Gaius Publius: What’s Called “Capitalism” Is Far from Any Model of Capitalism or Market

By Gaius Publius, a professional writer living on the West Coast of the United States and frequent contributor to DownWithTyranny, digby, Truthout, and Naked Capitalism. Follow him on Twitter @Gaius_Publius, Tumblr and Facebook. This piece first appeared at Down With Tyranny. GP article archive here.


Predators and prey. The homeless and left-behind are at the bottom (“decomposers”). Most of everyone else is in the next layer up (“producers”). The rest, from the well-off to the wealthy, are “consumers.” Interesting how that language works, isn’t it? (source)

by Gaius Publius

A recent piece I did on the British Labour politician Tony Benn featured a speech that offered a “history of neoliberalism” (click here to read and listen). Near the beginning of the speech, Benn said, “This country and the world have been run by rich and powerful men from the beginning of time.” Consider that for a moment, what that means about the arc of human history.

Near the end of his short talk, referencing the Thatcher (and Reagan) counterrevolution against the great populist gains of the 19th and 20th centuries, he said that this is “what the whole [modern] crisis is about, the restoration of power to those who’ve always controlled the world, the people who own the land and the resources and all the rest of it.”

That radical re-transformation of the world back to control by its original and longtime owners, “rich and powerful men,” was begun in England by Margaret Thatcher and several deliberate policies. Benn (my emphasis): “So privatization is a deliberate policy, along with the destruction of local democracy and the destruction of the trade unions to restore power back to to where it was.”

Benn also mentions the role of crushing personal debt in the Thatcher de-democratization of her society:

What she said, and this is very clever, “You can buy your council house so you’ll be a property owner. You may not be able to get a wage increase, but you can borrow.” And the borrowing was deliberately encouraged because people in debt are slaves to their employers.”

Notice that this re-transformation back to what was, this re-transfer of power to society’s original owners, isn’t about any ideology, any set of theories, any academic anything about “invisible hands” or mathematically correct economic models. This is about one group — “rich and powerful men” — reasserting control of the world, a control they’ve enjoyed since the virtual “beginning of time,” since the first day “property” meant more than just personal property (what I carry and wear) and included ownership of fields, buildings and land itself.

That period, which started the day the first city-state, the first temple-state arose, lasted more than 5,000 years. For almost all of the time since humanity left the Stone Age, the mass of humans have been ruled by the rich and powerful, until the opening of a very brief window initiated, as Benn tells it, by the trade union movement of the mid-1800s.

That small window is now closing. We’re watching the end, if we allow it, of this one-time-only freshwater teardrop in time, as it falls to become lost in the deep well of our salt-water civilized past. (And don’t be confused. If that small window, the 250-year period of relative freedom, closes — if “rich and powerful men” regain full control as they have almost already done — they will also end the 5,000-year window of human civilization. Because, climate.)

Please don’t take a short view of the times we inhabit together. This is what’s at stake, now, this year, this election cycle, this decade — at most, this quarter-century, which is more than half over. To help with that larger orientation, I showed you Tony Benn’s brief history, and also Tony Benn’s optimism (scroll to the end for that). Now I want to show you two contributions on this subject by Noam Chomsky — a piece of analysis, presented here, and his pessimism, presented later, which I will try to counter.

Today, the analysis.

What’s Called “Capitalism” Is Far from Any Model of “Capitalism” or “Market”

Simply put, we’re not living in a “capitalist” economy, and present economic activity is not properly described by the word “market.” To see and say that completely misses the facts. The economic “theory” we’re guided by, if it can be called a theory at all, is what Benn described at the start of his speech: “This country and the world have been run by rich and powerful men from the beginning of time.” The closest I can come to describing this “theory” is “predators and prey.” For more than 5,000 years the predators — “rich and powerful men” — enjoyed complete control. “Capitalism” is what they’re calling today’s reassertion of that control.

