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Jesús Suaste Cherizola Wins the 2021 CASP Essay Prize
No full textIn his essay, Suaste Cherizola explores a puzzle in political economy — the neglect of assets. Why, he asks, do most radical political economists focus on commodities, when capitalists themselves care about assets? The answer, Suaste Cherizola proposes, owes to a bad decision made by Karl Marx. In formulating his theory of capitalism, Marx insisted that capitalism’s ‘laws of motion’ must be grounded in production. The way to do this, Marx decided, was to focus on commodities — the things that workers produce and capitalists sell.
Marx’s obsession with commodities caused some embarrassing problems. It led him, for instance, to dismiss the stock market as ‘fictitious capital’. (He saw stocks as a kind of ‘false’ commodity — something that had a price but was not backed up by ‘real’ production). In hindsight, this decision was dubious. Fictions aren’t supposed to impact the real world. And yet the motion of the stock market dominates our lives. Something is amiss.
Suaste Cherizola thinks the solution is to turn Marxist theory on its head. Rather than ignore ‘fictitious capital’, he argues, we should ignore the Marxist idea of the ‘commodity’. The reason is simple. Commodities are a small subset of the things that have a price. When you use this small subset to explain everything in capitalism, weird things happen. You end up invoking ‘distortions’ to explain all the prices you’ve excluded from your theory. This ‘distortifying’ is standard practice in neoclassical economics. Sadly, it’s also part of Marxism — an unavoidable consequence of Marx’s focus on commodities. According to Susate Cherizola, "… once the commodity-form has become the basis of our understanding of exchanges, the other forms of economic transactions can only be considered as distortions or mystifications. … The ‘commodity’ thus becomes a theoretical fetish — a concept endowed with supernatural explanatory powers."
A century ago, Marx chastised people for ‘fetishizing’ commodities — treating commodity exchange as a relation between things rather than a relation between people. But perhaps the true ‘fetishism of the commodity’, Suaste Cherizola proposes, is how Marxists have reified the commodity itself. The commodity’s true ‘secret’, Suaste Cherizola argues, may be that it has nothing to reveal
A Brief History of the Buy-to-Build Indicator
No full textLet’s talk about Nitzan and Bichler’s ‘buy-to-build’ indicator. If you’re not familiar, this is an indicator that quantifies the portion of ‘investment’ spent buying other corporations...
The Truth About Inflation
No full textMilton Friedman has been dead for more than a decade, but his ghost still haunts us. In the 1960s, Friedman declared that inflation is ‘always and everywhere a monetary phenomenon’ — a problem of printing too much money. Since then, whenever inflation rears its head, you can count on someone to reanimate Friedman’s ghost and blame the government for spending too much.
If only inflation were so simple.
Like much of economic theory, Friedman’s thinking appears plausible on first glance. Inflation is a general rise in prices. And since prices are nothing but the exchange of money, more circulating money means prices must increase. Hence, inflation is ‘always and everywhere a monetary phenomenon’.
Unfortunately, this thinking falls apart on further inspection. The problem is that it treats inflation as a uniform rise in prices. That’s theoretically convenient, but empirically false. In the real world, inflation is wildly divergent. At the same time that the price of apples rises by 5%, the price of cars could grow by 50%, and the price of clothing might fall by 20%.
To understand inflation as it actually exists, we must look not to economics textbooks, but to real-world data. That’s what political economist Jonathan Nitzan did during his PhD research in the early 1990s. His work culminated in a dissertation called Inflation As Restructuring. In the real world, Nitzan observed, price change is always ‘differential’, meaning there are winners and losers. The consequence is that inflation is not purely a ‘monetary phenomenon’, as Milton Friedman claimed. Inflation restructures the social order.
It is this real-world feature of inflation that is most important, because it means that inflation signals a change in society’s power structure. Predictably, it is this real-world feature that mainstream economists ignore — largely because it conflicts with their tidy theory of inflation as a ‘monetary phenomenon’. Fortunately, the evidence is clear. Inflation is (and has always been) overwhelmingly differential. Inflation is restructuring.
