Disclaimer:
Some images in the original version of this book are not
available for inclusion in the eBook
First published 2000 by Pluto Press
345 Archway Road, London N6 5AA
and 22883 Quicksilver Drive, Sterling,
VA 20 166-20 12, USA
Copyright O Douglas Dowd 2000
The right of Douglas Dowd to be identified as the author
of this work has been asserted by him in accordance with
the Copyright, Designs and Patents Act 1988.
British Library Cataloguing in Publication Data
A catalogue record for this book is available from
the British Library
ISBN 0 7453 1644 1 hbk
ISBN 0 7453 1643 3 pbk
Library of Congress Cataloging in Publication Data
Dowd, Douglas Fitzgerald, 19 19-
Capitalism and its economics: a critical history 1 Douglas Dowd
p. cm.
Includes bibliographical references and index.
ISBNO-7453-1644-1
1. Capitalism-History. 2. Economic history. I. Title.
Produced for Pluto Press by Chase Production Services
Printed in the European Union by Antony Rowe, Chippenham, England
With deep gratitude and affection,
this book is dedicated to
Robert A. Brady j 1901-63), M.M. Knight j 1887-1981),
and Leo Rogin j 1893-1947):
wonderful teachers, whose passion for understanding
and contempt for ideology
have served as a continuing inspiration
Contents
What Has Capitalism Done For Us? To Us? 1
The Dynamics of Capitalist Development 3
Capitalism's nature and nurture 4
The heart of the matter: expansion and exploitation 5
Oligarchic rule? 6
What exploitation? 8
"Trade and the flag": Which follows which? 9
In sum 11
The Sociology of Economic Theory 12
"The economy" 13
Objectivity and neutrality 13
What should economists be expected to do? 15
PART I: 1750-1945
1 Birth: The Industrial Revolution and Classical Political
Economy, 1750-1850
The Start of Something Big 19
Why Britain took the lead 19
Commodification as revolution 20
The State: Now You See It, Now You Don't 21
Emperor Cotton 23
Hell on earth 24
Industrialism in the Saddle 25
The Brains Trust 28
Adam Smith 28
"Invisible hand" or "invisible fist"? 30
David Ricardo 31
The gospel of free trade 32
Abstract theory versus earthy realities 33
Jean-Baptiste Say 34
Depression is impossible 34
Thomas Robert Malthus 35
Jeremy Bentham 38
John Stuart Mill 40
And Karl Marx 42
2 Maturation: Global Capitalism and Neoclassical
Economics, 1850-1914
And British Industry Shall Rule the World: For a While 45
Politics, the accumulation of capital, and the
industrial revolution 46
The Second Industrial Revolution 48
Industrialization at the gallop 49
The Pandora's box of imperialism 49
The United States 51
The importance of being luclq 53
Big, bigger, biggest 54
Germany 57
Prussian political economy 58
German science and technology 59
The nation with two faces 60
A Digression on the Casting of Stones 62
Japan 64
Arise, Ye Prisoners of Starvation! 69
"Don't waste any time in mourning. Organize" 70
Socialist movements in Europe 72
And the United States? 72
Japan and Germany (again) 74
A Place in the Sun 76
The rat race begns 77
. . . And speeds up 78
. . . Then explodes 79
Economists in Wonderland 8 1
"Let us now assume ..." 81
Recipes for absurdities 83
Counter-attack: Karl Marx 86
The social Drocess 86
The dynamics of nineteenth-century
capitalist development 87
And Thorstein Veblen 90
Human beings versus the system 91
3 Death Throes: Chaos, War, Depression, War Again;
Economics in Disarray, 1914-45
The War to End All Wars - But That Didn't 94
Messy world, neat economics 95
As You Sow, So Shall You Reap 96
War's unwholesome economic fruits 97
The United States 97
Germany 98
Japan 98
The Soviet Union 99
The premature revolution 100
Forced industrialization 10 1
Fascist Italy 103
The first working class? 103
Antonio Gramsci 105
The future casts its shadow 106
The Big One 108
The bitter with the better 109
The bumpy road down 110
Global contagion 112
A tragedy of errors 113
New brooms don't always sweep clean 114
New Deal 11 5
Better late than never 116
Unions 117
Housing 117
Social security 117
Nazi Germany 1 18
Through a glass darkly 119
Waste Land 122
Apocalypse now 122
Economics: Almost Out With the Old, Almost In With
the New 124
The old stamping grounds 124
John Bates Clark 126
Irving Fisher 126
Joan Robinson I 126
Turning the earth 127
John Maynard Keynes 127
Alvin Hansen 132
Joan Robinson I1 133
Joseph A. Schumpeter 135
PART 11: 1945-2000
4 Resurrection: Global Economy I1 and its Crisis;
Hopeful Stirrings in Economics: 1945-75
The Best of Times - For Some, For a While 141
The Big Six 142
Behemoth Capitalism Unbound 143
From the Ashes Arising ... 144
Rescue 146
Rebuilding 146
Modernization ... and the Cold War 147
"Cry Havoc! And let slip the dogs of war" 149
"Excessive vigilance in the defense of freedom is no
crime" 150
BIG Business 151
The giants feed 152
As a matter of fact 152
Superstates 154
All Together Now: Shop! And Borrow! 156
The consciousness industry 156
Consumerism as a social disease 158
The family and politics 158
Stagflation: The Monster with Two Heads 159
Toward the new world order 16 1
Economics on a Seesaw 162