But it’s not by any stretch “capitalism,” not even close. Noam Chomsky, in a recent interview with Jacobin magazine, says it quite well. First, from the introduction to the interview (my emphasis):

Throughout his illustrious career, one of Noam Chomsky’s chief preoccupations has been questioning — and urging us to question — the assumptions and norms that govern our society.

Following a talk on power, ideology, and US foreign policy last weekend at the New School in New York City, freelance Italian journalist Tommaso Segantini sat down with the eighty-six-year-old to discuss some of the same themes, including how they relate to processes of social change.

For radicals, progress requires puncturing the bubble of inevitability: austerity, for instance, “is a policy decision undertaken by the designers for their own purposes.” It is not implemented, Chomsky says, “because of any economic laws.” American capitalism also benefits from ideological obfuscation: despite its association with free markets, capitalism is shot through with subsidies for some of the most powerful private actors. This bubble needs popping too.

The interview ranges widely (feel free to read it all). I want to point to just one section, in which Chomsky characterizes what we insist on calling and defending as “capitalism” (my emphasis in italics):

[Q] How do you think that the capitalist system will survive, considering its dependence on fossil fuels and its impact on the environment?

[Chomsky] What’s called the capitalist system is very far from any model of capitalism or market. Take the fossil fuels industries: there was a recent study by the IMF which tried to estimate the subsidy that energy corporations get from governments. The total was colossal. I think it was around $5 trillion annually. That’s got nothing to do with markets and capitalism.

And the same is true of other components of the so-called capitalist system. By now, in the US and other Western countries, there’s been, during the neoliberal period, a sharp increase in the financialization of the economy. Financial institutions in the US had about 40 percent of corporate profits on the eve of the 2008 collapse, for which they had a large share of responsibility.

There’s another IMF study that investigated the profits of American banks, and it found that they were almost entirely dependent on implicit public subsidies. There’s a kind of a guarantee — it’s not on paper, but it’s an implicit guarantee — that if they get into trouble they will be bailed out. That’s called too-big-to-fail.

And the credit rating agencies of course know that, they take that into account, and with high credit ratings financial institutions get privileged access to cheaper credit, they get subsidies if things go wrong and many other incentives, which effectively amounts to perhaps their total profit. The business press tried to make an estimate of this number and guessed about $80 billion a year. That’s got nothing to do with capitalism.

It’s the same in many other sectors of the economy. So the real question is, will this system of state capitalism, which is what it is, survive the continued use of fossil fuels? And the answer to that is, of course, no.

By now, there’s a pretty strong consensus among scientists who say that a large majority of the remaining fossil fuels, maybe 80 percent, have to be left in the ground if we hope to avoid a temperature rise which would be pretty lethal. And it is not happening. Humans may be destroying their chances for decent survival. It won’t kill everybody, but it would change the world dramatically.

If you click that last link and scroll down, you’ll get his sense of where we’re headed as a species, in particular with respect to habitability and climate.

But your takeaway should be this. Economic predation by the powerful is not an economic system in any sophisticated sense, any more than organized bullies stealing every child’s lunch money the minute she enters the building is a “system” in any complex sense. It’s not even a “racket” if that term implies misdirection and a multi-step process. It’s just boots on the neck and hands in the pocket.

Nor is such theft a “market” by any definition. It’s simply theft, backed by the power of the bullies themselves, their fists, their clubs, and the power of the state that enables them for a cut of the prize.

Feel free to defend (or not) what this “system” is becoming. Just don’t misdescribe it. It’s not capitalism by any definition. Nor is it a market, unless a factory farm with a slaughterhouse at one end is a market. Don’t confuse others; don’t confuse yourself.

When we next return to Chomsky’s speech, why he’s wrong about Bernie Sanders.

Print Friendly, PDF & Email


  1. greg

    Actually, it is purest anti-capitalism. What is happening is that real productive capacity is being dis-invested in, and allowed to decay. For instance, (according to Carl Icahn,) the average age of US plant and machinery is over 22 years. A record.

    The reason? Finance is more profitable than investing in real things. Money makes more money. Money no longer needs a foundation in reality to increase its quantity. The problem? Money is only an asset because of what it can really buy. Even economists haven’t figured this out.

