How not to argue for anti-capitalism

Critical reflections on Clara Mattei's bestseller Escape from Capitalism

I don’t know why I keep expecting anti-capitalist heterodox economists to one day dazzle me with profound new insights that blow mainstream economics out of the water. Perhaps it’s their own inflated rhetoric, which promises this in no uncertain terms with (almost) each new book they publish.

Perhaps I’m just very naive.

Or perhaps my own view of a typical heterodox book is so simplistically negative that I just can’t bring myself to accept it deep down. I tend to be somewhat self-critical, and so I worry when I realize that my view of “the other side” looks like a cartoonish straw-man. My critique of anti-capitalists seems too easy to me, too self-serving, too simplistic. Reality is always more complex. But then again, what do you do when the ideas and arguments you actually encounter just are this cartoonish and simplistic?

A laughably simplistic critique

Anyway, here’s the seeming straw-man I’m talking about. A nasty, simplistic critic of a typical anti-capitalist heterodox econ book might predict that it – i.e., the book – will just be wholly oblivious to the key social science point about incentives and information. Not only will the book, the critic would say, fail to deal with the crucial question of how economic incentives and information that are needed for production and distribution in a large, complex economy are to be arranged in an alternative, non-capitalist system. Instead, the book will more or less simply reject their reality and importance.

Moving on, the nasty critic might say that instead of clearly arguing for and empirically demonstrating the reality of exploitation, the book will merely assume every worker is exploited, because by definition only workers create value. Relatedly, there won’t be any honest and productive grappling with the obvious conceptual alternative, which is that many things go into the production of value and that, at least in principle and as a competitive benchmark, each factor of production must and will be paid its contribution.

The critic might go on and, seemingly quite unfairly, charge that the book will argue, without much thought, that mainstream economics is more or less just apologia for capital, that it’s completely ahistorical, and that oblivious silly economists assume capitalism is a natural and even inevitable phenomenon akin to a law of nature. (Take that, Daron Acemoglu, Douglass North, Joel Mokyr, and other Nobel Prize winners and economists who are among the most highly cited people in the field while also historizing everything!)

The critic might complain that the heterodox book will explicitly assign the blame for literally “all the problems afflicting our era” to capitalism. Right. As if critics of capitalism are that childish and unsophisticated. Sure, they get some things wrong and can get carried away for a moment or two. But it’s cartoonish to suggest that a serious and lauded new heterodox book would commit such an obvious mistake.

Still, the biased critic presses on and makes other wildly speculative charges. For instance, an ugly prediction they make is that the book will contrapose democracy and capitalism, as if they’re incompatible instead of being both conceptually and empirically synergistic.

Or to take a related point, the prediction is that the book will argue “the majority of people” have virtually no economic agency and that the vast majority of workers in one of the richest economies in the world (the US) are barely living from paycheck to paycheck. There are other nasty predictions still: for instance, that there will be throwaway lines in the book about the capitalist system generating “exploding” inequality and that poverty is “inherent to the very nature of capitalist [but not any kind of realistic non-capitalist] society even in its most developed form.”

There are so many other caricature complaints which the critic can’t help but entertain. Instead of listing all that remain, let me leave you with a final particularly silly one. It predicts that the book will characterize capitalist production as only for profit and thus indifferent to the satisfaction of our needs. Of course, that can’t be. In reality, everyone (including the famous heterodox author) knows very well that in capitalism, the two typically go together. That is, we tolerate profit precisely because this is how our needs and wants are usually satisfied in capitalism. But the critic remains stubborn and insists on straw-manning the opponent.

What can anti-capitalists do against such reckless hate?

When the heterodox target just is that simplistic

Well, for starters, they can stop writing books that in fact commit all of these sins. It pains me to report that Clara Mattei has written such a book, and one lauded by very serious thinkers the likes of Thomas Piketty, Adam Tooze, and Branko Milanović. A clip of her during an interview recently went viral on social media. The book also has a bestseller status on Amazon.

I’ll turn to Mattei’s Escape from Capitalism in a moment, but first let me do some additional throat clearing.

When I say “pains,” I actually mean it. Yes, I’m not a heterodox economist, nor do I have strong sympathies with them, at least I haven’t for some time now. I’m also quite appreciative of capitalism – though I know my Marx very well and have myself written a book about what capitalism gets right and wrong, including its bloody history and exploitation, construed in a way that doesn’t beg the question, among other things. So I understand if you don’t believe me when I say it really pains me Mattei’s book is this bad. But it does pain me.

