Adam Tooze is one of the few academic historians who can write thick tracts on economic history and also appear before the National Security Council. According to The New Yorker,1 his readership is primarily young, progressive technocrats and staffers with elite credentials. It fits with his style of history, since in contrast to the recent trend of left-wing historians writing narratives of exploited classes and marginalized minorities, he stays “inside the machine,” carefully tracking the network of individual decision-makers who move central banks and other powerful public and private institutions, documenting what he calls their “catastrophic fuckups.”2 The political lessons he draws from his work support a liberal Keynesianism calling for muscular state intervention to address problems that the market is unable to solve. “It’s a matter of holding ourselves as the PMC [professional managerial class] responsible for our catastrophic fuckups … It’s a PMC class politics,” Tooze has said, including himself in the technocratic elite he documents.3
Tooze also happens to be a content-producing machine, synthesizing massive information flows of news, tweets, academic papers, and history books, tying large-scale economic and political phenomena to small-scale technical nitty-gritty. He publishes thousands of words almost daily in his blog,4 and he’s also a social media divo, explaining that Twitter is for him “far more important … than academic seminar.”5 He is representative of a literate technocratic elite that doesn’t just spout Econ101 dogma. For example, he criticizes the Fed’s raising of interest rates to fight inflation, breaking ranks with the macroeconomic consensus built by his impeccably credentialed and distinguished colleagues. He even disappointed Paul Krugman,6 another distinguished economist who has been heaped with praises and prizes.
This critical attitude is part of Tooze’s fundamental project, a “critical analysis of contemporary capitalism,” documenting what he calls the “polycrisis.” Recently, in a Financial Times article7 and a follow-up blog post,8 he described “polycrisis” as a concept that captures the heterogeneity of the forces destabilizing the twenty-first century: “pandemic, drought, floods, mega storms and wildfires, threats of a third world war … economic shocks.”9 The FT article was a straightforward application of complexity theory to social topics, describing how the crises are nonlinearly coupled and therefore difficult to isolate, how the system can experience unpredictable jumps, and how the sum is more than its parts. More interesting is the blog post where he expands on the article, since it takes the form of a critique of what he calls “monistic theories” of crisis, which he associates with Marxism, a criticism that is unsurprising from someone who identifies so strongly with the technocratic elite:
Marxist friends will no doubt be tempted to say that it all boils down to capitalism and its crisis-ridden development. But, by the 1960s at the latest, sophisticated Marxist theory had abandoned monistic theories of crisis … to be convincing, it would be a Marxist theory of complexity and polycrisis.10
Although Tooze hedges against accusations of simplifying Marxism by not denying the potential of a “a Marxist theory of complexity and polycrisis,” he instead finds more appropriate the approach of Bruno Latour, who “sought to escape the long shadow of Marxism.” Tooze defines the Latourian perspective as embodied in the concept of “actor-networks”:
In place of an overly substantive notion of the economy or society, Latour proposed the looser conception of actor-networks. These are assemblages of tools, resources, researchers, means of registering concepts, and doing things that are not a priori defined in terms of a “mode of production” or a particular social order.11
Tooze also cites favorably the work of the sociologist Ulrich Beck, who argued that the growth of modern complexity caused by scientific and technological development produces fragilities and forces that are invisible even to science itself. Beck defined our epoch as the epoch of a Risk Society, where “the omnipresence of large-scale threats of global scope, anonymous and invisible, is the common denominator of our new epoch.”12
Tooze is specifically interested in the actor-networks of bourgeois elite decision-making. In other words, Tooze is interested in political economy, what Geoff Mann calls the “science of national government,”13 and what Foucault refers to as the “science of liberal capitalist government” which in its western form originated from state administrators and bankers of the 17th and 18th centuries. Hegel defines political economy as follows:
Political economy is the science which starts from this view of needs and labor but then has the task of explaining mass-relationships and mass-movements in their complexity and their qualitative and quantitative character. This is one of the sciences which have arisen out of the conditions of the modern world.14
Tooze’s swipes against Marxism mistake Marx for the same type of political thinker that he himself is, that is, a practitioner of political economy. He seems to think that Marx was offering another economic model, useful for policy makers, a map of the “mass-relationships and mass-movements“ that decision-makers could use to navigate the modern world. This squares with Tooze’s focus on elite decision-making and his audience of young technocrats looking for policy solutions to the “polycrisis.” A central bank technocrat (or a historian speaking from the perspective of the bourgeois elite, like Tooze) should study the financial plumbing of the banking system to make the optimal decision, rather than raising their hands and crying, “it’s all capitalism, dummy!” For decision-makers and their number crunchers, reducing the source of the crisis to “capitalism” is meaningless.