    So at the same time the plutocrats are reasserting control over the economy, they are turning that economy into a scrapheap, and their money, and our money, into worthless paper.

    And because they have no master, they cannot help themselves. They must compete, because who ever does not compete will be left behind. And so they consume all our tomorrows.

    1. skippy

      According to Carl Icahn are you bloody kidding me – ?????

      Man love for Carl… let me count the ways…

      1) WCI Communities (former ticker: WCI)
      On January 16, 2007, a Securities and Exchange Commission filing disclosed that Icahn was the beneficial owner of 14.57%, or 6.1 million shares, of WCI Communities Inc. In the filing, Icahn indicated he intended to contact WCI to discuss how to “unlock the inherent value” of its shares. Icahn served as chairman for the homebuilder. Icahn paid an average $18.46 a share — about $112.6 million — for his stake in WCI. Icahn’s shares of WCI stock are worthless today since WCI filed for bankruptcy and no longer trades on the NYSE under the ticker WCI.

      2) Motorola (MOT)
      On January 30, 2007, Motorola (NYSE: MOT) received notice that Icahn owned about 33.5 million shares — at the time representing a 1.39% interest in the company. Again, Icahn pushed for a seat on the board. The stock price was around $19 per share. But he was turned down by the majority of the stock holders in an election for Board of Directors. On March 24, 2008, Icahn sued Motorola as part of his efforts to gain 4 seats on Motorola’s Board and force a sale of its mobile business. Today, shares of MOT are fetching $7 per share.

      3) Blockbuster Inc (BBI): “Wow! What a difference (Icahn makes)!
      In 2005, Carl Icahn began his investment stake in Blockbuster (BBI) and securing representation on the company’s board. Icahn spent roughly $320 million on his stake at a time when BBI was over $10 per share. Icahn has been snowboarding downhill with BBI’s shares ever since he became an “activist” investor in the company. Today, Blockbuster shares are trading at $.41 per share. I guess his activism has been to destroy value.

      4) Time Warner (TWX)
      In 2006, Carl Icahn controlled 3% of the Time Warner (TWX) and waged a quixotic campaign to split the company into 4 separate units.
      But he didn’t get anywhere close. Instead, he only convinced management to increase share repurchases — even that was a horrible move. Shares were trading at about 45 when that was announced. Today, TWX shares trade at $30.50 per share.

      4) Telik (TELK)
      In early 2007, Carl Icahn owned over 5 million shares in biotech company, Telik (TELK). He purchased shares between $7 and $17 per share. By early 2009, Icahn sold his stake in Telik for under $1 per share.

      5) Greenbrier Companies (GBX)
      In early 2008, Carl Icahn acquired an approximate 10% stake in railroad freight car company Greenbrier Companies (GBX). At the time of Icahn’s share acquisition, shares of GBX were over $20. Icahn had the vision to hopefully merge GBX with another one of his heavily owned companies, American Railcar (ARII). However, his vision remained nothing but a vision. His vision flopped, and today Greenbrier is trading at appoximately $10 per share.

      6) Guaranty Financial (former ticker: GFG)
      In January 2008, Carl Icahn owned roughly 10% of the Texas-based financing group. The stock was trading over $12 per share. Icahn pressured its former parent, Temple-Inland (TIN), to spin off the financial group. The bullied action resulted in Guaranty finally declaring bankruptcy in the summer of 2009.

      Relative Success
      Two deals exhibiting Icahn’s corporate raider success include Eli Lilly’s (LLY) acquisition of ImClone and Anadarko’s (APC) acquisition of Kerr-McGee.

      Not to mention his elitist and expensive charter schools which skim off exorbitant admin fees just to have the brand transferred to the student, parents hope.

      Skippy….btw how is that FBI SEC probe coming along?

