Seven Theses on Brenner and Riley's "Political Capitalism"

Is it a crisis or a boring change?

As with the last post, this post offers some thoughts on the work of the eminent historian Robert Brenner, specifically the central claim offered in a new piece (co-authored by the brilliant sociologist Dylan Riley). That claim is that we are witnessing “the rise of a new regime of accumulation: let us call it political capitalism. Under political capitalism, raw political power, rather than productive investment, is the key determinant of the rate of return.” 

I think the case made for this so far has been unconvincing, but I appreciate the spur to thinking offered by the piece and its “experimental and provisional spirit.” The below is offered in the same spirit.  

1.     There is something to talk about here

For many people, the immediate temptation will be to respond that capitalist profits have obviously always depended on political power. I think this is true. But I also think it is true that over time, both the nature and visibility of the capitalist economy’s dependence on politics have shifted. The counterpart of the objective trend towards the socialization of production under capitalism has been new roles for the state in the coordination of investment, crisis management, etc. Recent examples which have commanded widespread popular attention and controversy include debt cancellation by executive order and the rather extraordinary role played by government transfers in maintaining household incomes during Covid. So I think Brenner and Riley are right to initiate a discussion about all this.

However, even if one ultimately ends up defending the idea that the politicization of capitalism is something new, they should do so only after acknowledging the relevant history (and after acknowledging that people pointing to the relevant history are not simply saying that the relationship between capital and the state has never changed). One would want to hear about, inter alia, the railroads (which inspired Gabriel Kolko to apply the term “political capitalism” to modern American capitalism), imperialism, the late-developmental state a la MITI, the military-industrial complex, etc. Within Marxist theory one would want some acknowledgment of the debates in the 1970s about organized and disorganized capitalism. For example, the conclusion to Erik Olin Wright’s Class, Crisis, and the State (1978) lists one of the principle specific contradictions of advanced capitalism as “the progressive politicization of the accumulation process itself.”

If you’re not interested in Marxist intellectual history, consider the business press in the 1970s - this is a good piece from Dun’s Review, which quotes a Nixon advisor predicting that “This country is going to an absolutely regulated economy. Within ten years, 50% of our industrial production will be controlled by the government.” You might think this is just an example of the misguided predictions which are common to history, but there was plenty of reason to think this way at the time: the advisor points out that "Washington already calls the tune in housing, airlines, railroads and aircraft production." Think of the Penn Central bankruptcy and partial nationalization of the railroads, the Lockheed bailout, various interventions into the airlines, the government’s assistance to ITT both at home and in Chile, and the remarkable level of interpenetration between the Nixon administration and particular corporate interests. Not to mention a defense budget which had roughly equaled, or even exceeded, total fixed business investment for decades.

Let me get more specific than just saying that there have been precedents. Every single item in the Riley/Brenner laundry list of new forms of political extraction—tax breaks, the privatization of public assets at bargain-basement prices, low interest rates, stock market booms with irrational consequences, massive state spending aimed directly at private industry—existed at different points in the 1945-1973 “golden age,” a period that they discuss without ever letting on that anything of the sort was occurring.

Given all this, it is quite surprising that the only historical precedent for political accumulation mentioned in the whole piece is feudalism: “The dramatic intensification of lobbying could be understood as a form of ‘political accumulation’, different of course from its feudal forebear, but nonetheless highly distinctive.” Surely there’s something more recent than feudalism to which lobbying can be compared?

2.     Wait, feudalism?

The claim in the new piece about the emergence of a new form of political accumulation is an uncertain echo of a stronger claim Brenner has made at different points over the last 2 or 3 years, namely that we are in the midst of “a transition from capitalism (back) to feudalism.” In a piece from late 2021, Riley also flirted with the idea, declaring that there is “something different from capitalism that needs to be accounted for” in phenomena such as “politically engineered asset bubbles and stock-market run-ups.” But by the end of that piece Riley opted for the more plausible idea that “a new form of capitalism [is] emerging, based on political mechanisms and associated with a new form of state and a new pattern of social stratification.”

For both authors, the idea was that money making had now come apart, to some significant but unspecified degree, from the forms in which capitalists generate surplus value. For Brenner, writing specifically of the Fed’s (ultimately unconsummated) program of direct lending to non-financial corporations:

underwriting economic egoism no longer necessarily meant enhancing corporate decision makers’ ability to increase investment or employment at a profit, or to maximize profits with the minimum of capital accumulation by way of squeezing their workers—or even simply to reproduce and sustain their own firms… money making has been de-linked from profitable production, especially in a weak economy.