Post-Keynesian economics 162
Radical political economy 164
Up with the old 165
5 New World Order: Globalization and Financialization;
and Decadent Economics, 1975-2000
Introduction and Retrospect 167
Monopoly Capitalism I1 168
Giants Roaming the Earth 170
The waltz of the toreadors 172
TNCs of the world, unite! 172
Media/telecommunications 174
Petroleum 174
"The new economy" -Who benefits, and who
pays? 174
Wall Street 175
Wages and hours 175
Lean and mean 176
Fat and mean 178
The Superstate's New Masters 180
The World as Capital's Oyster 182
The Triumph of Spectronic Finance 183
The little old lady of Threadneedle Street and her
offspring 186
"Is the United States Building a Debt Bomb?" 188
The addicted consumer 190
And so? 191
The Media: Amusing Ourselves to Death 192
For Shame! 195
Epilogue
Introduction: Economic Growth as Icon 200
The Case for Growth 201
The Tossicodipendente Global Economy 202
The theater of the absurd and the obscene 203
Honk, if you need a gas mask 204
Global Economy 111: Today, the World 205
Democracy: the challenge met 205
Orwell revisited 207
The political economy of corruption 208
From Bad to Worse 209
Hong Kong 209
Singapore 209
South Korea 210
Taiwan 210
The eleventh commandment: export! 21 1
Needs and Possibilities and New Directions 212
Politics and understanding 213
Structural changes 214
Notes 216
Bibliography 297
Index 3 13
Preface:-
As the twentieth century ended, two sets of economic facts stood in
stark and disturbing contrast. First, for the first time in history,
existing resources and technology talcen together had made it
possible for all 6 billion of the earth's inhabitants - now or within a
generation - to be at least adequately fed, housed, clothed, educated,
and their health cared for. And second, instead, well over half of
that population was malnourished (with numberless millions
starving), ill-housed, ill-clothed, ill-educated, in precarious health,
and stricken by infant mortality rates and average life-spans
belonging to the era of the early industrial revolution - when there
were no more than 2 billion people.
The contrasts between the possible and the actual illuminate the
disgraceful realities of that century. Yet, as this is written, capitalism -
"the marlcet system" - and its economic theory stride arm in arm on
parade, celebrating their joint triumph, aloof and oblivious to these
ugly facts.
But many who are neither capitalists nor economists laow or
sense much or all of those realities, and feel something other than
triumph. They are alarmed at what exists and fearful of what edges
over the horizon, and baffled, stupefied, or angered by what passes for
economic wisdom. Using only good sense, these uneasy or indignant
people see contemporary capitalism as producing a set of ongoing and
imminent disasters for most people and much of nature: and they
could rightly see economists serving not as society's economic doctors
but as cheerleaders for business and finance.
This boolc, a critical analysis of the dynamically interdependent
histories of capitalism and economic theory, contends that the
"many" are right, and sets out to show why. To do so, it is
necessary to examine the dynamic interaction of two processes - the
historical realities of capitalism and the evolution of the economic
theory that supports it. Both have been thoroughly studied over
many years (if with diverse aims), and many of those inquiries will
be referred to as we proceed.
In most histories emphasizing one or another or both processes,
attention has not always been paid to our concern: their interaction.
Even when the latter has received considerable attention, a serious
gap remains; namely, the relevance of understanding that interaction
for our own time. This worlc, as often with histories, has
been prompted by present issues. Among the most pressing of the
latter is that economists now celebrate capitalism in ways that malce
it reasonable to classify them as ideologues - and to put them in
their place.
The book's discussions of both socioeconomic and analytical
histories will necessarily be summary and, to meet present purposes,
selective, both for capitalist history and its economic theories:
summary, to lceep its length within reason; selective in terms of which
nations and which economists are discussed. The boolc's purposes
neither require nor allow an encyclopedic treatise; its failure or success
will be measured in the degree to which it meets the need of "the
many" to shalce off the hypnotic effects of contemporary ideology and
economic theory.
Much of what industrial capitalism has meant can, of course, be
seen as achievements. They will be duly noted, as will the valuable
analytical worlc of the relatively few exemplary economists over the
whole period of this study. But our examination, when placed
against the social values and scientific standards of our formal
culture, will also reveal considerably more in capitalism's past and
present that must be seen as tragedy, vergng all too often on
criminality.
