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Dominant Capital is Much More Powerful Than You Think
Get PDFHow 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
Cinema
Get PDFUnlike books, cinema directs and controls our attention and leaves less to the imagination. But that’s why we love it: it grabs us. And even if it isn’t always as deep as books, it can still teach us plenty. Here is a list of movies and series we liked, along with their directors/creators and the year/s in which they first screened
The Great Debt Divergence and its Implications for the Covid-19 Crisis: Mapping Corporate Leverage as Power
Get PDFThe COVID-19 pandemic has amplified longstanding concerns about mounting levels of corporate debt in the United States. This article places the current conjuncture in its historical context, analysing corporate indebtedness against the backdrop of increasing corporate concentration. Theorising leverage as a form of power, we find that the leverage of large non-financial firms increased in recent decades, while their debt servicing burdens decreased. At the same time, smaller firms experienced sharp deleveraging alongside increasing debt servicing costs. Crucially, smaller corporations also registered severe losses over this period, while large corporations remained profitable, and in fact doubled their net profit margins from the early-1990s to the present. Taken together, the results from our mapping exercise uncover a series of dramatic changes in the financial fortunes of large versus smaller firms in recent decades, a phenomenon we refer to as the great debt divergence. We explain this divergence with reference to the dynamics of power in the era of ‘shareholder capitalism’, and we argue that the US political economy in the post-COVID 19 world is likely to resemble the pre-COVID 19 one, only with more market turmoil, more concentration, more inequality, and even less investment
The 1-2-3 Toolbox of Mainstream Economics: Promising Everything, Delivering Nothing
Get PDFWe write this essay for both lay readers and scientists, though mainstream economists are welcome to enjoy it too. Our subject is the basic toolbox of mainstream economics. The most important tools in this box are demand, supply and equilibrium. All mainstream economists – as well as many heterodox ones – use these tools, pretty much all the time. They are essential. Without them, the entire discipline collapses. But in our view, these are not scientific tools. Economists manipulate them on paper with impeccable success (at least in their own opinion). But the manipulations are entirely imaginary. Contrary to what economists tell us, demand, supply and equilibrium do not carry over to the actual world: they cannot be empirically identified; they cannot be observed, directly or indirectly; and they certainly cannot be objectively measured. And this is a problem because science without objective empirical tools is hardly science at all
A Requiem for Carbon Capitalism?
No full textThe fossil fuels business has fallen on hard times. For years the sector has been mired in a slump due to stubbornly low oil and gas prices, concerns over climate change, as well as technological breakthroughs in renewable energy technologies. With the Covid-19 pandemic dealing a further blow to their fortunes, some media pundits claim that fossil fuels companies are entering a phase of terminal decline.
News of the immanent demise of companies responsible for a significant portion of global greenhouse gas emissions might sound like a boon for efforts to avert climate breakdown. But just how bad is the outlook for fossil fuels? In this research note, I offer a preview of findings from a new research project on the financial performance of the fossil fuels sector on a global scale.
My research shows that the share of oil, gas and coal companies in global profit and capitalization has steadily decreased over the past half century, while that of alternative energy companies has jumped since 2018. But despite falling distributive shares, what we also find is that the overall magnitude of oil, gas and coal profit and capitalization currently dwarfs that of the alternative energy companies. All signs indicate that capitalists are still, as Tim Di Muzio observed a decade ago, capitalizing a future unsustainable
How the Labor Theory of Value Emerges from Egalitarianism
Get PDFThe purpose of this essay is to put the last vestiges of the labor theory of value to rest. My goal is to explain why when we look at large sections of the economy, we find that value added correlates with labor time. The correlation comes not from some universal law of value. Instead, I argue that it results from a simple heuristic: humans seek income that is equivalent to their peers’. I call this principle the ‘egalitarian heuristic’. If it holds, even in rough form, then value added will correlate strongly with labor time. In short, we do not need the labor theory of value to explain the evidence
The Ritual of Capitalization
Get PDFFor more than a century, political economists have sought to understand the nature of capital. The prevailing wisdom is that there must be something ‘real’ – some productive capacity – that underpins capitalized values. This thinking, I argue, is a mistake. Building on Jonathan Nitzan and Shimshon Bichler’s theory of capital as power, I argue that capitalization is an ideology. It is a quantitative ritual for converting earnings into present value. Although the ritual is arbitrary, it gives rise to astonishing empirical regularities, reviewed here
Costly Efficiencies: Health Care Spending, Covid-19, and the Public/Private Health Care Debate
Get PDFThe debate around public versus private health care often turns on cost – that is, on how to reduce costs, and particularly government expenditures, when it comes to health care. This paper examines the theoretical and empirical relationship between health costs and health outcomes in the context of the COVID-19 pandemic. It proposes an alternative political economic framework – capital-as-power – for understanding how the provision of health care affects the relationship between health care costs and health outcomes, arguing that private health care realizes profits through the strategic limitation of health services. It presents empirical evidence suggesting that in countries which rely more heavily on private health care, higher overall health care expenditures predict more severe COVID-19 outbreaks, contradicting the argument that private health care services are more cost-efficient or will lead to better health outcomes at a lower cost
Unbridgeable: Why Political Economists Cannot Accept Capital as Power
Get PDFThe theory of capital as power (CasP) is radically different from conventional political economy.
In the conventional view, mainstream as well as heterodox, capital is seen a ‘real’ economic entity engaged in the production of goods and services, and capitalism is thought of as a mode of production and consumption. Finance in this approach is either a mere reflection/lubricant of the real economy (the mainstream view), or a parasitic fiction (the heterodox perspective).
CasP rejects this framework. Capital, it argues, is not a productive economic entity, but a symbolic representation of organized societal power writ large, and capitalism should be analysed not as a mode of production and consumption, but as a mode of power. In this approach, finance is neither a reflection nor a fiction, but the symbolic language that organizes and creorders – or creates the order of – capitalized power.
These are foundational claims. They go to the very heart of political economy, and they have far-reaching implications. So far-reaching, in fact, that if we accept them, we must rewrite, often from scratch, much of the theory, history and possible futures of the capitalist order.
Many have complained about CasP being aloof. Our approach, they have argued, insists on being ‘right’ – to the exclusion of all others. It shows no interest in ‘building bridges’. It dismisses neoclassical liberalism altogether, and although sometimes sympathetic to Marx, it aims not to revise Marxism, but to discard it altogether.
In this research note – excerpted and revised from our 2020 invited-then-rejected interview with Revue de la regulation – we explain the basis for these complaints and why CasP and conventional political economy cannot be easily bridged. Stated briefly, the problem is not unwillingness but built-in barriers. As it stands, political economy cannot accept capital as power. Its very foundations prevent it from doing so
No Way Out
No full textFor much of the 20th and early 21st centuries, U.S. unemployment and incarceration went hand in hand. This is how the rulers disciplined their subjects while bolstering the upward distribution of income