The new piece seems to occupy a kind of compromise position re: capitalism and post-capitalism. To the relief of this reader at least, it states that contemporary “lobbying” is “different of course from its feudal forebear.” But despite the second word in “political capitalism,” the piece also seems to pointedly distance the new thing from capitalism at several points. The phrase “a new form of capitalism,” which appeared in Riley’s earlier piece, does not appear here. And feudalism, capitalism, and the new thing are all defined in apparently discontinuous terms:

under feudalism, lords typically do not extract labour effort in the actual production process but subsequent to it, through the application or threat of force. 

under capitalism, owners of means of production typically extract labour effort from workers in the production process after the purchase of labour power—the capacity to work—in a market   

Under political capitalism, raw political power, rather than productive investment, is the key determinant of the rate of return.¹ 

Personally, I think a degree of ambiguity about the nature of emergent phenomena is appropriate in light of how little we know about the future and how wrong most of us have been in our predictions so far. But for people interested in the trivia of Marxist intellectual history, it is interesting to note that Brenner has tended to be quite critical, even dismissive, of theorists who approached the history of capitalism in terms of an evolutionary succession of different “social structures of accumulation” within capitalism. The traditional Brenner position was that “social-property systems, once established, tend to set strict limits and impose certain overall patterns upon the course of economic evolution.”² One might speculate that the felt need to jump from an evident change in capitalism to a claim about the end of capitalism reflects this lingering hostility to the idea of epochal changes within the history of capitalism.

3.    The class character of the interventions described has not been nearly as one-sided as Brenner and Riley claim

The piece offers a truly stunning list of policies which count as “politically constituted rip-offs.” They include “ultra-low interest rates…Bush’s Prescription Drug legislation, Obama’s Affordable Care Act, Trump’s CARES Act, Biden’s American Rescue Plan, the Infrastructure and chips Acts and the Inflation Reduction Act,” all of which are “mechanisms of surplus extraction.” You hardly need to be an apologist for the present state of things to question whether all of these can be simply subsumed under the rubric of “politically engineered upward redistribution.” You don’t even have to assume any good motives on the parts of the politicians, merely to ask: doesn’t the state ever spend money to legitimate itself, or to buy votes from non-rich people, or to invest in the cheapest possible version of social reproduction? Barely mentioned in the piece (and unintegrated into the theory in which all acts of fiscal and monetary policy are somehow automatically regressive) are the massive transfers to households during the Covid pandemic, nor is there any discussion of what happened in labor markets (and to wage growth) between 2018 and 2022, nor is there as far as I can tell any data presented on the course of wealth and income inequality in these years. Without this, the picture is one-sided at the very least.

4.   Even the regressive parts of current policy need to be distinguished more precisely

Despite everything just discussed above, I don’t disagree that the overall tilt of state policy is regressive (though of course, by the same token I would deny there’s anything particularly new in that fact). It is still the case that the U.S. state is the state of a capitalist social formation, as well as the (increasingly uncertain) superintendent of global capitalism. Across however many complicated mediations, its policies still work - on balance and sometimes in quite crudely instrumentalist ways - to preserve and when possible strengthen the basic relations underlying our “criminally oppressive, unsustainable, and unjust social order.”

With that said, even the discussion of obviously regressive policies in the NLR piece conflates wildly different sorts of regressive policy, which makes it difficult to evaluate the evidence for the central claim about a novel form of political accumulation. For example, an income tax break for the ultra-rich is a different kind of thing than something like the CHIPS Act, which essentially bribes corporations to make specific kinds of fixed investment they wouldn’t otherwise build. You can get a good sense of the difference by comparing Brenner’s 2020 essay with the new essay. In 2020, Brenner was upset about the possibility that the Fed might make direct loans without conditions to non financial corporations. By contrast, he seems to have looked more approvingly on industrial policy:

The policies pursued by the US political-economic establishment were in no way seeking to incentivize American corporations to undertake increased employment and new investment aimed at reviving the economy—a stimulus programme—let alone to induce them to take steps with the goal of revitalizing the economy by undertaking a new wave of statist intervention in the interests of greater productivity and competitiveness—a programme of re-structuring. Neither of these paths was even contemplated, despite the dire condition of the economy and the disaster affecting large swathes of the population.

But now, in 2022, these sorts of programs are not only contemplated but have become law (and, as Brenner and Riley note to their credit, “no administration since LBJ has proposed the sort of domestic initiatives Biden has; this would have been absolutely clear if the Administration had enjoyed a slightly greater advantage in Congress.”) But now the CHIPS Act, instead of being interpreted as a welcome or at least telling departure from the politicized plunder of the Fed’s proposed direct lending, just becomes a new version of politicized plunder, damned for the very “statist intervention” whose absence was previously cited as primary evidence of the inexorable decay of both political investment and the energy of the political class.