Significantly, it will be found that those few mainstream economists
(as distinct from radicals and reformers) who have made
serviceable studies of capitalist processes and relationships have rarely
if ever had their contributions integrated into the corpus of thought
laown as economic theory more than briefly. Least of all has such
analysis been incorporated in the economic theory that today guides
and rationalizes economic policies.
In less gentle words, the relationships between capitalism and
economics - unsurprisingly, as will be seen - have rarely been at
"scientific" arm's length; they have always been incestuous to some
degree, and most shamelessly so as we approach the present. In
consequence, the shared flaws of economics and capitalism have
been aggravated and now become downright lethal - a term here
used advisedly. This work is meant to support that strong language.
It will be noted that Part I covers a time span more than twice that
of Part 11. The reasons for that difference are discussed in the
Prologue. The latter provides a bare summation of the period within
which both capitalism and economics first took hold. After an
analysis of the core elements of capitalist development, there follows
a synoptic analysis of the nature of economic thought and how and
why it has evolved over the capitalist era.
The three chapters of Part I treat of the distinctive periods
bringng us up through World War 11, and do so by an examination
of the leading economies of each period - Britain in Chapter 1, plus
the United States, Germany, and Japan in Chapter 2, and their and
others' mutual breakdown in Chapter 3. It will also be noted that
Chapters 2 and 3 are more than twice the length of most others.
That is because, in addition to a continuing examination of the
functioning of the "analytical quartet" that ties this book together -
capitalism, industrialism, nationalism, and imperialism - there is an
examination of the "historical quartet" that led the way. That is, the
"quartet" that were becoming and still are the four most powerful
industrial capitalist nations: Britain, the United States, Germany,
and Japan. Those chapters might seem interminably long to the
reader; to the writer it was a constant problem to lceep them from
becoming even longer, if superficiality were to be avoided.
Part I1 critically examines the past half-century, and suggests
alternatives both to its socioeconomic realities and current trends and
to the economic theory guiding them.
What might seem a lopsided emphasis on recent decades is by no
means accidental, for they have "made" our present, and are the years
that most require our understanding. The emergence in recent years of
impending and frightening socioeconomic and ecological crises -with
every reason to believe that what underlies them is accelerating -
mandates that closer look.
The intended audience for this worlc are the concerned members of
the reading public, academic and otherwise, who suspect or laow in
their bones that something is terribly wrong with our socioeconomy,
but are unable to counter the abstruse arguments of mainstream
professionals and their political counterparts.
With that public in mind, this book's intention is to serve as a
useful step toward unlearning the dangerous arguments now guiding
economic policy, while also learning how capitalism, despite and
because of its innumerable changes over the years, serves more as a
wrecking crew than as a builder. It will conclude with a very brief set of
possible and desirable alternatives.
Neither this nor any other boolc, nor reading alone, can suffice
for such large purposes. But reading is essential for understanding.
Scandalously, such understanding of the economy is unlilcely to be
gained in a typical economics classroom or text: quite the opposite.
Begnning with the undergraduate major, and made worse at the
graduate level, the economics student is required to master
theoretical technique, not to understand the economy. The
consequence is what has been called a "trained incapacity" to
comprehend economic realities.
Because I have been a professor of economics and economic history
for about 50 years, it is probable that, despite my good intentions, I
have not successfully overcome the "professorial" tone. It will be seen
that there are numerous notes. Where they are not simply for
documentation they are meant to elaborate on and support the
generalizations in the text. There are many references for further
reading in those notes, also placed there with the hope that they will
be pursued. For the reader who is deterred by notes, I add that the text
can be read with no reference whatsoever to them; they may be
ignored or, for those interested, be read at a later time.
Many of the observations, analyses, and data to follow were
developed in various of my previous publications, and are used here
again in a somewhat or greatly different context. It seemed it would be
foolish to worlc out different ways of sayng things I had said before,
unless I had changed my mind. The source in which the orignal
occurred is given.
Finally, I wish to offer my deep thanks to those who have assisted
in the processes of getting this book written and published. In the
midst of its first draft, I was much helped by the solicited criticisms of
James Cypher, Michael Keaton, and Fred Doe (the latter currently
studyng economics at Berlceley). As the worlc went on, I was gratified
by the various forms of assistance provided by Edward S. Herman,
Howard Zinn, and, again, Michael Keaton. When Pluto Press accepted
the manuscript, the subsequent and numerous suggestions of Roger
van Zwanenberg of Pluto were vital in leading to a substantial
revision. And I can never sufficiently express my gratitude for the
constant encouragement and help of my wife, Anna.
Bologna,
November, 1999
No comments:
Post a Comment