never die, but at least there will be Jameson at the bar.”

More seriously, there’s Baltimore Orioles Chief Operating Officer John Angelos, son of owner Peter Angelos, responding to local sports-radio broadcaster Brett Hollande and offering his own explanation of why people have taken to the streets:

That said, my greater source of personal concern, outrage and sympathy beyond this particular case is focused neither upon one night’s property damage nor upon the acts, but is focused rather upon the past four-decade period during which an American political elite have shipped middle class and working class jobs away from Baltimore and cities and towns around the U.S. to third-world dictatorships like China and others, plunged tens of millions of good, hard-working Americans into economic devastation, and then followed that action around the nation by diminishing every American’s civil rights protections in order to control an unfairly impoverished population living under an ever-declining standard of living and suffering at the butt end of an ever-more militarized and aggressive surveillance state.

OK, it’s not just the shipping of jobs to China and other “third-world dictatorships.” It’s also the decline of unions, the use of new worker-displacing technologies, the increasing importance of finance, and much more.

In other words, it’s the “whole damn system” that has created an economy of extraction for a tiny minority at the top and an economy of exclusion for a large portion of the working-class in Baltimore and across the United States. What we are witnessing, then, are the effects of capital that is operating in the background—in the real world just as in The Wire—just off-screen.

slums-of-london-engraving-by-gustave-everett1 pollution_delhi_20140217

Once again, we find ourselves in the midst of an orgy of worries and pronouncements about how to raise the rate of economic growth.

And yet, from the Industrial Revolution down to the present, it’s that same growth—capitalist growth—that has robbed us of the ability to breathe clean air.

Consider the report filed by Anu Anand [ht: ja] on the effects of capitalist growth on the air in Delhi:

Saharan dust, traffic fumes and smog from Europe may be clogging up London’s air at present – and causing alarm in the newspapers – but in the world’s most polluted city London’s air would be considered unusually refreshing. That city is Delhi, the Indian capital, where air quality reports now make essential reading for anxious residents.

In London last week, the most dangerous particles – PM 2.5 – hit a high of 57 – that’s nearly six times recommended limits.

Here in Delhi, we can only dream of such clean air.

Our reading for these minute, carcinogenic particles, which penetrate the lungs, entering straight into the blood stream – is a staggering 215 – 21 times recommended limits. And that’s better than it’s been all winter.

Until a few weeks ago, PM 2.5 levels rarely dipped below 300, which some here have described as an “air-pocalypse”.

Like the rest of the world, those of us in Delhi believed for years that Beijing was the world’s most polluted city.

But last May, the World Health Organization announced that our own air is nearly twice as toxic.

The result, we’re told, is permanent lung damage, and 1.3 million deaths annually. That makes air pollution, after heart disease, India’s second biggest killer.

And yet, it’s only in the past two months as India’s newspapers and television stations have begun to report the situation in detail that we’ve been gripped, like many others, with a sense of acute panic.

It’s a little bit like being told you’re living next to an active volcano that might erupt at any moment.

The residents of Gustave Doré’s London would have easily recognized that environmental volcano.


If capitalism were a batter in a baseball game, it would be clear to all that it just struck out.

Let me explain. . .

The first strike was “just deserts.” Capitalism promises that everyone gets what they deserve. However, the rising level of economic (income and wealth) equality beginning in the mid-1970s demonstrated that not everyone was getting what they deserve. No matter how measured (e.g., in terms of CEO-to-average-worker pay ratio or the top 1 percent or top-90-to-bottom-10 ratio), the obscene levels of inequality we’ve seen over the course of the past decade are simply impossible to understand or justify as a form of “just deserts.”

The second strike was the worst economic crisis since the first Great Depression. The problem of capitalist instability, especially the exaggerated boom-and-bust cycle of the late-nineteenth and early-twentieth centuries was supposed to have been solved. They even gave it a name: the Great Moderation. And then we were faced with—and forced to suffer the effects of—the crisis of 2007-08 and the onset of the second Great Depression. Neither conventional nor unconventional economic policies were able to stem the tide, and the negative consequences of both the severe crisis and the lopsided recovery will be felt by the majority of people for years (perhaps even decades) to come.

And now strike three: if capitalism doesn’t (and can’t) deliver “just deserts” and instability, at least it can produce economic growth and rising living standards. At least more stuff—an immense accumulation of commodities—will be produced. Or so the third claim goes. But now, according to the International Monetary Fund (in an advance chapter [pdf] from next week’s World Economic Outlook), the prospects for renewed economic growth are growing dimmer and dimmer. Already before the crisis, potential output growth in advanced economies was slowing (although it was rising in emerging market economies). Shortly after the crisis hit in September 2008, economic activity collapsed, and more than six years after the crisis, growth is still weaker than was expected before the crisis. Now, the IMF argues, potential growth has declined in both advanced and emerging market economies in the aftermath of the crisis and is expected to decline even further compared with pre-crisis rates.

Reduced prospects for potential growth in the medium term have important implications for policy. In advanced economies, lower potential growth makes it more difficult to reduce still-high public and private debt. It is also likely to be associated with low equilibrium real interest rates, meaning that monetary policy in advanced economies may again be confronted with the problem of the zero lower bound if adverse growth shocks materialize. In emerging market economies, lower potential growth makes it more challenging to rebuild fiscal buffers. For all economies, a total factor productivity growth rate that remains below precrisis rates will slow the rise in living standards relative to the precrisis years.

In a real baseball game, the umpire standing behind the plate would declare: “Strike three, you’re out!”