5.     Where’s the Marxism (1)?

One striking thing about “politically engineered upward redistribution” is that this phrase is hardly a new discovery from the laboratory of historical materialism, but something that has for decades been a cliché in the hands of liberal writers like Paul Krugman (see here and here and here, countless examples could be added). Once this connection has been made, it’s interesting to note that most of the footnotes in Brenner’s 2020 piece on plunder come from magazines like the American Prospect.

Of course, just because liberals say something doesn’t mean it’s wrong; in this case, both liberals and NLR are clearly right that much political upwards redistribution has occurred. But it’s interesting that in this case, what is shared is not just the (inarguably correct) critique of upwards redistribution, but the idea that all of this represents some kind of departure from capitalism, or at least the way capitalism “should” be. We have already seen above how the NLR writers have been tempted to describe all this as something other than capitalism. The 2020 plunder piece heavily cited pieces which lamented the plight of small business and complained that bailouts made “a mockery of the alleged virtues of free-market capitalism.” In the new piece, one of the first citations comes from Luigi Zingales, a University of Chicago Professor of Entrepreneurship and Finance and right-wing critic of “crony capitalism” in the name of a better capitalism. There a million other books like this, including Robert Reich's "Saving Capitalism," according to which "the threat to capitalism" is "the increasing concentration of political power in a corporate and financial elite that has been able to influence the rules by which the economy runs."

It strikes me that the role of Marxist intellectuals should be to point out that the pathologies of our current economic and political system grow out of capitalist social relations, and that precedent for many of the current pathologies can be found scattered throughout the earlier history of capitalism (even something like “asset price inflation”). Instead, Riley and Brenner blame the pathologies on the disappearance of capitalism, with the latter now painted in retrospect as a system in which market logics led to productive investment, more-or-less shared growth, and functional politics.

6.     Where’s the Marxism (2)?

As Dylan Riley asked in an earlier piece, “Isn’t the fundamental point about Marxism to figure out how, and with what consequences, the surplus is extracted from the direct producers?” The new piece states that “political capitalism” represents not just a new way of distributing surplus but actually a new set of “mechanisms of surplus extraction.”

It is one thing to argue that accumulation has become increasingly dependent on political processes of various kinds. It is a far stronger claim that things like tax breaks, low interest rates, the ACA, or the CHIPS Act now constitute “mechanisms of surplus extraction” themselves (it is an even stronger claim that they are now the defining mechanisms of surplus extraction in our social formation). Yet this is what Riley and Brenner claim.

In what way do these laws and policies represent “the specific economic form in which unpaid surplus labor is pumped out of the direct producers”? One possible formulation, with some support in this text and others by the same authors, is that the state is “plundering” “taxpayer money” to give out to favored capitalists. This formulation has certain politically dubious connotations, not to mention analytical confusion about whether the US government actually finances itself through taxation. But even leaving those issues aside, it is obvious that taxpayers are not direct producers, at least not qua taxpayers.

Even on a highly critical rendering, something like the CHIPS Act is easily grasped by traditional, even banal categories. Politicians bribe profit-seeking capitalists to build privately-owned semiconductor factories they wouldn’t otherwise build. If unpaid surplus labor occurs, surely it is done by the workers in the semiconductor factory, who are dominated by the managers of the plant and exploited by its owners (not to mention the foreign workers whose labor provides some of the crucial input materials - there is very little sense in the NLR piece that the rather large manufacturing sector which the US still possesses is interlocked in a global mode of production).

Even in a situation where the government just gave money to its rich friends in return for nothing (which is clearly something that has happened throughout the history of capitalism, and which sometimes seems to be how Brenner/Riley think about central banking), the recipients of the plundered money would only be receiving claims on goods and services produced elsewhere in the economy. Given the structure of contemporary American capitalism, much of what our hypothetical crony would consume would be services, a sector in which profits can famously be wrung out of workers without much investment in plant and equipment. In the NLR piece, there is hardly any sense that this dominant sector even exists. The framing contrast between accumulation via “raw political power” or  “productive investment” conspicuously omits labor exploitation, just as surely as workers in general are omitted from the confusing idea that Congressional appropriations and Fed policy now constitute the way in which surplus is pumped out of the direct producers.