However, Marx’s project was not political economy, but the critique of political economy. Marx was not trying to hold bourgeois decision-makers accountable so that next time they do better. Instead, the critique of political economy is an analysis of why decision-makers, in spite of the wonderful lessons in political economy devised by the likes of John Maynard Keynes and Paul Krugman, keep making the wrong decisions and therefore “fucking up.” In other words, the critique of political economy focuses on why elite decision-makers, in spite of their legions of bean counters and exquisitely credentialed technocrats, have not only failed to deal with the systemic crises of the “Risk Society” but actually keep making them worse. Tooze, as a Keynesian, defends the legitimacy of the scientific elite that ultimately owns his allegiance; Marx calls it into question.
From the Marxian point of view, the specifics of a crisis—whether a bank run, climate change, or inter-imperialist war—are not really the point. Why is it that though Keynes, Tooze’s scientific and political precursor, had the confidence to say almost a hundred years ago that “the economic problem is not too difficult to solve. If you leave it to me, I will look after it,”15 the economic problem remains unsolved. In 2012, Krugman, another who claims the mantle of Keynes, emphasized the simplicity of the “economic problem,” since recessions can be ended more easily and more quickly than anyone imagines:
The depression [the Great Recession] we’re in is essentially gratuitous: we don’t need to be suffering so much pain and destroying so many lives. We could end it both more easily and more quickly than anyone imagines—anyone, that is, except those who have actually studied the economics of depressed economies and the historical evidence on how policies work in such economies.16
Tooze joins the chorus of Keynes and Krugman in their impotent cries against the failures of decision-makers to follow the obvious paths unearthed by science. In one strange article,17 Tooze chastised John Mearsheimer, a geopolitical realist, for predicting precisely what happened: Russia invading Ukraine due to the perceived threat of NATO expansion. Since Mearsheimer failed to couch his explanation in terms of Putin’s “epic failure of decision-making and intelligence,” Tooze labeled the explanation “glib.” Tooze argues that a correct explanation must acknowledge the elite’s capacity for “collective learning” rather than pretending that elites are just blindly driven by structural forces. However, Tooze contradicts himself, since he also criticizes the elite for lacking the “collective learning” that he assumes decision-makers already have.18
Against the assumption of elite “collective learning,” the critique of political economy starts from the runaway tendency of the “capitalist mode of production” to undermine the rule of the bourgeois elite. In other words, it shows how, despite the management skills of the elite, the “law of value” (Marx’s term for the emergent structures of the capitalist mode of production) undermines elite decision-making both through an increase of opaque interconnectedness and complexity and also through economic constraints (e.g. the requirement to sustain a certain type of economic growth). Already the young Marx in 1848 had stated in the Communist Manifesto the main thesis of a critique that he developed for the rest of his life:
Modern bourgeois society, with its relations of production, of exchange and of property, a society that has conjured up such gigantic means of production and exchange is like the sorcerer who is no longer able to control the powers of the nether world whom he has called up by his spells … the history of industry and commerce is but the history of the revolt of modern productive forces against the conditions of production, against the property relations that are the conditions for the existence of the bourgeoisie and of its rule.
