Notes on ‘Political Capitalism’ II

Between Behemoth and Leviathan

Sorry it’s taken me a while to return to this, but I’ve been very busy with other stuff. I’m going to get back to working out som more thoughts on Robert Brenner and Dylan Riley’s recent “Seven Theses on American Politics,” but first I want to address an interesting reader question:

Mark writes:

I wouldn't say it's a top reason I subscribe, but your work introduces me to a lot of thinking of the Left that I am not very familiar with. That has definitely been the case reading your article on "The Seven Theses" of American politics. After reading through your treatment, I went and read it. 

I have a ton of issues with the article, mostly revolving around the authors' interpretation of American politics, from demonstrably false, to misleading and simplistic, to their weirdly parochial discourse on everything from educational polarization to inflation (ignoring very relevant international comparisons). And more.

With that out of my system, to my mailbag question: Is it common in Leftist/Marxist discourse to be so obsessed with manufacturing, especially manufacturing profitability? It seems like the only meaningful economic fact that matters to them, but I find it bizarre. I think the idea is that material abundance provides the foundation for any successful socialism so you don't fall into a battle for scarce resources. But like, there's way more to prosperity than manufacturing. Like housing, agriculture, education, healthcare. 

From reading this article you'd have no idea that America's GDP has doubled since 2003 (the "no growth" period), or that manufacturing output has gone up by 50% (much faster than population growth). 

Thanks for your writing, keep it up, and looking forward to the book.

Thanks Mark! As I said in the first installement, I was more interested in what could be said about the concept of political capitalism than in fact checking the entirety of the piece, but a lot of readers have expressed dismay at specific claims in the article. As to the question about profits and manufacturing, I told Mark to check out Tim Barker’s great post on that very question and so should you if it troubles you.

It’s also worth pointing out to those less familiar with Marxist tradition that the “tendency of the rate of profit to fall” is one of the major scientific predictions in Capital and a central thesis of Marxian political economy. Very roughly, the idea is that the sheer productivity of the capitalist system itself makes it difficult for capitalist investments to stay profitable: the development of machinery and ever more sophisticated and specialized division of labor, at first the path to enormous riches for the capitalist class, has made it just too easy and cheap to make stuff, so the market would be essentially glutted with cheap commodities. The capitalists would then respond by exploiting labor even more ruthlessly, with one eventual result being major political upheaval. But that’s not the only thing they might do to countervail this tendency.

According to Riley and Brenner’s account, the capitalist response to the rate of profit to fall is leading not to proletarian revolution, but to “political capitalism” and its reassertion of quasi-feudal social relations. Now, I should say that the tendency of the rate of profit to fall is extremely controversial, both empirically and conceptually, within and without Marxist circles, and I do not claim to know or understand all of the discussions surrounding it.

But as, Barker points out, Brenner is trying to account for something real, the weakening of investment in fixed capital in the U.S. economy:

…whatever is going on with profits, Brenner is correct (though hardly unique in pointing out) that fixed investment in the U.S. has been weak for decades. I don’t think anyone seriously disputes this, though I’d be interested to know if that argument has in fact been made somewhere. The question therefore is whether to think of weak investment as the predictable result of a falling profit rate, or as the somewhat puzzling failure of investment to behave as it “should” given the level of profits…

The most common explanation, is that since the 1980s the shareholder revolution has meant that activist shareholders have both the desire and the capacity to enforce a low investment, high cash payout model onto corporate manager.

In short, something’s happening, but no one is quite sure why. As a non-economist, I think it’s obviously a lot less risky of an investment to not build lot of giant labor and capital intensive stuff, like a plant, that might not return very much on your money and would be difficult to offload if it struggled, but rather to put your money in some financial product that you could dump in a manner of minutes if the market turns sour.

Looking at 20th century Communist propaganda, one might be forgiven in thinking that Marxists have a kind of a fetish for heavy industry, but another reason why manufacturing is so important to Marxists is its sociological form: the mass character of industrial production, the way it brings together many, many workers under one roof who develop a shared experience of class struggle and solidarity. This all was a result of the development of the capitalist forces of production and also the way it would eventually be overcome.

Marx also believed that, from a certain point of view, the workers’ subjection to machinery is the essence of capitalism itself , capital as a system is manifested materially for the worker in the hostile relationship between machine and worker, where the the worker was there to serve the machines, rather than the tools being there to help the worker, as in an older, artisanal model of production.

It’s Over

Let’s face it: in crude outlines, things haven’t quite gone the way Marx imagined they would go. The development of capitalism has not led to a global proletarian revolution and its doesn’t look like that’s too probable in the foreseeable future. Should we just stop caring what Marxists have to say? Many would “say, yes,” but I don’t think so.