It does partly because I had engaged in similar mischief as a Master’s student writing my final thesis more than a decade ago. I did so with great tenacity and fervor, even though I was all of 23 years old. It won’t surprise you if I say I knew literally almost nothing about how the social world, including the economy, works. Mind you, I’d studied journalism as an undergrad for 4 years and then switched to political theory for 1 semester before starting to write my final thesis on Marx, Marxism, and the “irrational brutality” of capitalism. At that point, I had been personally studying Marxism, without any tutoring or a syllabus, in my free time for around 10 months mostly through the internet, some forums, and a few books. What can I say, I was a “quick learner.”

Here are a few gems from my introduction, translated into English for the purposes of this post:

Since at least 2007, the countries of developed capitalism have been haunted by an undeniable reality: the reality of the immanent brutality and irrationality of the capitalist mode of production in all its more or less inhuman manifestations. We are witnessing this terrifying reality in Slovenia as well, where conditions are worsening month by month, while politicians look on helplessly at the unfolding tragedy and wait – wait for the end of a devastating crisis that, since 2009, they have claimed is close at hand, just around the corner. Unfortunately, however, we can only dismiss this scenario without pretension, since even the official apologists of liberal capitalism warn that the actual end of this all-too-tangible nightmare is still far away.

…

Paul Samuelson, the first American economist to receive the ‘Nobel’ Prize in Economics, defines his science as follows: “economics, or political economy [sic!], as it used to be called, is the study of how people and society choose to use scarce productive resources, with or without money, which could have alternative uses, in order to produce various commodities and distribute them for consumption among different individuals and groups, now and in the future” (Samuelson 1967, 1). Economics is thus, at its core, a science that studies transhistorical decisions, the choices of people and society.

Let us compare this with the definition given by the Russian Marxist economist Isaak Rubin: “[p]olitical economy is not the science of relations between things, as the vulgar economists thought, nor of relations between people and things, as the theory of marginal utility maintains [in our case, Samuelson], but of relations between people in the process of production” (Rubin 1999; his emphases).

This definition is not only diametrically opposed to Samuelson’s, since unlike Samuelson’s it foregrounds the importance of social relations of production rather than merely individual choice, but is also incomparably more penetrating: economists are not psychologists concerned with the study of subjective impulses, human choice, and marginal utility. These are not entirely worthless objects of scientific inquiry, but the fact remains that they are not what concerns us when we study the specificity of the capitalist mode of production as a coherent, historically specific system of social (re)production with distinctive features.

People under capitalism live, produce, and consume in a way utterly different from people in slave-owning or feudal societies, yet this cannot be the result of some spontaneous transformation of people’s subjective preferences and marginal utilities. Our needs could have remained exactly the same for the past 2,000 years, and yet the mode of social production and distribution in different socio-economic systems would have changed just as it in fact has. The theory of choice cannot explain why the internal dynamic of capitalist society, based on generalized market exchange, is radically different from the dynamic of a slave-owning or feudal society. It cannot do so because it does not study social relations of production and because it is ahistorical.

Such an explanation can, however, begin to be provided by a science – political economy – that studies precisely these relations, even if it remains ahistorical; and above all by the critique of that science, which also explains why social relations of production in capitalist economies assume a specifically material form, thereby recognizing the historical specificity of different societies.

We need Marx today because contemporary economics is merely a mathematized theory of choice, one that does not concern itself with social relations of production, but instead explains how and why people choose certain things rather than others – today, tomorrow, and 10,000 years ago. We need Marx for a macroeconomic analysis of the condition or dynamic of contemporary capitalist economies, whereas orthodox economics is concerned with the study of individual preferences and with the a priori hypothesizing of the allocation of more or less scarce resources. We need Marx in order to think the relations between those who own the means of production and those who do not; to understand what regulates and coordinates social production and distribution in a socio-economic system in which no subject regulates them consciously or according to a plan, and in which, because access to the means of production is artificially created and perpetuated as unavailable, most people can survive only by submitting to the logic of the market and continually selling their labor-power. We need Marx in order to grasp why, in capitalist economies, relations of production between people assume a material form – that is, the form of relations between things.

Put differently, we need him in order to answer the question of why, under capitalism, things possess a social form, or why it is things that confer social power, or function, upon subjects, and not the other way around. In fact, we need him simply in order to pose such a question in the first place.

Okay, I torture and bore you with my student-era slop only to demonstrate why I feel so queasy when I encounter heterodox books that critique mainstream economics in more or less the same way I did in 2013 (recognize the “ahistorical econ” and “capital apologia” points from before in my quote above?). I lived this stuff, and did so as a know-nothing 20-some year old. I refuse to believe that the political economy inanities I was able to cook up as journalism-background student, reading Marx in my spare time, without really knowing anything about the economy or mainstream economics and without any statistical knowledge, can be passed of as state of the art heterodox critique of capitalism. It just can’t be that simple.

Alas. Let’s go through some parts of Mattei’s book, which stand out as most egregious to me.

