This timely book arrives with capitalism in crisis (again). This time it feels critical, if you factor in global warming and the rise of AI – (both a result of the capitalist drive for profit). Inequality is increasing on a huge scale.
This epic overview of capitalism starts with an exploration of the East India Company, and the building of the mills in northern England in the 1770s. The latter sees the beginning of the factory system and industrialisation. The former was founded in the 1600s and had become, by the 1760s, effectively rulers of Bengal so that it “transitioned from traditional merchant capitalism to full-scale corporate plunder”.
From these twin beginnings critics emerged. And not all were anti-capitalist.
Adam Smith – yes, he of “the free hand of the market” fame – wrote “emphasizing the link between mercantile capitalism and war”.
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The East India company encapsulated a convergence of the interests of the British elites (as investors), the military power of the British state (especially the navy – in terms of protection/enforcement), and a focus on profit to the detriment of the local people. It became a template for US foreign policy over the last 100 years.
The historical recurrence does not end there – eventually the East India Company had to be bailed out by the British government. Bailouts are something we have become familiar with.
All the expected critics of capitalism are here – Marx, Engels and Keynes; the last espoused managed capitalism – capitalism with interventions to prevent it from getting out of control. Yet it is the lesser-known figures who make this book so interesting, often responding to other economists.
One is the economist Paul Sweezy. His Marxist critique of Keynes in the 1940s stated that eventually “managing the economy in the public interest came into conflict with capitalists’ drive to accumulate capital”. He also wrote that, “The Keynesians tear the economic system out of its social context.”
If you are not of a left-wing persuasion you could hold that many ideas expressed in this book are utopian. If you are, then they will seem like common sense
Another name I was unfamiliar with was Joan Robinson. She was an English economist who argued with the neoclassical economists of the 1950s and 1960s. They had co-opted Keynes to create economic models that did not consider many variables outside their abstract economic formula. She called them the “bastardised Keynesians”. She characterised their position thus: “the great corporations must be allowed to go on chewing up the planet, unless they will not be able to make profits and provide employment.” Very prescient.
Karl Polanyi was an Austrian journalist and editor. He escaped from the Nazis’ persecution of Jews in the 1930s (he lost his sister in the death camps) to London and eventually the US. He claimed that in Austria business people backed fascism to avoid socialism. The nub of his argument, Cassidy maintains, was that “Efforts to subjugate society to the dictates of the free market and the profit motive ... were incompatible with democracy”.
There is Irish interest here too. William Thompson was born in Cork in 1775. He was a landlord who “cared about the welfare of his tenant farmers”. In 1824 he published a book, An Inquiry into the Principles of the Distribution of Wealth Most Conducive to Human Happiness. Here is the motto of Utilitarianism. Cassidy sees Thompson’s legacy as creating “an analytical framework that Marx and his disciples would adopt and develop”. He was also “an early feminist”.
It is no surprise then that he encountered Anna Wheeler. They became good friends based on “their shared interest in progressive politics, the co-operative movement, and women’s rights”. Wheeler, born in Tipperary, was also upper class. Through running salons on the continent she gathered progressive thinkers. The chapters on Thompson and Wheeler introduce us to Robert Owen, who set up co-operative communal living communities; to the economist Ricardo; the Utilitarian thinker Bentham; and the French co-operative founders Saint-Simon and Fourier.
This is only a taste of the scope of this brilliant book.
In the final chapters the issues laid out in my introduction are explored. Thomas Piketty’s data-heavy, left-leaning Capital in the Twenty-First Century from 2014 traces the “long-term dynamics of inequality”. It is expertly critiqued and other left-leaning critiques of it are explored. Modern problems are addressed – globalisation, deregulation, investment in financial instruments that contribute nothing real to the economy.
“Capitalism can be reformed,” Cassidy maintains, however. “Shrinking capitalism” seems like a way forward. As the economist Joseph Stiglitz writes: “There must be large parts of the economy that are not and cannot be driven by profits ... health, education and care sectors.”
If you are not of a left-wing persuasion you could hold that many ideas expressed in this book are utopian. If you are, then they will seem like common sense and most importantly, at this time, essential. As is this excellent book – compelling ideas enlivened with colourful biography.