      1. greg

        Hey Skippy. It’s not that I have a high opinion of Mr Icahn. And if he was toeing the party line, that everything was fine and not to worry and we should give him and his ilk more money to continue business as usual, I wouldn’t pay undue attention. But he’s not saying that. He’s saying business as usual has put us in a f*cked up situation, and we should be aware of it. When one of the responsible parties says things are f*cked up, you should pay attention. But I certainly would not mindlessly follow his prescriptions, which are almost certainly self serving and probably otherwise counterproductive.

        Anyway: “The average age of fixed assets reached 22 years in 2013, the highest level since 1956, according to data compiled by the Commerce Department, as reported by Bloomberg and S&P.”

        IIRC, while buildings may last longer, when calculating depreciation, by about 20 years, most fixed assets are listed as scrap.

          1. greg

            Getting the Masters of the Universe to admit there are problems is a necessary first step. Getting them to admit responsibility for those problems is probably quite impossible. Though they are running things, somehow they are not responsible for the consequences of their own greed and incompetence in running.things. Their patsies in government (on whom the wealthy do intend to fix the blame) suffer from the same mental disconnect. Our politicians do not regard their pandering to the insatiable greed of the moneyed class as a cause of increasing social and government dysfunction.

            However, other things can happen now, which may result it long run benefits. The powerful, as they on occasion do, may panic. In that case, there will likely be hard times for a while, and people should prepare.

    2. susan the other

      It is free-market capitalism. Which should be called anti-capitalism because it turns into turbo cannibalism, monopoly, and implosion. We can’t have “capitalism” without laws controlling it. There is a fine balance which must be preserved for capitalism to work and it includes healthy social economies. Social economies also need a healthy capitalism working for them. But neoliberal capitalism is nuts. It’s suicide.

  2. Leo

    To be honest, there is nothing new here that Karl Marx didn’t realize in the 19th Century. Mr. Beard of the Year 1867 knew that Capitalism was a snake eating its own tail. It’s game over: it’s already baked into the cake. When I was born, there were 4 billion humans on the planet. Dire predictions were being made for the future. TBTB did not give a monkey’s toss. Apocalypse is our destiny. Power is relative, and as America declines relative to the rest of the World she will have only one option: play her trump card and deploy her massive nuclear arsenal against the “bad guys”, ie, the rest of the world.

    1. Moneta

      Capitalism has always been dependent on natural gifts which have mostly been unaccounted externalities… oil, metals, lumber, water, air, nature doing the heavy lifting, etc. Thus, the implementation of capitalism was flawed from the get-go.

      But now that we are 7 billion going to 9 billion and global growth is based on selling our ways to the newly created middle class while preserving the standard of living of the existing one, all these externalities will start getting measured… and we are in for a big surprise.

      1. susan the other

        If we can come up with multiple trillions to subsidize fossil-fuel “capitalism” we can also come up with various trillions to subsidize the antidote. No reason why not. Money is only what you do with it. But because we have let this mess devastate the planet for so long, it will be a big change.

        1. MyLessThanPrimeBeef

          Nature’s antidote is less money or no money for humans.

          All the species will probably sleep or breathe better then.

    2. Je' Czaja

      Nothing is inevitable, nothing is “our destiny.” Humans make choices, these choices affect our lives. What choices will humans make? How to foretell the future? Shall we examine sheep entrails? Get out a crystal ball? Put our faith in Marx’s historical inevitability?

      Nothing is inevitable. We do not know everything about now, never mind the future.

    1. Alejandro

      Are you suggesting that profits should be earned in exchange for value, e.g., standard of living or quality of life?

  3. James Levy

    I’m reminded of the contradiction of a man like Andrew Johnson. Johnson had been an ardent enemy of the planter aristocrats in the Senate and when his state left the Union, he went North. His entire career had been that of a little-guy Jackson Democrat. Yet when it came time to include blacks in the definition of “we the people”, Johnson ran to the Right and played footsie with the very people who had mocked him (and whom he had hated) before the war. Black equality was simply a bridge too far.