A more fruitful line of inquiry, suggested in Riley’s earlier essay but not in the new piece, would be to focus more specifically on rents, which are politically constituted but often exacted by private actors and which, unlike the ACA or the CHIPS Act, can be plausibly described as themselves a form of extraction.³ Lots of profits today are made through things like IP, or through fees for financial services, not to mention prices which are are set to some extent by corporations with market power. The question would still need to be answered about what was brand new or non-capitalist here, but it would avoid the most implausible version of the case and might be the basis for a wider discussion. It might also offer the basis for a theory of inflation which did not simply blame "deficit spending," as Brenner and Riley unfortunately do (I hope to say more about the implicit macroeconomics of the piece in a later post).

7.     All this comes out in the discussion of finance in general, and central banking in particular

Perhaps it’s just because I’ve been thinking a lot about the Fed recently, but I found the piece’s discussion of monetary policy especially frustrating, and exemplary of many of the issues I’ve tried to raise above. The piece takes the position that “ultra-low interest rates” are a “surplus extraction mechanism,” benefiting rich people through asset price inflation. Even leaving uncontested (for the moment) the idea that there is a straightforward relationship between easy money and stock prices, Brenner and Riley’s view of central banking has severe analytical and political shortcomings.

There is, first, the idea that “easy money” is unnatural and that some other level of interest rates would be either natural or have distributional consequences which were either neutral or better for workers. This view came out more explicitly in Brenner’s 2020 piece, which lamented that Fed intervention brought about one set of results “at a time when the real economy would otherwise have brought about the opposite result,” as if there was ever at any time a real economy existing except in and through financial conditions which have always been heavily influenced by government policy. But the premise is still intact in the new piece: otherwise, how to make sense of the idea of low rates as part of a new regime in which “political accumulation” has replaced the prior, market-driven outcomes of earlier decades? (Arguably, a similar ontology needs to be exorcised from the idea of asset price inflation, which suggests there is a natural price where asset values should tend to rest, but that’s a question for another day).

In fact, every monetary policy stance has distributional consequences, and it is just as easy (in my opinion, easier) to tell a just-so story in which tight money is a political handout (just think about who is receiving most of the fruits of higher interest rates, on government debt and private debt alike). The distressingly common picture of the Fed as some kind of permanent conduit of the easy money desired by Wall Street not only makes a mockery of decades of Marxist state theory, it is also obviously impossible to square with the Fed’s current monetary tightening. If the money rich people made through stock price appreciation counts as “plunder” channeled to the rich by the Fed, what does this theory say about the “destruction” of huge amounts of stock market wealth that has already happened with the tightening? This is a problem for the hard money left more generally. Consider these two sentences, written by the same author in sibling publications less than three months apart:

“Wall Street had given up on inflation-phobia and come to love easy money and the floor the Fed seemed to put under stock prices... because the Fed’s easy money has been so kind to Wall Street, there’s almost no constituency for monetary tightening in finance” (September)

“Powell is now faced with a class duty to get inflation down, and if that means creating a recession, that’s fine with him.” (November)

The point here is not that “easy money” (a phrase we should probably drop in serious analytical discussions) is a panacea, or offers no benefits to rich people (clearly it is not, and it does). It’s that we need a way of talking about monetary policy which is able to account for the fact that it can run both ways, despite the continued dominance of financial elites over our policy in general.

But while I don’t want to defend easy money per se — since it is clearly not sufficient even for full employment capitalism, much less socialist democracy — I would like to say one thing in closing - less about this piece than out of a general sense of frustration with certain discussions of monetary policy on the left. Each one-percent increase in the unemployment rate represents more than 1.6 million workers thrown out of a job. We’ve already learned on the left that it is politically shortsighted and ethically questionable to propose mass unemployment (of, say, coal miners) as a solution to climate change. Any discussion of the distributional consequences of low interest rates which focuses exclusively on asset bubbles, without considering the effects on workers, has no more to add to socialist politics than a hypothetical piece of climate journalism which proposed letting coal miners go straight to hell.

1. The implicit distance from capitalism here is accentuated if Riley’s hard line in an earlier essay is recalled: if a “form of extraction is politically constituted…to that extent something different from capitalism that needs to be accounted for.”

2. For a contemporary example of this approach, from a serious reader of Brenner, it’s worth reading this recent piece by Phil Neel, who writes that despite “processes which seems to constantly generate new ‘varieties of capitalism’ (whether divided by decade or branching at national borders), little actually changes. There is only and has only ever been a single capitalist society. The long-run expansion and development of this society changes the conditions in which it must survive, but without changing its basic laws of motion. New institutional arrangements, new geographic centers, the emergence of new technologies—these are all, in the end, adaptive reiterations of those same laws.”

3. Riley’s example of “something different from capitalism” in contemporary capitalism was a toll bridge.