What Is Capitalism?

In the Absence of Any Alternatives

Capitalism seems here to stay, so I decided it is a topic worth understanding beyond what’s provided in embarrassingly banal newspaper editorials. My initial readings were Sven Beckert’s magisterial Capitalism – A Global History – and New Yorker writer John Cassidy’s Capitalism and Its Critics– A History from the Industrial Revolution to AI, a more modest and easier read. I recommend both and solicit further reader suggestions from my more expert audience.

Taken together, the two seem to suggest that capitalism as a dextrous and wily beast that inevitably adopts to changing conditions and has made our world far richer, albeit at the cost of a reduction in individual autonomy as those with money and power already generally benefit most.

Beckert, author of an earlier big and compelling history of cotton, surprisingly concludes that capitalism won’t last forever, but is good for at least a few more centuries in a history he figures already exceeds a millennium. Cassiday, who devotes a chapter to each of capitalism’s critics he finds compelling (Marx, Henry George, Keynes, Polanyi), isn’t about to write an obituary either. His focus is on how capitalism constantly responds and adapts.

Neither author should be construed as a fan of capitalism, both are analytical critics. And, significantly and unhelpfully, neither has an alternative to suggest. Both seem to settle for continuing tweaks to make it tolerable.

Beckert tells a compelling story about the seductive dance between capitalists and government with the capitalists more often paying the role of seducer. He reminds us that capitalism is dependent on a government enforcing the rules that enable and protect it.

Despite rhetoric praising creative destruction or slogans about moving quickly and breaking things, capitalists crave the stability provided by a monopoly, one of their unchanging goals. Their goal is to create what seems to be a better mouse trap and then have the government enact anti-rat rules that require each of us to buy one.

So the predictable endless debates about the advantages of having government get out of the way to allow economic progress should be taken with a shaker of salt. Successful governments depend on a robust economy created by capitalists. Governments of every type and capitalism are in a mutually beneficial marriage that each partner finds suboptimal. The real debate is about who’s in the driver’s seat.

Among Beckert’s most interesting and provocative claims is that capitalism’s golden age within the industrial world in the mid-20th century was ended by simultaneous uncoordinated attacks from the left and the right. The corporate community was concerned that the shrinkage in income disparity, often caused by strong unions, was shrinking profits, leading to Lewis Powell’s famous memo about the need for a counter attack from business to influence government policy.

Marginalized non-white and non-male workers made a strong argument for government action from the other direction to give them a fair share of the generalized prosperity

Cultural critics weren’t very happy either with authors of The Man in the Gray Flannel Suit , the Lonely Crowd and the Hidden Persuaders, worrying about the loss of autonomy for the apparent middle-class winners.

In our world at least, these forces once again required capitalism to redefine itself, as it did during the Great Depression. Insofar as capitalism is about private property, we’re all participants in a capitalistic system that seems more advantageous to most of us than some theoretical alternative.

There is no poster child for an alternative system.

Barring a compelling recommendation from my audience, my next book will be Hungarian economist Karl Polanyi who I’m told argues that there’s a constant tension between capitalism which tends to most advantage the rich and social constraints imposed by the broader population.

In my current ignorant state that seems like a plausible hypothesis.