Later in the Manifesto Marx adds:
The productive forces … have become too powerful for these conditions, by which they are fettered, and so soon as they overcome these fetters, they bring disorder into the whole of bourgeois society … And how does the bourgeoisie get over these crises? On the one hand by enforced destruction of a mass of productive forces; on the other, by the conquest of new markets … That is to say, by paving the way for more extensive and more destructive crises, and by diminishing the means whereby crises are prevented.
Marx, like Tooze and Latour, does have a concept of actor-networks: “the assemblages of tools, resources, researchers, means of registering concepts.” Marx’s magnum opus, Capital: Critique of Political Economy, is full of accounts of these assemblages, from technical descriptions of factory machinery to detailed studies of all types of involved actors, from peasants and artisans to industrial workers, capitalists, parliament members, and labor unions. There are even discussions of the chemical composition of the soil. For Marx, however, this heterogeneity is not mutually exclusive of its unity. All these assemblages are causally linked to a fundamental type of actor-network, the network made of capitalists and workers, which he analyzes scientifically in Capital.
In spite of Tooze’s criticisms of “monistic theories,” behind the so-called heterogeneity of his analysis there’s also a unifying factor: elite decision-makers. These are people who usually come from certain narrow class backgrounds and fancy schools, and share a fairly homogenous worldview. However, the difference between Marx and Tooze is that Marx makes this unifying factor explicit, and a central part of his critique. Whereas for Tooze, to the extent he acknowledges it in interviews and blog posts, it’s just another fact to be enumerated, without the self-reflexivity required to be truly critical.
Marx, by rendering explicit the productive network linking capitalist and worker—that is, the production of commodities of workers hired by capitalists—can criticize the ruling order and its political economy. He does this by showing that the system of commodity production that built the capitalist “wealth of nations” and is the basis of bourgeois elite rule is also the source of a certain disorder that ultimately undermines the decision-making of the elite and, therefore, their self-justification for their rule, namely, their pretense of expertise in scientific governance. The critique of political economy elaborated in Capital is an attempt to uncover the causal structure of the disorder embedded in commodity production. That’s why the critique of political economy starts with an analysis of the commodity.
Capital begins with the analysis of the commodity at a highly abstract level, stressing its two-fold nature—its usefulness as a concrete biophysical entity, which Marx calls use-value, and its quantitative value, related to its monetary price, which he calls exchange-value. Given that the decision-makers running commodity production only care about “use-value” (for example the performance of a car they happen to produce) to the extent that it is leads to a monetary profit, that is, “exchange value,” their decision-making will be fundamentally based on monetary signals rather than on technical knowledge about the production process. If a firm’s production is profitable, it doesn't matter how ecologically wasteful, unnecessarily complex, financially fragile, or psychologically and physically damaging to workers and consumers it is. Given that workers are constrained by the employment contract to follow orders based on what decision-makers find profitable, rather than what workers find useful, pleasurable, and logical, waged work becomes alienated labor. The worker we’re speaking of has no specific income or profession; they could be a scientific worker, a care worker, a retail worker, or a bricklayer. The worker is merely someone who mostly depends on a wage or a salary, as opposed to personal private property, for the reproduction of the social and physical activities they require for their well-being.
Given the alienation of their activity, its sale to employers, workers “blindly” build the capitalist network of circulation and production, adding ad-hoc complexity, in the form of commodities, supply-chains, software and hardware infrastructure, etc., without consideration for the network’s structure except what managers say matters for short-term profit. The links and nodes become increasingly intractable since the network’s workers don’t act as members of a community of producers who through deliberation become aware of how the produced objects fit usefully (or not) in the network of actors and things. Instead workers are like machine parts that management manipulates to produce profit, without consideration of how the commodities produced are interdependent both on other commodities and on workers as creative beings.
