This is the final version of the terms of trade for 2024. This year has been an extraordinary year from the perspective of political economy, which is the primary subject of this column. However, rather than dwell on individual anecdotes or try to piece them together, I intend to make a more provocative argument and hope that readers will join me in this.
One of the last TV shows I watched this year is the adaptation of Frederick Forsyth’s The Day of the Jackal. It is currently established in Europe and America. Written by the left-wing Labor Party supporting Irish writer Ronan Bennett, the show makes an interesting political point in its choice of the killer’s target and the faction that commissioned the hit-job. The man who is hunted and ultimately killed by the jackal is a character named Ulle Dag Charles, a new age tech billionaire who is threatening to launch a new online product that will bring complete financial transparency and Therefore it will also reveal hidden assets. Very rich. The hit-job has been commissioned by a group of the super-rich in the US, who have a lot to lose from such revelations and are backed by the deep state in the UK.
Ulley’s planned act of fratricide against his fellow capitalists is motivated by his deep belief in the aspiration of a just world where the poor can live decent lives by snatching away the ill-gotten and hidden wealth of the super-rich. Note that in technology, you can mine gold by simply being super-bright instead of having workers toil in a factory.
While I was watching this series, a fitting case of truth being stranger than fiction occurred. One of the most interesting stories to come out of the US this year was the gap between popular sentiment and the rule of law following the murder of Brian Thompson, a top health insurance executive in New York, by Ivy League graduate Luigi Mangione. Thompson’s murder seems like a premeditated act of retribution for the company’s – United Healthcare is one of the largest health insurance companies in the US – practice of denying health insurance claims, leading to customers Significant economic pain is certain to occur. A time of gravest personal crisis.
America is not immune to gun violence or polarized opinions on such crimes. The only difference is that Mangione was not a racist or violent act, which usually puts America on edge. In fact, many people sympathized with his vindictive actions, far from being childish and anarchic, even illegal, because they agreed with the basic charge: capitalism’s greatest success stories have been built on people with little change. No matter the direction the murder trial takes, this act has horrified the leadership of corporate America and they fear for their physical safety, even though businesses have nothing to be concerned about.
What is the big issue of starting with these two stories?
If one paraphrases Churchill’s quote on democracy, capitalism is the worst form of mode of production of all that has been tried. It has created unparalleled prosperity and innovation in the world and has proven to be far more flexible, agile and tolerant of individual freedom than its only modern rival, namely socialism as well as previous forms of feudalism.
And yet, we live with extreme poverty, massive inequality and now an existential threat to life in the form of a climate crisis as the motivation for private profit continues to resist the changes that could solve these problems.
It is not unknown that there are problems with capitalism. At the most turbulent stage of its crisis, in the inter-war years, the essence of the debate between the two economists who gave the most authoritative interpretation of the crisis was whether capitalism had a chance to reform itself or whether it would always be weak. Was doomed to perform. On the production and employment front or take a reactionary political form. The former view was supported by John Maynard Keynes, perhaps the most influential economist the world has ever known, and the latter by a relatively lesser known but equally brilliant economist, Michael Kalecki.
Keynes observed the chaos after World War I and gradually came to the conclusion that the government should take care of underemployment by investing in the economy itself because the law of supply creating its own demand did not work in real life. Keynes argued that so-called animal spirits could not be relied upon to keep the economy running and he saw fiscal intervention as the ultimate silver bullet. His ideas have had a transformative impact on capitalism.
Keynes’ path to this conclusion was driven more by his philosophical outlook on the political problem facing mankind – he saw it as more a matter of mastering the combination of three things than some quantitative wizardry: economic efficiency, Social justice and individual freedom, which he could. He asked. His view was that the inconsistency between the three goals, which characterized the inter-war years, was more the result of poor economic ideas than of the system.
“Practical people, who consider themselves completely free from any intellectual influence, are generally the slaves of some idle economist. The crazy people in power, who hear voices in the air, are venting their madness from some academic writer from a few years ago. I am convinced that the power of vested interests is greatly exaggerated in comparison with the gradual encroachment of ideas”, Keynes wrote in the concluding paragraph of his cult classic The General Theory of Employment, Interest and Money.
