WHAT LIES IN THE FUTURE OF CAPITALISM
By Manuel E. Yepe
US American economists of different political orientation have been commenting these days on Robert Reich´s new book entitled Saving Capitalism: For the Many, Not the Few, in the New York Review of Books (December 17, 2015).
For Paul Krugman “It was gratifying to find the stark candor behind the title of Reich’s book. ‘Saving capitalism’ assuredly implies that capitalism is on the ropes –in danger of expiring– an implication that I both believe and welcome.”
Marxist analyst Zoltan Zigedy says that Robert Reich, Paul Krugman, and Joseph Stiglitz share lofty accomplishments in academic economics and constitute the intellectual triumvirate informing the non-Marxist left in the US.
Although they do not agree on everything, they share a core set of beliefs in the viability of capitalism and its need for reform. It is unusual to see Krugman and Reich blatantly suggesting the urgency of saving the capitalist order.
The urgency they feel turns on the dramatic increase in economic inequality in major capitalist countries, particularly the US. Krugman stresses that inequality was an issue that Reich and he “were already taking seriously” twenty-five years ago.
“That may be, but I think it’s fair to say that neither was taking the growth of inequality seriously as a structural feature of capitalism until the important work of Thomas Piketty two years ago.”
According to Zigedy, Krugman, Reich, and other non-Marxist economists modified their understanding of the causes of the growth of inequality over the last several decades. Krugman, says Zigedy, describes a currently- evolved capitalism resembling the capitalism that Marxists described well over half of a century ago.
Decades ago, liberal economists believed that rising inequality sprang from a poor match between technological requirements and workers’ skill sets –what Krugman calls “skill-based technological change” (SBTC). Education was seen as the great leveler, restoring wealth and income to those falling behind.
But with the correlation between levels of education and compensation broken today, all reject SBTC as an adequate explanation and the key to arresting the growth of inequality. The growth of debt-laden college graduates working in call centers surely shattered that illusion.
Krugman thus dismisses a technological explanation for the growth of inequality. Instead he urges that we consider the centerpiece of Reich’s study: monopoly power.
It is the concentration of economic power in the hands of fewer corporate players that accounts for growing economic inequality. According to Krugman and Reich: “…it’s obvious to the naked eye that our economy consists much more of monopolies and oligopolists than it does of atomistic competitors.”
Zigedy wonders, why did it take Reich and Krugman so long to arrive at this juncture, a place that Lenin had visited over a hundred years ago? Marxist writers like Paul Baran and Paul Sweezy devoted an entire influential book to monopoly capitalism nearly fifty years ago.
Thus, non-Marxist economists and their political allies have scorned the concept of monopoly power until recently, a concept that Marxists have made a centerpiece of their analyses.
Krugman and Reich reveal another crucial linkage –that between economic power (monopoly power) and political power. They see monopoly power as sustained, protected, and expanded by political actors. At the same time, they see political actors as selected, nourished, and guided by monopoly power. This creates a troubling conundrum for those seeking to reform capitalism.
Reich’s conclusion, in Krugman’s words: Rising wealth at the top buys growing political influence via campaign contributions, lobbying, and the rewards of the revolving door. Political influence in turn is used to rewrite the rules of the game in society. The result is a sort of spiral, a vicious cycle of oligarchy.
For Marxists, concentration necessarily begets monopoly capitalism, which subsequently completely fuses with the state, creating a mutually reinforcing synthesis. The state rules in the interest of monopoly capitalism while policing the economic terrain to maximize the viability and success of monopoly capital.
Nothing demonstrates the intimacy more than the crisis bailouts of mega-corporations (“too big to fail”) and the increasing monopoly capital’s dominance over the two-party political system that rules the United States.
January 8, 2016.