    I think after the New Deal a lot of the “natural leaders of society” (i.e. the rich) had reconciled themselves to sharing power with white guys of all classes. It was only when blacks, Hispanics, women, and the young claimed a seat at the big table that the real counterrevolution got underway. People are leery of identify politics around here, but I think that the rich and powerful instinctively respond differently to different claims on their power. In the American context, cutting in white males has been necessary for large swaths of our history (from the 1790s into the 1870s and then again from 1933-76). But when “inferiors” lay claim to a share of control, the reaction is quite different and much more aggressively reactionary. The analog for today would be the period after Reconstruction, where Northern business elites sat on their hands while the most reactionary elements in the South effectively rolled back the 14th and 15th Amendments. You see this with the unwillingness or inability of the rich to reign in the anti-science, anti-minority, and voter roll slashing reactionaries (especially in the South) so long as those reactionaries back their accumulation strategies and provide willing cannon fodder for their resource wars. This collusion between the money interests and the most backward elements of society was true in the 1890s and the 1920s and we see it again today.

    1. hemeantwell

      While it’s possible that racism undercut elite willingness to tolerate a greater income share to non-elites, I’m more inclined to load on the intransigent refusal of most of them — not all — to accept a Keynesian ground for more egalitarian distribution and instead just orient to a combination of capitalist-imperial imperatives as they got over their demoralization during the 30s. Elites certainly used racism to divide non-elites, and I’m sure that privately their rage at threatening non-elites was intensified and rationalized by racism. We should also add fear of socialist or communist expropriation, and how those principles were summarily reduced to “alien” propositions that seemed all the more alien if they were racially cast, e.g. as “Jewish” ideas enabling Third World empowerment.

    2. Carolinian

      Ah yes, the old blame it on Dixie theory. Isn’t this simply a restatement of the typical argument made by Obama apologists: he would be so much more liberal if those rightwing crazies in Congress didn’t make him act this way.

      However another way of looking at it is that the problem is not money interests colluding with Southern (and other) reactionaries but rather the money interests themselves. And those forces are very much centered in “liberal” NYC not to mention Chicago, Los Angeles, San Francisco. And if that’s true the notion that the US would be a kinder, gentler place if the South had somehow succeeded in seceding is pure delusion.

      The left should stop trying to find scapegoats and admit that it is their own weakness that is the source of the right’s power. The great mass of Americans aren’t nearly so stupid as many would like to believe but they are politically passive and open to populist appeals from either direction. Since the left, captured by neoliberals, has given them nothing they turn elsewhere. Perhaps that will change with Sanders but it could be too little too late. At any rate “regionalism”–at a superconnected time when the country’s regions are increasingly more alike than different–is an out of date idea.

      1. James Levy

        Please look up “The System of ’96”, stop your defensive Southern drivel, show me where I didn’t blame the elites for supporting/colluding in all this, admit that the Jim Crow laws and the lynchings were IN THE SOUTH, and get back to me.

        1. hunkerdown

          Are you suggesting that slavery would have existed even if it weren’t profitable for the landed aristocracy, or that the Jim Crow laws were not simply exploiting a convenient, easily identifiable Other? Great Men are nothing more than tyrants who escaped the lamp post by good salesmanship. People lie about themselves all the time. It is a delusion of the highest order to treat their own self-dealing as a factual account of their motivations.

        2. Ulysses

          “Northern business elites sat on their hands while the most reactionary elements in the South effectively rolled back the 14th and 15th Amendments.” Yes, but these same elites also had no problem killing white male workers attempting to build a labor movement.

          Were the 19 men, women and children killed by the Baldwin Felts goons in the Ludlow massacre, a century ago, killed because they were uppity people of color? No, they were killed because they were coal miners pushing back against the greed of Rockefeller.

        3. Carolinian

          Please admit that Jim Crow happened because the Northern public was just as indifferent to the fate of the former slaves as the Southerners were. Also there were more than a few lynchings in the North. Henry Fonda said one of his most vivid memories of growing up in Omaha was witnessing one. One reason Lincoln was reluctant to make the Emancipation Proclamation was that he knew it would be bitterly controversial to suggest thousands of Northern soldiers were dying to end slavery. And indeed race riots, and lynchings, subsequently took place in NYC during the draft riots.

