Capitalism as Oligarchy
Time passes and it’s hard to believe it has been three years since my last post. I hope all former readers and commenters are doing well.
I’ve devoted this hiatus to writing a book centered on some of the basic themes that have been brought out in this blog and I’m happy to announce it has finally been released. Capitalism as Oligarchy seeks to build on the works of Jeffrey Winters (Oligarchy) and Michal Kalecki and offers a somewhat different and I believe important approach to understanding our social world. Since it will provide the grounding perspective for future posts, I’d like to outline the basic idea here.
Throughout the entire 5,000 year history of recorded civilization, and for thousands of years before that, every socioeconomy of any size was a hierarchy in which a tiny minority possessed virtually all material power and thereby ruled over the vast majority. It’s no different today as conservative estimates report that the bottom 90 percent of the global population possesses just 12 percent of wealth. Similar asymmetries exist within all countries.
Despite the deep historical continuity of inequality, our system over the last couple hundred years is almost universally defined and analyzed as ‘capitalism’. This is a significant problem for a number of reasons. It imposes unneeded complexity onto a power structure that’s inherently simple, it presents the system as relatively new and we therefore lose sight of its tight link with the past, and it hides the core hostility that’s the essence of power.
As capitalism, the system is presented as one of ‘private’ ownership in which the primary motive, the “Moses and the Prophets”, is the unending accumulation of monetary profit. Inequality is a mere by-product as is the massive poverty and insecurity that reigns everywhere. Despite our immense productive potential, billions live in polluted slums and vast majorities in even the ‘developed’ world struggle for the basics of decent food, housing, sanitation, medical care, safe neighborhoods, secure retirements, leisure, and so on.
But if we think of the system as ancient inequality, i.e. oligarchy, things appear completely different. It’s no longer one of ‘private’ ownership but ‘concentrated minority’ ownership. The systemic logic becomes straightforward. The motives of the propertied minority are self-evidently the aggressive defense of wealth and luxury consumption. Its prime risks arise from others competing for power and, existentially, the propertyless population. And from these, we can deduce two fundamental dynamics that must apply wherever inequality exists—I call them diversion and suppression.
Diversion is the process by which the oligarchic minority costlessly diverts human effort into satisfying its motives. Some ways this has been historically handled is through slavery, serfdom, and indentured servitude. It’s managed today through what I term the diversion-profit loop by which whatever is monetarily expended by the oligarchy is subsequently returned via profit. This is the essential meaning of the Kalecki profit equation (Profit = Capitalist Spending) and from it we can see that profit isn’t the systemic motive but is rather a mere operational detail that permits the oligarchy as a class to costlessly achieve its motives in a monetary based socioeconomy. Through Kalecki, we also discover that the population can never be profitable for, excluding ever-expanding debt, workers can’t spend more than they’re paid in wages.
The other dynamic is suppression, the means by which inequality is enforced over the population. It’s the ongoing imposition of suboptimal living standards, dependence, insecurity, and poverty in service to the vital wealth defense need of sustaining the structural hierarchy. It’s evident in every nook and cranny of the system but is easily overlooked because so many of us accept the ideologies of finance. Examples include corporate pricing power achieved through consolidation, the suppression of unions, the ideology of worker competition, and a host of mythologies on cost, taxation, public debt, international trade, inefficiencies of collective action, individualism, and so on. Suppression is a crucial dynamic of oligarchy as inequality can’t exist without a subservient population. It unambiguously explains why it is that despite our immense productive capacity, the conditions across the planet are what they are. Poverty and insecurity flow directly from the fundamental logic of the system.
I’ll stop here. For those interested, a more detailed summary of my argument can be found under the Capitalism as Oligarchy tab where I’ve posted the book’s Table of Contents, Preface, and Introduction.