The growth in density and extension of the alienated network of production and circulation has a temporal dimension, an arrow of time leading to a world that is increasingly unmanageable by bourgeois decision-makers, exhibiting a secular tendency in its increasing opacity. Firms, in order to compete, are forced continuously to expand their productive capacities—that is, to increase the quantity of commodities (including services) produced through exploitation of a unit of labor time, what is referred today as a “man-hour” of labor. This expansion of productive capacity leads to cumulative scientific knowledge, technical knowledge, institutional know-how, etc., which through labor becomes embodied or, in Hegelian terms, “objectified” in the material infrastructure of society.
This “objectified labor” comes in the form of buildings, databases, servers, streets, and supply chains, connected by vehicles and radio waves, logistical and scientific know-how stored in brains. This mass of objectified alienated labor becomes increasingly opaque and complex, as it gets shaped blindly by the search for profit at the expense of knowledge about the network of use-values. The network’s alienated and ad-hoc complexity grows into a labyrinth where everyone, from worker to elite manager, becomes increasingly lost, a structure running away from human control. In the Communist Manifesto Marx already described this secular tendency towards the revolutionizing of the production process and its opacity in terms of “uncertainty and agitation,” writing that “Constant revolutionizing of production, uninterrupted disturbance of all social conditions, everlasting uncertainty and agitation distinguish the bourgeois epoch from all earlier ones.”
As the concrete interdependencies among commodities, balance sheets, and workers become increasingly opaque, elite decision-makers are forced to depend more and more on monetary signals. This compels them to financialize their institutions, basing decision-making on the timeseries of the monetary signs representing asset values and dividend returns. This tendency towards financialization not only appears due to the elite’s blindness to the interdependencies among agents and things, but also because financial technology is used to accelerate transactions (called “lowering transaction costs”) in order to squeeze more profit out of a unit of labor time.
As the state also becomes increasingly blind to the interdependencies among actors and things, political decision-makers become increasingly impotent to intervene directly, e.g. by stimulating the economy through public works, and increasingly depend instead on monetary interventions through the digital manipulation of balance sheets by central banks. “The Efficient Market Hypothesis” which was the basis of economic orthodoxy leading up to the Great Recession is the ideology of this alienated machine, where share prices deliver all the information needed for financial decision-making.
As capitalists and governments financialize, the concrete properties (i.e. use-value interdependence, fragilities) of the capitalist network of production and circulation become opaque to decision-making and therefore can manifest as crises, through economic, psychological, or ecological channels. The cybernetic structures of information-gathering and control aren’t in the hands of the workers themselves as members of a self-aware community, but rather are controlled by a tiny group of decision-makers, often antagonistic to each other. Since these decision-makers only consider price signals, fragilities initially invisible within the monetary space of the capitalist elite will then appear as financial disorder, in the form of bank runs, the bursting of bubbles, inflationary or deflationary spirals, etc. For example, these decision-makers won’t treat the environmental problems caused by concrete biophysical processes through direct interventions, but instead indirectly through monetary tools like carbon cap-and-trade, carbon taxes, etc., since elite decision-makers lack knowledge about the concrete interdependencies between the agents and things that form an economy that they are afraid to destabilize.
The critique of political economy diagnoses the increasingly disordered information deficit of elite decision-makers. It doesn’t argue that the subject-matter of political economy is false. Instead, it argues that, paradoxically, as political economists become more successful in increasing the productivity of a unit of labor time, their science spirals into increasing impotence. The death of the Keynesian state during the 1970s—a state that could mobilize labor power directly through political economy (for example, through the New Deal’s employment programs or during World War II)—and its replacement by financial management through central banks and money managers, is a consequence of the death spiral of political economy as a science. This death can’t be understood without grasping the temporal structure of capitalism, on a time scale measured in centuries.
