Magazine article The American Conservative

Is There Capitalism after Cronyism?

Magazine article The American Conservative

Is There Capitalism after Cronyism?

Article excerpt

Does Capitalism Have a Future?, Immanuel Wallerstein, Randall Collins, Michael Mann, Georgi Derluguian, and Craig Calhoun, Oxford University Press, 208 pages

Judging by the mainstream media, the most pressing problems facing capitalism are 1) income inequality the subject of Thomas Piketty's bestseller Capital in the Twenty-First Century, and 2) the failure of free markets to regulate their excesses, a common critique encapsulated by Paul Craig Roberts' recent book The Failure of Laissez Faire Capitalism. These and many similar diagnoses reach a widely shared conclusion: capitalism must be reformed to save it from itself.

Exactly how this economic reformation should be implemented is a question that sparks debates across the ideological spectrum, but the idea that capitalism can be reformed is accepted by the left, right, and libertarians alike. But socio-economist Immanuel Wallerstein asks a larger question: is the current iteration of global capitalism poised to be replaced by some other arrangement? Wallerstein and four colleagues explore the answer in Does Capitalism Have a Future?

Wallerstein is known as a proponent of world systems, the notion that each dominant economic-political arrangement eventually reaches its limits and is replaced by a new globally hegemonic system. Wallerstein draws his basic definition of the current dominant system--let's call it Global Capitalism 1.0--from his mentor, historian Fernand Braudel, who meticulously traced modern capitalism back to its developmental roots in the 15th century in an influential three-volume history, Civilization & Capitalism, 15th to 18th Centuries. From this perspective, there is a teleological path to global capitalism's expansion, beneath the market's ceaseless cycle of boom-and-bust.

It is today's latest and most expansive iteration of capitalism--one dominated by the mobility of global capital, state enforcement of private rentier/ cartel arrangements, and the primacy of financial capital over industrial capital--that Wallerstein and his collaborators view as endangered. Amidst the conventional chatter of social spending countering markets gone wild--as if the only thing restraining rampant capitalism is the state--Wallerstein clearly identifies the state's role as enforcer of private cartels. This is not just a function of regulatory capture by monied elites: if the state fails to maintain monopolistic cartels, profit margins plummet and capital is unable to maintain its spending on investment and labor. Simply put, the economy tanks as profits, investment, and growth all stagnate.

Wallerstein characterizes this iteration of capitalism as "a particular historical configuration of markets and state structures where private economic gain by almost any means is the paramount goal and measure of success."

Even those who reject this left-leaning description of free markets and the self-interested pursuit of profit can agree that the prime directive of capitalism is the accumulation of capital: enterprises that fail to accumulate capital lose it and eventually go bust. As economist Joseph Schumpeter recognized, capitalism is not a steady-state system but one constantly reworked by "creative destruction," the process of the less efficient being replaced by the more efficient.

In Wallerstein's view, Global Capitalism 1.0 could end in the inability of capitalists to continue reaping large and fairly secure profits. If capital can no longer accumulate more capital, this iteration of capitalism runs out of oxygen and creative destruction will usher in a radically new arrangement. Wallerstein's chapter in this book is titled, "Structural Crisis, or Why Capitalists May No Longer Find Capitalism Rewarding."

Though exponents of the status quo believe that amending the political-financial rules is all that's needed to maintain the current centralized arrangement, Wallerstein believes that following the old rules will actually intensify the coming structural crisis. …

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