          As to the rest of your point–the notion that the right’s resurgence in the late 20th century was about race (at least I think that’s your point)–I believe this is utterly simplistic. After all that resurgence was a global phenomenon and not just in America. But it does make a convenient excuse in that the left can blame irrational forces for their own failures. And that’s all I’m saying. Yes you do blame the elites–you just don’t blame them nearly enough. And those elites live in the power centers of America and not, for the most part, in the hinterlands.

      2. susan the other

        5000 years of robber baron capitalism has had a long stretch. It fogs all the intervening episodes like the Civil War in its long march to now. It’s been pure survival instinct. It’s territory. Not for a long plan, just for today and maybe tomorrow. (good definition of neo-capitalism) But now? The big reversal means that tomorrow depends on today. On today being very deliberate and rational. That’s the good news. And it is interesting that this is happening without genetic engineering (seriously) because we are so genetically aggressive we have done this to ourselves intentionally. As irony will have it, the same genetics will be put to work assuring our survival. I doubt it is going to fold on us now.

        1. Vatch

          5000 years of capitalism? There have certainly been that many years of oligarchic rule by the rich and powerful over the vast majority, but for most of that period, I’m not so sure that it was capitalism. It seems to me that it was only about 800 years ago that something resembling modern capitalism was developed in places like Venice and Bruges.

      3. Winston

        Regionalism in US really means integrated local governance. US desperately needs that. But chances of getting it widely are slim. However it is a rising force around the world. v12n30/news_analysis
        Detroit is America

    3. Ulysses

      “You see this with the unwillingness or inability of the rich to reign in the anti-science, anti-minority, and voter roll slashing reactionaries (especially in the South) so long as those reactionaries back their accumulation strategies and provide willing cannon fodder for their resource wars.”

      I believe that there is a sub-section of the wealthy elite, that see themselves as fighting a noble culture war to defend tolerance and civilization against these reactionaries. It is important to them to distract all of us from the pretty straightforward class warfare being waged against all genders and ethnicities in the working class.

      Thus we see completely ineffective hand-wringing and pearl-clutching at raw exploitation by the wealthy, coupled with zero tolerance for the modest demands of the demonized “white working classes” for a greater share of the pie. How dare those racist, foul-mothed trailer-trash try to disrupt our TPP,TISA, and other foundations of transnational kleptocratic supremacy. Never mind that working people of all genders, sexual orientations, ethnicities and religions are being exploited!

      If there weren’t racist, sexist, intolerant pigs amongst the “white working classes,” people like Hillary Clinton would have to invent them in order to divide and conquer us for her Wall St. masters. As we speak, the punditocracy is ramping up their campaign to smear the campaign of Bernie Sanders as limited in appeal to “angry white men.” Fortunately it’s not working as anyone who bothers to check notices that he has actually opposed racism, sexism, the for-profit prison system, etc., for his entire adult life.

      1. James Levy

        Show me where I said any such thing, or have ever, on these boards, supported ANY neoliberal position, ever. I have a pretty large footprint around here, so go to it, Giving the xenophobes and the racists a pass out of some asinine ideal of class solidarity is just stupid.

        1. JTMcPhee

          Internal contradictions and conflicts abound. Why the predators and parasites eat well and have no concerns about losing their place… Everyone wants to be the one with the one true correct formulation of the diagnosis of the massive dysfunction ( from the standpoint of ordinary people and all the Lesser Critters and plant species that are on the Doomed List too), and us smart people argue endlessly not only over which rope to pull on, but which end, in which direction…

          Gnosce te ipsum, and recognize our friends as well as our real foes…

        2. Ulysses

          “Any such thing”? Please be more specific! I didn’t accuse you of holding or defending neoliberal positions– I merely pointed out that demonizing the “white working classes,” as racist, sexist homophobes, etc., allows Harvard educated servants of Wall Street, who happen to not be cisgender, straight white males to claim moral superiority over those working people who are.