The accumulation of “objectified labor time” manifests as economic growth and therefore in the growth of opaque complexity. Qualitatively, this is easily intuited in the lightning-fast technological and social changes that Marx had already diagnosed in 1848. In addition, two long-scale processes that can be measured, the expansion of wage labor and population growth, provide clear quantitative signals.
The expansion of wage labor itself is part of economic growth, as capitalist competition requires the constant reinvesting of profits into capital that in turn require more workers. Over time competition and violence (e.g. the English enclosure of the commons in the seventeenth century and the colonization of the Americas) transformed the world’s peasantry into the world’s proletariat. Marx already identified this tendency in 1848, at a time when workers were just a tiny proportion of the European population:
The bourgeoisie … has converted the physician, the lawyer, the priest, the poet, the man of science, into its paid wage laborers …In proportion as the bourgeoisie, i.e., capital, is developed, in the same proportion is the proletariat, the modern working class, developed — a class of laborers, who live only so long as they find work, and who find work only so long as their labor increases capital.19
Another type of economic growth connected to capitalism is the expansion of the population itself—a spike that turned an estimated 600 million people worldwide in 1700 into eight billion people in 2022, with growth accelerating exponentially in time.20 This development is associated with the perpetual revolutionizing of production in agriculture and healthcare brought by making a unit of labor time more efficient in producing commodities (e.g. food and scientific knowledge).
Bourgeois intellectuals have argued, not unconvincingly, that this economic growth has brought much prosperity, in spite of its imperfections. A recent example is Harvard psychologist Steven Pinker, who argues in his book Enlightenment Now that it is undeniable that the average life expectancy has increased dramatically and that modern agriculture has basically eliminated starvation, at least in the developed world. Wealth, as defined by GDP, has increased exponentially during the last two centuries. However, as we have seen, this growth brings with it an increasingly opaque complexity that leads to increased unmanageability and vulnerability to shocks. This is because, as I’ve argued in a previous article,21 capitalist complexity, which links nodes across planetary distances, has an inbuilt tendency towards extremely unequal concentrations of links among nodes, which makes the system very fragile and subject to crisis. The mechanism behind increasing inequality is that nodes with more links—for example capitalists with more assets—can use their wealth to acquire yet more assets through credit and investment, centralizing links into the wealthier nodes, in the same way a massive object, like a star, can gravitationally attract more matter than a small object.
Not only can shocks propagate globally, due to links among economic agents, but the collapse of a central node—for example a gigantic financial firm like Lehman Brothers—can threaten a collapse of the whole system. These lopsided systems with a very unequal distribution of links among nodes exhibit what statisticians call “fat-tailed” dynamics, where extreme events, such as the collapse of the whole network, have a non-negligible probability. Thus Nassim Taleb has shown that there’s a one in a thousand chance that more than half of the world population gets wiped out by a major conflict. Humanity plays Russian roulette with a revolver of a thousand chambers every time a conflict pops up.22 The “fat-tailedness” of capitalist growth gives the critique of political economy an existential dimension.
In Medias Reification
Ultimately, the critique of political economy applies to the work of Adam Tooze because he eschews the temporal dimension of capitalism, which as we have seen is its unifying property and what differentiates capitalism from earlier social systems. This temporal structure exhibits scales from decades to centuries. Through recognition of this temporal structure, for instance, the critique of political economy was able to predict the generalization of wage labor across the planet as the basic social relation for subsistence and production. Tooze, however, prefers what he calls the mode of in medias res, dealing with only the immediate networks of decision-makers surrounding a crisis. Thus in response to Perry Anderson, who accused him of ignoring long-term structural issues, he wrote:
I generally prefer a narrative mode that plunges you into the middle of things, rather than beginning at the beginning … This stylistic preference also reflects a certain understanding of politics and agency and their relationship to history, which might broadly be described as Keynesian left-liberalism … “a ‘situational and tactical’ approach to the subject in hand determines entry to” the subject matter “in medias res.” It mirrors my preoccupation with “pragmatic crisis management in the form of punctual adjustments without illusion of permanency.”23
The problem with this epistemology is that the short-term in medias res is a moment of the long term; they are not in reality separate. In fact, Georg Lukács would have accused Tooze of “reifying” or “thingifying” the short-term, in other words, turning the “short-term” into a thing when it’s just an often misguided heuristic. Climate scientists have become painfully aware of this issue because of global warming. Tooze’s discursive suppression of the deep temporal structure, and therefore the suppression of any secular tendency, is analogous to an atmospheric scientist ignoring the existence of global warming, an atmospheric process that reveals its structure over the time scale of decades, because she finds the immediate weather more important.