The philosopher of science Imre Lakatos defines progressive or “healthy” scientific research programs as those that allow us to predict novel facts. One sees this happen in physics, the most developed of the hard sciences, all the time: theory posits some celestial phenomenon or new particle, then there’s an experiment or new instrument capable of observing it, and boom, there it actually is. We didn’t actually “see” a black hole until relatively recently: they were just theoretical consequences of the general theory of relativity.

Suffice it to say, there is nothing in the human and social sciences, including Marxism, that comes anywhere close to this type of predictive power. Marxism in particular would appear to be, in Lakatos terms, a “degenerating research programme,” which means it is always explaining why things haven’t quite gone the way it has previously predicted. His classic example of a degenerating research program is Ptolemaic cosmology, which had to invent more and more complicated epicycles to account for why celestial bodies didn’t seem to act the way they ought to according to its core theoretical propositions. Skeptics tend to view the auxiliary hypotheses of Marxism in a similar way: after all, what are the theories of imperialism, hegemony, and so forth—and now perhaps “political capitalism”— but a way to retrofit Marxist explanations for awkward empirical circumstances? So, that would seem to discredit it as a research program, right? Well, no, not quite.

Lakatos notes that even quite successful research programs encounter “anomalous” phenomena that appear to refute them all the time, and they just ignore them or cook up ad hoc stratagems and auxiliary hypotheses to explain them away and protect to their core assumptions. I think unlike most economic schools, Marxism has successfully diagnosed that there is an intrinsic imbalance within and crisis-riddenness of capitalism, a core irrationality of the system. Other schools, like Keynesianism, have their own account of that, but I believe it is worth sticking with the central theoretical axiom of Marxism: that there is a fundamental contradiction in the way society produces and reproduces itself and the way society is organized and that this leads to periodic political, economic, and social crises. I believe this has been born out by history. And “socialism” of some sort or another has been the response: The way this contradiction was ameliorated, at least until the end of the 20th century, was through different schemes of partial socialization or public control of the economy. Although we supposedly live today in a market society without central planning, we actually do have powerful coordinating institutions that direct the economy, like the central banks and even the privately owned financial titans that move capital around the economy.

It’s worth considering if “political capitalism” is potentially functioning the same way in Riley/Brenner theses as it does in Libertarianism: as a kind of ad hoc hypothesis to explain why “capitalism isn’t doing what it should.” — “Well, the problem is that it’s this bad, defective kind of capitalism, but if they did the right kind, we would get a better result.”

We’re So Back

In the meantime, a piece by Yakov Feygin and Nils Gilman of the Berggruen Institute entitled “The Designer Economy” has been published in Noema that takes basically the opposite view of Riley & Brenner’s about the current state of politics and the economy. While Riley & Brenner’s picture is quite dour—“Political capitalism remains firmly in place, meaning that redistribution from capital to labour will be extremely difficult, if not impossible, because of the dependency of profits on politically engineered upward redistribution”—is extremely optimistic, its authors believe we have exited “the neoliberal era” and entered a new epoch of capitalism, which has some real opportunities for “a more just, peaceful and verdant world” as the slogan of the MacArthur Foundation you might hear over and over on NPR goes:

Over the last few decades, monetary policy has been the main (and blunt) instrument for shaping the economy, but today, policymakers from across the political spectrum are embracing a more active role for the federal government in directly configuring the “real economy” — wages, employment and investment. Leaders on both left and right are actively thinking about how the government can intentionally shape markets to fashion socioeconomic outcomes. 

This new dispensation represents a reframing of the relationship between the state and the economy, one potentially as transformational to American capitalism as the New Deal was in the 1930s or Reaganism was in the 1980s. It is most evident in a new bipartisan openness to the old-fashioned idea of an industrial strategy, but it is broader than that. Let’s call it the “Designer Economy.”

One can represent the difference between the R&B and G&F visions of the future with the below images, with R&B on the left and G&F on the right.

(The right image is from a popular meme and the left image I just made using Dall-E.)

Gilman and Feygin propose a series of political groupings that share an interest in this state intervention in the economy and might form coalitions toghether: social democrats, green accelerationists, supply chain hawks, and national developmentalists. And who will lead this revolution? Well—as I’m friendly with Yakov and Nils, I’m sure they will not mind some gentle teasing—people like them. What they propose is essentially the valorization of a section of the intellectual elite, that is to say the bureaucratic class, but one that staffs public organizations rather than private ones:

Rejecting anti-government rhetoric and instead celebrating competent operators is thus a crucial first step. Managing a successful Designer Economy requires a cadre of experienced, entrepreneurial and independent government officials. Today, however, government service is difficult to enter due to a labyrinth of byzantine rules and processes. Moreover, public servants lack social prestige and are often underpaid relative to what they can earn in the private sector; a McKinsey partner earns much more than a congressional staffer or a Commerce Department GS-15. Many staffers are overworked, underpaid and can’t make ends meet in long-term government service. 