          I recall distinctly one particular comment you made, a while back, that dismissed pretty much all the working class Irish Catholics that you met in your youth as beneath your contempt. Another comment referred to the entirety of the U.S. working class as “meth-addled.” You have often argued strenuously against the idea that both major parties serve neoliberal interests in the U.S with equal vigor– constantly pointing out how much people of color, and other historically persecuted groups would suffer if we allow someone with an R rather than a D after their name to win an election, if we stop our LOTE voting habits.

          1. Yves Smith Post author

            Your comment is out of line.

            Personal attacks are against site policy. All you’ve got is your recall, which is faulty. I’ve gone to check comments and have often found that what I recall someone having said is not in fact what they said, that their remark was typically more nuanced than what I took away.

            You need to provide the links and quotes from past comments. Going on memory does not cut it. Other readers (skippy and OIFVet, for instance) have pulled up specific examples.

  4. Eric Patton

    Noam and Michael Albert are close friends, and have been since the 60s. I wish Noam would mention participatory economics once in a while. I emailed him once, and suggested this. He disagreed.

    I still think he should mention it though, because the entire fucking left absolutely refuses to even acknowledge parecon (which has a robust mathematical model behind it) exists. No one wants to work a balanced job complex; no one wants to seriously address classism. No one even UNDERSTANDS classism.

    There are three classes, not two: owners, workers, and COORDINATORS. Eventually, we are going to have to deal with this fact.

  5. Larry

    While there may have been a 250 “tear drop” of time that represented more democratic control by producers, I do not see how it contradicted this model of capitalism in the least. Workers simply gained more power to grab a greater share of productivity gains as the capitalist machine ramped up.

  6. say_what?

    “There’s another IMF study that investigated the profits of American banks, and it found that they were almost entirely dependent on implicit public subsidies. There’s a kind of a guarantee — it’s not on paper, but it’s an implicit guarantee — that if they get into trouble they will be bailed out. That’s called too-big-to-fail.” Gaius Publius

    Let’s not forget:

    1) the lender of last resort, the central bank.
    2) borrowing at positive interest rates by the monetary sovereign.
    3) government deposit insurance instead of a risk-free storage and transaction service (ie. payment system) provided by the monetary sovereign for all its fiat users.
    4) the huge amount of private debt to the banks that is thus unjust and which should be abolished without disadvantaging non-debtors, ie. something like Steve Keen’s “A Modern Jubilee.”

    As for new fiat needs after a jubilee (say to lower interest rates) that should be accomplished as much as possible from the bottom up via distributions to the entire population.

    To sum up: Socialism should be for the poor, not the rich.

  7. tim s

    I don’t know if the situation with the “teardrop” is as dire as that. Power in the west started being taken from the Kings back with the Magna Carta. Sure it went to the higher classes, but it was a start and surely there was a trickle down effect that eventually led us to the relatively equal conditions of the 20th century, at least in the West.

    As far as our current teardrop goes, the power wrested from the “elites” in the West came while the economies, or at least labor, were more or less limited to the nation state. Once labor became international, then local labor power diminished because they could not coordinate their efforts with other remote groups of laborers. The powerful had international connections, while the local populations did not, so locals lost, or rather are still in the process of losing.

    The powerful try to keep the locals in the dark about this situation, just as they always try to keep the underclasses in the dark, but since you cant fool all of the people all of the time, this only can last so long. Eventually, the underclasses wises up, and at the same time the powerful decline after generations of relative ease. This is already happening to an extent. At this time, the balance of power shifts.

    Assuming no cataclysmic occurrences, such as climate collapse or nuclear Armageddon, the powerful will have to act better than the $hitheads they are now, and the underclasses will be better organized and less clueless. This balance that was achieved during the last “250 years” will come back to the benefit of the commoners.

    If this assumption does not hold, then it’s a whole different animal….