I want to escape from Escape from Capitalism

Any serious critique of capitalism must start from the recognition that, despite their flaws, the capitalist market system and the mechanism of economic competition tend to serve, at least in many domains, an immensely useful function of providing efficient incentives and information that are needed for the production and distribution of goods and services.

Mattei seems not to recognize that. She mostly concerns herself with saying things like:

Our economic machinery is structured not to meet the needs of ordinary people but to increase the rents and profits of the few capital holders.

We have created a socioeconomic system in which meeting our needs depends on mechanisms that thrive on their suppression.

She does talk about prices but just to point out that they are (imperfect) rationing devices. The example she gives is that if you don’t have the money to buy a sandwich, even if you might want it, you won’t get it — at least not on the market.

Okay? Yes, that’s what a market is. You have to ration things somehow in any society where goods don’t just spawn out of thin air. You can do it with money and prices, which often works fairly well. You can also do it in other ways, like a state choosing and commanding who gets what, which tended not to work well. You can have queues and waiting lists, which can sometimes be good (and we do have those), though that carries a whole other set of costs and benefits with it. You can do it on a first-come, first-served basis, or you can serve the people who waited longest first. You can randomly allocate goods with a lottery. You can do all sorts of other things. But there has to be a system of allocating and rationing.

Obviously, what’s she’s getting at is that, in an ideal world, we’d be able to accurately measure what everyone “needs” and allocate on the basis of need. And sometimes, we do come close to that, as in medicine and hospitals. But why do you think we don’t allocate everything on the basis of “need?” Please don’t say propaganda or ideology or whatever. Obviously, a central reason for why we ration via proxies (like money and prices) instead of “need” is that, for most things, “need” is so arbitrary. Aside from a few well-known physiological basics, people mostly have “wants.” Some people want this kind of spicy food, others a different kind. Some people want more, others less. Some people want jacuzzies, others are content with a sports bike. How do you produce and distribute cigarettes on the basis of “need?” What about laptops and lip balms and hotels and short shorts?

Look, how we ration and what the upsides and downsides of money/prices in that process are (in contrast to other mechanisms) are complicated questions that are hard to answer. But what is certain is that platitudes that Mattei writes, like this below, are completely useless:

We have to take back the ability to collectively decide what and how much we want to produce, what energy sources to rely on, and how to structure power relations in the workplace. We have to take back command over production and our relationship with nature, and we must make decisions with the well-being of future generations in mind.

What does this get us? How does this serve the anti-capitalist cause? It’s especially frustrating, since she explicitly says in the book that “I go beyond mere criticism of neoliberalism to propose an anti-capitalist view that I hope will shake readers into participating in real social transformation.” If you want to propose a workable alternative to capitalism that does without money and prices (or will those nevertheless be kept in place?), you have to at least broadly suggest what kinds of incentive structures we’ll replace capitalism with so that strangers will be willing to spend their own time producing stuff for strangers whom they have no attachment to.

You also have to roughly explain to us where we’ll get credible information from, each and every day, on what millions upon millions of people from across society and the world want others to produce for them. I hope it’s not going to be: communal deliberation where every person tells us what their wants, sorry, needs in terms of packs of Skittles and luxury cars are, so that we can then “as a community” seamlessly decide how production and distribution will look like the following month. That’s completely unworkable and nobody wants that.

Next up, worker exploitation. That’s a crucial topic in any anti-capitalist discussion. Mattei says:

All wage labor, even if it pays well, is by definition exploited labor because, counterintuitively, we as workers produce more value than we receive in our paychecks.

A couple of issues with this. First, you should be careful with such an expansive definition of exploitation, because it means (as she notes) that both a badly paid and mistreated agricultural worker and a handsomely-rewarded surgeon living a lavish lifestyle are exploited in the same way. That’s fishy. Most people will balk at the suggestion and won’t find that intuitive at all, so that won’t get them to join your anti-capitalist struggle. A philosophically sophisticated account of exploitation involves not only the fact of unequal exchange or surplus but also the instrumentalization of a person’s (structural) vulnerability.

Second, there should be some fair engagement with the obvious alternative view, which posits that wage labor is in principle not exploited under capitalism, because on a competitive market each factor of production (including labor) gets paid its marginal contribution. (Closely relatedly, most workers typically have reasonable exit and switching options; this is especially the case for high paid ones.) She mentions the marginalist theory in the book, but never engages with it. Why is it wrong? Because oligopsonistic or monopsonistic, not perfectly competitive, conditions prevail in the real world? Okay, fair enough. But if so, you have to demonstrate that, preferably with quantitative evidence. Moreover, if we lean on the imperfect competition account, then exploitation is not necessarily “inherent” in the system and is not experienced by literally all wage labor. On this account, the discrepancy between pay and value can also be quantified, so we get to see how high it is in absolute terms and whether it’s rising or falling over time. All of that would be good to know if we’re doing serious analysis.