Tooze’s emphasis on the short-term is as he says connected to his political outlook, “left-liberal” and “Keynesian.” In the same way that everyone has to deal with the immediate weather when going to work, so every elite decision-maker has to deal with immediate social problems, with the “long term” relegated to the horizon. “Everyone's a Keynesian in the foxhole,” the great bourgeois economist Robert Lucas said. Yes, “In the long term, we are all dead,” as Keynes said, but the problem is that the “long term” might be tomorrow since we might all be dead, if tomorrow a strong enough gust tumbles the capitalist house of cards. Marx was painfully aware of this fact, when he argued that the contradictions of the capitalist system can lead to the “common ruin of the contending classes.”
Wage Labor and Cybernetics
If the source of this managerial disorder is wage labor, as both conceptual and long-term empirical analysis suggest, then wage labor must be overcome. However, the moment the political economy “overcomes” wage labor, political economy ceases. This is because the economic and political laws that arise from a capitalist society steered indirectly through monetary signals by an antagonistic and tiny minority—the “mass relationships” between employment, inflation, overproduction, etc.—would dissolve, rendering political economy superfluous. What would replace it is cybernetics, the general science of the self-regulation of viable systems, from biological to human. In other words, the political and economic sciences will be replaced by a natural science, the science of cybernetics.
In fact, one of the greatest twentieth-century cyberneticians, Stafford Beer, came close to formulating a cybernetic “critique of political economy.” In his “Designing Freedom” lectures, Beer eschewed the typical economic and political explanations for crisis and civilizational decline, and instead analyzed economic and institutional crises as expressions of cybernetic problems, the inadequate self-regulation mechanisms of the world system. His critique starts from a cybernetic theorem derived from information theory, Ashby’s theorem of a “good regulator.” The idea is that a regulator of a system must be equally complex as the system being regulated. In the language of cybernetics, the regulator must have as much variety as the system being regulated, where variety stands for the number of possible states the regulator or the system can have. The capitalist system relies on nested top-down structures of limited variety compared to the highly unregulated variety it produces in the form of technical and logistical complexity.
Stafford Beer criticizes this top-down command structure, since it assumes that a few brains can regulate the whole economy:
Requisite variety for running the world does not exist in any man’s headful of ten thousand million badly programmed neurons. Requisite variety for running things properly exists with the people who generate the world’s variety in the first place, and that means everyone. Whoever opts out of his or her regulatory role is robbing the total system of its power to be stable.24
Stafford Beer came to this conclusion not only through information theory but by the analysis of real viable systems. He often uses the human nervous system25 as an example. Much of the human body’s regulatory sub-systems, for example the localized nerve systems that govern internal organs like the heart or kidneys, largely self-regulate autonomously, rarely depending on higher-level brain functioning. However these local systems are still connected through the spinal cord, where their information spreads throughout the whole body to coordinate, reaching higher levels of brain functioning when the sub-systems behave abnormally. Only when the behavior of an organ becomes very abnormal will that manifest in symptoms that the conscious mind will recognize and “manage” by, for example, going to the doctor. The human nervous system isn’t, therefore, a top-down-command structure, but an embedded cluster of higher-order systems (e.g. the brain’s conscious state) and lower-order systems (e.g. the lungs) that mutually influence each other.