  8. Gil Gamseh


    Still, the Juggernaut of Reaction continues to steamroll over everything decent and even mildly democratic in the countries fka the USA. There is no, no, and no countervailing force to oppose it. The Juggernaut will expire of its own self-destruction, but by then it will be a Cosmic So What for the rest of us yet around. As the author points out, our inability to think, which derives from an ability to use language, prevents us from acting, even had we the collective will to act. And that’s debatable.

    So as the American Experience circles round the drain of the bathtub of history, we can take small solace that never have so few owed so much to so many, suckers.

  9. Michah

    Re: the Food Chain Pyramid. IMHO, since carnivors (even humans) are devoured, after they die, by the snails, worms etc. the pyramid scheme doesn’t fit reality. It would look more cyclical.
    In Physics too, everything that goes up must come down.
    History shows the same applies for wealth: everything amassed gets lost, dispersed and vanishes.

  10. hermes

    What a Great post. Very thoughtful. I’m not sure if the massive subsidies given to energy corporations make our system “not capitalism” though, the connection doesn’t seem to fit. I think to make this connection perhaps what is needed first is a definition of capitalism. One standard definition of capitalism is using the capital you have to make more. For instance, buying a factory and machines for making pins (as one example goes), and then hiring workers to make the pins. Then the pins are sold in the hope of making more money than it costs to produce them.

    Now if a government subsidy enters the equation, I am not sure how that overturns the definition and the process is no longer capitalism. Don’t get me wrong, those energy corporation subsidies are clearly not in our best interest. But so the owner gets money stuffed into his pockets, what is that to the definition of capitalism?

    I think it still is capitalism, and (as the poster Leo pointed out earlier) this is the same basic conclusion Marx came to in the mid 19th century.

    1. susan the other

      Our imperative is far more imperative because it has gone beyond class to survival of a planet that is habitable. We’ve got much bigger problems. Which might be a good thing in that it finally makes us take action.

  11. Lambert Strether

    I would love for predators and prey to be more than a metaphor; so but and my vague understanding of biology/ecology/anthropology is that there are well-known patterns that occur over time in predator-prey populations/relationships. So it would be interesting to see whether such patterns apply to human predators and, if not, why not.

    Another way of saying this is that all forms of resource extraction are not necessarily usefully categorized as predation, or all forms of social control.

    1. JTMcPhee

      Pick your discipline — seems to me at least that a more accurate analog of The Current Situation than predatot-prey is something more akin to metastatic cancers and tapeworm/pick your favorite disgusting parasite infestations. Or a vicious viral infection like Ebola or influenza. Tumor, virus, parasite completely focused on “victory for its type,” up to and including self-extinction by consumption of the host…

  12. Massinissa

    This article is ridiculous. It reminds me of Glibertarian screeds that “this isn’t ‘true’ Capitalism!”. Capitalism has ALWAYS been extractive and corrupt.

    Design, not defect.

    1. say_what?

      A look at a balance sheet should inform that money can be created as liabilities OR as shares in equity. The first method extracts wealth and the second method shares wealth.

      Guess which method has been subsidized by government since 1694?

      So no, capitalism does not have to be extractive.

    2. Martin Finnucane

      And: capitalism as a form of social organization is really something different than what preceded it. This account is ahistorical and, as such, junk.

      But regarding the extractive aspects of capitalism: I am reading The Empire of Cotton by Sven Beckert, in which he distinguishes “war capitalism” from “industrial capitalism,” and makes what to my mind is a compelling argument that the latter is predicated upon the former.

      Industrial capitalism was born in Britain. This fact is not properly attributable to the supposed genius of Anglo-Saxons, but rather to an aggressive, violent and already-imperialistic state which was plenty willing to inflict violence upon foreign people (generally but not always brown people), ultimately to the benefit of private interests. After chattel slavery – the greatest accomplishment of war capitalism to date – played itself out, the British state again turned to India and literally destroyed its ancient cotton goods industry in the process. Under such circumstances, the late 19th century el nino famines that claimed millions of lives were no mere bad luck, but rather were perfectly predictable and, in fact, had been predicted by East India Company officials in the 18th century.

      Capital drips blood from head to toe.

Comments are closed.