Kalecki argued in a very clear and profound essay titled The Political Aspects of Full Employment in October 1943 that any attempt by the state to promote full employment was incompatible with preserving the hierarchy of capital vis-à-vis labor.
“Indeed, under the regime of permanent full employment, ‘dismissal’ will cease to play its role as a disciplinary measure. The social position of the boss will weaken, and the self-assurance and class-consciousness of the working class will increase. A strike to demand wage increases and improvements in working conditions would create political tension. It is true that profits under a system of full employment will on the average be higher than under laissez-faire; And even an increase in wage rates resulting from the stronger bargaining power of workers is less likely to reduce profits than an increase in prices, and thus adversely affect only the interests of the rentier. But ‘discipline in the factories’ and ‘political stability’ are valued more by business leaders than profits”, Kalecki wrote.
“Certainly, ‘full employment capitalism’ must develop new social and political institutions that will reflect the increased power of the working class. If capitalism could adjust itself to full employment, it would involve a fundamental reform. If not, it will itself prove to be an outmoded system that must be dismantled”, he said in his essay, highlighting Keynes’ underlying optimism in the power of progressive economic ideas to save the world from capitalism’s self-inflicted tendency. Disappointment has been clearly expressed.
More than 80 years after Kalecki wrote his essay and nearly 90 years after the publication of the General Theory in 1935, where does the world compare to the Keynes–Kalecki debate?
Capitalism has certainly improved itself enough to prevent a resurgence of 20th century fascism or the world wars that preceded and followed the rise of fascism. The resort to Keynesianism in times of crisis, even after the neoliberal counter-revolution, has certainly played a role in this. This is the greatest proof that even the most reactionary politicians don’t care about being fiscally prudent.
On this front, Kalecki’s more serious warnings have not materialized, even as businesses push back against policies that would strengthen the bargaining power of the working class vis-à-vis capital.
Certainly, the world is even further away from Keynesian optimism than from Kaleckian pessimism. “There are also changes in other areas that we should expect… The love of money as property – as distinguished from the love of money as a means to the enjoyments and realities of life – will be recognized as such, to a certain extent. Disgusting morbidity, one of those semi-criminal, semi-pathological tendencies which one shudder submits to experts in mental disease”, Keynes wrote in Economic Prospects for Our Grandchildren in 1930 Nearly a century later, the time frame he gave for the realization of these possibilities has been proven astonishingly wrong.
Now we can go back to the anecdotes at the beginning of the column.
By portraying the future of capitalism as a war between a good-hearted capitalist and a faction of greedy capitalists, the left-leaning Bennett is suggesting that the only serious threat to the dominance of capital may come from capital itself and governments. Or even the people at large have become largely insensitive to this question. Given the power of international finance in today’s world, Bennett’s subtle skepticism has merit.
Mangione’s nihilistic act of violence against a symbol of capitalist greed and empathy that followed only serves to underline this point from another direction, which can be summarized as follows. Politics at large is also quite helpless in regulating capital from exploitation or deprivation of consumers and even a symbolic resistance must come from acts of anarchic violence.
Also read: Changes in US markets: Wall Street returns to T+1 stock trading after a century
Has capitalism really fortified itself against the optimistic and pessimistic extremes that Keynes and Kalecki predicted the fate of capitalism by taking what was absolutely necessary and discarding the rest? Does this mean that the status quo, even though it is extremely unfair to the overwhelming majority of mankind, cannot be dismantled?
Both the economics and politics of these questions are beyond the scope of journalism. They require the continued involvement of today’s versions of brilliant and politically motivated minds like Keynes and Kalecki. There is no reason why we would not have as many talented people today as we had a century ago. Perhaps what is needed is a political redirection of their priorities. What made Keynes and Kalecki great were the historical circumstances in which they became intellectuals. Perhaps today’s elite intellectuals do not have the material basis to feel the intellectual outrage that Keynes and Kalecki do. Perhaps this will change as US President-elect Donald Trump is potentially preparing to pull the carpet out from under the existing one Economic Orders will start in a few days from now.
Roshan Kishore, HT’s data and political economy editor, writes a weekly column on the state of the country’s economy and its political fallout, and vice versa.