Today, as inflation fears return and Friedman’s ghost is resurrected, it’s worth reminding ourselves of the real-world facts
Novels
Full text linkThe study of society today is divided into different disciplines – the so-called social sciences – a division that fractures our consciousness into disconnected bits and pieces. Literature does the very opposite: it brings things together, offering glimpses into the enfolded, hologramic nature of society. Here are some of the novels that helped us understand this hologramic enfoldment from different angles. They are all worth reading
'Protein' Industry Convergence and its Implications for Resilient and Equitable Food Systems
Full text linkRecent years have seen the convergence of industries that focus on higher protein foods, such as meat processing firms expanding into plant-based substitutes and/or cellular meat production, and fisheries firms expanding into aquaculture. A driving force behind these changes is dominant firms seeking to increase their power relative to close competitors, including by extending beyond boundaries that pose constraints to growth. The broad banner of “protein” offers a promising space to achieve this goal, despite its nutritionally reductionist focus on a single macronutrient. Protein firm strategies to increase their dominance are likely to further diminish equity in food systems by exacerbating power asymmetries. In addition, the resilience of food systems has the potential to be weakened as these strategies tend to reduce organizational diversity, as well as the genetic diversity of livestock and crops. To better understand these changes, we visually characterize firms that are most dominant in higher protein food industries globally and their recent strategic moves. We discuss the likelihood for these trends to further jeopardize food system resilience and equity, and we make recommendations for avoiding these impacts
Political Economy of Capital Accumulation (YorkU, LAPS/POLS 4292 6.0, Undergraduate, Fall Term, 2021-22)
Full text linkCapital is the central power institution of capitalism: it is the main force underlying the relentless transformation of power relations in capitalist societies. The course explores the accumulation of capital from three interrelated perspectives: conceptual, historical and empirical. At the conceptual level, the course examines the evolution of orthodox and critical theories of value and how these theories serve to explain and justify contending notions of accumulation. At the historical level, it traces the development of capital from its humble pre-capitalist origins to its present world dominance. At the empirical level, it studies and juxtaposes the qualitative and quantitative aspects of capital accumulation and explores what they mean for the contemporary political economy. In parallel to these explorations, the course introduces students to the art and science of empirical research. By the end of the course, students are expected to be able to develop and integrate theoretical arguments with their own empirical work
Investigating Networks of Corporate Influence on Government Decision-Making: The Case of Australia’s Climate Change and Energy Policies
Full text linkThis paper argues that the ability of dominant corporations in the fossil fuel and other polluting industries to shape government policy on climate change and energy issues is directly related to their financial interests in particular countries, and emblematic of the crippling effect which they have exercised on the ability of nation states to decarbonise. Using Australia as an exemplar of the many favourable policy outcomes which powerful corporate interests have secured from successive governments in relation to climate and energy policy, it seeks to demonstrate that covert networks of political influence have played a major role in the decisions made and actions implemented in both areas of policymaking over the last fifteen years. Through detailed empirical analysis of a database of current and former senior politicians, political staffers and bureaucrats with employment links to the fossil fuel and resource extraction industries, it argues that these industries have constructed a covert network of lobbyists and revolving door appointments which has ensured that industry interests continue to dominate Australia’s energy policy, and that its emissions from fossil fuel use continue to rise. Covert corporate influence in Australia’s energy and resource sectors provides an additional layer of explanation for the persistence of structural biases in its financing, policy and regulatory regimes to those accounts which draw on different forms of discourse and policy analysis
Dominant Capital is Much More Powerful Than You Think
No full textHow should we measure the power of dominant capital? Economists, although seldom if ever referring to ‘dominant capital’, quantify the relative size of large firms by measuring their so-called aggregate concentration. But for all their insight, measures of aggregate concentration have one serious shortcoming: they tend to underestimate the power of dominant capital and its temporal growth – by a lot
Pharmaceuticals: Beating the Hell Out of the Average
Full text linkA lot has been written on the imminent decline of pharmaceuticals: their falling production, reduced R&D, declining innovation, the opioid crisis, patent cliffs, biting competition from generic drugs, growing opposition to IPR. The list goes on. Judging by the yardsticks that matter the most, though – namely, the companies’ relative profit and relative capitalization – pharmaceuticals are doing just fine. In fact, based on these yardsticks, they remain the most powerful corporate sector of all
Dominant Capital and the Government
Full text linkThis note contextualizes the ongoing U.S. policy shift toward greater ‘regulation’ of large corporations. Cory Doctorow and Blair Fix are optimistic about this shift. We doubt it