So, what’s wrong with the mainstream econ view that profit is not inherently proof of exploitation? You can’t just dismiss it in a book-length treatment on capitalism and anti-capitalism and then move on.

Here’s another yikesy statement from the book:

All the problems afflicting our era—from the rise of ultranationalist parties to perpetual wars, hatred for migrants, the environmental catastrophe that is especially hitting the Global South, and the mental health crisis, especially among younger people—can be explained by an economic system that oppresses the majority both nationally and globally.

All the problems? Literally all the problems today are the fault of capitalism? Ultranationalist parties are rising today because of capitalism? What about all the research that shows this isn’t the case? Hatred for migrants is due to capitalism? What? And before we blame capitalism for the mental health crisis among adults or young people, do we even know the actual extent of the crisis? The data don’t tell a straightforward story at all, and the adolescent suicide rate in OECD countries is actually lower today than it was 20 years ago.

In the book, she cites the 77% figure (from PayrollOrg), which is the share of Americans who say they’d face financial difficulties if their pay was one week late. That’s a datapoint we shouldn’t dismiss. But you can’t reason just from one piece of evidence. Why was there no mention of the fact that the median American (so at least 50% of the population) has $8,000 dollars in transaction accounts, and 46% of adults have three months of expenses saved (which is roughly $19,600 at average spending)? Or that the share of total spending Americans do on their food has fallen from over 40% in 1901 to less than 15% today? The share spent on housing (around 30%) has barely budged between the 1930s and today. Same goes for healthcare or education and spending: spending shares are close to where they were 60 years ago. Not mentioning that seems a bit biased.

But god damn capitalism, am I right?

Here’s another tidbit about America:

Even in the richest country in the world, the United States, during its golden post–World War II epoch, poverty was pervasive. In 1962, it plagued 20 percent of American families (around 35 million individuals) and almost half of the nonwhite population.

Is that relative or absolute? Because relative poverty has indeed stayed fairly consistent in the US over time. (In Sweden, for context, it’s actually doubled over the past few decades.) But that’s not surprising, because relative poverty is akin to an inequality measure: it looks at what’s the share of people below the average or median income in a society. Relative poverty stays flat even when everyone’s incomes rise, as long as incomes at the bottom don’t rise faster than those higher up.

Relative poverty tells you nothing about absolute poverty, which is what many people have in mind when hearing the word. And in the US, absolute poverty has fallen from 20-25% in the 1960s to 3-10% today.

There’s a lot more to dislike about the book, as I’ve hopefully intimated at the beginning: the faulty contraposing of democracy and capitalism, or the intimation that liberalism is just like fascism when it comes to “the common goal of protecting the capital order … [using] aggressive austerity policies,” and other things like that. It’s not all bad. There are also parts where it’s hard to disagree, like on misguided austerity. But those are, to my mind at least, far outweighed by the bad stuff.

By way of conclusion, consider this striking passage:

For decades, ‘experts’ have been spreading this numbing story with academic theories spun from the elite circles of the most prestigious universities in the world. By hiding the true nature of the prevailing economic system, they atrophy our minds, blocking any possibility of transformative action. But it is possible to escape from capitalism.

The “numbing story” she’s referring to is the idea that the capitalist economy is a positive-sum game, where typically most of the society is lifted up (or, as she says, “business success helps all of us”). That’s false. You see, it’s those dastardly economists (so-called “experts”), who have invented this fake story, and are “hiding the true nature” of the system and “atrophy[ing] our minds.” That’s not a conspiracy theory. It’s just how it is. Moreover, once you penetrate the veil and see truth for what it is, you’ll realize that following. “[T]he reality is that ultimately market gains, or profit, are contrary to the well-being of citizens—as one rises, the other decreases.”

Okay, leave aside the conspiracy theorizing, the missing factual contexts, and the sidestepping of any fair-minded discussion of alternative explanations for phenomena she takes issue with. What I find perhaps most risible of all in this travesty is that Mattei claims the mainstream econ interpretation of the world and capitalism “represents the dominant story today.”

Is that even true? Given the distaste people have for any kind of “expert” these days, but especially economists and economics, is the random person on the street really more likely to believe the counter-intuitive mainstream econ view of capitalism, prices, market competition, and the general fact of material progress? Or are they more likely to go with the heterodox-sounding: “Yeah, man, everything is corrupt and staged. The CIA, the IMF, those pointy-headed ‘economists’ - they’re all in on it, I heard it on Joe Rogan. It’s all fake. They’re ripping us hard-working people off while they get rich on their yachts. GDP, money, it’s all fake. You know what they say, the rich get richer and the poor get poorer!”

I don’t know, I don’t have the data if that’s what the common person really thinks. But if it’s anywhere close to being so, I guess the heterodox people have already won in a sense?