Capitalism-and-Its-Critics-A-History-From-the

On the center left, where the intellectual blueprint for the postwar version of managed capitalism had originated, the search for a new form of the genus that could transcend social, racial, and geographic divides was particularly urgent. There was no shortage of proposals to address specific problems. In a 2019 essay, “Economics After Neoliberalism,” Dani Rodrik, Columbia’s Suresh Naidu, and Berkeley’s Gabriel Zucman presented a long list of policy ideas from a new group they had created, Economists for Inclusive Prosperity. The proposals included establishing wage boards in low-wage industries to rein in employers’ monopsony power, which Joan Robinson highlighted in her early work; expanding early childhood education programs as a means of raising the lifetime incomes of children from poor families; taxing multinational corporations where they make their sales to reduce tax avoidance; reforming the patent system to reduce monopoly power; beefing up international financial regulation; and including labor standards in trade agreements. The thinking behind this expansive agenda was that there was no quick fix for twenty-first-century capitalism: the entire system needed a makeover. “These proposals take Polanyi’s words to heart,” Rodrik, Naidu, and Zucman wrote: “To work well, crucial markets (including markets for labor, land, and capital) must be embedded in nonmarket institutions, and the ‘rules of the game’ must be supplied by government.”54

The mention of Polanyi was a reminder of the stakes in these policy debates. In containing capitalism within a set of rules and social norms, postwar Keynesian social democracy had seemingly refuted Polanyi’s argument that socialism or fascism was the logical end point of the system. But when neoliberalism supplanted Keynesianism, it enabled capitalism, once again, to break free of its bounds. In their 2021 paper where they raised the question of what purpose capitalism served, Samuel Bowles and Wendy Carlin argued that efforts to build a new economic paradigm should be organized around reversing this process and “shrinking capitalism” to a “diminished space,” where its strengths, such as the capacity of competition to spur innovation, would serve the community.

Political and economic forces were aligning with this new paradigm, Bowles and Carlin argued. Intensifying concerns about climate change, inequality, and wage stagnation were undermining support for capitalism in general terms, while the rise of AI and robotics represented a threat to the traditional hierarchical capitalist firm, in which workers carried out routine, preassigned tasks for a set wage or salary. As technology eliminated these positions, the jobs that survived would involve more nuanced and complex tasks, which were far more difficult for employers to monitor effectively. One potential solution to this problem, Bowles and Carlin said, was to switch to teamwork and reputation-based rewards, of the sort common in open-source and open- science settings. A more draconian option was to introduce Amazon-style surveillance of employees. A third option was to abandon the traditional corporate structure and hire gig workers who get paid on a piecework basis. “By reducing the share of economic activity over which capitalist firms have a comparative advantage, the first and the third solution—team-based open source and the gig economy—shrink capitalism,” Bowles and Carlin wrote. “The second—Amazon-type monitoring—has convinced many that capitalism should be shrunk.”55

Bowles and Carlin weren’t endorsing the pernicious practices of platform companies like Uber and Lyft. They were pointing out that doing gig work is different from being employed on a full-time basis—they compared it to the preindustrial “putting out” system—and pointing out that technology-driven capitalism was, to some extent, eating itself. They also argued that this cannibalization was creating space for new economic ideas and alternative economic forms, such as not-for-profits, worker-owned cooperatives, and community-organized public commons, which had broad appeal across the entire left and possibly beyond it. “This is a confluence that could propel a new paradigm in political economy to dominance,” the article concluded.56

The idea of shrinking capitalism seemed like one a broad range of thinkers could unite around, from Bowles and Carlin to Silvia Federici to Joseph Stiglitz. In his 2024 book The Road to Freedom: Economics and the Good Society, Stiglitz called for a “decentralized economy with a rich ecology of institutions.” Noting the many encroachments that capitalism had made in recent decades, he wrote, “There must be large parts of the economy that are not and cannot be driven by profits. These include much of the health, education, and care sectors, in which the narrow pursuit of profits often leads to perverse results.”57 Stiglitz also called for restrictions on the activities of platform monopolies, particularly social media companies, arguing that their algorithms had “enabled the incitement of violence and the spread of hate speech and induced anti-social behavior.”58

That some of Stiglitz’s criticisms jibed with those of Federici and others with the National Conservatism project was perhaps an indication of the scope for creating a broad-ranging coalition to rein in hypercapitalism. Already, however, efforts to create a new economic paradigm were running into pushback from free market conservatives. In July 2023, dozens of them, including Jeb Bush, Karl Rove, and representatives of the Mont Pelerin Society, the American Enterprise Institute, and the Capitalist League, issued a statement of principles proclaiming, “The free enterprise system is the foundation of prosperity.”59 During the 1930s American conservatives had issued similar arguments when they opposed FDR’s New Deal. In the early 1940s, Hayek issued his famous warning that the shift toward collectivism could lead to serfdom. More recently, some conservatives had argued that the government response to the coronavirus pandemic, which included large stimulus programs, had been overweening. It wasn’t perfect, but it had succeeded in heading off a lengthy economic slump, and, in some of its particulars, it was highly illuminating. The American Rescue Act converted an existing program of tax credits for lowpaid workers with children into a monthly universal cash benefit of \$300 per child. In 2021, after this policy was introduced, the rate of child poverty, as measured by the Census Bureau’s Supplemental Policy Measure, fell from 9.7 percent to 5.2 percent in one year. In 2022, after the expanded tax credits were eliminated, the child poverty rate shot up to 12.4 percent—the biggest one-year increase on record.60

The lesson of this brief policy experiment was clear: where the political intent is present, it is perfectly possible to reduce child poverty, just as it was possible, in the twentieth century, to reduce the prevalence of poverty in old age by introducing state pensions.

The system can be reformed: the challenge is to summon the will and the means to do it. With the rise of right-wing populism, profit-driven AI, and a tech and finance oligarchy that was increasingly uninhibited about exerting its political influence, the task, going into the second quarter of the twenty-first century, seemed more formidable than ever. But for more than two hundred years, capitalism has evolved in waves and counterwaves, some of which are driven by its inner conflicts, as identified by Marx and his followers; some by technological developments, as in the Kondratiev “long wave” model; and others by political pressures, as in Polanyi’s “double movement.” At any given moment, it’s difficult (if not impossible) to tell how long the current configuration will survive, or what will succeed it. But the system cannot rest. This has been true throughout its history. It will remain true until Wolfgang Streeck or one of his descendants is eventually proved right.

Notes

Introduction

1. The Logic of the Luddites