So Beer is ultimately arguing that workers should become regulators in order to introduce regulatory variety to the system. However, the employment contract, which constrains workers’ creative autonomy, deprives them of regulatory capacity. Furthermore, the profit system and wage labor reinforce each other, since even in a workers’ cooperative, decision-making still requires following profit imperatives so that the firm remains viable, constraining the regulatory variety with monetary signals. This reinforces wage labor-like conditions where workers, rather than behaving as a community of interconnected producers, are atomized and constrained by the profit motive. In fact, co-ops often end up transforming into normal top-down firms; for example, the famous workers’ co-op Mondragon has developed a tiered system where overseas contractors are treated like normal wage workers and have no stake in the company. Representatives had justified that practice by saying they run a business and if they don't contract overseas cheap labor they won't be competitive.26
Yet Beer was ultimately what Marx and Engels called a utopian socialist, since he thought that a viable world system was possible if only the wonderful ideas of the cyberneticians could convince elite shot-callers. In reality, a viable world system would require the overcoming of capitalism, that is, the overcoming of governance through monetary signals, and its associated property relations, a system that has made the shot-callers incredibly wealthy and powerful. I doubt that in history there has ever been a statistically significant portion of the elite that relinquished its wealth from the goodness of their hearts.
Instead of producing meticulous blueprints for the future, Marx was interested in supporting the unfolding class struggle, “the real movement which abolishes the present state of things,” since it was through this process that workers won concessions for their autonomy and well-being, making it the channel through which a “free association of producers,” where workers are their own regulators, is possible. He tracked this class struggle in the 1848 European republican revolts, and the rise of early labor unions and workers’ political movements, such as the Chartists in England. Marx’s cybernetic program was embodied in what he called the social republic, which he saw emerge from the “real movement” in 1871 during the Paris Commune. In my previous article for Field Notes I wrote:
Marx speculated that the blind motions of the market must be replaced by the democratic planning of the economy, through a “free association of producers.” … the “social republic,” which he saw emerge in 1871 in the working-class uprising of the Paris Commune. Instead of the typical electoral system, where disparate individuals merely vote a couple times a year for unaccountable professional politicians, the social republic is made of assemblies and associations that coordinate through mandated and recallable delegates who are paid a working-class salary, subordinating the executive to the legislative. This social republic is the precondition for democratic planning.27
In the medium to short-run, we are already dead.
Not unlike Beer, the left Keynesians, the tradition to which Tooze claims allegiance, have their own “utopian socialist” tradition that criticizes financialization. The tradition starts with Keynes’s argument for “socialization of investment.”28 Keynes argued that the socialization or nationalization of investment may become necessary since monetary instruments like the central bank’s interest rate lever might be insufficient to stimulate the required investment for full employment and general social well-being.
Keynes argued there’s a tendency for the expected returns (the investor’s expected profit) of invested capital to fall since competition makes capital abundant, overwhelming demand—capital needs to be scarce for high investment returns. Once the expected rate of capital returns becomes lower than the interest rate through competition, investing stops, which generates an economic depression. Given that this tendency for expected capital returns to fall is inherent to private investment due to its competitive nature, sooner or later, the state will have to socialize more and more investment since private capital returns will diminish too much, making it harder and harder for private investment to sustain adequate employment and social well-being. Keynes was vague about this nationalization, but he made sure that the reader knows he doesn’t support “state socialism,” since only the investment needs to be socialized, and the means of production can stay in private hands.
The reason why Keynes was vague, and so adamant to remind us that he was no Bolshevik, was to avoid declaring class war against the capitalists. Therefore “socialization” here, as in the case of utopian socialists like Beer, would happen by convincing the capitalists to yield to the state the capitalist ability for enrichment through investment, all through the persuasive arguments of Keynes and his extremely intelligent colleagues.