This vision of bureaucrats as a “universal class” able to work in the general interest to reconcile the complex interplay of particular interests that arise civl society and shape it into a coherent whole (and therefore requiring sufficient material support) is very old: it’s exactly what Hegel envisioned in the Philosophy of Right. It’s also very similar to what Max Weber imagined as the rational and universalizing function of bureaucracy.

It might be worth recalling here that Marx’s first philosophical work was a critique of Hegel’s Philosophy of Right. His response to the idea of bureaucrats being the universal is basically, “that sounds nice, but in reality it’s kind of bullshit.” Behind the putative “universalism” of the bureaucratic class just lurks the particular interests and careerism of bureaucrats. For Marx, the universal class was actually the newly developing industrial proletariat because in its plight and situation it represented the situation of humanity itself. But he says something else interesting in his critique: a political revolution can only be based on a particular class taking upon itself the role of general emancipator:—

No class of civil society can play this role without arousing a moment of enthusiasm in itself and in the masses, a moment in which it fraternizes and merges with society in general, becomes confused with it and is perceived and acknowledged as its general representative, a moment in which its claims and rights are truly the claims and rights of society itself, a moment in which it is truly the social head and the social heart. Only in the name of the general rights of society can a particular class vindicate for itself general domination.

The opposite is also true: over time, the dominant class’s interest and the interest of society in general will diverge, but that group will attempt to defend their privileges nonetheless. This apparently can go on for a very long time. So what Riley & Brenner identify as “political capitalism” and a new development is just one possible political expression of the central contradiction identified by the materialist theory of history: that a contradiction arises between how society produces and how it is organizes itself.

You might recall from last time our brief discussion Gramsci’s theory of hegemony. Well, here it is in nuce: the idea that a class can take on a universal role as the leader of the entire nation, rising above their mere corporate interest, that is to say, their narrow group interest. This is what Gramsci calls “the third stage” of what he sometimes “development of political consciousness” and at others “the relations of forces”:

in which one becomes aware that one's own corporate interests, in their present and future development, transcend the corporate limits of the purely economic class, and can and must become the interests of other subordinate groups too. This is the most purely political phase…t is the phase in which previously germinated ideologies become "party", come into confrontation and conflict, until only one of them, or at least a single combination of them, tends to prevail, to gain the upper hand, to propagate itself throughout society-bringing about not only a unison of economic and political aims, but also intellectual and moral unity, posing all the questions around which the struggle rages not on a corporate but on a "universal" plane, and thus creating the hegemony of a fundamental social group over a series of subordinate groups.

Again, this hegemony is not just domination for its own sake but leadership that comprises the reconciliation of interests—the predominant group doesn’t just feed themselves at the expense of others:

In other words, the dominant group is coordin­ated concretely with the general interests of the subordinate groups, and the life of the State is conceived of as a continuous process of formation and superseding of unstable equilibria (on the juridical plane) between the interests of the fundamental group and those of the subordinate groups-equilibria in which the interests of the dominant group prevail, but only up to a certain point, i.e. stopping short of narrowly corporate economic interest.

This is somewhat of a middle position between Hegel’s Philosophy of Right and Marx’s cynical critique of it. It’s precisely hegemonic role that Riley & Brenner is foreclosed and impossible under “political capitalism”—for them we’re hopelessly stuck in economic-corporate gear—and Feygin & Gilman imagine for their New New Dealers, the heroic civil service of “national development.” Even if the “party” of this group, its political organization and leadership, is not fully developed, one can say that at least they are imagining such a leadership is possible or desirable, and not just saying, “nope, not possible” This is a first step perhaps?

One possible critique would be that this conception is overly “PMC” at this point: it doesn’t quite imagine what the work of winning cross-class assent and enthusiasm might look like like. Even the name “Designer Economy” arguably overly represents the consciousness of an aspirant upper middle-class. After all, the New Deal wasn’t just the combination of rising idealistic progressive professional class and the educated scions of that section of the WASP élite who realized they had to create have a more capacious and just political and social order, it also included organized labor. So my questions would be, “Is how can we begin to imagine this beyond the realm of the think tank? What organizations and mediating institutions are required? Who are the organic intellectuals of this coalition and how should they move forward?”

Brenner & Riley are correct in at least one part of their diagnosis: the sense that society has devolved into a series of rackets. The false universalism that emerges from that, a cynical politics that combines regressive nationalism, right-populism, and racism, appears to many as the sensible and realistic option. The politics of enlightened bureaucracy suffers in this era when it is quickly labeled as naively idealistic or just another racket—and indeed, sometimes, it can be. How should this be overcome? Is this supposed universal class big, self-conscious, and politically adventurous enough to do it? I’m curious to find out.