But there’s really no other way to conceive of the socialization of investment except as class war, since the state would have to take the means of investment from the existing capitalist investors, who make their profit by investing. Michael Kalecki, a Marxian economist whom the Keynesians have anointed as one of their own, argued in “Political Aspects of Full Employment” that the capitalists wouldn’t accept a pro-social policy like full employment, since it would reduce their power over workers, who would improve their bargaining position; much less likely would the capitalists accept socialization, since it crowds them out of investing.
Indeed, the popularization of Keynes among American economists didn’t impede increasing neoliberalization and financialization. The historian Greta Krippner argues that neoliberalization wasn’t an “ideological coup” in the sense that the ideology of monetarism won over the state’s economists. Rather, financial deregulation was an ad-hoc strategy based on the state’s economists’ unwillingness to take sides among the demands of conflicting groups, opting out of the class struggle for the “neutral” market as the easiest choice to sell.29 If the Keynesian managers yielded so easily to neoliberalization, that doesn’t give much faith in the ability of what Keynes called the “enlightened bourgeoisie” to implement “comprehensive socialization of investment.” Instead, ironically, one of Keynes “long-term” predictions became true, investment has significantly declined, part of the “secular stagnation” diagnosed even by mainstream economists like Larry Summers.30
The fundamental flaw in Tooze’s worldview, which is the worldview of Keynes, is not supporting too little or too much nationalization. It’s that they are unwilling to reckon with alienated labor and therefore, ultimately, the problem of class struggle. In fact, Keynesianism, as a form of political economy, is ultimately about the management of alienated labor through technocratic means. The Keynesian space of action is the network of elite decision makers administrating the masses of labor and things. This is the world of immediate crisis management through elite decision-making, the world of the short-term. Yet the long term, scientific outlook—that is, the outlook of the critique of political economy—shows a secular increase of opaque and fragile complexity that is not sourced in the world of shot-callers, but radiates from alienated labor. In cybernetic terms, the critique of political economy shows that wage labor, which is labor deprived of its creative, regulatory capacities by the employment contract, produces a growing mass of unregulated variety in the form of opaque, fragile and complex growth that ultimately threatens civilizational collapse.
Given that cybernetic disorder can only be reckoned with through workers becoming their own cybernetic regulators—that is, through self-governance rather than their passive administration by technocrats—the critique of political economy points towards social and labor movements as sources of political agency. These movements constitute social experiments where communities of workers become self-aware and attempt to steer themselves. For example, the millions who flooded the streets to protest George Floyd’s murder chose to coordinate together against the carceral state. The recent minor flare-up of organized labor is part of this tendency. The internet has made possible extremely fast flare-ups of collective rationality and self-awareness embodied by millions, however the alienated social order of capitalism incentivizes their quick dissolution. That these movements failed to produce robust political gains doesn’t remove the need for collective rationality of this nature. Here the shot-callers studied by Tooze, the elite decision-makers in government and corporate meeting rooms, are not, and structurally cannot be, the protagonists. Scientific experts and politicians would be an extension of this rationality, workers who can be elected as recallable delegates and facilitators, without being arbitrarily imposed authorities. Only when these moments of fleeting collective rationality, emerging from workers deliberating and coordinating, can coalesce into stable structures of self-governance, can political economy be overcome. Otherwise, in the medium to short run, we will all be dead.
- Geoff Mann, In the Long Run We Are Dead,
- Hegel’s Philosophy of Right, cit. G. Mann In the Long Run.
- K. Marx and F. Engels, Communist Manifesto.
- P. Cirillo N.N. & Taleb,, “The Decline of Violent Conflicts: What Do The Data Really Say?” The Nobel Foundation, Causes of Peace, forthcoming, NYU Tandon Research Paper (2876315), 2016.
- Designing Freedom, Stafford Beer.
- Brain of the Firm, Stafford Beer.
- J.M. Keynes, The General Theory of Employment Interest and Money, Chapter 24, Part III.
- Greta Krippner, Capitalizing on Crisis.